undefined Price: Quote, Forecast, Charts & News (undefined)

Perplexity Finance

OPI

Office Properties Income Trust

OPI

NASDAQ

Market Closed

Saturday, May 24, 2025

$0.20

$0.00

1.9%

At close: May 23, 4:00:01 PM EDT

$0.20

$0.00

After hours: 7:59:36 PM EDT

Change

$0.00

1.9%

Financial Profile

Prev Close

$0.20

Market Cap

$13.91M

Day Range

$0.19 - $0.21

Open

$0.20

P/E Ratio

-0.1

52W Range

$0.18 - $3.02

24H Volume

$138.74K

Dividend Yield

20.39%

EPS

-3.18

Earnings

Report Date

Apr 30, 2025

Reported Revenue

113.6M

Miss -1.03%

Avg 1d Change

12.04%

Report Period

Q1 2025

Reported EPS

0.06

Beat +111.11%

Implied Move 1d

452.41%

Transcript

11m 26s

Additional information concerning factors that could cause those differences is contained in our filings with the Securities and Exchange Commission which can be accessed from our website opireit.com. Investors are cautioned not to place undue reliance upon any forward looking statements. In addition, will be discussing non GAAP numbers during this call, including normalized FFO, and cash basis net operating income or cash basis NOI. A reconciliation of these non GAAP figures to net income are available in OPI's earnings release presentation we issued last night can be found on our website. And finally, we will be providing guidance on this call, including normalized FFO and cash basis NOI. We are not providing a reconciliation of these non GAAP measures as part of our guidance. Because certain information required for such reconciliation is not available without unreasonable efforts or at all such as gains and losses or impairment charges, related to the disposition of real estate. Will now turn the call over to Yael. Thank you, Kevin, and good morning.

12m 24s

On today's call, I will provide an overview of our portfolio and review trends we are seeing in the office market before outlining OPI's first quarter leasing and disposition activity. From there, I will turn the call over to Brian to discuss our financial results. As of 03/31/2025, OPI's portfolio consisted of 125 properties [indiscernible] 17,300,000 square feet with a weighted average remaining lease term of seven years. We ended the quarter with same property occupancy of 85.4%. Approximately 60% of our revenues come from investment grade rated tenants or their subsidiaries. The U. S. Government is our largest tenant [indiscernible] 16.8% of our annualized revenue. The office sector continues to face headwinds associated with the impacts of work from home as well as macroeconomic and political uncertainty. Throughout the country, we face pressure in our re leasing efforts with minimal tenants in the market to absorb large blocks of vacant space. In instances where activity exists, leasing demand has been concentrated towards trophy assets as tenants seek amenity rich that will entice employees back to the office. Given OPI's portfolio is predominantly comprised of older properties and the capital required to reposition assets is often cost prohibitive new leasing interest has been minimal.

14m 7s

Accordingly, we have experienced negative net absorption declining asking rents and heightened competition. In Washington DC, where OPI has a [indiscernible] the market vacancy rate is over 23% and conditions have worsened due to federal leasing uncertainty. Despite our leasing efforts, strategies to preserve cash flow and manage our debt maturity schedule, OPI's financial performance has declined in this difficult operating environment. Annualized revenue is down $93,000,000 or 19% to $4.00 $5,000,000 compared to a year ago. Interest expense increased $17,900,000 to $53,400,000 representing a 50% increase year over year. We have little room under our debt covenants, which restricts us from refinancing or issuing new debt. Dollars $280,000,000 in debt principal payments are due in twenty six, and our liquidity is currently limited to $73,000,000 of cash. In response to these challenges, we are exploring all options address our financial commitments while simultaneously operating and leasing our properties. Turning to our leasing results. In the first quarter, we executed 11 leases totaling 223,000 square feet at a weighted average lease term of ten point three years and a 13.5% roll up in rent. Concessions and capital commitments of $4.62 per square foot per year declined 22% quarter over quarter.

