What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-07-30 compared with 2025-04-30 · 229 added, 126 removed, 334 unchanged (52% of the section changed)

3 unchanged sentences

We are a REIT organized under Maryland law.

As of March 31, 2025, our wholly owned properties were comprised of 125 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 March 31, 2025, our properties are located in 29 states and the District of Columbia and contain approximately 17,274,000 rentable square feet.

As of March 31, 2025, our properties were leased to 223 different tenants with a weighted average remaining lease term (based on annualized rental income) of approximately 6.9 years.

government is our largest tenant, representing approximately 16.8% of our annualized rental income as of March 31, 2025.

The term annualized rental income as used herein is defined as the annualized contractual base rents from our tenants pursuant to our lease agreements as of March 31, 2025, plus straight line rent adjustments and estimated recurring expense reimbursements to be paid to us, and excluding lease value amortization.

As of June 30, 2025, our wholly owned properties were comprised of 125 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 June 30, 2025, our properties are located in 29 states and the District of Columbia and contain approximately 17,270,000 rentable square feet.

As of June 30, 2025, our properties were leased to 220 different tenants with a weighted average remaining lease term (based on annualized rental income) of approximately 6.8 years.

government is our largest tenant, representing approximately 17.1% of our annualized rental income as of June 30, 2025.

The term annualized rental income as used herein is defined as the annualized contractual base rents from our tenants pursuant to our lease agreements as of June 30, 2025, plus straight line rent adjustments and estimated recurring expense reimbursements to be paid to us, and excluding lease value amortization.

Leases representing approximately $14,426 and $15,851, or 3.6% and 4.0%, of our annualized rental income are scheduled to expire during the remainder of 2025 and 2026, respectively, and we may be unable to renew leases or find replacement tenants.

2 unchanged sentences

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, recent announcements regarding tariffs on a wide variety of imports, other government policies (including the potential reduction of U.S.

2 unchanged sentences

Entities in the market for office space may delay their decision to lease space due to current economic conditions.

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.

We also have a significant amount of debt maturing in the next 12 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.

1 unchanged sentence

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 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.

As of July 30, 2025, our total available liquidity was comprised of $90,102 of cash and, in addition to long-term debt, our near-term obligations include outstanding lease obligations of $72,394, and principal debt repayments of $13,000 in 2025 and $277,431 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, which could include potential asset sales, debt exchanges 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.

3 unchanged sentences

Property Operations

Unless otherwise noted, the data presented in this section includes properties classified as held for sale as of March 31, 2025 and excludes two properties owned by an unconsolidated joint venture in which we owned a 51% interest and the hotel component of a mixed-use property in Washington, D.C.

For more information regarding our properties classified as held for sale and our unconsolidated joint venture, see Note 4 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Occupancy data for our properties as of March 31, 2025 and 2024 was as follows (square feet in thousands):

Unless otherwise noted, the data presented in this section includes properties classified as held for sale as of June 30, 2025 and excludes two properties owned by an unconsolidated joint venture in which we owned a 51% interest and the hotel component of a mixed-use property in Washington, D.C.

For more information regarding our properties classified as held for sale, our unconsolidated joint venture and our mixed-use property in Washington, D.C., see Notes 4 and 11 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Occupancy data for our properties as of June 30, 2025 and 2024 was as follows (square feet in thousands):

All Properties (1)

6 unchanged sentences

81.2 % 83.5 % 85.2 % 91.4 %

(1) Based on properties we owned on March 31, 2025 and 2024, respectively.

(1) Based on properties we owned on June 30, 2025 and 2024, respectively.

(2) Based on properties we owned continuously since January 1, 2024;

2 unchanged sentences

(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 three months ended March 31, 2025 and 2024 were as follows:

Three Months Ended March 31,

The average effective rental rate per square foot for our properties for the three and six months ended June 30, 2025 and 2024 were as follows:

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

2025 2024 2025 2024

Average effective rental rate per square foot (1) :

4 unchanged sentences

(1) Average effective rental rate per square foot represents annualized total rental income during the period specified divided by the average rentable square feet leased during the period specified.

(2) Based on properties we owned on March 31, 2025 and 2024, respectively.

(3) Based on properties we owned continuously since January 1, 2024;

(2) Based on properties we owned on June 30, 2025 and 2024, respectively.

(3) Based on properties we owned continuously since April 1, 2024 and January 1, 2024, respectively;

excludes three 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 three months ended March 31, 2025, changes in rentable square feet leased and available for lease at our properties were as follows (square feet in thousands):

Three Months Ended March 31, 2025

Leased Available for Lease Total

During the three and six months ended June 30, 2025, changes in rentable square feet leased and available for lease at our properties were as follows (square feet in thousands):

Three Months Ended June 30, 2025 Six Months Ended June 30, 2025

Leased Available for Lease Total Leased Available for Lease Total

Beginning of period 14,048 3,226 17,274 15,092 2,671 17,763

3 unchanged sentences

Lease renewals (1)

278 (278) — 451 (451) —

New leases (1)

138 (138) — 188 (188) —

Lease conversion to managed hotel — — — (240) — (240)

Remeasurements (4) — (4) (4) — (4)

End of period 14,019 3,251 17,270 14,019 3,251 17,270

(1) Based on leases entered during the three months ended March 31, 2025.

