Office Properties Income Trust · OTC:OPITQ
Office Properties Income Trust — Q2 2023 Earnings Presentation
33 slides from Office Properties Income Trust's earnings presentation, Jul 26, 2023
Slide 1: Second Quarter 2023 Financial Results and Supplemental Information
Office Properties Income Trust Second Quarter 2023 Financial Results and Supplemental Information July 26, 2023 Washington, D.C. Exhibit 99.2
Slide 2: Table of Contents
Q2 2023 2 Table of Contents QUARTERLY RESULTS Office Properties Income Trust Announces Second Quarter 2023 Financial Results .......................................................................... 4 Second Quarter 2023 Highlights ...................................................................
Slide 3: Quarterly Results
Q2 2023 3RETURN TO TABLE OF CONTENTS Quarterly Results
Slide 4: Office Properties Income Trust Announces Second Quarter 2023 Financial Results
Q2 2023 4RETURN TO TABLE OF CONTENTS OFFICE PROPERTIES INCOME TRUST ANNOUNCES SECOND QUARTER 2023 FINANCIAL RESULTS “Our second quarter results reflect execution of key initiatives for our business, resulting in Normalized FFO per share exceeding the prior quarter and the high end of our guidance ra
Slide 5: Second Quarter 2023 Highlights
Q2 2023 5RETURN TO TABLE OF CONTENTS Second Quarter 2023 Highlights Financial Results • Net loss of $12.2 million, or $0.25 per share. • Normalized FFO of $53.7 million, or $1.11 per share. Portfolio Update • Leased 713,000 sq. ft. with a 10.3 year weighted average lease term. • Increased consolidat
Slide 6: Second Quarter 2023 Results
Q2 2023 6RETURN TO TABLE OF CONTENTS Second Quarter 2023 Results Folsom, CA (dollars in thousands, except per share and per sq. ft. data) Three Months Ended June 30, Financial Results 2023 2022 Net loss $ (12,242) $ (16,056) Net loss per share $ (0.25) $ (0.33) Normalized FFO $ 53,713 $ 58,923 Norma
Slide 7: Financials
Q2 2023 7RETURN TO TABLE OF CONTENTS Financials
Slide 8: Key Financial Data
Q2 2023 8RETURN TO TABLE OF CONTENTS As of and for the Three Months Ended As of 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 Selected Balance Sheet Data: Capitalization: Total gross assets $ 4,633,357 $ 4,591,512 $ 4,541,435 $ 4,507,422 $ 4,578,277 Total common shares (at end of peri
Slide 9: Condensed Consolidated Balance Sheets
Q2 2023 9RETURN TO TABLE OF CONTENTS June 30, December 31, 2023 2022 ASSETS Real estate properties: Land $ 809,590 $ 821,238 Buildings and improvements 3,225,963 3,114,836 Total real estate properties, gross 4,035,553 3,936,074 Accumulated depreciation (605,789) (561,458) Total real estate propertie
Slide 10: Condensed Consolidated Statements of Income (Loss)
Q2 2023 10RETURN TO TABLE OF CONTENTS Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Rental income $ 133,997 $ 141,316 $ 266,419 $ 288,670 Expenses: Real estate taxes 15,901 16,583 31,234 33,228 Utility expenses 5,742 5,820 13,002 12,685 Other operating expenses 26,634 26,
Slide 11: Debt Summary
Q2 2023 11RETURN TO TABLE OF CONTENTS Fixed vs. Variable Rate Debt Fixed 90.6% Variable 9.4% Coupon Rate (1) Interest Rate (2) Principal Balance Maturity Date Due at Maturity Years to Maturity Unsecured Floating Rate Debt: $750,000 unsecured revolving credit facility (3) (4) 6.600% 6.600% $ 240,000
Slide 12: Debt Maturity Schedule