16m

Notable leasing activity included a new eleven year lease for 45,000 square feet in Omaha, Nebraska a twelve year lease renewal for 101,000 square feet in Fremont, California and an eight year renewal for 100,000 square feet in Irving, Texas. We are closely monitoring the Department of Government Efficiencies measures to reduce the government's office square footage. As part of its efforts to optimize its real estate While the ultimate impact on OPI portfolio remains uncertain, we have not yet received any lease termination notices related to these efficiency measures. Today, the GSA represents 2,400,000 square feet or approximately $68,000,000 of OPI's annualized revenue. Of this, approximately 432,000 square feet or $14,900,000 in annualized revenue is within their soft term, which gives the GSA a right to terminate the lease in whole or in part without penalty. Turning to OPI's upcoming lease expirations. Lease expirations through 2026 total 1,600,000 square feet, representing $45,000,000 or 11% of OPI's annualized rental income. As we have discussed on prior calls, single tenant properties will drive most of our expirations, and we expect 780,000 square feet or $19,400,000 of annualized revenue will not renew. Our current leasing pipeline totaled nearly 2,000,000 square feet of which one third could result in positive net absorption.

17m 52s

Turning to dispositions. During the quarter, we sold three properties consisting of 249,000 square feet for $26,900,000 Additionally, we are under agreement to sell another three vacant properties consisting of 76,000 square feet for a total sales price of $28,900,000 We do not have any other properties being marketed for sale. However, we continue to evaluate disposition opportunities that will allow OPI to mitigate occupancy risk and carry costs associated with vacant properties. As we consider future sales, we must must balance the impact of potential dispositions on our liquidity, debt covenants and operating metrics. Before I turn the call over to Brian, I would like to highlight the recent publication of the RMR Group's annual sustainability report. Which offers a comprehensive overview of our managers, commitment and progress in addressing sustainability. As we continue to work through challenges in the office market, we remain committed to enhancing OPI's corporate sustainability practices and advancing initiatives that benefit our tenants and communities. Links to the report and the supplemental reports specific to OPI's highlights are available on our website at opireit.com. Brian?

19m 23s

Thank you, Yael, and good morning. For the first quarter, we reported normalized FFO of $4,400,000 or $06 per share which came in $02 below our guidance range as a result of non cash amortization included in interest expense related to our debt exchanges. This compares to normalized FFO of $20,900,000 or $0.36 per share for the fourth quarter of twenty twenty four The decrease on a sequential quarter basis was driven by lower NOI a result of asset sales tenant vacancies and higher interest expense. Turning to our outlook for the second quarter of twenty twenty five, we normalized FFO to be between $0.9 and $0.11 per share for Q2. The increase sequentially from Q1 is primarily driven by higher NOI as a result of lower seasonal operating expenses and the seasonally stronger performance expected from our hotel in Washington DC. We project recurring G and A expense to be $5,000,000 for Q2 Our current estimated quarterly interest expense run rate is $53,000,000 consisting of $41,000,000 of cash interest expense and $12,000,000 of non cash amortization of financing costs. We expect same property cash basis NOI to decrease 10% to 12% as compared to the second quarter of twenty twenty four driven by tenant vacancies and an increase of free rent from recent leasing activity.

20m 45s

This NOI guidance does not include any potential changes to our same store portfolio. Turning to our investing activities. We spent $13,800,000 on expenditures during the first quarter. We are reducing our 2025 full year CapEx guidance from a total projected spend of $80,000,000 to approximately $75,000,000 comprised of $17,000,000 of building capital and $58,000,000 of leasing capital. During the first quarter, we sold three properties with 249,000 square feet for proceeds of $26,900,000 One of the properties sold was encumbered by our 2027 senior notes and the proceeds of $5,000,000 were used to pay down debt principal. At quarter end, we had three properties with a carrying value of $10,400,000 classified as held for sale. As of today, we have three properties under agreement for sale for $29,000,000 Turning to the balance sheet. In mid March, we completed the private debt exchange of $21,000,000 of our outstanding senior unsecured notes due 2026, 2027 and 02/1931 a weighted average interest rate of 3.1% for $14,000,000 of new 8% senior priority guaranteed notes due 02/1930. Our total liquidity today is $73,000,000 of cash. We are currently projecting cash from operations to be a use of $50,000,000 to $55,000,000 during the balance of 2025 including capital expenditures.