During the three months ended March 31, 2025, we entered into new and renewal leases as summarized in the following table (square feet in thousands):

Three Months Ended March 31, 2025

(1) Based on leases entered during the three and six months ended June 30, 2025.

During the three and six months ended June 30, 2025, we entered into new and renewal leases as summarized in the following table (square feet in thousands):

Three Months Ended June 30, 2025

New Leases Renewals Total

8 unchanged sentences

$ 9.34 $ 1.20 $ 3.53

Six Months Ended June 30, 2025

New Leases Renewals Total

Rentable square feet leased 188 451 639

Weighted average rental rate change (by rentable square feet) 5.5 % 10.4 % 8.8 %

Tenant leasing costs and concession commitments (1)

$ 9,838 $ 8,759 $ 18,597

Tenant leasing costs and concession commitments per rentable square foot (1)

$ 52.42 $ 19.43 $ 29.13

Weighted (by square feet) average lease term (years) 6.2 7.5 7.1

Total leasing costs and concession commitments per rentable square foot per year (1)

$ 8.45 $ 2.58 $ 4.08

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

During the three months ended March 31, 2025, changes in effective rental rates per square foot achieved for new leases and lease renewals at our properties that commenced during the three months ended March 31, 2025, when compared to prior effective rental rates per square foot in effect for the same space (and excluding space acquired vacant), were as follows (square feet in thousands):

Three Months Ended March 31, 2025

During the three and six months ended June 30, 2025, changes in effective rental rates per square foot achieved for new leases and lease renewals at our properties that commenced during the three and six months ended June 30, 2025, when compared to prior effective rental rates per square foot in effect for the same space (and excluding space acquired vacant), were as follows (square feet in thousands):

Three Months Ended June 30, 2025 Six Months Ended June 30, 2025

Old Effective Rent Per Square Foot (1)

New Effective Rent Per Square Foot (1)

Rentable Square Feet Old Effective Rent Per Square Foot (1)

New Effective Rent Per Square Foot (1)

Rentable Square Feet

3 unchanged sentences

(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 three months ended March 31, 2025 and 2024, amounts capitalized at our properties for lease related costs, building improvements and development, redevelopment and other activities were as follows:

Three Months Ended March 31,

During the three and six months ended June 30, 2025 and 2024, amounts capitalized at our properties for lease related costs, building improvements and development, redevelopment and other activities were as follows:

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

2025 2024 2025 2024

Lease related costs (1)

1 unchanged sentence

Building improvements (2)

4,327 4,085 7,338 8,559

Recurring capital expenditures 13,157 30,050 26,895 51,292

Development, redevelopment and other activities (3)

565 3,862 648 10,773

Total capital expenditures $ 13,722 $ 33,912 $ 27,543 $ 62,065

2 unchanged sentences

(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 for the three months ended March 31, 2024.

We did not capitalize any interest and other operating costs during the three months ended March 31, 2025.

As of March 31, 2025, we had estimated unspent leasing related obligations of $78,499, of which we expect to spend $46,133 over the next 12 months.

As of March 31, 2025, we had leases at our properties totaling approximately 1,194,000 and 437,000 rentable square feet that were scheduled to expire during 2025 and 2026, respectively.

As of April 29, 2025, we expect tenants with leases totaling approximately 723,000 and 60,000 rentable 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.

Includes capitalized interest and other operating costs of $1,172 for the six months ended June 30, 2024.

We did not capitalize any interest or other operating costs during the three months ended June 30, 2024 or the three and six months ended June 30, 2025.

As of June 30, 2025, we had estimated unspent leasing related obligations of $72,394, of which we expect to spend $42,748 over the next 12 months.

As of June 30, 2025, we had leases at our properties totaling approximately 911,000 and 427,000 rentable square feet that were scheduled to expire during 2025 and 2026, respectively.

As of July 29, 2025, we expect tenants with leases totaling approximately 682,000 and 60,000 rentable 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.

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.

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;

3 unchanged sentences

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 March 31, 2025, our lease expirations by year were as follows (square feet in thousands):

As of June 30, 2025, our lease expirations by year were as follows (square feet in thousands):

Number of Leases Expiring Leased

16 unchanged sentences

Some of our leases allow the tenants to vacate the leased premises before the stated expirations of their leases with little or no liability.

As of March 31, 2025, tenants occupying approximately 1.4% of our rentable square feet and responsible for approximately 1.8% of our annualized rental income as of March 31, 2025 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 2.2%, 1.5%, 1.8%, 5.2%, 3.2%, 1.8%, 1.1%, 3.6%, 0.3%, 1.0%, 0.2%, 0.2% and 0.4% of our rentable square feet, respectively, and contributed an additional approximately 2.6%, 2.4%, 2.6%, 6.0%, 2.9%, 2.3%, 1.1%, 4.9%, 0.9%, 1.5%, 0.4%, 0.2% and 0.5% of our annualized rental income, respectively, as of March 31, 2025.

In addition, as of March 31, 2025, pursuant to leases with seven 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 seven tenants occupied approximately 4.4% of our rentable square feet and contributed approximately 4.7% of our annualized rental income as of March 31, 2025.

(2) Leased square feet is pursuant to leases existing as of March 31, 2025, 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.

As of June 30, 2025, tenants occupying approximately 1.4% of our rentable square feet and responsible for approximately 1.8% of our annualized rental income as of June 30, 2025 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 1.1%, 1.2%, 1.8%, 5.2%, 3.2%, 2.4%, 0.7%, 4.2%, 0.3%, 1.0%, 0.2%, 0.2% and 0.4% of our rentable square feet, respectively, and contributed an additional approximately 1.4%, 1.9%, 2.6%, 5.8%, 3.0%, 2.9%, 0.8%, 5.6%, 0.9%, 1.6%, 0.4%, 0.3% and 0.5% of our annualized rental income, respectively, as of June 30, 2025.

In addition, as of June 30, 2025, pursuant to leases with six 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 six tenants occupied approximately 4.4% of our rentable square feet and contributed approximately 4.8% of our annualized rental income as of June 30, 2025.

(2) Leased square feet is pursuant to leases existing as of June 30, 2025, 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.

2 unchanged sentences

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.

As of March 31, 2025, we derived 23.8% of our annualized rental income from our properties located in the metropolitan Washington, D.C.

As of June 30, 2025, we derived 24.2% of our annualized rental income from our properties located in the metropolitan Washington, D.C.

market area, which includes Washington, D.C., Northern Virginia and suburban Maryland.

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.

Additionally, although the current administration has issued so called return to work mandates, there has been a decrease in demand for leased office space by the U.S.

government, including in the metropolitan Washington, D.C.

2 unchanged sentences

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.

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:

2 unchanged sentences

and/or (c) tenants with investment grade rated parent entities that do not guarantee the tenant’s lease obligations.

As of March 31, 2025, tenants contributing 52.2% 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 7.7% 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 March 31, 2025, tenants representing 1% or more of our total annualized rental income were as follows (square feet in thousands):

As of June 30, 2025, tenants contributing 51.0% 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 7.7% 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 June 30, 2025, tenants representing 1% or more of our total annualized rental income were as follows (square feet in thousands):

Tenant Credit Rating Sq.

13 unchanged sentences

Not Rated 84 0.6 % 7,497 1.9 %

10 Allstate Insurance Corporation Investment Grade 458 3.3 % 6,270 1.5 %

10 Automatic Data Processing, Inc.

9 unchanged sentences

16 Science Applications International Corp Non Investment Grade 159 1.1 % 5,151 1.3 %

Investment Grade 425 3.0 % 5,131 1.3 %

17 Berkshire Hathaway Inc.

5 unchanged sentences

20 Hartford Financial Services Group Inc Investment Grade 143 1.0 % 4,469 1.1 %

23 BAE Systems plc Investment Grade 165 1.2 % 4,441 1.1 %

Investment Grade 425 3.0 % 4,068 1.0 %

Total 7,932 56.6 % $ 241,107 60.5 %

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.

During the six months ended June 30, 2025, we sold three properties containing approximately 249,000 rentable square feet for an aggregate sales price of $26,900, excluding closing costs.

The net proceeds from these sales were used to repay debt and to increase our liquidity.

In July 2025, we sold one property containing approximately 56,000 rentable square feet for a sales price of $2,150, excluding closing costs.

We 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 April 29, 2025, we have entered into agreements to sell three properties containing approximately 376,000 rentable square feet for an aggregate sales price of $28,863, excluding closing costs.

As of July 29, 2025, we have entered into agreements to sell three properties containing approximately 376,000 rentable square feet for an aggregate sales price of $28,863, excluding closing costs.

We expect to sell two of the three properties under agreement for $10,738 in the third quarter of 2025 and expect to use the proceeds from these sales for general business purposes.

We expect the third property under agreement for $18,125 to sell in 2027.

We cannot be sure we will sell any properties we are marketing for sale for prices in excess of their carrying values or otherwise.

