Office Properties Income Trust (OPI) | Investment Case

1. Company Snapshot

1.a. Company Description

OPI is a REIT focused on owning, operating and leasing properties primarily leased to single tenants and those with high credit quality characteristics such as government entities.OPI is managed by the operating subsidiary of The RMR Group Inc.(Nasdaq: RMR), an alternative asset management company that is headquartered in Newton, Massachusetts.

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1.b. Last Insights on OPI

Here is a 90-word analysis of the negative drivers behind Office Properties Income Trust's recent performance: Office Properties Income Trust's (OPI) recent performance was negatively driven by concerns over its occupancy rates and debt maturities. Despite a surprisingly good Q4 2024, investors were spooked by the company's conference call, which highlighted long-term issues. OPI's asset sales and debt redemption efforts, while positive, may be too little, too late. The company's high-yielding baby bonds, currently at 13.6%, reflect the market's risk perception. OPI's struggles to stabilize occupancy rates and manage its debt burden have created uncertainty, weighing on its performance.

1.c. Company Highlights

Last Price	0.2
Change Percentage	-16.98%
Open	0.24
Previous Close	0.24
Market Cap ( Millions)	15
Volume	11283053
Year High	2.06
Year Low	0.06
M A 50	0.28
M A 200	0.45

FCF Yield	6303.77%
Dividend Yield	134.23%
ROE	-25.56%
Debt / Equity	222.73%
Net Debt / EBIDTA	2702.48%
Price To Book	0.0
Price Earnings Ratio	-0.0
Price To FCF	0.02
Price To sales	0.0
EV / EBITDA	27.04

2. OPI's Q2 2025 Earnings: A Mixed Bag

OPI reported a normalized FFO of $9.4 million ($0.13 per share) for Q2 2025, beating guidance due to lower operating expenses. This represents a significant improvement from $4.4 million ($0.06 per share) in the previous quarter, driven by higher NOI from reduced expenses and strong performance at a Washington, D.C. hotel. The actual EPS of $0.13 far exceeded estimates of -$0.51, indicating a positive surprise.

Publication Date: Sep -02

                                    📋 Highlights
                                    Q2 2025 FFO Beat Guidance:
                                                Normalized FFO rose to $9.4M ($0.13/share), up 22% from Q1’s $4.4M ($0.06/share) due to lower operating expenses and strong hotel performance.
Portfolio Performance:
                                                125 properties (17.3M sq ft) with 85.2% occupancy, but annualized revenue fell 18% YoY to $398M, reflecting leasing challenges.
Dividend Suspension:
                                                Cash preservation led to dividend halt amid $280M debt maturity in 2026 and $90M liquidity, signaling financial constraints.
Positive Leasing Activity:
                                                416K sq ft leased at 6.4% higher rates, with renewals driving two-thirds of transactions in Q2.
Challenging Dispositions:
                                                Sold one asset for $2.2M and has three pending sales for $28.9M, but market conditions remain tough with declining valuations.

                                

Portfolio Overview

The company's portfolio consists of 125 properties totaling 17.3 million square feet, with a weighted average lease term of 6.8 years and 85.2% occupancy. Annualized revenue stands at $398 million, down 18% year-over-year due to leasing challenges. Interest expense rose 37% to $53 million, highlighting the company's financial constraints.

Leasing Activity and Dispositions

Leasing activity was modest, with 15 leases totaling 416,000 square feet at 6.4% higher rental rates than prior terms. Renewals accounted for two-thirds of leasing activity, indicating a stable tenant base. Dispositions remain challenging due to declining valuations and limited buyer interest, with one property sold for $2.2 million and three properties under agreement to sell for $28.9 million.

Guidance and Outlook

OPI projects third-quarter 2025 normalized FFO to be $0.07 to $0.09 per share, reflecting lower rental income, higher operating expenses, and seasonal weakness in the hotel. The company expects $43 million in CapEx for the second half of 2025 and projects cash from operations to be a use of $45 million to $55 million for the remainder of 2025, including capital expenditures.

Valuation Metrics

With a P/S Ratio of 0.03 and an EV/EBITDA of 27.21, the market appears to be pricing in a challenging operating environment for OPI. The Dividend Yield, which was previously attractive at 14.06%, is now irrelevant as the company has suspended its dividend to preserve cash.

Financial Health

OPI's financial health is a concern, with $280 million in debt principal due in 2026 and limited liquidity of $90 million. The Net Debt / EBITDA ratio stands at 27.02, indicating a high level of indebtedness. The company's decision to suspend its dividend is a prudent measure to conserve cash, but it may not be enough to address its financial constraints.

