Office Properties Income Trust · OTC:OPITQ
Office Properties Income Trust — Q4 2022 Earnings Presentation
30 slides from Office Properties Income Trust's earnings presentation, Mar 3, 2023
Slide 1: Investor Presentation Q4 2022
1 OFFICE PROPERTIES INCOME TRUST INVESTOR PRESENTATION Q4 2022 Washington, DC
Slide 2: Forward-looking statements
2 OFFICE PROPERTIES INCOME TRUST This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Also, whenever we use words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “will”, “m
Slide 3: OPI at a Glance
3 OFFICE PROPERTIES INCOME TRUST a. Total gross assets. b. Based on annualized rental income. See Appendix herein for our definition of investment grade tenants. OPI AT A GLANCE 21.0 MILLION SQUARE FEET $567 Million TOTAL LIQUIDITY $4.5 Billion INVESTMENT PORTFOLIO(1) 90.6% OCCUPANCY 160 PROPERTIES
Slide 4: Recent Company Highlights
4 OFFICE PROPERTIES INCOME TRUST RECENT COMPANY HIGHLIGHTS Fourth Quarter 2022 Full Year 2022 • Reported strong leasing momentum, solid financial results and further execution of capital recycling plans. • Completed 705,000 square feet of leasing, representing the highest quarterly retention in thre
Slide 5: Compelling Investment Opportunity
5 OFFICE PROPERTIES INCOME TRUST (1) Based on annualized rental income. See Appendix herein for our definition of investment grade tenants. COMPELLING INVESTMENT OPPORTUNITY Diversified Portfolio Secure and Stable Income Investment Grade Balance Sheet Capital Recycling Strategy Dividend Coverage Com
Slide 6: Diversified Across Strategic U.S. Markets
6 OFFICE PROPERTIES INCOME TRUST Phoenix DIVERSIFIED ACROSS STRATEGIC U.S. MARKETS Chicago 11% D.C. Metro(1)(2) 23% Atlanta 9% Silicon Valley/ Sacramento 10% Dallas 5% OPI Strategic Markets % Annualized Rental Income Focused on markets with strong economics and favorable long-term demand outlook. Bo
Slide 7: Secure and Stable Income
7 OFFICE PROPERTIES INCOME TRUST SECURE AND STABLE INCOME U.S. Government 19.7% Other Government 8.8% Government Contractors 6.4% Real Estate & Financial 16.7% Technology & Communications 15.5% Legal & Other Professional Services 11.5% Manufacturing & Transportation 10.6% Life Science and Medical 3.
Slide 8: Growth Strategy
8 OFFICE PROPERTIES INCOME TRUST GROWTH STRATEGY Positioned to advance core business strategies focused on enhancing the overall quality and geographic footprint of the portfolio. Organic Growth • Maintain high occupancy through best-in-class operations and service centered tenant relationships. • D
Slide 9: Proactive Asset Management and Leasing
9 OFFICE PROPERTIES INCOME TRUST 4.2% 6.9% 6.3% 5.6% -1% 1% 3% 5% 7% 9% 11% 13% 15% 0 500 1000 1500 2000 2500 3000 3500 2019 2020 2021 2022 Renewals New Leasing Leasing Roll-up/down 2.6M SF New and renewal leasing Leasing Activity (SF in 000s) PROACTIVE ASSET MANAGEMENT AND LEASING Staggered Lease E
Slide 10: Strategic Capital Recycling
10 OFFICE PROPERTIES INCOME TRUST • Completed $216 million of property sales.(1) • Two properties under agreement for $7.6 million. STRATEGIC CAPITAL RECYCLING Since 2019, OPI has sold approximately $1.5 billion of assets and redeployed proceeds into more attractive markets. Property Acquisitions &
Slide 11: Recent Portfolio Reshaping
11 OFFICE PROPERTIES INCOME TRUST Phoenix RECENT PORTFOLIO RESHAPING Investing in newer, less capital-intensive properties that improve geographic diversification, rent growth, portfolio metrics and the long-term stability of cash flows. Reducing Exposure Increasing Exposure • Huntsville, AL • Birmi
Slide 12: Acquisition Focus
12 OFFICE PROPERTIES INCOME TRUST ACQUISITION FOCUS Focused on acquiring office properties in markets that have strong economic fundamentals to support rent growth. Properties in strong and growing markets with characteristics to attract and retain tenants. • Strategic to tenants. • Minimum remainin
Slide 13: Recent Acquisitions
13 OFFICE PROPERTIES INCOME TRUST RECENT ACQUISITIONS 1000 W. Fulton Street, Chicago, IL – “1K Fulton” $355.0 Million Purchase Price 4.7% GAAP Cap Rate 531,190 Square Feet 99.2% Percent Leased 6.6 Years WALT Google (73%) Primary Tenant 1224 Hammond Dr., Atlanta, GA - “Twelve24” $195.0 Million Purcha
Slide 14: Value Creation Through Select Redevelopment
14 OFFICE PROPERTIES INCOME TRUST VALUE CREATION THROUGH SELECT REDEVELOPMENT “20 Mass” 20 Massachusetts Avenue, Washington, D.C. “Unison” 351, 401, 501 Elliott Ave, Seattle, WA ~$215 Million Total Project Cost 8% - 10% Stabilized Returns 54% Pre-Leased 427,000 Square Feet Mixed Use Use Q2 2023 Esti
Slide 15: Strong and Flexible Financial Health
15 OFFICE PROPERTIES INCOME TRUST Atlanta, GA STRONG AND FLEXIBLE FINANCIAL HEALTH Debt Profile Liquidity Position $555M Available Revolving Credit Facility $12M Cash on Hand 4.0% Weighted Average Interest Rate on Debt Debt Metrics 48.0% Net Debt to Gross Book Value of Real Estate Assets Ba1 Moody’s
Slide 16: Commitment to Sustainability
16 OFFICE PROPERTIES INCOME TRUST For more information, please read The RMR Group’s 2021 Sustainability Report here. COMMITMENT TO SUSTAINABILITY • 2022 ENERGY STAR® Partner of the Year Award (fifth consecutive year). • 2022 Gold Level Green Lease Leader. • 2021 Green Lease Leader, Silver (earned in
Slide 17: Appendix
17 OFFICE PROPERTIES INCOME TRUST Appendix Colorado Springs, CO
Slide 18: OPI Is Managed by The RMR Group
18 OFFICE PROPERTIES INCOME TRUST RMR’s Operations Include: National Multi-Sector Investment Platform OFFICE INDUSTRIAL GOVERNMENT MEDICAL OFFICE LIFE SCIENCE SENIOR LIVING HOTELS RETAIL RMR Managed Companies Nearly 2,100 Properties More than $16 Billion in Annual Revenues Over $37 Billion in AUM Ov
Slide 19: A Winning Tradition
19 OFFICE PROPERTIES INCOME TRUST A WINNING TRADITION EPA’S ENERGY STAR Partner of the Year 2019 - 2022. 70 properties with EPA ENERGY STAR certifications 60 properties with BOMA designations. Ranked #2 for portfolio with most designations 56 properties with LEED designations SUSTAINABILITY Ranked B
Slide 20: Relationship with RMR Provides Scale and Efficiency
20 OFFICE PROPERTIES INCOME TRUST (1) Source: S&P Global Market Intelligence. Data is for the most recently reported twelve months as of February 22, 2023. RELATIONSHIP WITH RMR PROVIDES SCALE AND EFFICIENCY Key Benefits • RMR provides all the employees; OPI has no employees. • RMR’s acquisitions te
Slide 21: RMR Management Fee Structure
21 OFFICE PROPERTIES INCOME TRUST RMR base management fee tied to OPI share price performance. • Consists of an annual fee equal to generally 50 bps multiplied by the lower of: (1) OPI’s historical cost of real estate, or (2) OPI’s total market capitalization. • There is no incentive for RMR to comp
Slide 22: Financials
22 OFFICE PROPERTIES INCOME TRUST San Jose, CA Financials
Slide 23: Key Financial Data
23 OFFICE PROPERTIES INCOME TRUST KEY FINANCIAL DATA (dollars in thousands, except per share data) As of and for the Three Months Ended 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021 Selected Balance Sheet Data: Total gross assets $ 4,541,435 $ 4,507,422 $ 4,578,277 $ 4,703,791 $ 4,737,595 Tota
Slide 24: Debt Summary
24 OFFICE PROPERTIES INCOME TRUST DEBT SUMMARY 1. Reflects the interest rate stated in, or determined pursuant to, the contract terms. 2. Includes the effect of mark to market accounting for certain mortgages and discounts on senior unsecured notes. Excludes the effect of debt issuance costs amortiz
Slide 25: Calculation of NOI and Cash Basis NOI
25 OFFICE PROPERTIES INCOME TRUST CALCULATION OF NOI AND CASH BASIS NOI 1. We recorded a liability for the amount by which the estimated fair value for accounting purposes exceeded the price we paid for our former investment in The RMR Group Inc. common stock in June 2015. A portion of this liabilit
Slide 26: Calculation of EBITDA, EBITDAre and Adjusted EBITDAre
26 OFFICE PROPERTIES INCOME TRUST CALCULATION OF EBITDA, EBITDAre AND ADJUSTED EBITDAre 1. Amounts represent equity based compensation to our Trustees, our officers and certain other employees of RMR. 2. Incentive fees under our business management agreement with RMR are payable after the end of eac
Slide 27: Calculation of FFO, Normalized FFO and CAD
27 OFFICE PROPERTIES INCOME TRUST CALCULATION OF FFO, NORMALIZED FFO AND CAD 1. Incentive fees under our business management agreement with RMR are payable after the end of each calendar year, are calculated based on common share total return, as defined, and are included in general and administrati
Slide 28: Non-GAAP Financial Measures and Certain Definitions
28 OFFICE PROPERTIES INCOME TRUST NON-GAAP FINANCIAL MEASURES AND CERTAIN DEFINITIONS Non-GAAP Financial Measures We present certain “non-GAAP financial measures” within the meaning of applicable rules of the SEC, including NOI, Cash Basis NOI, EBITDA, EBITDAre, Adjusted EBITDAre, FFO, Normalized FF
Slide 29: Non-GAAP Financial Measures and Certain Definitions
29 OFFICE PROPERTIES INCOME TRUST NON-GAAP FINANCIAL MEASURES AND CERTAIN DEFINITIONS Annualized dividend yield is the annualized dividend per share paid during the period divided by the closing price of our common shares at the end of the period. Annualized rental income is calculated using the ann
Slide 30: Contact
30 OFFICE PROPERTIES INCOME TRUST Washington, DC INVESTOR PRESENTATION Q4 2022 Two Newton Place 255 Washington Street, Suite 300 Newton, MA 02458 OPIREIT.COM
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