Q2 2023 12RETURN TO TABLE OF CONTENTS $— $350,000 $650,000 $300,000 $350,000 $562,000 $240,000 $108,120 Unsecured Fixed Rate Debt Unsecured Floating Rate Debt Secured Fixed Rate Debt 2023 2024 2025 2026 2027 2028 and thereafter $0 $200,000 $400,000 $600,000 $800,000 Year Unsecured Floating Rate Debt
Slide 13: Leverage Ratios, Coverage Ratios and Public Debt Covenants
Q2 2023 13RETURN TO TABLE OF CONTENTS Leverage Ratios, Coverage Ratios and Public Debt Covenants As of and for the Three Months Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 Leverage Ratios: Net debt / total gross assets 54.7% 54.1% 53.8% 53.4% 54.4% Net debt / gross book value of real es
Slide 14: Capital Expenditures Summary and Significant Redevelopment Information
Q2 2023 14RETURN TO TABLE OF CONTENTS For the Three Months Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 Lease related costs $ 28,252 $ 13,041 $ 24,776 $ 17,297 $ 16,131 Building improvements 5,355 4,582 17,323 8,585 4,702 Recurring capital expenditures 33,607 17,623 42,099 25,882 20,833
Slide 15: Property Acquisitions and Dispositions Information Since January 1, 2023
Q2 2023 15RETURN TO TABLE OF CONTENTS Acquisitions: OPI has not acquired any properties since January 1, 2023. Dispositions: Date Sold Location Number of Properties Sq. Ft. Gross Sales Price Gross Sales Price Per Sq. Ft. 1/6/2023 Richmond, VA 3 89 $ 5,350 $ 60.11 4/28/2023 Phoenix, AZ 1 107 4,900 45
Slide 16: Investments in Unconsolidated Joint Ventures
Q2 2023 16RETURN TO TABLE OF CONTENTS Unconsolidated Joint Ventures: Joint Venture OPI Ownership OPI Investment Number of Properties Location Sq. Ft. Occupancy Weighted Average Remaining Lease Term (1) Prosperity Metro Plaza 51% $ 18,810 2 Fairfax, VA 329 76.6% 3.0 years 1750 H Street, NW 50% 18,557
Slide 17: Portfolio Information
Q2 2023 17RETURN TO TABLE OF CONTENTS Portfolio Information
Slide 18: Summary Same Property Results
Q2 2023 18RETURN TO TABLE OF CONTENTS For the Three Months Ended For the Six Months Ended 6/30/2023 6/30/2022 6/30/2023 6/30/2022 Properties (end of period) 148 148 148 148 Rentable sq. ft. 19,591 19,541 19,591 19,541 Percent leased 94.4% 95.4% 94.4% 95.4% Rental income $ 133,467 $ 132,958 $ 265,335
Slide 19: Leasing Summary
Q2 2023 19RETURN TO TABLE OF CONTENTS As of and for the Three Months Ended As of and for the Six Months Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 Properties (end of period) (1) 155 157 160 162 172 155 Rentable sq. ft. (1) 20,784 20,895 20,969 21,211 22,491 20,784 Percentage
Slide 20: Tenant Diversity and Credit Characteristics
Q2 2023 20RETURN TO TABLE OF CONTENTS Investment Grade 62.9% Non-Investment Grade 6.7% Not Rated 30.4% Percentage of Total Annualized Rental Income Tenant Credit Characteristics ( 4 ) (3) Tenant Industry Tenant Diversity and Credit Characteristics As of June 30, 2023 (1) Total Government: 34.8% (1)
Slide 21: Tenants Representing 1% or More of Annualized Rental Income
Q2 2023 21RETURN TO TABLE OF CONTENTS Tenant Credit Rating Sq. Ft. % of Leased Sq. Ft. Annualized Rental Income % of Total Annualized Rental Income 1 U.S. Government Investment Grade 3,815 20.3% $ 105,836 19.6% 2 Alphabet Inc. (Google) Investment Grade 386 2.0% 22,119 4.1% 3 Shook, Hardy & Bacon L.L
Slide 22: Lease Expiration Schedule
Q2 2023 22RETURN TO TABLE OF CONTENTS Year (1) Number of Leases Expiring Leased Square Feet Expiring % of Total Leased Square Feet Expiring Cumulative % of Total Leased Square Feet Expiring Annualized Rental Income Expiring % of Total Annualized Rental Income Expiring Cumulative % of Total Annualize
