Office Properties Income Trust

Reported second-quarter 2025 normalized FFO was $9.4 million, or $0.13 per share, versus $4.4 million, or $0.06 per share, in Q1 2025; the result was $0.02 above the high end of guidance due to lower-than-anticipated seasonal operating expenses. Yael Duffy said annualized revenue is $398 million, down $85 million, or nearly 18%, year over year, and second-quarter interest expense was $53 million, up $14 million, or 37%, year over year. Same-property occupancy ended the quarter at 85.2%. For Q3 2025, management expects normalized FFO of $0.07 to $0.09 per share, recurring G&A of about $5 million, and interest expense of about $52 million, including $41 million of cash interest and $11 million of noncash amortization of financing costs. Same-property cash basis NOI is expected to decline 7% to 9% versus Q3 2024, and full-year/balance-of-2025 cash from operations is projected to be a use of $45 million to $55 million, including capital expenditures.

Yael Duffy emphasized that the office sector’s leasing challenges have materially hurt OPI’s financial performance and said the company is focused on leasing and operating properties while also looking for ways to address financial commitments and reduce costs. She pointed to the dividend suspension as a cash-preservation step and highlighted that most near-term expirations are tied to single-tenant assets, which increases renewal risk. Her tone was cautious and defensive, with clear emphasis on preserving liquidity and managing occupancy risk.

Brian Donley said Q2 normalized FFO improved sequentially to $9.4 million, or $0.13 per share, mainly because of lower operating expenses and stronger performance from the hotel at 20 Mass Ave. He guided Q3 normalized FFO to $0.07 to $0.09 per share, recurring G&A of about $5 million, and a roughly $52 million interest expense run rate split between $41 million of cash interest and $11 million of noncash amortization. He also noted $28 million of capital expenditures year to date, expects about $43 million more in the second half of 2025, and said total liquidity is $90 million of cash while the company continues evaluating options with its financial adviser to address 2026 debt maturities.

This was a prepared-remarks call with no live analyst Q&A. The main issues management addressed proactively were covenant constraints, limited refinancing flexibility, the expectation that $280 million of principal comes due in 2026, and the need to use asset sales and other options to address maturities. They also discussed disposition difficulty, saying office buyer demand is limited and transaction timelines are lengthening, which complicates efforts to raise cash and reduce risk.