OFFICE PROPERTIES INCOME TRUST 10-Q

Item 1. Financial Statements OFFICE PROPERTIES INCOME TRUST CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in thousands, except per share data) (unaudited) March 31, 2025 December 31, 2024 ASSETS Real estate properties: Land $ 706,623 $ 711,039 Buildings and improvements 2,946,137 2,946,520 Total real estate properties, gross 3,652,760 3,657,559 Accumulated depreciation ( 643,089 ) ( 618,650 ) Total real estate properties, net 3,009,671 3,038,909 Assets of properties held for sale 11,070 32,199 Investment in unconsolidated joint venture 17,118 17,370 Acquired real estate leases, net 180,803 193,739 Cash and cash equivalents 63,745 261,318 Restricted cash 12,909 13,847 Rents receivable 150,678 155,668 Due from related persons 853 — Deferred leasing costs, net 99,070 97,642 Other assets, net 23,842 11,594 Total assets $ 3,569,759 $ 3,822,286 LIABILITIES AND SHAREHOLDERS’ EQUITY Unsecured debt, net $ 488,556 $ 662,277 Secured debt, net 1,872,355 1,872,357 Liabilities of properties held for sale 652 765 Accounts payable and other liabilities 87,499 118,689 Due to related persons 4,815 5,869 Assumed real estate lease obligations, net 9,219 9,525 Total liabilities 2,463,096 2,669,482 Commitments and contingencies Shareholders’ equity: Common shares of beneficial interest, $ .01 par value: 250,000,000 authorized, 70,063,086 and 69,824,743 shares issued and outstanding, respectively 701 698 Additional paid in capital 2,656,969 2,656,548 Cumulative net loss ( 81,800 ) ( 35,933 ) Cumulative common distributions ( 1,469,207 ) ( 1,468,509 ) Total shareholders’ equity 1,106,663 1,152,804 Total liabilities and shareholders’ equity $ 3,569,759 $ 3,822,286 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 Table of Contents OFFICE PROPERTIES INCOME TRUST CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (amounts in thousands, except per share data) (unaudited) Three Months Ended March 31, 2025 2024 Rental income $ 113,615 $ 139,435 Expenses: Real estate taxes 13,458 15,709 Utility expenses 7,567 8,151 Other operating expenses 31,205 27,327 Depreciation and amortization 43,733 50,341 Transaction related costs 876 233 General and administrative 5,058 5,644 Total expenses 101,897 107,405 Loss on sale of real estate ( 4,737 ) ( 2,384 ) Interest and other income 1,162 1,357 Interest expense (including net amortization of debt premiums, discounts and issuance costs of $ 11,919 and $ 3,444 , respectively) ( 53,378 ) ( 35,476 ) Net loss on early extinguishment of debt ( 243 ) ( 425 ) Loss before income tax expense and equity in net losses of investees ( 45,478 ) ( 4,898 ) Income tax expense ( 137 ) ( 56 ) Equity in net losses of investees ( 252 ) ( 230 ) Net loss ( 45,867 ) ( 5,184 ) Weighted average common shares outstanding (basic and diluted) 69,257 48,466 Per common share amounts (basic and diluted): Net loss $ ( 0.66 ) $ ( 0.11 ) The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 Table of Contents OFFICE PROPERTIES INCOME TRUST CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (dollars in thousands) (unaudited) Number of Shares Common Shares Additional Paid In Capital Cumulative Net Income Cumulative Common Distributions Total Shareholders’ Equity Balance at December 31, 2024 69,824,743 $ 698 $ 2,656,548 $ ( 35,933 ) $ ( 1,468,509 ) $ 1,152,804 Issuance of common shares, net 238,343 3 142 — — 145 Common share grants — — 279 — — 279 Net loss — — — ( 45,867 ) — ( 45,867 ) Distributions to common shareholders — — — — ( 698 ) ( 698 ) Balance at March 31, 2025 70,063,086 $ 701 $ 2,656,969 $ ( 81,800 ) $ ( 1,469,207 ) $ 1,106,663 Number of Shares Common Shares Additional Paid In Capital Cumulative Net Income Cumulative Common Distributions Total Shareholders’ Equity Balance at December 31, 2023 48,755,415 $ 488 $ 2,621,493 $ 100,174 $ ( 1,466,476 ) $ 1,255,679 Common share grants — — 362 — — 362 Common share forfeitures and repurchases ( 869 ) — ( 6 ) — — ( 6 ) Net loss — — — ( 5,184 ) — ( 5,184 ) Distributions to common shareholders — — — — ( 487 ) ( 487 ) Balance at March 31, 2024 48,754,546 $ 488 $ 2,621,849 $ 94,990 $ ( 1,466,963 ) $ 1,250,364 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 Table of Contents OFFICE PROPERTIES INCOME TRUST CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) (unaudited) Three Months Ended March 31, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 45,867 ) $ ( 5,184 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 29,461 29,699 Net amortization of debt premiums, discounts and issuance costs 11,919 3,444 Amortization of acquired real estate leases and assumed real estate lease obligations, net 11,449 17,669 Amortization of deferred leasing costs 3,325 3,408 Loss on sale of real estate 4,737 2,384 (Gain) loss on early extinguishment of debt ( 1,430 ) 425 Straight line rental income ( 6,856 ) ( 7,379 ) Other non-cash expenses, net 115 90 Equity in net losses of investees 252 230 Changes in assets and liabilities: Rents receivable 366 2,934 Due from related persons ( 853 ) — Deferred leasing costs ( 8,397 ) ( 3,342 ) Other assets ( 1,357 ) ( 773 ) Accounts payable and other liabilities ( 