6 unchanged sentences

RESULTS OF OPERATIONS (amounts in thousands, except per share amounts)

Three Months Ended March 31, 2025, Compared to Three Months Ended March 31, 2024

Three Months Ended June 30, 2025, Compared to Three Months Ended June 30, 2024

Comparable Properties (1) Results

Three Months Ended March 31,

Three Months Ended June 30,

Non-Comparable

Properties Results

Three Months Ended March 31,

Three Months Ended June 30,

Consolidated Results

Three Months Ended March 31,

Three Months Ended June 30,

2025 2024 $ Change % Change 2025 2024 2025 2024 $ Change % Change

9 unchanged sentences

Depreciation and amortization 43,838 50,391 (6,553) (13.0 %)

Loss on impairment of real estate 2,426 131,732 (129,306) (98.2 %)

Transaction related costs 3,940 — 3,940 n/m

1 unchanged sentence

Total other expenses 55,020 187,413 (132,393) (70.6 %)

Gain (loss) on sale of real estate 159 (64) 223 n/m

Interest and other income 788 226 562 n/m

Interest expense (52,507) (38,349) (14,158) 36.9 %

Net gain on early extinguishment of debt 148 225,798 (225,650) (99.9 %)

(Loss) income before income tax (expense) benefit and equity in net losses of investees (40,964) 76,244 (117,208) (153.7 %)

Income tax (expense) benefit (94) 107 (201) (187.9 %)

Equity in net losses of investees (128) (180) 52 (28.9 %)

Net (loss) income $ (41,186) $ 76,171 $ (117,357) (154.1 %)

Weighted average common shares outstanding (basic and diluted) 71,282 48,648 22,634 46.5 %

Per common share amounts (basic and diluted):

Net (loss) income $ (0.58) $ 1.56 $ (2.14) (137.2 %)

n/m - not meaningful

(1) Comparable properties consists of 117 properties we owned on June 30, 2025 and which we owned continuously since April 1, 2024 and excludes three 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) income 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 three months ended June 30, 2025, compared to the three months ended June 30, 2024.

Rental income.

Rental income for non-comparable properties decreased $13,098 related to our property disposition activities, partially offset by an increase in rental income at properties affected by significant redevelopment activities of $6,320 related to the conversion of a lease at a mixed-use property to a hotel management agreement and our recognition of the operating revenues of the hotel.

Rental income for comparable properties decreased $2,409 as a result of increased vacancies and lower rents from lease renewals at certain of our properties in the 2025 period.

Rental income includes non-cash straight line rent adjustments totaling $6,636 in the 2025 period and $7,563 in the 2024 period, and amortization of acquired real estate leases and assumed real estate lease obligations totaling $159 in the 2025 period and $56 in the 2024 period.

Real estate taxes.

Real estate taxes decreased $2,580 related to our property disposition activities, $694 for properties affected by significant redevelopment activities, partially offset by an increase of $658 related to real estate taxes that were previously paid directly by one of our tenants that are now being paid by us pursuant to a lease renewal with that tenant.

Utility expenses.

Utility expenses decreased $674 related to our property disposition activities and $23 for properties affected by significant redevelopment activities, partially offset by an increase in comparable properties of $618 primarily due to higher electricity costs.

Other operating expenses.

Other operating expenses for non-comparable properties increased $6,929 related to the conversion of a lease at a mixed-use property to a hotel management agreement and our recognition of operating expenses of the hotel, partially offset by a decrease of $3,196 related to our property disposition activities.

Other operating expenses for comparable properties increased $353 due to higher repairs and maintenance costs, partially offset by lower insurance costs and property management fee expenses in the 2025 period.

Depreciation and amortization.

Depreciation and amortization for non-comparable properties decreased $5,212 related to our property disposition activities, partially offset by an increase of $824 due to the substantial completion of redevelopment activities at certain properties in the 2024 period.

Depreciation and amortization for comparable properties declined $2,165 due to certain leasing related assets becoming fully depreciated since April 1, 2024, partially offset by depreciation and amortization of improvements made to certain of our properties since April 1, 2024.

Loss on impairment of real estate.

We recorded a $2,426 loss on impairment of real estate in the 2025 period to reduce the carrying value of one property to its estimated fair value less costs to sell.

We recorded a $131,732 loss on impairment of real estate in the 2024 period to reduce the carrying value of 13 properties to their estimated fair values less costs to sell.

Transaction related costs.

Transaction related costs in the 2025 period consist of costs related to our evaluation of potential financing transactions.

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 average total market capitalization and a decrease in share-based compensation in the 2025 period compared to the 2024 period.

Gain (loss) on sale of real estate.

We recorded a $159 net gain on sale of real estate related to disposition activities in the 2025 period.

We recorded a $64 loss on sale of real estate resulting from the sale of one property in the 2024 period.

Interest and other income.

The increase in interest and other income is primarily due to higher cash balances invested, partially offset by the effect of lower interest rates earned on cash balances invested in the 2025 period compared to the 2024 period.

Interest expense.

The increase in interest expense is due to higher weighted average interest rates in the 2025 period as a result of our financing activities in 2024.

Net gain on early extinguishment of debt .

We recorded a net gain on early extinguishment of debt of $148 in the 2025 period related to the reduction of debt principal related to our Senior Note Exchange, partially offset by the write off of unamortized discounts and issuance costs related to the partial redemption of our senior secured notes due 2027.

