Office Properties Income Trust

OPI reported second-quarter 2025 normalized FFO of $9.4 million, or $0.13 per share, versus $4.4 million, or $0.06 per share in Q1 2025. The company said this was $0.02 above the high end of its guidance range, helped by lower-than-anticipated seasonal operating expenses and stronger performance at its hotel at 20 Mass Ave. As of June 30, 2025, the portfolio included 125 properties totaling 17.3 million square feet, with same-property occupancy of 85.2% and weighted average remaining lease term of 6.8 years. Annualized revenue was $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. For Q3 2025, management expects normalized FFO of $0.07 to $0.09 per share, recurring G&A of about $5 million, interest expense of about $52 million, and same-property cash basis NOI to decline 7% to 9% versus Q3 2024. For full-year cash needs, management said cash from operations is projected to be a use of $45 million to $55 million during the balance of 2025, including capital expenditures.

Yael Duffy emphasized that OPI’s financial performance has materially declined as office leasing challenges persist, and she framed the company’s actions as focused on preserving liquidity and managing through the pressure. She pointed to the dividend suspension, ongoing leasing efforts, and disposition review as steps to reduce costs and address financial commitments. Her tone was cautious and pragmatic, with clear emphasis on covenant constraints, debt maturities, and the difficulty of selling office properties in the current market.

Brian Donley highlighted that Q2 normalized FFO of $9.4 million, or $0.13 per share, exceeded guidance, mainly due to lower seasonal operating expenses. He guided Q3 normalized FFO to $0.07 to $0.09 per share, recurring G&A to about $5 million, and interest expense to a run rate of about $52 million, including $41 million of cash interest and $11 million of noncash amortization. He also said year-to-date CapEx was nearly $28 million, another $43 million is expected in the second half, liquidity stands at $90 million, and cash from operations is projected to be a use of $45 million to $55 million for the rest of 2025.

There was no analyst Q&A in the transcript, so management’s comments were limited to prepared remarks. The key issues raised were leasing weakness, expected non-renewals tied mainly to single-tenant properties, limited liquidity of $90 million, debt covenant restrictions that prevent refinancing or issuing new debt, and nearly $280 million of debt principal payments due in 2026. Management said it continues to work with a financial adviser to evaluate options for the maturities and to dispose of assets where possible.