24,398 ) ( 17,207 ) Due to related persons ( 1,054 ) 234 Net cash (used in) provided by operating activities ( 28,588 ) 26,632 CASH FLOWS FROM INVESTING ACTIVITIES: Real estate improvements ( 11,229 ) ( 40,034 ) Proceeds from sale of property, net 26,263 35,672 Net cash provided by (used in) investing activities 15,034 ( 4,362 ) CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of senior unsecured notes ( 171,600 ) ( 350,000 ) Proceeds from issuance of senior secured notes — 280,500 Repayment of senior secured notes ( 11,969 ) — Borrowings on revolving credit facility — 232,000 Repayments on revolving credit facility — ( 247,000 ) Borrowings on secured term loan — 100,000 Payment of debt issuance costs ( 835 ) ( 19,885 ) Proceeds from issuance of common shares, net 145 — Repurchases of common shares — ( 6 ) Distributions to common shareholders ( 698 ) ( 487 ) Net cash used in financing activities ( 184,957 ) ( 4,878 ) (Decrease) increase in cash, cash equivalents and restricted cash ( 198,511 ) 17,392 Cash, cash equivalents and restricted cash at beginning of period 275,165 26,714 Cash, cash equivalents and restricted cash at end of period $ 76,654 $ 44,106 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 6 Table of Contents OFFICE PROPERTIES INCOME TRUST CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (dollars in thousands) (unaudited) Three Months Ended March 31, 2025 2024 SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid $ 64,008 $ 34,639 Income taxes refunded $ 28 $ — NON-CASH INVESTING ACTIVITIES: Real estate improvements accrued, not paid $ 14,606 $ 18,084 Capitalized interest $ — $ 969 NON-CASH FINANCING ACTIVITIES: Extinguishment of unsecured senior notes in exchange for senior priority guaranteed unsecured notes $ ( 6,537 ) $ — SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH: 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, 2025 2024 Cash and cash equivalents $ 63,745 $ 23,513 Restricted cash (1) 12,909 20,593 Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows $ 76,654 $ 44,106 (1) Restricted cash consists of cash held for operations and amounts escrowed for future real estate taxes, insurance, leasing costs, capital expenditures and debt service, as required by certain of our debt agreements. The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 7 Table of Contents OFFICE PROPERTIES INCOME TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share data) (unaudited) Note 1. Basis of Presentation The accompanying condensed consolidated financial statements of Office Properties Income Trust and its subsidiaries, or OPI, we, us or our, are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2024, or our 2024 Annual Report. In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair statement of results for the interim period have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. The preparation of these financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the condensed consolidated financial statements include purchase price allocations, useful lives of fixed assets and assessment of impairment of real estate and the related intangibles. Going Concern Our portfolio has been adversely affected by shifts in office space utilization, including increased remote work arrangements and tenants consolidating their real estate footprint, as well as ongoing market and economic conditions, including government spending and budget priorities. Demand for office space continues to face headwinds, including in markets where we have a concentration of properties, such as Washington D.C., and declining rents and increasing costs to relet space when tenants can be identified continue to impact the market. In addition, we have limited debt or equity financing alternatives available to us to refinance our debt and financing sources we have utilized 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 April 30, 2025, our total available liquidity was comprised of $ 73,071 of cash and, in addition to long-term debt, our near-term obligations include outstanding lease obligations of $ 78,499 , and principal debt repayments of $ 19,500 in 2025 and $ 279,460 in 2026. Given the limited alternatives available to us to obtain debt or equity 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, future debt exchanges or equity issuances. 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 allowing us to refinance our maturing 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. Our condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. Note 2. Recent Accounting Pronouncements In December 2024, the Financial Accounting Standards Board issued Accounting Standards Update, or ASU, No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statements Expenses , which requires public entities to provide disaggregated disclosure of certain income statement expense captions within the footnotes to the financial statements. ASU No. 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods after December 15, 2027, with early adoption permitted. We are currently evaluating the impact ASU 2024-03 will have on our consolidated financial statements. 