We recorded a gain on early extinguishment of debt of $225,798 in the 2024 period resulting from our exchange of $865,219 of existing unsecured notes for $567,429 of our 9.000% senior secured notes due 2029 in June 2024.

For more information regarding the Senior Note Exchange, see Note 7 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Income tax (expense) benefit.

Income tax (expense) benefit 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 the repayment of debt.

Equity in net losses of investees.

Equity in net losses of investees represents our proportionate share of losses from our investment in our unconsolidated joint venture.

Net (loss) income.

Net (loss) income and net (loss) income per basic and diluted common share changed in the 2025 period compared to the 2024 period primarily as a result of the changes noted above.

Six Months Ended June 30, 2025, Compared to Six Months Ended June 30, 2024

Comparable Properties (1) Results

Six Months Ended June 30,

Non-Comparable

Properties Results

Six Months Ended June 30,

Consolidated Results

Six Months Ended June 30,

2025 2024 $ Change % Change 2025 2024 2025 2024 $ Change % Change

Rental income $ 207,071 $ 212,202 $ (5,131) (2.4 %) $ 21,043 $ 50,919 $ 228,114 $ 263,121 $ (35,007) (13.3 %)

Operating expenses:

Real estate taxes 24,476 23,855 621 2.6 % 1,093 6,581 25,569 30,436 (4,867) (16.0 %)

Utility expenses 12,615 11,586 1,029 8.9 % 635 2,327 13,250 13,913 (663) (4.8 %)

Other operating expenses 47,095 45,052 2,043 4.5 % 15,347 9,426 62,442 54,478 7,964 14.6 %

Total operating expenses 84,186 80,493 3,693 4.6 % 17,075 18,334 101,261 98,827 2,434 2.5 %

Net operating income (2)

$ 122,885 $ 131,709 $ (8,824) (6.7 %) $ 3,968 $ 32,585 126,853 164,294 (37,441) (22.8 %)

Other expenses:

Depreciation and amortization 87,571 100,732 (13,161) (13.1 %)

Loss on impairment of real estate 2,426 131,732 (129,306) (98.2 %)

Transaction related costs 4,816 233 4,583 n/m

General and administrative 9,874 10,934 (1,060) (9.7 %)

Total other expenses 104,687 243,631 (138,944) (57.0 %)

Loss on sale of real estate (4,578) (2,448) (2,130) 87.0 %

1 unchanged sentence

Interest expense (105,885) (73,825) (32,060) 43.4 %

Net loss on early extinguishment of debt (243) (425) 182 (42.8 %)

Loss before income tax expense and equity in net losses of investees (45,478) (4,898) (40,580) n/m

Income tax expense (137) (56) (81) 144.6 %

Net (loss) gain on early extinguishment of debt (95) 225,373 (225,468) (100.0 %)

(Loss) income before income tax (expense) benefit and equity in net losses of investees (86,442) 71,346 (157,788) n/m

Income tax (expense) benefit (231) 51 (282) n/m

Equity in net losses of investees (380) (410) 30 (7.3 %)

Net loss $ (45,867) $ (5,184) $ (40,683) n/m

Net (loss) income $ (87,053) $ 70,987 $ (158,040) n/m

Weighted average common shares outstanding (basic and diluted) 70,275 48,557 21,718 44.7 %

Per common share amounts (basic and diluted):

Net loss $ (0.66) $ (0.11) $ (0.55) n/m

Net (loss) income $ (1.24) $ 1.45 $ (2.69) (185.5 %)

n/m - not meaningful

(1) Comparable properties consists of 117 properties we owned on March 31, 2025 and which we owned continuously since January 1, 2024 and excludes three 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 three months ended March 31, 2025, compared to the three months ended March 31, 2024.

(1) Comparable properties consists of 117 properties we owned on June 30, 2025 and which we owned continuously since January 1, 2024 and excludes three 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 NOI and our reconciliation of net income (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 six months ended June 30, 2025, compared to the six months ended June 30, 2024.

Rental income.

Rental income for non-comparable properties declined $28,854 related to our property disposition activities, partially offset by an increase in rental income at properties affected by significant redevelopment activities of $5,757 related to the conversion of a lease at a mixed-use property to a hotel management agreement.

Rental income for comparable properties declined $2,723 as a result of increased vacancies and lower rents from lease renewals at certain of our properties in the 2025 period.

Rental income for non-comparable properties decreased $41,952 related to our property disposition activities, partially offset by an increase in rental income at properties affected by significant redevelopment activities of $12,076 related to the conversion of a lease at a mixed-use property to a hotel management agreement and our recognition of the operating revenues of the hotel.

Rental income for comparable properties decreased $5,131 as a result of increased vacancies and lower rents from lease renewals at certain of our properties in the 2025 period.