22m 15s

OPI's upcoming maturities consist of approximately $120,000,000 due in March 2026 under our senior secured notes due 2027 and $134,000,000 of senior unsecured notes due June 2026. Given our liquidity position, financial covenant constraints under our debt agreements, and debt principal repayments coming due in 2026, we continue to evaluate options to address these maturities with our financial advisor. Operator, that concludes our call. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Key Insights

OPI's portfolio as of 03/31/2025 consisted of 125 properties totaling 17.3 million square feet, with a same property occupancy rate of 85.4% and a weighted average remaining lease term of seven years; 60% of revenues come from investment grade tenants, with the U.S. Government as the largest tenant at 16.8% of annualized revenue.
The office sector remains challenged by work-from-home trends and macroeconomic uncertainty, resulting in negative net absorption, declining asking rents, and increased competition, particularly for OPI's older properties; annualized revenue declined 19% year-over-year to $405 million, and interest expense rose 50% to $53.4 million.
OPI executed 11 leases totaling 223,000 square feet in Q1 with a weighted average lease term of 10.3 years and a 13.5% roll-up in rent; notable leases include new and renewed long-term agreements in Omaha, Fremont, and Irving; leasing pipeline is nearly 2 million square feet, with one third potentially resulting in positive net absorption.
Dispositions in Q1 included three properties sold for $26.9 million; three additional vacant properties (76,000 square feet) are under agreement to sell for $28.9 million; no other properties are currently being marketed for sale, but further dispositions are being evaluated to mitigate occupancy risk and manage liquidity.
Q1 normalized FFO was $4.4 million ($0.06 per share), below guidance due to non-cash amortization; Q2 normalized FFO is projected at $0.09–$0.11 per share; same property cash NOI is expected to decrease 10–12% year-over-year in Q2; liquidity stands at $73 million, with $254 million in debt maturities due in 2026 and projected cash use from operations of $50–$55 million for the remainder of 2025.

Recent Transcripts

OPI's Q1 revenue fell 19% amid office market headwinds and rising debt pressure.

OPI addressed 2025 debt maturities, but faces declining revenue, occupancy, and liquidity pressures.

$428M (down from $513M)

Income Statement

Revenue

	2020	2021	2022	2023	2024
Revenue	$588M	$576M	$554M	$534M	$502M
Cost of Revenue	$65M	$72M	$58M	$173M	$62M
Gross Profit	$523M	$505M	$496M	$361M	$440M
Gross Profit %	89%	88%	90%	68%	88%
R&D Expenses	$0.014	-$0.0094	-$0.0042	$0	$0

2020

2021

2022

2023

2024

Revenue

$588M

$576M

$554M

$534M

$502M

Cost of Revenue

$65M

$72M

$58M

$173M

$62M

Gross Profit

$523M

$505M

$496M

$361M

$440M

Gross Profit %

89%

88%

90%

68%

88%

R&D Expenses

$0.014

-$0.0094

-$0.0042

Cash Flow

Net Income

	2020	2021	2022	2023	2024
Net Income	$6.7M	-$8.2M	-$6.1M	-$69M	-$136M
Dep. & Amort.	$251M	$237M	$217M	$200M	$183M
Def. Tax	-$3.3M	-$2.9M	-$2.9M	$0	$0
Stock Comp.	$3.3M	$2.9M	$2.9M	$0	$0
Chg. in WC	-$23M	-$7.7M	-$40M	-$13M	-$27M

2020

2021

2022

2023

2024

Net Income

$6.7M

-$8.2M

-$6.1M

-$69M

-$136M

Dep. & Amort.

$251M

$237M

$217M

$200M

$183M

Def. Tax

-$3.3M

-$2.9M

Stock Comp.

$3.3M

$2.9M

Chg. in WC

-$23M

-$7.7M

-$40M

-$13M

-$27M

Balance Sheet

Cash

	2020	2021	2022	2023	2024
Cash	$42M	$83M	$12M	$12M	$261M
ST Investments	$0	$0	$35M	$0	$0
Cash & ST Inv.	$42M	$83M	$12M	$12M	$261M
Receivables	$102M	$113M	$106M	$133M	$156M
Inventory	$75M	$27M	$2.5M	$0	$0

2020

2021

2022

2023

2024

Cash

$42M

$83M

$12M

$261M

ST Investments

$35M

Cash & ST Inv.