8 Table of Conte n t s OFFICE PROPERTIES INCOME TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share data) (unaudited) Note 3. Per Common Share Amounts We calculate basic earnings per common share using the two class method. We calculate diluted earnings per common 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 common share. The calculation of basic and diluted earnings per common share is as follows (amounts in thousands, except per share data): Three Months Ended March 31, 2025 2024 Numerators: Net loss $ ( 45,867 ) $ ( 5,184 ) Income attributable to unvested participating securities ( 6 ) ( 3 ) Net loss used in calculating earnings per common share $ ( 45,873 ) $ ( 5,187 ) Denominators: Weighted average common shares outstanding - basic and diluted 69,257 48,466 Net loss per common share - basic and diluted $ ( 0.66 ) $ ( 0.11 ) Note 4. Real Estate Properties As of March 31, 2025, our 125 wholly owned properties contained approximately 17,274,000 rentable square feet, with an undepreciated carrying value of $ 3,671,499 , including $ 18,739 classified as held for sale. We also had a noncontrolling ownership interest of 51 % in an unconsolidated joint venture that owned two properties containing approximately 346,000 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 2025 and 2044. 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 March 31, 2025, we entered into 11 leases for approximately 223,000 rentable square feet for a weighted (by rentable square feet) average lease term of 10.3 years, and we made commitments of $ 10,623 for leasing related costs. As of March 31, 2025, we had estimated unspent leasing related obligations of $ 78,499 . We regularly evaluate whether events or changes in circumstances have occurred that could indicate an impairment in the value of long lived assets. Impairment indicators may include declining tenant occupancy, lack of progress re-leasing vacant space, tenant bankruptcies, low long term prospects for improvement in property performance, weak or declining tenant profitability, cash flow or liquidity, our decision to dispose of an asset before the end of its estimated useful life and legislative, market or industry changes that could permanently reduce the value of a property. If there is an indication that the carrying value of an asset is not recoverable, we estimate the projected undiscounted cash flows to determine if an impairment loss should be recognized. The future net undiscounted cash flows are subjective and are based in part on assumptions regarding hold periods, market rents and terminal capitalization rates. We determine the amount of any impairment loss by comparing the historical carrying value to estimated fair value. We estimate fair value through an evaluation of recent financial performance and projected discounted cash flows using standard industry valuation techniques. In addition to consideration of impairment upon the events or changes in circumstances described above, we regularly evaluate the remaining useful lives of our long lived assets. If we change our estimate of the remaining useful lives, we allocate the carrying value of the affected assets over their revised remaining useful lives. 9 Table of Conte n t s OFFICE PROPERTIES INCOME TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share data) (unaudited) Disposition Activities During the three months ended March 31, 2025, we sold three properties containing approximately 249,000 rentable square feet for an aggregate sales price of $ 26,900 , excluding closing costs. The sales of these properties, as presented in the table below, do not represent a strategic shift in our business. As a result, the results of operations of these properties are included in continuing operations through the date of sale in our condensed consolidated statements of comprehensive income (loss). Date of Sale Number of Properties Location Rentable Square Feet Gross Sales Price (1) Gain (Loss) on Sale of Real Estate February 2025 1 Parsippany, NJ 100,000 $ 5,750 $ ( 4,779 ) February 2025 2 Santa Clara, CA 149,000 21,150 42 3 249,000 $ 26,900 $ ( 4,737 ) (1) Gross sales price is the contract price, excluding closing costs. As of March 31, 2025, we had three properties classified as held for sale in our condensed consolidated balance sheet. As of April 29, 2025, we had three properties, including two properties classified as held for sale, under agreement to sell for an aggregate sales price of $ 28,863 , excluding closing costs, as summarized below: Date of Sale Agreement Number of Properties Location Rentable Square Feet Gross Sales Price (1) October 2024 2 Tempe, AZ 101,000 $ 10,738 December 2024 1 Reston, VA (2) 275,000 18,125 3 376,000 $ 28,863 (1) Gross sales price is the contract price, excluding closing costs. (2) Property did not meet held for sale criteria as of March 31, 2025. 