Rental income includes non-cash straight line rent adjustments totaling $13,492 in the 2025 period and $14,942 in the 2024 period, and amortization of acquired real estate leases and assumed real estate lease obligations totaling $282 in the 2025 period and $89 in the 2024 period.

Real estate taxes.

Real estate taxes decreased $2,032 related to our property disposition activities, $182 for properties affected by significant redevelopment activities and $37 for comparable properties.

Real estate taxes decreased $4,611 related to our property disposition activities and $877 for properties affected by significant redevelopment activities, partially offset by an increase of $621 related to real estate taxes that were previously paid directly by one of our tenants that are now being paid by us pursuant to a lease renewal with that tenant.

Utility expenses.

1 unchanged sentence

Other operating expenses.

Other operating expenses for comparable properties increased $1,690 due to higher snow removal and repairs and maintenance costs in the 2025 period.

Other operating expenses for non-comparable properties increased $6,111 related to the conversion of a lease at a mixed-use property to a hotel management agreement and our recognition of operating expenses of the hotel, partially offset by a decline of $3,923 related to our property disposition activities.

Other operating expenses for non-comparable properties increased $13,039 related to the conversion of a lease at a mixed-use property to a hotel management agreement and our recognition of operating expenses of the hotel, partially offset by a decrease of $7,118 related to our property disposition activities.

Other operating expenses for comparable properties increased $2,043 due to higher snow removal and repairs and maintenance costs, partially offset by lower insurance costs and property management fee expenses in the 2025 period.

Depreciation and amortization.

1 unchanged sentence

Depreciation and amortization for comparable properties declined $4,799 due to certain leasing related assets becoming fully depreciated since January 1, 2024, partially offset by depreciation and amortization of improvements made to certain of our properties since January 1, 2024.

Loss on impairment of real estate.

We recorded a $2,426 loss on impairment of real estate in the 2025 period to reduce the carrying value of one property to its estimated fair values less costs to sell.

We recorded a $131,732 loss on impairment of real estate in the 2024 period to reduce the carrying value of 13 properties to their estimated fair values less costs to sell.

Transaction related costs.

6 unchanged sentences

Interest and other income.

The decrease in interest and other income is primarily due to the effect of lower interest rates earned on cash balances invested, partially offset by higher cash balances invested in the 2025 period compared to the 2024 period.

Interest expense.

The increase in interest expense is due to higher weighted average interest rates in the 2025 period as a result of our financing activities in 2024.

Net loss on early extinguishment of debt .

Net (loss) gain on early extinguishment of debt.

We recorded a net loss on early extinguishment of debt of $95 in the 2025 period related to the Senior Note Exchange and the write off of unamortized discounts and issuance costs related to the partial redemption of our senior secured notes due 2027.

We recorded a loss on early extinguishment of debt of $425 in the 2024 period related to the write off of unamortized discounts resulting from the early redemption of our $350,000 senior unsecured notes.

We recorded a net gain on early extinguishment of debt of $225,373 in the 2024 period resulting from our exchange of $865,219 of existing unsecured notes for $567,429 of our 9.000% senior secured notes due 2029 in June 2024.

For more information regarding the Senior Note Exchange, see Note 7 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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 the repayment of debt.

Income tax (expense) benefit.

Equity in net losses of investees.

Equity in net losses of investees represents our proportionate share of losses from our investment in our unconsolidated joint venture.

Net loss and net loss per basic and diluted common share decreased in the 2025 period compared to the 2024 period primarily as a result of the changes noted above.

Equity in net losses of investees represents our proportionate share of losses from our investments in two unconsolidated joint ventures.

Net (loss) income.

Net (loss) income and net (loss) income per basic and diluted common share changed in the 2025 period compared to the 2024 period primarily as a result of the changes noted above.

Non-GAAP Financial Measures

11 unchanged sentences

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 three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

Net loss $ (45,867) $ (5,184)

The following table presents the reconciliation of net loss to NOI for the three and six months ended June 30, 2025 and 2024:

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

2025 2024 2025 2024

Net (loss) income $ (41,186) $ 76,171 $ (87,053) $ 70,987

Equity in net losses of investees 128 180 380 410

Income tax expense 137 56

Loss before income tax expense and equity in net losses of investees (45,478) (4,898)

Net loss on early extinguishment of debt 243 425

Income tax expense (benefit) 94 (107) 231 (51)

(Loss) income before income tax expense (benefit) and equity in net losses of investees (40,964) 76,244 (86,442) 71,346

Net (gain) loss on early extinguishment of debt (148) (225,798) 95 (225,373)

Interest expense 52,507 38,349 105,885 73,825

Interest and other income (788) (226) (1,950) (1,583)

Loss on sale of real estate 4,737 2,384

(Gain) loss on sale of real estate (159) 64 4,578 2,448

General and administrative 4,816 5,290 9,874 10,934

10 unchanged sentences

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) income to FFO and Normalized FFO for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

Net loss $ (45,867) $ (5,184)