Slide 23: Appendix
Q2 2023 23RETURN TO TABLE OF CONTENTS Appendix
Slide 24: About the Company and Management
Q2 2023 24RETURN TO TABLE OF CONTENTS The Company: OPI is included in 161 market indices and comprises more than 1% of the following indices as of June 30, 2023: BI North America Office REIT Valuation Peers (BROFFRTV), Bloomberg Real Estate Investment Trust Mid Cap Index (BBREMIDC), Invesco KBW Prem
Slide 25: Governance Information
Q2 2023 25RETURN TO TABLE OF CONTENTS Atlanta, GA Governance Information Board of Trustees Donna D. Fraiche Barbara D. Gilmore John L. Harrington Independent Trustee Independent Trustee Independent Trustee William A. Lamkin Elena B. Poptodorova Jeffrey P. Somers Independent Trustee Lead Independent
Slide 26: Non-GAAP Financial Measures
Q2 2023 26RETURN TO TABLE OF CONTENTS Non-GAAP Financial Measures OPI presents certain “non-GAAP financial measures” within the meaning of the applicable rules of the Securities and Exchange Commission (SEC), including NOI, Cash Basis NOI, Same Property NOI, Same Property Cash Basis NOI, EBITDA, EBI
Slide 27: Definitions of Terms
Q2 2023 27RETURN TO TABLE OF CONTENTS Adjusted total assets and total unencumbered assets include the original cost of real estate assets calculated in accordance with GAAP before impairment writedowns, if any, and exclude depreciation and amortization, accounts receivable and intangible assets. Ann
Slide 28: Calculation of NOI and Cash Basis NOI
Q2 2023 28RETURN TO TABLE OF CONTENTS For the Three Months Ended For the Six Months Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Calculation of NOI and Cash Basis NOI: Rental income $ 133,997 $ 132,422 $ 127,922 $ 137,683 $ 141,316 $ 266,419 $ 288,670 Property operati
Slide 29: Reconciliation of NOI to Same Property NOI
Q2 2023 29RETURN TO TABLE OF CONTENTS For the Three Months Ended For the Six Months Ended 6/30/2023 6/30/2022 6/30/2023 6/30/2022 Reconciliation of NOI to Same Property NOI: Rental income $ 133,997 $ 141,316 $ 266,419 $ 288,670 Property operating expenses (48,277) (48,900) (96,927) (99,773) NOI 85,7
Slide 30: EBITDA and Adjusted EBITDAre Reconciliation
Q2 2023 30RETURN TO TABLE OF CONTENTS For the Three Months Ended For the Six Months Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Net income (loss) $ (12,242) $ (446) $ 6,390 $ 16,964 $ (16,056) $ (12,688) $ (29,463) Add (less): Interest expense 26,525 25,231 24,557 24
Slide 31: FFO and Normalized FFO Reconciliation
Q2 2023 31RETURN TO TABLE OF CONTENTS For the Three Months Ended For the Six Months Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Net income (loss) $ (12,242) $ (446) $ 6,390 $ 16,964 $ (16,056) $ (12,688) $ (29,463) Add (less): Depreciation and amortization: Consolida
Slide 32: Warning Concerning Forward-Looking Statements
Q2 2023 32RETURN TO TABLE OF CONTENTS Warning Concerning Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws that are subject to risks and uncertainties. These statements
Slide 33: Additional Information on the Proposed Merger with DHC
Q2 2023 33RETURN TO TABLE OF CONTENTS This earnings presentation may be deemed to be solicitation material in respect of the proposed merger between OPI and DHC. In connection with the proposed merger, OPI filed a registration statement on Form S-4 with the SEC containing a joint proxy statement/pro
Office Properties Income Trust — Q2 2023 Earnings Presentation on 6ix