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 pricing will not change. See Note 8 for more information regarding our properties held for sale. Unconsolidated Joint Venture As of March 31, 2025, we owned an interest in one joint venture that owned two properties. We accounted for this investment under the equity method of accounting. As of March 31, 2025 and December 31, 2024, our investment in our unconsolidated joint venture is as follows: OPI Carrying Value of Investment at Joint Venture OPI Ownership March 31, 2025 December 31, 2024 Number of Properties Location Rentable Square Feet Prosperity Metro Plaza 51 % $ 17,118 $ 17,370 2 Fairfax, VA 346 As of March 31, 2025 and December 31, 2024, the mortgage debt of our unconsolidated joint venture is as follows: Joint Venture Interest Rate (1) Maturity Date Principal Balance at March 31, 2025 (2) Principal Balance at December 31, 2024 (2) Prosperity Metro Plaza 4.09 % 12/1/2029 $ 49,780 $ 50,000 (1) Includes the effect of mark to market purchase accounting. (2) Reflects the entire balance of the debt secured by the properties and is not adjusted to reflect the interest in the joint venture we did not own. None of the debt is recourse to us. 10 Table of Conte n t s OFFICE PROPERTIES INCOME TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share data) (unaudited) As of March 31, 2025, the unamortized basis difference of our joint venture of $ 666 was primarily attributable to the difference between the amount we paid to purchase our interest in the joint venture, including transaction costs, and the historical carrying value of the net assets of the joint venture. The difference is being amortized over the remaining useful life of the related property and the resulting amortization expense is included in equity in net losses of investees in our condensed consolidated statements of comprehensive income (loss). Note 5. Leases Our leases provide for base rent payments and, in addition, may include variable payments. Rental income from operating leases, including any payments derived by index or market-based indices, is recognized on a straight line basis over the lease term once we have determined that the collectability of substantially all of the lease payments is probable. Some of our leases have options to extend or terminate the lease exercisable at the option of our tenants, which are considered when determining the lease term. Allowances for bad debts are recognized as a direct reduction of rental income. In certain circumstances, some leases provide the tenant with the right to terminate if the legislature or other funding authority does not appropriate the funding necessary for the tenant to meet its lease obligations; 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 recorded rental income under our leases of $ 106,462 and $ 139,435 during the three months ended March 31, 2025 and 2024, respectively, including adjustments to increase rental income to record revenue on a straight line basis by $ 6,856 and $ 7,379 , respectively. Rents receivable, excluding properties classified as held for sale, included $ 135,306 and $ 140,132 of straight line rent receivables at March 31, 2025 and December 31, 2024, 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 $ 19,854 and $ 22,558 for the three months ended March 31, 2025 and 2024, respectively, of which tenant reimbursements totaled $ 19,092 and $ 21,329 , respectively. Note 6. Concentration Tenant and Credit Concentration As of March 31, 2025 and 2024, the U.S. government and certain state and other government tenants combined were responsible for approximately 25.1 % and 27.6 %, respectively, of our annualized rental income. The U.S. government is our largest tenant by annualized rental income and represented approximately 16.8 % and 20.2 % of our annualized rental income as of March 31, 2025 and 2024, respectively. 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. Geographic Concentration As of March 31, 2025, our 125 wholly owned properties were located in 29 states and the District of Columbia. Properties located in Virginia, California, Texas, Georgia and Illinois were responsible for approximately 13.8 %, 11.9 %, 11.0 %, 10.4 % and 10.3 % of our annualized rental income as of March 31, 2025, respectively. Note 7. Indebtedness Our principal debt obligations as of March 31, 2025 were: (1) $ 325,000 of outstanding borrowings under our $ 325,000 secured revolving credit facility; (2) $ 100,000 outstanding principal amount under our secured term loan; (3) $ 1,834,098 aggregate outstanding principal amount of senior notes and (4) $ 177,320 aggregate outstanding principal amount of mortgage notes. Our $ 325,000 secured revolving credit facility and $ 100,000 secured term loan are governed by a credit agreement, or our credit agreement, with a syndicate of institutional lenders. As collateral for all loans and other obligations under our credit agreement, certain of our subsidiaries pledged all of their respective equity interests in certain of our direct and indirect property owning subsidiaries, and our pledged subsidiaries provided first mortgage liens on 19 properties that had a gross book value of 11 Table of Conte n t s OFFICE PROPERTIES INCOME TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share data) (unaudited) real estate assets of $ 1,031,523 as of March 31, 2025. We can borrow, repay and reborrow funds available under our revolving credit facility until maturity, and no principal repayments on borrowings under our credit agreement 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 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 at a rate of the secured overnight financing rate, or 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 of 25 to 35 basis points per annum based on amounts outstanding. As of March 31, 2025 and April 29, 2025, our $ 325,000 revolving credit facility was fully drawn and $ 100,000 was outstanding under our term loan. As of March 31, 2025, the annual interest rate payable on borrowings under our credit agreement was 7.9 %. The weighted average annual interest rate for borrowings under our credit agreement for the three months ended March 31, 2025 and 2024 was 7.9 % and 8.5 %, respectively. Our credit agreement and senior 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 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 increase our distribution rate above the current level of $ 0.01 per common share per quarter. As of March 31, 2025, our ratio of secured debt to adjusted total assets was above the maximum level under our revolving credit facility and our senior notes indentures and their supplements, and as a result, we are unable to incur additional secured debt unless this ratio is at or below the required level on a pro forma basis as a result of any contemplated secured debt transaction. As of March 31, 2025, we believe we were in compliance with all of the other terms and conditions of our respective covenants under our credit agreement and our senior notes indentures and their supplements. Senior Notes Redemptions In January 2025, we redeemed, at par plus accrued interest, all of the remaining $ 171,586 of our 4.50 % senior unsecured notes due 2025. In February 2025, in connection with the sale of a collateral property, we redeemed, at par plus accrued interest, $ 5,469 of our senior secured notes due 2027. As a result, we recorded a loss on early extinguishment of debt of $ 928 during the three months ended March 31, 2025, which represented the unamortized discounts and issuance costs related to these notes. Senior Notes Exchange In March 2025, we exchanged $ 14,439 of new 8.00 % senior priority guaranteed unsecured notes, or the New 2030 Notes, for an aggregate $ 20,990 of our outstanding unsecured senior notes, or the Existing Notes, and such transaction, the Senior Note Exchange, as follows: Existing Notes Exchanged Aggregate Principal Amount of Existing Notes Accepted for Exchange Aggregate Principal Amount of New Notes Delivered Existing 2.650 % 2026 Notes $ 6,559 $ 5,836 Existing 2.400 % 2027 Notes 2,478 1,882 Existing 3.450 % 2031 Notes 11,953 6,721 Total $ 20,990 $ 14,439 12 Table of Conte n t s OFFICE PROPERTIES INCOME TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share data) (unaudited) The New 2030 Notes are fully and unconditionally guaranteed on a joint, several and unsecured basis by certain of our subsidiaries which also guarantee our senior secured notes due 2027. The New 2030 Notes require semi-annual payments of interest only and are prepayable, at par plus accrued interest, after March 12, 2029. During the three months ended March 31, 2025, we recorded an aggregate gain related to the Senior Note Exchange of $ 685 , or $ 0.01 per common share, which is included in net loss on early extinguishment of debt in our condensed consolidated statements of comprehensive income (loss). As of March 31, 2025, seven of our properties with an aggregate gross book value of real estate assets of $ 305,456 were encumbered by mortgage notes with an aggregate principal amount of $ 177,320 . Our mortgage notes are non-recourse, subject to certain limited exceptions and do not contain any material financial covenants. Note 8. Fair Value of Assets and Liabilities Our financial instruments include our cash and cash equivalents, restricted cash, rents receivable, accounts payable, a revolving credit facility, a term loan, senior notes, mortgage notes payable, amounts due to related persons, other accrued expenses and security deposits. At March 31, 2025 and December 31, 2024, 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, 2025 As of December 31, 2024 Financial Instrument Carrying Value (1) Fair Value Carrying Value (1) Fair Value Senior unsecured notes, 4.500 % interest rate, due in 2025 (2) $ — $ — $ 171,607 $ 169,302 Senior unsecured notes, 2.650 % interest rate, due in 2026 133,175 100,447 139,578 106,078 Senior unsecured notes, 2.400 % interest rate, due in 2027 78,049 45,809 80,486 49,475 Senior secured notes, 3.250 % interest rate, due in 2027 363,026 356,066 363,432 383,806 Senior secured notes, 9.000 % interest rate, due in March 2029 277,065 286,839 275,632 293,100 Senior secured notes, 9.000 % interest rate, due in September 2029 635,595 498,961 637,052 529,436 Senior priority guaranteed unsecured notes, 8.000 % interest rate, due in 2030 (3) 18,516 10,528 — — Senior unsecured notes, 3.450 % interest rate, due in 2031 101,673 39,836 113,511 49,688 Senior unsecured notes, 6.375 % interest rate, due in 2050 157,144 