The following table presents the reconciliation of net (loss) income to FFO and Normalized FFO for the three and six months ended June 30, 2025 and 2024:

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

2025 2024 2025 2024

Net (loss) income $ (41,186) $ 76,171 $ (87,053) $ 70,987

Depreciation and amortization:

2 unchanged sentences

Loss on impairment of real estate 2,426 131,732 2,426 131,732

Loss on sale of real estate 4,737 2,384

(Gain) loss on sale of real estate (159) 64 4,578 2,448

FFO 5,627 258,969 8,858 307,152

Transaction related costs

Net loss on early extinguishment of debt 243 425

3,940 — 4,816 233

Net (gain) loss on early extinguishment of debt (148) (225,798) 95 (225,373)

Lease termination fees for sold property — — — (10,524)

2 unchanged sentences

Per common share amounts (basic and diluted):

Net loss $ (0.66) $ (0.11)

Net (loss) income $ (0.58) $ 1.56 $ (1.24) $ 1.45

FFO $ 0.08 $ 5.32 $ 0.13 $ 6.33

8 unchanged sentences

• our ability to successfully sell properties that we market for sale.

• 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.

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, as well as ongoing market and economic conditions, including government spending and budget priorities.

1 unchanged sentence

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 are actively pursuing several strategic initiatives to improve liquidity, which could include asset sales, debt refinancing or 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 improve our liquidity.

During the three months ended March 31, 2025 , we sold three properties for an aggregate sales price of $26,900 , excluding closing costs.

During the six months ended June 30, 2025 , we sold three properties for an aggregate sales price of $26,900 , excluding closing costs.

In July 2025, we sold one property containing approximately 56,000 rentable square feet for a sales price of $2,150, excluding closing costs.

W e continue to evaluate our portfolio and are currently in various stages of marketing certain of our properties for sale.

As of April 29, 2025, we had three properties containing approximately 376,000 rentable square feet which are under agreement to sell for an aggregate sales price of $28,863.

As of July 29, 2025, we had three properties containing approximately 376,000 rentable square feet which are under agreement to sell for an aggregate sales price of $28,863.

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.

2 unchanged sentences

The following is a summary of our sources and uses of cash flows for the periods presented, as reflected in our condensed consolidated statements of cash flows:

Three Months Ended March 31,

Six Months Ended June 30,

Cash, cash equivalents and restricted cash at beginning of period $ 275,165 $ 26,714

4 unchanged sentences

Cash, cash equivalents and restricted cash at end of period $ 91,954 $ 34,387

The change from cash provided by operating activities in the 2024 period to cash used in operating activities in the 2025 period was primarily due to higher interest expense and decreased NOI due to property dispositions and reductions in occupied space at certain of our properties in the 2025 period.

The change from cash used in investing activities in the 2024 period to cash provided by investing activities in the 2025 period was primarily due to decreased capital expenditures in the 2025 period.

The increase in cash used in financing activities in the 2025 period was primarily due to the redemption of $171,586 of our 4.50% senior unsecured notes due 2025 in the 2025 period.

The decrease in cash provided by operating activities in the 2025 period was primarily due to higher interest expense and decreased NOI related to property dispositions and reductions in occupied space at certain of our properties in the 2025 period.

The increase in cash used in financing activities in the 2025 period was primarily due to an increase in net debt repayments in the 2025 period.

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.

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 $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 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.

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 $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 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 March 31, 2025.

As of March 31, 2025, the annual interest rate payable on borrowings under our credit agreement was 7.9%.

As of March 31, 2025, and April 29, 2025, we had fully drawn our $325,000 revolving credit facility and $100,000 was outstanding under our term loan.

Senior Notes Redemptions

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 June 30, 2025.

As of June 30, 2025, the annual interest rate payable on borrowings under our credit agreement was 7.9%.

As of June 30, 2025, and July 29, 2025, we had fully drawn our $325,000 revolving credit facility and $100,000 was outstanding under our term loan.

Senior Notes Redemptions and Repayments

In January 2025, we redeemed, at par plus accrued interest, all $171,586 of our 4.50% senior unsecured notes due 2025 using the proceeds from the issuance of our senior secured notes due 2027 and cash on hand.

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 unamortized discounts and issuance costs related to these notes.

Our senior secured notes due 2027 require quarterly principal repayments of $6,500.

As of June 30, 2025, we have made $13,000 of scheduled quarterly principal repayments on these notes in 2025.

In July 2025, in connection with the sale of a collateral property, we redeemed, at par plus accrued interest, $2,029 of our senior secured notes due 2027.

Senior Note Exchange

3 unchanged sentences

For more information regarding the Senior Note Exchange and the New 2030 Notes, see Note 7 to our Condensed Consolidated Financial Statements included in Part I, Item I of this Quarterly Report on Form 10-Q.

As of March 31, 2025, our debt maturities (other than our revolving credit facility), consisting of senior notes, a term loan and mortgage notes, were as follows:

As of June 30, 2025, 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

6 unchanged sentences

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 March 31, 2025, we had estimated unspent leasing related obligations of $78,499, of which we expect to spend $46,133 over the next 12 months.

