Office Properties Income Trust Reports $45.9 Million Net Loss in Q1 2025

Office Properties Income Trust (OPI) reported a significant decline in financial performance for the first quarter of 2025, with a net loss of $45.9 million, or $0.66 per share, compared to a net loss of $5.2 million, or $0.11 per share, in the same period last year. The company’s rental income fell to $113.6 million, down 18.5% from $139.4 million in the prior year, primarily due to increased vacancies and lower rents from lease renewals. Total expenses decreased slightly to $101.9 million from $107.4 million, driven by lower depreciation and amortization costs, but were offset by higher interest expenses, which rose to $53.4 million from $35.5 million.

In terms of operational metrics, OPI's properties, which include 125 wholly owned locations across 29 states, reported an occupancy rate of 81.3% as of March 31, 2025, down from 85.6% a year earlier. The company entered into 11 new leases during the quarter, covering approximately 223,000 rentable square feet, with a weighted average lease term of 10.3 years. However, the average effective rental rate for new leases decreased by 3.5%, indicating challenges in maintaining rental income levels amid shifting market conditions.

Strategically, OPI has been active in managing its portfolio, selling three properties for a total of $26.9 million during the quarter, which were used to repay debt and enhance liquidity. The company is currently in various stages of marketing additional properties for sale, with agreements in place for three more properties expected to generate $28.9 million in sales. Despite these efforts, OPI faces substantial challenges, including a significant amount of debt maturing in the next 15 months and limited financing options, which have raised concerns about its ability to continue as a going concern.

Looking ahead, OPI's management has expressed uncertainty regarding future leasing activity and market conditions, particularly in light of ongoing economic pressures, including inflation and interest rate increases. The company is exploring various strategies to address its upcoming debt obligations, including potential asset sales and equity issuances. However, there is no assurance that these strategies will be successful, and the company has acknowledged substantial doubt about its ability to meet its financial commitments in the near term. As of April 30, 2025, OPI reported total available liquidity of $73.1 million, with upcoming obligations including lease payments and principal debt repayments totaling approximately $299 million over the next two years.