48,211 157,096 80,676 Mortgage notes payable 173,144 180,690 172,912 177,295 Total $ 1,937,387 $ 1,567,387 $ 2,111,306 $ 1,838,856 (1) Includes net unamortized debt premiums, discounts and issuance costs totaling $ 74,031 and $ 90,218 as of March 31, 2025 and December 31, 2024, respectively. (2) These senior notes were redeemed in January 2025. (3) These senior notes were issued in March 2025. We estimated the fair values of our senior notes (except for our senior priority guaranteed unsecured notes due 2030 and 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 (Level 1 inputs as defined in the fair value hierarchy under GAAP) as of the measurement date. We estimated the fair values of our senior priority guaranteed unsecured notes due 2030 and 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. 13 Table of Conte n t s OFFICE PROPERTIES INCOME TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share data) (unaudited) Note 9. Shareholders’ Equity Distributions During the three months ended March 31, 2025, we declared and paid a regular quarterly distribution to common shareholders as follows: Declaration Date Record Date Paid Date Distributions Per Common Share Total Distributions January 16, 2025 January 27, 2025 February 20, 2025 $ 0.01 $ 698 On April 10, 2025, we declared a regular quarterly distribution payable to common shareholders of record on April 22, 2025 in the amount of $ 0.01 per share, or approximately $ 701 . We expect to pay this distribution on or about May 15, 2025. Share Issuances In March 2025, we entered into a sales agreement with Clear Street LLC, or the Agent, pursuant to which we may issue and sell our common shares from time to time, in transactions that are deemed to be an “at the market offering” as defined in Rule 415 under the Securities Act of 1933, as amended, for up to an aggregate sales price of $ 100,000 , or the ATM Program. We are required to pay the Agent a cash commission of 3 % of the gross sales prices of any common shares we sell under the ATM Program. During the three months ended March 31, 2025, we sold an aggregate 238,343 of our common shares under the ATM Program valued at a weighted average share price of $ 0.61 for net proceeds of $ 145 after deducting Agent commissions. In April 2025, we sold an additional aggregate 837,164 of our common shares under the ATM Program valued at a weighted average share price of $ 0.40 for net proceeds of $ 334 after deducting Agent commissions. Note 10. Business and Property Management Agreements with RMR We have no employees. The personnel and various services we require to operate our business are provided to us by RMR. We have two agreements with RMR to provide management services to us: (1) a business management agreement, which relates to our business generally; and (2) a property management agreement, which relates to our property level operations. We are generally responsible for all of our operating expenses, including certain expenses incurred or arranged by RMR on our behalf. We are generally not responsible for payment of RMR’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR’s employees assigned to work exclusively or partly at our properties, our share of the wages, benefits and other related costs of RMR’s centralized accounting personnel, our share of RMR’s costs for providing our internal audit function and as otherwise agreed. Our property level operating expenses are generally incorporated into the rents charged to our tenants, including certain payroll and related costs incurred by RMR. 14 Table of Conte n t s OFFICE PROPERTIES INCOME TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share data) (unaudited) For the three months ended March 31, 2025 and 2024, the business management fees, property management fees and construction supervision fees and expense reimbursements recognized in our condensed consolidated financial statements were as follows: Financial Statement Three Months Ended March 31, Line Item 2025 2024 Pursuant to business management agreement: Business management fees (1) General and administrative expenses $ 3,115 $ 3,558 Pursuant to property management agreement: Property management fees (2) Other operating expenses $ 2,874 $ 3,818 Construction supervision fees Buildings and improvements (3) 307 732 $ 3,181 $ 4,550 Expense Reimbursement: Property level expenses General and administrative expenses $ 5,538 $ 6,587 (1) The net business management fees we recognized for the three months ended March 31, 2025 and 2024 each reflect a reduction of $ 151 for the amortization of the liability we recorded in connection with our former investment in The RMR Group Inc., or RMR Inc. (2) The net property management fees we recognized for the three months ended March 31, 2025 and 2024 each reflect a reduction of $ 121 for the amortization of the liability we recorded in connection with our former investment in RMR Inc. (3) Amounts capitalized as buildings and improvements are depreciated over the estimated useful lives of the related assets. Based on our common share total return, as defined in our business management agreement, as of March 31, 2025, no estimated incentive fees are included in the net business management fees we recognized for the three months ended March 31, 2025. The actual amount of annual incentive fees for 2025, if any, will be based on our common share total return for the three year period ending December 31, 2025, and will be payable in January 2026. We did no t incur an incentive fee payable to RMR for the year ended December 31, 2024. In January 2025, in connection with a $ 100,000 credit agreement and related security agreement entered into by RMR and certain of its subsidiaries with Citibank, N.A., or Citibank, and the other lenders party thereto, we consented to the pledge and assignment of RMR’s interest in our management agreements under the security agreement. Pursuant to the consent, we agreed, among other things, that upon notice that an event of default under the RMR credit agreement has occurred and is continuing, we will continue to make all payments under our management agreements in accordance with the instructions of Citibank, and that if there is an event of default by RMR under our management agreements that would allow us to terminate or suspend our obligations, we will not terminate or suspend without notice to Citibank and providing Citibank 30 days to cure the default on RMR’s behalf. The consent was approved by our Independent Trustees. Management Agreement Between Our Joint Venture and RMR . RMR provides management services to our unconsolidated joint venture. We are not obligated to pay management fees to RMR under our management agreement with RMR for the services it provides regarding the joint venture. The joint venture pays management fees directly to RMR. Note 11. Related Person Transactions We have relationships and historical and continuing transactions with RMR, RMR Inc. and others related to them, including other companies to which RMR or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. RMR is a majority owned subsidiary of RMR Inc. The Chair of our Board of Trustees and one of our Managing Trustees, Adam Portnoy, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., the chair of the board of directors, a managing director, the president and chief executive officer of RMR Inc. and an officer and employee of RMR. Jennifer Clark, our other Managing Trustee, is a managing director and the executive vice president, general counsel and secretary of RMR Inc., an officer and employee of RMR and an officer of ABP Trust. Each of our officers is also an officer and employee of RMR. Some of our Independent Trustees also serve as independent trustees of other public companies to which RMR or its subsidiaries provide management services. Mr. Portnoy serves as chair of the boards and as a managing trustee of these public companies. Other officers of RMR, including Ms. Clark, serve as managing trustees or officers of certain of these companies. 15 Table of Conte n t s OFFICE PROPERTIES INCOME TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share data) (unaudited) Our Manager, RMR. We have two agreements with RMR to provide management services to us. RMR also provides management services to our unconsolidated joint venture. See Note 10 for more information regarding our and our unconsolidated joint venture’s management agreement with RMR. Leases with RMR. 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 $ 201 and $ 194 for the three months ended March 31, 2025 and 2024, respectively. Sonesta. Prior to January 1, 2025, we leased 240,000 rentable square feet of a mixed-use property in Washington, D.C. pursuant to a lease with a subsidiary of Sonesta International Hotels Corporation, or the Sonesta Lease. We terminated the Sonesta Lease effective January 1, 2025. The Sonesta Lease commenced in August 2023 and was amended in September 2024 to expand the premises by 5,900 rentable square feet. Pursuant to the amended Sonesta Lease, Sonesta International Hotels Corporation, or Sonesta, was required to pay us annual base rent of approximately $ 6,724 beginning February 2025, and the annual base rent would have increased by 10 % every five years throughout the term. Sonesta was also obligated to pay its pro rata share of the operating costs for the property. We recognized rental income of $ 2,775 during the three months ended March 31, 2024 under the Sonesta Lease. Effective January 1, 2025, we entered into a management agreement with Sonesta, or the Sonesta Management Agreement, to replace the Sonesta Lease. The Sonesta Management Agreement expires on December 31, 2040, and includes two 10-year renewal options. The Sonesta Management Agreement provides that we are paid an annual owner’s priority return if gross revenues of the hotels, after payment of hotel operating expenses and management and related fees (other than Sonesta’s incentive fee, if applicable), are sufficient to do so. The Sonesta Management Agreement further provides that we are paid an additional return of the operating profits, as defined therein, after paying the owner’s priority return, reimbursing owner or manager advances, funding furniture, fixtures and equipment, or FF&E, reserves and paying Sonesta’s incentive fee, if applicable. We do not have any security deposits or guarantees for this Sonesta hotel. The stated annual owner’s priority return is $ 7,500 and increases by 8.0 % of our out-of-pocket capital expenditures and will increase annually to 102 % of our prior year’s annual owner’s priority return. We recognized $ 7,153 of hotel operating revenues for the three months ended March 31, 2025, which is included in rental income in our condensed consolidated statements of comprehensive income (loss). We realized returns under the Sonesta Management Agreement of $ 910 during the three months ended March 31, 2025. We are responsible for any capital expenditures in excess of available funds in the FF&E reserve. We did not incur capital expenditures under the Sonesta Management Agreement during the three months ended March 31, 2025. Our annual priority return under the Sonesta Management Agreement as of March 31, 2025 was $ 7,500 . Sonesta owed us $ 853 in owner’s priority returns and other amounts as of March 31, 2025. Amounts due from Sonesta are included in due from related persons in our condensed consolidated balance sheet. The Sonesta Management Agreement requires that 1.0 % of gross revenues for 2025, 3.0 % of gross revenues for 2026 and 4.0 % of gross revenues for each calendar year thereafter be escrowed for future capital expenditures as FF&E reser ves. FF&E escrow deposits of $ 81 were required during the three months ended March 31, 2025. Pursuant to the Sonesta Management Agreement, we are required to pay Sonesta, after p ayment of hotel operating expenses, a base management fee equal to 1.5 % of gross revenues, as defined in the Sonesta Management Agreement, for 2025 and 3.0 % of gross revenues each calendar year thereafter. Additionally, we are required to pay (i) an incentive fee equal to 20 % of net operating profit, as defined in the Sonesta Management Agreement, in excess of the annual owner’s priority; (ii) a brand promotion fee of 1.75 % of gross revenues for 2025 and 3.5 % of gross revenues for each calendar year thereafter; and (iii) a loyalty fee of the greater of 1.0 % of room revenues or 4.5 % of qualified room revenues from guests participating in certain loyalty programs. Sonesta’s incentive management fee, but not its other fees, is earned only after our annual owner’s priority return is paid. The Sonesta Management Agreement also provides that the pro rata costs Sonesta incurs for advertising, marketing, promotional and public relations programs and campaigns, including its Rewards Program, for the benefit of this hotel are subject to reimbursement by us or are otherwise treated as hotel operating expenses. We incurred management, brand promotion and loyalty fees of $ 361 for the three months ended March 31, 2025. These fees and costs are included in other operating expenses in our condensed consolidated statements of comprehensive income (loss). We are required to maintain working capital under the Sonesta Management Agreement and have advanced a fixed amount based on the number of rooms in the hotel to meet the cash needs for hotel operations. We advanced $ 548 of working capital in April 2025 in accordance with the Sonesta Management Agreement. As of December 31, 2024, we had a straight line rent receivable related to the Sonesta Lease totaling $ 12,343 . Due to our ongoing relationship with Sonesta under the Sonesta Management Agreement, upon termination of the Sonesta Lease, we 16 Table of Conte n t s OFFICE PROPERTIES INCOME TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share data) (unaudited) reclassified this receivable to other assets, net in our condensed consolidated balance sheet. We are amortizing this receivable through the original Sonesta Lease expiration date, or July 2053, as an increase to other operating expenses in our condensed consolidated statements of comprehensive income (loss). We recognized $ 108 of amortization expense during the three months ended March 31, 2025 and as of March 31, 2025, the remaining unamortized balance of this receivable was $ 12,235 . Mr. Portnoy is a director and controlling shareholder of Sonesta, and Ms. Clark is a director of Sonesta. Another officer and employee of RMR is a director and president and chief executive officer of Sonesta. For more information about these and other such relationships and certain other related person transactions, refer to our 2024 Annual Report. Note 12. Segment Reporting We manage our business on a consolidated basis and therefore have one reportable segment: ownership and leasing of real estate properties. The chief operating decision maker, or CODM, is our President and Chief Operating Officer. The CODM assesses performance, allocates resources and makes strategic decisions based on net income (loss) as shown in our condensed consolidated statements of comprehensive income (loss). The CODM is also regularly provided with information on expenses related to our management agreements with RMR, which are detailed in Note 10. The measure of segment assets is reported as total assets in our condensed consolidated balance sheets. 17 Table of Contents