In addition to our debt obligations, as of June 30, 2025, we had estimated unspent leasing related obligations of $72,394, of which we expect to spend $42,748 over the next 12 months.

Share Issuances

1 unchanged sentence

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.

As of April 30, 2025, our total available liquidity was comprised of $73,071 of cash and 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.

We are evaluating strategies to address our upcoming debt obligations, including through asset sales, future debt exchanges or 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.

During the three months ended June 30, 2025, we sold an aggregate 3,933,346 of our common shares under the ATM Program valued at a weighted average share price of $0.26 for net proceeds of $961 after deducting Agent commissions and other offering costs.

During the six months ended June 30, 2025, we sold an aggregate 4,171,689 of our common shares under the ATM Program valued at a weighted average share price of $0.27 for net proceeds of $1,106 after deducting Agent commissions and other offering costs.

As of July 30, 2025, our total available liquidity was comprised of $90,102 of cash and our near-term obligations include outstanding lease obligations of $72,394 and principal debt repayments of $13,000 in 2025 and $277,431 in 2026.

We are evaluating strategies to address our upcoming debt obligations, which could include potential asset sales, future debt exchanges or 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.

6 unchanged sentences

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 three months ended March 31, 2025, we paid quarterly distributions to our shareholders totaling $698 using cash on hand.

On April 10, 2025, we declared a regular quarterly distribution payable to shareholders of record on April 22, 2025 of $0.01 per share, or approximately $701.

We expect to pay this distribution on or about May 15, 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.

During the six months ended June 30, 2025, we paid quarterly distributions to our shareholders totaling $1,407 using cash on hand.

On July 10, 2025, we suspended our regular quarterly distribution payable on our common shares to preserve our cash.

For more information regarding the distributions we paid and declared during 2024, see Note 9 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

We owned a 51% interest in an unconsolidated joint venture which owned two properties at March 31, 2025.

As of March 31, 2025, the properties owned by this joint venture were encumbered by $49,780 principal amount of mortgage indebtedness, none of which is recourse to us.

As of March 31, 2025, 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.

We owned a 51% interest in an unconsolidated joint venture which owned two properties at June 30, 2025.

As of June 30, 2025, the properties owned by this joint venture were encumbered by $49,557 principal amount of mortgage indebtedness, none of which is recourse to us.

As of June 30, 2025, 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 our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Other than this joint venture, as of March 31, 2025, 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.

Other than this joint venture, as of June 30, 2025, 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.

Debt Covenants (dollars in thousands)

Our principal debt obligations as of March 31, 2025 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 $1,834,098 of senior notes and mortgage notes with an outstanding principal balance of $177,320.

Our principal debt obligations as of June 30, 2025 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 $1,827,598 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.

1 unchanged sentence

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 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.

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

The following table presents our senior notes and credit agreement covenants as of March 31, 2025:

The following table presents our senior notes and credit agreement covenants as of June 30, 2025:

Maintenance Covenant

4 unchanged sentences

Consolidated income available for debt service / debt service (minimum 1.50x) 1.51x

(1) As of March 31, 2025, our ratio of secured debt to adjusted total assets was above the requirement under our credit agreement and its 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, adjusted total assets for covenant purposes as defined in our senior notes indentures were $4,858,048.

As of June 30, 2025, we were in compliance with all of the terms and conditions of our respective covenants under our credit agreement and our senior notes indentures and their supplements, which reinstates our ability to incur secured debt.

However, our ability to incur debt is limited due to the narrow margin by which these covenant ratios are below or above the minimum or maximum allowed levels.

As of June 30, 2025, adjusted total assets for covenant purposes as defined in our senior notes indentures were $4,877,317.

Assets serving as collateral under our credit agreement, our secured senior notes or mortgage notes represented $4,083,970 of adjusted total assets, as defined in our senior notes indentures.

Our unencumbered assets represented $793,347 of adjusted total assets.

The following table presents the calculation of adjusted total assets to total assets in accordance with GAAP as of March 31, 2025:

The following table presents the calculation of adjusted total assets to total assets in accordance with GAAP as of June 30, 2025:

Total assets $ 3,560,949

8 unchanged sentences

and others related to them.

For more information about these and other such relationships and related person transactions, see Notes 10 and 11 to our

Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, our 2024 Annual Report, our definitive Proxy Statement for our 2025 Annual Meeting of Shareholders and our other filings with the SEC.

For more information about these and other such relationships and related person transactions, see Notes 10 and 11 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, our 2024 Annual Report, our definitive Proxy Statement for our 2025 Annual Meeting of Shareholders and our other filings with the SEC.

In addition, see the section captioned “Risk Factors” in Part I, Item 1A of our 2024 Annual Report for a description of risks that may arise as a result of these and other related person transactions and relationships.

9 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis