Office Properties Income Trust Reports $41.2 Million Net Loss in Q2 2025

Office Properties Income Trust (OPI) reported a significant decline in financial performance for the second quarter of 2025, with a net loss of $41.2 million, or $0.58 per share, compared to a net income of $76.2 million, or $1.56 per share, in the same period last year. Total rental income decreased by 7.4% to $114.5 million from $123.7 million, primarily due to increased vacancies and lower rents from lease renewals. For the first half of 2025, the company recorded a net loss of $87.1 million, or $1.24 per share, compared to a net income of $71.0 million, or $1.45 per share, in the prior year.

The company’s total assets decreased to $3.56 billion as of June 30, 2025, down from $3.82 billion at the end of 2024. This decline was attributed to a reduction in the value of real estate properties, which fell to $2.99 billion from $3.04 billion, alongside a decrease in cash and cash equivalents from $261.3 million to $78.2 million. Total liabilities also decreased to $2.50 billion from $2.67 billion, largely due to repayments of unsecured and secured debt.

In terms of operational developments, OPI's portfolio consisted of 125 properties with approximately 17.27 million rentable square feet, leased to 220 tenants. The U.S. government remained the largest tenant, contributing 17.1% of annualized rental income. The company entered into 15 leases for approximately 416,000 rentable square feet during the second quarter, with a weighted average lease term of 5.4 years. However, the overall occupancy rate dropped to 81.2% from 83.5% a year earlier, reflecting ongoing challenges in the office space market.

Strategically, OPI has been actively managing its debt obligations, having redeemed $171.6 million of senior unsecured notes due in 2025 and engaged in a senior note exchange to improve its capital structure. The company is also exploring asset sales to enhance liquidity, with three properties under agreement to sell for a total of $28.9 million. However, the company has expressed substantial doubt about its ability to continue as a going concern, citing limited financing options and the potential need for a reorganization in bankruptcy court if it cannot meet its upcoming debt obligations.

Looking ahead, OPI faces significant challenges due to shifts in office space utilization, including increased remote work and government budget constraints affecting demand. The company is focused on improving liquidity through potential asset sales and refinancing strategies, but the uncertain economic environment and rising interest rates may hinder its efforts to stabilize its financial position.