$42M

$83M

$12M

$261M

Receivables

$102M

$113M

$106M

$133M

$156M

Inventory

$75M

$27M

$2.5M

Go Deeper

Financial information provided by Financial Modeling Prep. Options data provided by Unusual Whales. Live transcripts provided by Quartr. Reported revenue and EPS data from Earnings powered by FinChat.io. All data is provided for informational purposes only, and is not intended for trading purposes or financial, investment, tax, legal, accounting or other advice.

Market Cap: $14M
IPO Date: 6/4/09
CEO: Ms. Yael Duffy
Fulltime Employees: 0
Sector: Real Estate
Industry: REIT - Office
Country: US
Exchange: NASDAQ Global Select

Peers

Hudson Pacific Properties, Inc.

$1.88

HPP

2.08%

Piedmont Office Realty Trust, Inc.

$6.52

PDM

1.09%

City Office REIT, Inc.

$4.74

CIO

0.21%

Kilroy Realty Corporation

$31.27

KRC

0.76%

Postal Realty Trust, Inc.

$13.14

PSTL

0.31%

Boston Properties, Inc.

$64.61

BXP

0.03%

SL Green Realty Corp.

$55.48

SLG

0.45%

Alexandria Real Estate Equities, Inc.

$67.83

ARE

1.14%

Cousins Properties Incorporated

$27.00

CUZ

1.05%

Highwoods Properties, Inc.

$28.73

HIW

0.93%

Brandywine Realty Trust

$4.10

BDN

1.2%

Corporate Office Properties Trust

$24.94

OFC

1.59%

City Office REIT, Inc.

$18.84

CIO-PA

1.57%

Franklin Street Properties Corp.

Watchlist

Earnings

Report Date

Apr 30, 2025

Reported Revenue

113.6M

Miss -1.03%

Avg 1d Change

12.04%

Report Period

Q1 2025

Reported EPS

0.06

Beat +111.11%

Implied Move 1d

452.41%

Transcript

11m 26s

12m 24s

14m 7s

16m

17m 52s

19m 23s

20m 45s

22m 15s

Key Insights

OPI's portfolio as of 03/31/2025 consisted of 125 properties totaling 17.3 million square feet, with a same property occupancy rate of 85.4% and a weighted average remaining lease term of seven years; 60% of revenues come from investment grade tenants, with the U.S. Government as the largest tenant at 16.8% of annualized revenue.
The office sector remains challenged by work-from-home trends and macroeconomic uncertainty, resulting in negative net absorption, declining asking rents, and increased competition, particularly for OPI's older properties; annualized revenue declined 19% year-over-year to $405 million, and interest expense rose 50% to $53.4 million.
OPI executed 11 leases totaling 223,000 square feet in Q1 with a weighted average lease term of 10.3 years and a 13.5% roll-up in rent; notable leases include new and renewed long-term agreements in Omaha, Fremont, and Irving; leasing pipeline is nearly 2 million square feet, with one third potentially resulting in positive net absorption.
Dispositions in Q1 included three properties sold for $26.9 million; three additional vacant properties (76,000 square feet) are under agreement to sell for $28.9 million; no other properties are currently being marketed for sale, but further dispositions are being evaluated to mitigate occupancy risk and manage liquidity.
Q1 normalized FFO was $4.4 million ($0.06 per share), below guidance due to non-cash amortization; Q2 normalized FFO is projected at $0.09–$0.11 per share; same property cash NOI is expected to decrease 10–12% year-over-year in Q2; liquidity stands at $73 million, with $254 million in debt maturities due in 2026 and projected cash use from operations of $50–$55 million for the remainder of 2025.

Earnings

Report Date

Reported Revenue

Avg 1d Change

Report Period

Reported EPS

Implied Move 1d

Transcript

Key Insights

Recent Transcripts

Income Statement

Cash Flow

Balance Sheet

Go Deeper

Related

Go Deeper

Recent Transcripts

Earnings

Report Date

Reported Revenue

Avg 1d Change

Report Period

Reported EPS

Implied Move 1d

Transcript

Key Insights