3. NewsRoom

Independence Realty Trust (NYSE:IRT) and Office Properties Income Trust (NASDAQ:OPI) Critical Analysis

Dec -03

Source: defenseworld.net

Office Properties Income Trust Enters into Restructuring Support Agreement with Noteholders to Reduce Debt and Strengthen Balance Sheet

Oct -31

Source: businesswire.com

Office Properties Income Trust (OPI) Q2 2025 Earnings Call Transcript

Aug -01

Source: seekingalpha.com

Office Properties Income Trust Announces Second Quarter 2025 Results

Jul -30

Source: businesswire.com

Office Properties Income Trust Suspends Quarterly Distribution to Preserve Cash

Jul -10

Source: businesswire.com

Office Properties Income Trust Second Quarter 2025 Conference Call Scheduled for Thursday, July 31st

Jul -02

Source: businesswire.com

The State Of REITs: June 2025 Edition

Jun -23

Source: seekingalpha.com

Office Properties Income Trust Elects Timothy Pohl to Board of Trustees

Jun -12

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.82%)

6. Segments

Comparable Properties

Expected Growth: 4.83%

Strong demand for office spaces, particularly in urban areas, driven by growing industries such as tech and healthcare. Limited supply and increasing rents in prime locations, coupled with Office Properties Income Trust's strategic acquisitions and redevelopment initiatives, contribute to the 4.83% growth.

Non-Comparable Properties

Expected Growth: 4.65%

The 4.65% growth of Non-Comparable Properties from Office Properties Income Trust is driven by increasing demand for flexible workspaces, expansion into high-growth markets, and strategic acquisitions. Additionally, the trust's focus on amenity-rich properties and strong property management capabilities have contributed to higher occupancy rates and rental income growth.

7. Detailed Products

Office Buildings

Office Properties Income Trust owns and operates a portfolio of high-quality office buildings, providing tenants with modern and efficient workspaces.

Industrial Properties

The company's industrial properties offer flexible and functional spaces for manufacturing, logistics, and distribution operations.

Retail Spaces

Office Properties Income Trust's retail properties provide prime locations for retailers, restaurants, and service providers.

Mixed-Use Developments

The company's mixed-use developments combine office, retail, and residential spaces, creating vibrant and dynamic communities.

8. Office Properties Income Trust's Porter Forces

Forces Ranking

Threat Of Substitutes

Office Properties Income Trust operates in a niche market with limited substitutes, reducing the threat of substitutes.

Bargaining Power Of Customers

Office Properties Income Trust has a diversified tenant base, reducing the bargaining power of individual customers.

Bargaining Power Of Suppliers

Office Properties Income Trust has a strong negotiating position with suppliers due to its large scale of operations.

Threat Of New Entrants

The high barriers to entry in the office property market, including significant capital requirements, reduce the threat of new entrants.

Intensity Of Rivalry

The office property market is competitive, but Office Properties Income Trust's strong brand and diversified portfolio mitigate the intensity of rivalry.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	67.30%
Debt Cost	4.25%
Equity Weight	32.70%
Equity Cost	9.62%
WACC	6.01%
Leverage	205.81%

11. Quality Control: Office Properties Income Trust passed 1 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Piedmont Office Realty Trust

A-Score: 5.4/10

Value: 7.5

Growth: 2.2

Quality: 4.9

Yield: 8.0

Momentum: 3.5

Volatility: 6.0

1-Year Total Return ->

Brandywine Realty

A-Score: 5.0/10

Value: 6.8

Growth: 1.8

Quality: 4.5

Yield: 10.0

Momentum: 1.5

Volatility: 5.7

1-Year Total Return ->

New York City REIT

A-Score: 4.4/10

Value: 9.4

Growth: 3.3

Quality: 2.6

Yield: 0.0

Momentum: 8.5

Volatility: 2.3

1-Year Total Return ->

Empire State Realty OP

A-Score: 4.0/10

Value: 5.7

Growth: 4.4

Quality: 4.4

Yield: 3.0

Momentum: 2.5

Volatility: 4.3

1-Year Total Return ->

Office Properties Income Trust

A-Score: 3.8/10

Value: 8.2

Growth: 0.8

Quality: 4.0

Yield: 10.0

Momentum: 0.0

Volatility: 0.0

1-Year Total Return ->

Creative Media & Community Trust

A-Score: 2.2/10

Value: 8.5

Growth: 0.8

Quality: 1.8

Yield: 2.0

Momentum: 0.0

Volatility: 0.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-1.51%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

6.01%

Office Properties Income Trust - US67623C1099

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on OPI

1.c. Company Highlights

More Volatile

Weak Momentum

Cheaper

Earnings Miss

Revenues Beats

Earnings Beats

Lower Growth

Revenues Miss

2. OPI's Q2 2025 Earnings: A Mixed Bag

Portfolio Overview

Leasing Activity and Dispositions

Guidance and Outlook

Valuation Metrics

Financial Health

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.82%)

6. Segments

Comparable Properties

Expected Growth: 4.83%

Non-Comparable Properties

Expected Growth: 4.65%

7. Detailed Products

Office Buildings

Industrial Properties

Retail Spaces

Mixed-Use Developments

8. Office Properties Income Trust's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Office Properties Income Trust passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

0.2$

Current Price

0.2$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA