Form 10-Q - Quarterly report [Sections 13 or 15(d)]

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-34364

OFFICE PROPERTIES INCOME TRUST

(Exact Name of Registrant as Specified in Its Charter)


Maryland						26-4273474
(State or Other Jurisdiction of Incorporation or Organization)						(IRS Employer Identification No.)

Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458-1634

(Address of Principal Executive Offices) (Zip Code)

617-219-1440

(Registrant’s Telephone Number, Including Area Code)

Securities Registered Pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name Of Each Exchange On Which Registered

Common Shares of Beneficial Interest

OPI

The Nasdaq Stock Market LLC

6.375% Senior Notes due 2050

OPINL

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of registrant’s common shares of beneficial interest, $.01 par value per share, outstanding as of July 25, 2023: 48,586,735

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OFFICE PROPERTIES INCOME TRUST

FORM 10-Q

June 30, 2023

INDEX


		Page
PART I.	Financial Information

Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Balance Sheets — June 30, 2023 and December 31, 2022	3

	Condensed Consolidated Statements of Comprehensive Income (Loss) — Three and Six Months Ended June 30, 2023 and 2022	4

	Condensed Consolidated Statements of Shareholders’ Equity — Three and Six Months Ended June 30, 2023 and 2022	5

	Condensed Consolidated Statements of Cash Flows — Six Months Ended June 30, 2023 and 2022	6

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34

Item 4.	Controls and Procedures	36

	Warning Concerning Forward-Looking Statements	37

	Statement Concerning Limited Liability	38

PART II.	Other Information

Item 1.	Legal Proceedings	38

Item 1A.	Risk Factors	39

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45

Item 6.	Exhibits	45

	Signatures	47

References in this Quarterly Report on Form 10-Q to “the Company”, “OPI”, “we”, “us” or “our” include Office Properties Income Trust and its consolidated subsidiaries unless otherwise expressly stated or the context indicates otherwise.

Table of Contents

PART I. Financial Information

Item 1. Financial Statements

OFFICE PROPERTIES INCOME TRUST

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)

(unaudited)



	June 30, 2023		December 31, 2022
ASSETS
Real estate properties:
Land	$	809,590	$	821,238
Buildings and improvements	3,225,963		3,114,836
Total real estate properties, gross	4,035,553		3,936,074
Accumulated depreciation	(605,789)		(561,458)
Total real estate properties, net	3,429,764		3,374,616
Assets of properties held for sale	11,731		2,516
Investments in unconsolidated joint ventures	37,367		35,129
Acquired real estate leases, net	318,975		369,333
Cash and cash equivalents	25,212		12,249
Restricted cash	610		—
Rents receivable	110,599		105,639

Deferred leasing costs, net	82,691		73,098
Other assets, net	10,619		7,397
Total assets	$	4,027,568	$	3,979,977

LIABILITIES AND SHAREHOLDERS’ EQUITY
Unsecured revolving credit facility	$	240,000	$	195,000
Senior unsecured notes, net	2,191,676		2,187,875
Mortgage notes payable, net	106,365		49,917
Liabilities of properties held for sale	28		73
Accounts payable and other liabilities	134,425		140,151
Due to related persons	6,232		6,469
Assumed real estate lease obligations, net	12,887		14,157
Total liabilities	2,691,613		2,593,642

Commitments and contingencies

Shareholders’ equity:
Common shares of beneficial interest, $.01 par value: 200,000,000 shares authorized, 48,587,650 and 48,565,644 shares issued and outstanding, respectively	486		486
Additional paid in capital	2,620,691		2,619,532
Cumulative net income	156,918		169,606

Cumulative common distributions	(1,442,140)		(1,403,289)
Total shareholders’ equity	1,335,955		1,386,335
Total liabilities and shareholders’ equity	$	4,027,568	$	3,979,977

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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OFFICE PROPERTIES INCOME TRUST

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(amounts in thousands, except per share data)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022

Rental income	$	133,997	$	141,316	$	266,419	$	288,670

Expenses:
Real estate taxes	15,901		16,583		31,234		33,228
Utility expenses	5,742		5,820		13,002		12,685
Other operating expenses	26,634		26,497		52,691		53,860
Depreciation and amortization	51,601		57,536		103,293		118,005
Loss on impairment of real estate	—		4,773		—		21,820
Acquisition and transaction related costs	11,181		224		14,399		224
General and administrative	5,785		7,083		11,710		12,789
Total expenses	116,844		118,516		226,329		252,611

Gain (loss) on sale of real estate	(2,305)		(11,637)		243		(9,488)


Interest and other income	337		16		501		17
Interest expense (including net amortization of debt premiums, discounts and issuance costs of $2,327, $2,366, $4,532 and $4,770, respectively)	(26,525)		(26,515)		(51,756)		(53,954)
Loss on early extinguishment of debt	—		(77)		—		(77)
Loss before income tax (expense) benefit and equity in net losses of investees	(11,340)		(15,413)		(10,922)		(27,443)
Income tax (expense) benefit	(211)		190		(241)		(341)
Equity in net losses of investees	(691)		(833)		(1,525)		(1,679)



Net loss	$	(12,242)	$	(16,056)	$	(12,688)	$	(29,463)














Weighted average common shares outstanding (basic and diluted)	48,354		48,249		48,345		48,246


Per common share amounts (basic and diluted):



Net loss	$	(0.25)	$	(0.33)	$	(0.27)	$	(0.61)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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OFFICE PROPERTIES INCOME TRUST

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(dollars in thousands)

(unaudited)


	Number of Shares	Common Shares		Additional Paid In Capital		Cumulative Net Income		Cumulative Common Distributions		Total Shareholders’ Equity
Balance at December 31, 2022	48,565,644	$	486	$	2,619,532	$	169,606	$	(1,403,289)	$	1,386,335
Share grants	—	—		477		—		—		477
Share forfeitures and repurchases	(1,935)	—		(15)		—		—		(15)
Net loss	—	—		—		(446)		—		(446)
Distributions to common shareholders	—	—		—		—		(26,710)		(26,710)
Balance at March 31, 2023	48,563,709	486		2,619,994		169,160		(1,429,999)		1,359,641
Share grants	31,500	—		744		—		—		744
Share forfeitures and repurchases	(7,559)	—		(47)		—		—		(47)
Net loss	—	—		—		(12,242)		—		(12,242)
Distributions to common shareholders	—	—		—		—		(12,141)		(12,141)
Balance at June 30, 2023	48,587,650	$	486	$	2,620,691	$	156,918	$	(1,442,140)	$	1,335,955



Balance at December 31, 2021	48,425,665	$	484	$	2,617,169	$	175,715	$	(1,296,659)	$	1,496,709
Share grants	—	—		415		—		—		415
Share forfeitures	(400)	—		(1)		—		—		(1)
Net loss	—	—		—		(13,407)		—		(13,407)
Distributions to common shareholders	—	—		—		—		(26,634)		(26,634)
Balance at March 31, 2022	48,425,265	484		2,617,583		162,308		(1,323,293)		1,457,082
Share grants	31,500	1		1,078		—		—		1,079
Share forfeitures and repurchases	(1,690)	—		(21)		—		—		(21)
Net loss	—	—		—		(16,056)		—		(16,056)
Distributions to common shareholders	—	—		—		—		(26,634)		(26,634)
Balance at June 30, 2022	48,455,075	$	485	$	2,618,640	$	146,252	$	(1,349,927)	$	1,415,450

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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OFFICE PROPERTIES INCOME TRUST

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(unaudited)


	Six Months Ended June 30,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(12,688)	$	(29,463)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	50,459		49,455
Net amortization of debt premiums, discounts and issuance costs	4,532		4,770
Amortization of acquired real estate leases and assumed real estate lease obligations, net	48,581		65,691
Amortization of deferred leasing costs	4,739		4,096
(Gain) loss on sale of real estate	(243)		9,488
Loss on impairment of real estate	—		21,820
Loss on early extinguishment of debt	—		77

Straight line rental income	(8,429)		(5,461)
Other non-cash expenses, net	673		943


Equity in net losses of investees	1,525		1,679





Change in assets and liabilities:


Rents receivable	3,440		6,770
Deferred leasing costs	(13,106)		(15,194)
Other assets	3,234		4,821
Accounts payable and other liabilities	5,748		(10,460)
Due to related persons	(237)		(119)
Net cash provided by operating activities	88,228		108,913

CASH FLOWS FROM INVESTING ACTIVITIES:

Real estate improvements	(138,724)		(89,144)

Distributions in excess of earnings from unconsolidated joint ventures	—		51
Contributions to unconsolidated joint ventures	(3,763)		(2,202)
Proceeds from sale of properties, net	12,527		74,183



Net cash used in investing activities	(129,960)		(17,112)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of mortgage notes payable	(50,000)		(25,283)
Proceeds from issuance of mortgage notes payable	108,120		—
Repayment of senior unsecured notes	—		(300,000)



Borrowings on unsecured revolving credit facility	205,000		230,000
Repayments on unsecured revolving credit facility	(160,000)		—
Payment of debt issuance costs	(8,907)		—
Repurchase of common shares	(57)		(16)


Distributions to common shareholders	(38,851)		(53,268)
Net cash provided by (used in) financing activities	55,305		(148,567)

Increase (decrease) in cash, cash equivalents and restricted cash	13,573		(56,766)
Cash, cash equivalents and restricted cash at beginning of period	12,249		84,515
Cash, cash equivalents and restricted cash at end of period	$	25,822	$	27,749

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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OFFICE PROPERTIES INCOME TRUST

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(dollars in thousands)

(unaudited)


	Six Months Ended June 30,
	2023		2022
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid	$	51,134	$	56,490
Income taxes paid	$	339	$	283

NON-CASH INVESTING ACTIVITIES:
Real estate improvements accrued, not paid	$	30,852	$	25,706


Capitalized interest	$	4,732	$	1,600

SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH:

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows:


	As of June 30,
	2023		2022
Cash and cash equivalents	$	25,212	$	26,006
Restricted cash (1)	610		1,743
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows	$	25,822	$	27,749

(1)Restricted cash consists of amounts escrowed for future real estate taxes, insurance, leasing costs, capital expenditures and debt service, as required by certain of our mortgage debts.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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OFFICE PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

(unaudited)

Note 1. Basis of Presentation

The accompanying condensed consolidated financial statements of Office Properties Income Trust and its subsidiaries, or OPI, we, us or our, are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2022, or our 2022 Annual Report. In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair statement of results for the interim period have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.

The preparation of these financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the condensed consolidated financial statements include purchase price allocations, useful lives of fixed assets and assessment of impairment of real estate and the related intangibles.

Pending Merger with Diversified Healthcare Trust

On April 11, 2023, we and Diversified Healthcare Trust, or DHC, entered into an Agreement and Plan of Merger, or the Merger Agreement, pursuant to which, on the terms and subject to the satisfaction or waiver of the conditions thereof, DHC will be merged with and into us, with us continuing as the surviving entity in the merger, or the Merger.

Pursuant to the terms and subject to the conditions and limitations set forth in the Merger Agreement, at the date and time the Merger becomes effective, or the Effective Time, each common share of beneficial interest, $0.01 par value per share, of DHC, or the DHC Common Shares, issued and outstanding as of immediately prior to the Effective Time will be automatically converted into the right to receive 0.147 (such ratio, the Exchange Ratio) of our common shares of beneficial interest, $0.01 par value per share, or our common shares, subject to adjustment for certain reclassifications, distributions, recapitalizations or similar transactions and other exceptional distributions as described in the Merger Agreement, with cash paid in lieu of fractional shares. Other than as provided in the Merger Agreement, the Exchange Ratio is fixed and will not be adjusted to reflect changes in the market price of our common shares or the DHC Common Shares prior to the Effective Time. Our common shares issued and outstanding immediately prior to the Effective Time will remain issued and outstanding common shares of beneficial ownership of the surviving entity following the Merger. In connection with the Merger, we expect to change our name to “Diversified Properties Trust” and, following the Effective Time, will change our ticker symbol to “DPT.”

The transactions contemplated by the Merger Agreement and the terms thereof were evaluated, negotiated and recommended to our Board of Trustees, or our Board, by a special committee of our Board, or the OPI Special Committee, and to DHC’s board of trustees, or the DHC Board, by a special committee of DHC’s Board, or the DHC Special Committee, each consisting of disinterested, independent trustees of us and DHC, respectively. Following the recommendations of the OPI Special Committee and the DHC Special Committee, our Board and the DHC Board each approved the Merger Agreement and the transactions contemplated thereby and resolved to recommend that the OPI and DHC shareholders, respectively, vote in favor of approval of the Merger and the transactions contemplated thereby. Our shareholders will be asked to vote on the approval of the Merger and related matters, including the issuance of our common shares in the Merger, at a special meeting of our shareholders.

The consummation of the Merger is subject to the satisfaction or waiver of certain closing conditions, including, among others: (1) the approval of the Merger by the affirmative vote of at least a majority of all the votes entitled to be cast by holders of outstanding DHC Common Shares at the meeting held for that purpose; (2) the approval of the Merger by the affirmative vote of at least a majority of all the votes entitled to be cast by holders of our outstanding common shares at the meeting held for that purpose; (3) the approval of the issuance of our common shares to be issued in the Merger, or the Share Issuance, by the affirmative vote of at least a majority of all votes cast by holders of our outstanding common shares at the meeting held for that purpose; (4) the absence of any statute, rule or regulation by any governmental entity of competent jurisdiction or any temporary, preliminary or permanent judgment, order or decree by any court of competent jurisdiction which would prohibit or make illegal or prevent the consummation of the Merger or any of the transactions contemplated by the Merger Agreement; (5)

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OFFICE PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

(unaudited)

the effectiveness of the registration statement on Form S-4, as amended, or the Form S-4, filed by us with the Securities and Exchange Commission, or the SEC, in connection with the Share Issuance; (6) the approval (subject to notice of issuance) of The Nasdaq Stock Market LLC, or Nasdaq, of the listing of our common shares to be issued in the Merger; (7) the replacement of our existing revolving credit agreement, on terms that, among other things, would not be reasonably likely to be materially adverse to the business, operations or financial condition of us after giving effect to the Merger and would not delay or prevent the consummation of the Merger; (8) the receipt of certain tax opinions by us and DHC; and (9) the other party’s representations and warranties being accurate (subject to certain customary materiality exceptions) and the other party having performed or complied in all material respects with its agreements and covenants in the Merger Agreement.

The Merger Agreement contains certain customary representations, warranties and covenants, including covenants providing that we and DHC will use reasonable best efforts to conduct our and its respective businesses in all material respects in the ordinary course during the period between the execution of the Merger Agreement and the earlier of the Effective Time or the termination of the Merger Agreement, and to refrain from taking certain types of actions without the other party’s consent during the period between the execution of the Merger Agreement and the earlier of the Effective Time or the termination of the Merger Agreement, subject in each case to specified exceptions.

In connection with the execution of the Merger Agreement, we entered into a commitment letter, dated as of April 11, 2023, with JPMorgan Chase Bank, N.A., or JPM, pursuant to which JPM committed to provide, subject to the terms and conditions of the commitment letter, a senior secured bridge facility to us in an aggregate principal amount of $368,000. As of June 30, 2023, we have issued four mortgage notes with an aggregate principal balance of $108,120 secured by properties that previously collateralized the senior secured bridge facility, and as a result, we subsequently amended the commitment letter to reduce the principal amount of the senior secured bridge facility to $259,880. For more information regarding our mortgage notes, see Note 6.

Note 2. Per Common Share Amounts

We calculate basic earnings per common share using the two class method. We calculate diluted earnings per share using the more dilutive of the two class method or the treasury stock method. Unvested share awards and other potentially dilutive common shares, together with the related impact on earnings, are considered when calculating diluted earnings per share. The calculation of basic and diluted earnings per share is as follows (amounts in thousands, except per share data):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Numerators:
Net loss	$	(12,242)	$	(16,056)	$	(12,688)	$	(29,463)
Income attributable to unvested participating securities	(56)		(100)		(182)		(200)
Net loss used in calculating earnings per share	$	(12,298)	$	(16,156)	$	(12,870)	$	(29,663)

Denominators:
Weighted average common shares outstanding - basic and diluted	48,354		48,249		48,345		48,246



Net loss per common share - basic and diluted	$	(0.25)	$	(0.33)	$	(0.27)	$	(0.61)

Note 3. Real Estate Properties

As of June 30, 2023, our wholly owned properties were comprised of 155 properties containing approximately 20,784,000 rentable square feet, with an undepreciated carrying value of $4,050,183, including $14,630 classified as held for sale. We also had noncontrolling ownership interests of 51% and 50% in two unconsolidated joint ventures that own three properties containing approximately 444,000 rentable square feet. We generally lease space at our properties on a gross lease, modified gross lease or net lease basis pursuant to fixed term contracts expiring between 2023 and 2053. Some of our leases generally require us to pay all or some property operating expenses and to provide all or most property management services. During the three months ended June 30, 2023, we entered into 23 leases for approximately 713,000 rentable square feet for a weighted (by rentable square feet) average lease term of 10.3 years and we made commitments of $40,638 for leasing related costs. During the six months ended June 30, 2023, we entered into 39 leases for approximately 916,000 rentable square feet for a weighted

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OFFICE PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

(unaudited)

(by rentable square feet) average lease term of 9.5 years and we made commitments for approximately $49,385 of leasing related costs. As of June 30, 2023, we had estimated unspent leasing related obligations of $151,798.

We regularly evaluate whether events or changes in circumstances have occurred that could indicate an impairment in the value of long lived assets. Impairment indicators may include declining tenant occupancy, lack of progress releasing vacant space, tenant bankruptcies, low long term prospects for improvement in property performance, weak or declining tenant profitability, cash flow or liquidity, our decision to dispose of an asset before the end of its estimated useful life and legislative, market or industry changes that could permanently reduce the value of a property. If there is an indication that the carrying value of an asset is not recoverable, we estimate the projected undiscounted cash flows to determine if an impairment loss should be recognized. The future net undiscounted cash flows are subjective and are based in part on assumptions regarding hold periods, market rents and terminal capitalization rates. We determine the amount of any impairment loss by comparing the historical carrying value to estimated fair value. We estimate fair value through an evaluation of recent financial performance and projected discounted cash flows using standard industry valuation techniques. In addition to consideration of impairment upon the events or changes in circumstances described above, we regularly evaluate the remaining useful lives of our long lived assets. If we change our estimate of the remaining useful lives, we allocate the carrying value of the affected assets over their revised remaining useful lives.

Disposition Activities

During the six months ended June 30, 2023, we sold five properties containing approximately 296,000 rentable square feet for an aggregate sales price of $13,075, excluding closing costs. The sales of these properties, as presented in the table below, do not represent significant dispositions individually or in the aggregate, nor do they represent a strategic shift in our business. As a result, the results of operations of these properties are included in continuing operations through the date of sale in our condensed consolidated statements of comprehensive income (loss).


Date of Sale	Number of Properties	Location	Rentable Square Feet	Gross Sales Price(1)		Gain (Loss) on Sale of Real Estate
January 2023	3	Richmond, VA	89,000	$	5,350	$	2,548
April 2023	1	Phoenix, AZ	107,000	4,900		511
June 2023	1	Vernon Hills, IL	100,000	2,825		(2,816)
	5		296,000	$	13,075	$	243

(1)Gross sales price is the gross contract price, excluding closing costs.

As of June 30, 2023, we had two properties classified as held for sale in our condensed consolidated balance sheet. As of July 25, 2023, we have entered into an agreement to sell one of the properties classified as held for sale containing approximately 80,000 rentable square feet for a sales price of $10,500, excluding closing costs. This pending sale is subject to conditions, and accordingly, we cannot be sure that we will complete this sale or that this sale will not be delayed or the terms will not change.

Unconsolidated Joint Ventures

We own interests in two joint ventures that own three properties. We account for these investments under the equity method of accounting. As of June 30, 2023 and December 31, 2022, our investments in unconsolidated joint ventures consisted of the following:


		OPI Carrying Value of Investments at
Joint Venture	OPI Ownership	June 30, 2023		December 31, 2022		Number of Properties	Location	Rentable Square Feet
Prosperity Metro Plaza	51%	$	18,810	$	19,237	2	Fairfax, VA	329,000
1750 H Street, NW	50%	18,557		15,892		1	Washington, D.C.	115,000
Total		$	37,367	$	35,129	3		444,000

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OFFICE PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

(unaudited)

The following table provides a summary of the mortgage debt of our two unconsolidated joint ventures:


Joint Venture	Interest Rate (1)	Maturity Date	Principal Balance at June 30, 2023 and December 31, 2022 (2)
Prosperity Metro Plaza	4.09%	12/1/2029	$	50,000
1750 H Street, NW (3)	3.69%	8/1/2027	32,000
Weighted Average / Total	3.93%		$	82,000

(1)Includes the effect of mark to market purchase accounting.

(2)Reflects the entire balance of the debt secured by the properties and is not adjusted to reflect the interests in the joint ventures we do not own. None of the debt is recourse to us.

(3)In July 2023, the maturity date of this mortgage loan was extended by three years at the same interest rate.

At June 30, 2023, the aggregate unamortized basis difference of our two unconsolidated joint ventures of $6,245 was primarily attributable to the difference between the amount we paid to purchase our interest in these joint ventures, including transaction costs, and the historical carrying value of the net assets of these joint ventures. This difference is being amortized over the remaining useful life of the related properties and the resulting amortization expense is included in equity in net losses of investees in our condensed consolidated statements of comprehensive income (loss).

Note 4. Leases

Our leases provide for base rent payments and in addition may include variable payments. Rental income from operating leases, including any payments derived by index or market-based indices, is recognized on a straight line basis over the lease term when we have determined that the collectability of substantially all of the lease payments is probable. Some of our leases have options to extend or terminate the lease exercisable at the option of our tenants, which are considered when determining the lease term. Allowances for bad debts are recognized as a direct reduction of rental income. In certain circumstances, some leases provide the tenant with the right to terminate if the legislature or other funding authority does not appropriate the funding necessary for the tenant to meet its lease obligations; we have determined the fixed non-cancelable lease term of these leases to be the full term of the lease because we believe the occurrence of early terminations to be a remote contingency based on both our historical experience and our assessments of the likelihood of lease cancellation on a separate lease basis.

We increased rental income to record revenue on a straight line basis by $4,256 and $2,775 for the three months ended June 30, 2023 and 2022, respectively, and $8,429 and $5,461 for the six months ended June 30, 2023 and 2022, respectively. Rents receivable, excluding properties classified as held for sale, included $94,705 and $86,305 of straight line rent receivables at June 30, 2023 and December 31, 2022, respectively.

We do not include in our measurement of our lease receivables certain variable payments, including payments determined by changes in the index or market-based indices after the inception of the lease, certain tenant reimbursements and other income until the specific events that trigger the variable payments have occurred. Such payments totaled $22,190 and $43,560 for the three and six months ended June 30, 2023, respectively, of which tenant reimbursements totaled $20,853 and $40,919, respectively. For the three and six months ended June 30, 2022, such payments totaled $22,101 and $44,637, respectively, of which tenant reimbursements totaled $21,009 and $42,484, respectively.

Note 5. Concentration

Tenant and Credit Concentration

We define annualized rental income as the annualized contractual base rents from our tenants pursuant to our lease agreements as of the measurement date, plus straight line rent adjustments and estimated recurring expense reimbursements to be paid to us, and excluding lease value amortization. As of June 30, 2023 and 2022, the U.S. government and certain state and other government tenants combined were responsible for approximately 28.5% and 28.4%, respectively, of our annualized rental income. The U.S. government is our largest tenant by annualized rental income and represented approximately 19.6% and 18.5% of our annualized rental income as of June 30, 2023 and 2022, respectively.

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OFFICE PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

(unaudited)

Geographic Concentration

At June 30, 2023, our 155 wholly owned properties were located in 30 states and the District of Columbia. Properties located in California, Virginia, Illinois, the District of Columbia and Georgia were responsible for approximately 11.9%, 11.1%, 10.7%, 10.3% and 9.2% of our annualized rental income as of June 30, 2023, respectively.

Note 6. Indebtedness

Our principal debt obligations at June 30, 2023 were: (1) $240,000 of outstanding borrowings under our $750,000 unsecured revolving credit facility; (2) $2,212,000 aggregate outstanding principal amount of senior unsecured notes; and (3) $108,120 aggregate outstanding principal amount of mortgage notes.

Our $750,000 revolving credit facility is governed by a credit agreement, or our credit agreement, with a syndicate of institutional lenders that includes a feature under which the maximum aggregate borrowing availability may be increased to up to $1,950,000 in certain circumstances. Our revolving credit facility is available for general business purposes, including acquisitions. In June 2023, we exercised our option to extend the maturity date of our revolving credit facility by six months to January 31, 2024 and paid an extension fee of $469. We can borrow, repay and reborrow funds available under our revolving credit facility until maturity and no principal repayment is due until maturity.

In March 2023, we amended our credit agreement to, among other things, replace LIBOR with the secured overnight financing rate, or SOFR, as the benchmark interest rate for calculating interest payable on the amounts outstanding under our revolving credit facility. We are required to pay interest at a rate of SOFR plus a premium, which was 145 basis points per annum at June 30, 2023, on the amount outstanding under our revolving credit facility. We also pay a facility fee on the total amount of lending commitments under our revolving credit facility, which was 30 basis points per annum at June 30, 2023. Both the interest rate premium and facility fee are subject to adjustment based upon changes to our credit ratings. As of June 30, 2023 and December 31, 2022, the annual interest rate payable on borrowings under our revolving credit facility was 6.6% and 5.4%, respectively. The weighted average annual interest rate for borrowings under our revolving credit facility was 6.5% and 6.2% for the three and six months ended June 30, 2023, respectively, and 2.4% for both the three and six months ended June 30, 2022. As of June 30, 2023 and July 25, 2023, we had $240,000 and $230,000, respectively, outstanding under our revolving credit facility, and $510,000 and $520,000, respectively, available for borrowing.

Our credit agreement and senior unsecured notes indentures and their supplements provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default, such as, in the case of our credit agreement, a change of control of us, which includes The RMR Group LLC, or RMR, ceasing to act as our business and property manager. Our credit agreement and senior unsecured notes indentures and their supplements also contain covenants, including covenants that restrict our ability to incur debts, require us to comply with certain financial covenants and, in the case of our credit agreement, restrict our ability to make distributions under certain circumstances. We believe we were in compliance with the terms and conditions of the respective covenants under our credit agreement and senior unsecured notes indentures and their supplements at June 30, 2023.

Mortgage Note Issuances

During the six months ended June 30, 2023, we issued the following four mortgage notes with an aggregate principal balance of $108,120 and a weighted average interest rate of 7.863%:


Issuance Date	Principal Balance		Interest Rate	Maturity
May 2023	$	30,680	7.210%	7/1/2033
June 2023	26,340		8.139%	7/1/2028
June 2023	42,700		8.272%	7/1/2028
June 2023	8,400		7.305%	7/1/2033


Total / Weighted Average	$	108,120	7.863%

Mortgage Note Repayment

In June 2023, we repaid at maturity, a mortgage note secured by one property with an outstanding principal balance of $50,000 and an annual interest rate of 3.70%.

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OFFICE PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

(unaudited)

At June 30, 2023, four of our properties with a net book value of $153,078 were encumbered by mortgage notes with an aggregate principal balance of $108,120. Our mortgage notes are non-recourse, subject to certain limited exceptions and do not contain any material financial covenants.

Note 7. Fair Value of Assets and Liabilities

Our financial instruments include our cash and cash equivalents, restricted cash, rents receivable, accounts payable, a revolving credit facility, senior unsecured notes, mortgage notes payable, amounts due to related persons, other accrued expenses and security deposits. At June 30, 2023 and December 31, 2022, the fair values of our financial instruments approximated their carrying values in our condensed consolidated financial statements, due to their short term nature or floating interest rates, except as follows:


	As of June 30, 2023				As of December 31, 2022
Financial Instrument	Carrying Value (1)		Fair Value		Carrying Value (1)		Fair Value


Senior unsecured notes, 4.25% interest rate, due in 2024	$	348,004	$	330,082	$	346,863	$	331,601
Senior unsecured notes, 4.50% interest rate, due in 2025	644,542		561,672		642,818		589,388
Senior unsecured notes, 2.650% interest rate, due in 2026	298,151		221,097		297,839		232,770
Senior unsecured notes, 2.400% interest rate, due in 2027	347,776		235,344		347,466		256,606
Senior unsecured notes, 3.450% interest rate, due in 2031	396,396		210,204		396,178		268,004

Senior unsecured notes, 6.375% interest rate, due in 2050	156,807		79,704		156,711		113,075
Mortgage notes payable (2) (3)	106,365		111,230		49,917		49,099
Total	$	2,298,041	$	1,749,333	$	2,237,792	$	1,840,543

(1)Includes unamortized debt premiums, discounts and issuance costs totaling $22,079 and $24,208 as of June 30, 2023 and December 31, 2022, respectively.

(2)Balances as of December 31, 2022 include a mortgage note secured by one property with an outstanding principal balance of $50,000 that was repaid in June 2023.

(3)Balances as of June 30, 2023 include four mortgage notes issued during the six months ended June 30, 2023 with an aggregate outstanding principal balance of $108,120.

We estimated the fair values of our senior unsecured notes (except for our senior unsecured notes due 2050) using an average of the bid and ask price of the notes (Level 2 inputs as defined in the fair value hierarchy under GAAP) as of the measurement date. We estimated the fair value of our senior unsecured notes due 2050 based on the closing price on Nasdaq (Level 1 inputs as defined in the fair value hierarchy under GAAP) as of the measurement date. We estimated the fair values of our mortgage notes payable using discounted cash flow analyses and currently prevailing market rates (Level 3 inputs as defined in the fair value hierarchy under GAAP) as of the measurement date. Because Level 3 inputs are unobservable, our estimated fair values may differ materially from the actual fair values.

Note 8. Shareholders’ Equity

Share Awards

On June 13, 2023, in accordance with our Trustee compensation agreements, we awarded to each of our nine Trustees 3,500 of our common shares, valued at $7.90 per share, the closing price of our common shares on Nasdaq on that day.

Share Purchases

During the three and six months ended June 30, 2023, we purchased an aggregate of 6,779 and 7,754 of our common shares, valued at a weighted average share price of $6.48 and $7.37 from one of our Trustees and certain former officers and employees of RMR in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

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OFFICE PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

(unaudited)

Distributions

During the six months ended June 30, 2023, we declared and paid regular quarterly distributions to common shareholders as follows:


Declaration Date	Record Date	Paid Date	Distributions Per Common Share		Total Distributions
January 12, 2023	January 23, 2023	February 16, 2023	$	0.55	$	26,710
April 13, 2023	April 24, 2023	May 18, 2023	0.25		12,141


			$	0.80	$	38,851

On July 13, 2023, we declared a regular quarterly distribution payable to common shareholders of record on July 24, 2023 in the amount of $0.25 per share, or approximately $12,150. We expect to pay this distribution on or about August 17, 2023.

Note 9. Business and Property Management Agreements with RMR

We have no employees. The personnel and various services we require to operate our business are provided to us by RMR. We have two agreements with RMR to provide management services to us: (1) a business management agreement, which relates to our business generally; and (2) a property management agreement, which relates to our property level operations.

Pursuant to our business management agreement with RMR, we recognized net business management fees of $3,592 and $7,543 for the three and six months ended June 30, 2023, respectively, and $4,492 and $9,202 for the three and six months ended June 30, 2022, respectively. Based on our common share total return, as defined in our business management agreement, as of June 30, 2023, no estimated incentive fees are included in the net business management fees we recognized for the three and six months ended June 30, 2023. The actual amount of annual incentive fees for 2023, if any, will be based on our common share total return for the three year period ending December 31, 2023, and will be payable in January 2024. We did not incur an incentive fee payable to RMR for the year ended December 31, 2022. We include business management fees in general and administrative expenses in our condensed consolidated statements of comprehensive income (loss).

Pursuant to our property management agreement with RMR, we recognized aggregate net property management and construction supervision fees of $6,163 and $12,482 for the three and six months ended June 30, 2023, respectively, and $6,394 and $12,522 for the three and six months ended June 30, 2022, respectively. Of these amounts, for the three and six months ended June 30, 2023, $3,801 and $7,534, respectively, were expensed to other operating expenses in our condensed consolidated statements of comprehensive income (loss) and $2,362 and $4,948, respectively, were capitalized as building improvements in our condensed consolidated balance sheet. For the three and six months ended June 30, 2022, $4,015 and $8,241, respectively, were expensed to other operating expenses in our condensed consolidated statements of comprehensive income (loss) and $2,379 and $4,281, respectively, were capitalized as building improvements in our condensed consolidated balance sheet. The amounts capitalized are being depreciated over the estimated useful lives of the related capital assets.

In connection with the Merger, on April 11, 2023, we and RMR entered into a Third Amended and Restated Property Management Agreement, or the Amended Property Management Agreement. For more information about the Amended Property Management Agreement, refer to Note 10.

We are generally responsible for all of our operating expenses, including certain expenses incurred or arranged by RMR on our behalf. We are generally not responsible for payment of RMR’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR’s employees assigned to work exclusively or partly at our properties, our share of the wages, benefits and other related costs of RMR’s centralized accounting personnel, our share of RMR’s costs for providing our internal audit function and as otherwise agreed. Our property level operating expenses are generally incorporated into the rents charged to our tenants, including certain payroll and related costs incurred by RMR. We reimbursed RMR $6,617 and $12,964 for these expenses and costs for the three and six months ended June 30, 2023, respectively, and $6,047 and $12,013 for the three and six months ended June 30, 2022, respectively. We included these amounts in other operating expenses and general and administrative expenses, as applicable, in our condensed consolidated statements of comprehensive income (loss).

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OFFICE PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

(unaudited)

Management Agreements Between Our Joint Ventures and RMR. RMR provides management services to our two unconsolidated joint ventures. We are not obligated to pay management fees to RMR under our management agreements with RMR for the services it provides regarding the joint ventures. The joint ventures pay management fees directly to RMR.

Note 10. Related Person Transactions

We have relationships and historical and continuing transactions with RMR, The RMR Group Inc., or RMR Inc., and others related to them, including other companies to which RMR or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. RMR is a majority owned subsidiary of RMR Inc. The Chair of our Board of Trustees and one of our Managing Trustees, Adam D. Portnoy, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., the chair of the board of directors, a managing director, the president and chief executive officer of RMR Inc. and an officer and employee of RMR. Jennifer B. Clark, our other Managing Trustee and our Secretary, also serves as a managing director and the executive vice president, general counsel and secretary of RMR Inc., an officer and employee of RMR and an officer of ABP Trust. Each of our officers is an officer and employee of RMR. Some of our Independent Trustees also serve as independent trustees of other public companies to which RMR or its subsidiaries provide management services. Mr. Portnoy serves as chair of the boards and as a managing trustee of these public companies. Other officers of RMR serve as managing trustees or officers of certain of these companies.

Our Manager, RMR. We have two agreements with RMR to provide management services to us. RMR also provides management services to our two unconsolidated joint ventures. See Note 9 for more information regarding our and our unconsolidated joint ventures’ management agreements with RMR.

Leases with RMR. We lease office space to RMR in certain of our properties for RMR’s property management offices. Pursuant to our lease agreements with RMR, we recognized rental income from RMR for leased office space of $244 and $467 for the three and six months ended June 30, 2023, respectively, and $285 and $569 for the three and six months ended June 30, 2022, respectively.

Sonesta. In June 2021, we entered into a 30-year lease agreement with a subsidiary of Sonesta International Hotels Corporation, or Sonesta, in connection with the redevelopment of an office property we own in Washington, D.C. as a mixed-use property. Sonesta’s lease is for the full-service hotel component of the property that includes approximately 230,000 rentable square feet, which represents approximately 54% of the total square feet upon completion of the redevelopment. We substantially completed the redevelopment in June 2023 and the term of the lease is estimated to commence in August 2023. Sonesta has two options to extend the term for 10 years each. Pursuant to the lease agreement, Sonesta will pay us annual base rent of approximately $6,436 beginning 18 months after the lease commences. The annual base rent will increase by 10% every five years throughout the term. Sonesta is also obligated to pay its pro rata share of the operating costs for the building. We estimate that the total cost to build the hotel space will be approximately $77,000, of which approximately $73,000 has been incurred as of June 30, 2023. Mr. Portnoy is a director and controlling shareholder of Sonesta and Ms. Clark is also a director of Sonesta.

Merger Agreement with Diversified Healthcare Trust. As described further in Note 1, on April 11, 2023, we and DHC entered into the Merger Agreement, pursuant to which, on the terms and subject to the satisfaction or waiver of the conditions thereof, DHC will be merged with and into us, with us continuing as the surviving entity in the merger. Subject to the satisfaction or waiver of the conditions to closing, the Merger is expected to close during the third quarter of 2023.

RMR serves as our and DHC’s manager and will continue to manage the surviving entity following the Merger. Contemporaneously with the execution of the Merger Agreement, on April 11, 2023, we and RMR entered into the Amended Property Management Agreement. The effectiveness of the Amended Property Management Agreement is conditioned upon and will be concurrent with the consummation of the Merger. If the Merger is not consummated, the Amended Property Management Agreement will not become effective and the Second Amended and Restated Property Management Agreement, or the Current Property Management Agreement, will remain in effect.

Pursuant to the Amended Property Management Agreement, at the Effective Time, properties currently owned by DHC that are subject to its existing property management agreement, including its medical office and life science properties, will become subject to the terms and conditions of the Amended Property Management Agreement. Also pursuant to the Amended Property Management Agreement, RMR will be entitled to a renovation and repositioning fee equal to 3% of the cost of any major capital projects and repositionings at senior living communities currently owned by DHC that the surviving entity may

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OFFICE PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

(unaudited)

request RMR to oversee from time to time, consistent with DHC’s existing property management agreement with RMR. The terms of the Amended Property Management Agreement are otherwise consistent with the terms of the Current Property Management Agreement.

In addition, contemporaneously with the execution of the Merger Agreement, we, DHC and RMR entered into a letter agreement pursuant to which, on the terms and subject to conditions contained therein, DHC and RMR have acknowledged and agreed that, effective upon consummation of the Merger, DHC shall have terminated its business and property management agreements with RMR for convenience, and RMR shall have waived its right to receive payment of the termination fee pursuant to each such agreement upon such termination. The foregoing terminations and waivers apply only in respect of the Merger and do not apply to any other transaction or arrangement.

For more information about these and other such relationships and certain other related person transactions, refer to our 2022 Annual Report and our joint proxy statement/prospectus that is included in our registration statement on Form S-4 filed with the SEC.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction with our condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our 2022 Annual Report.

OVERVIEW (dollars in thousands, except per share and per square foot data)

We are a real estate investment trust, or REIT, organized under Maryland law. As of June 30, 2023, our wholly owned properties were comprised of 155 properties and we had noncontrolling ownership interests of 51% and 50% in two unconsolidated joint ventures that own three properties containing approximately 444,000 rentable square feet. As of June 30, 2023, our properties are located in 30 states and the District of Columbia and contain approximately 20,784,000 rentable square feet. As of June 30, 2023, our properties were leased to 268 different tenants with a weighted average remaining lease term (based on annualized rental income) of approximately 6.4 years. The U.S. government is our largest tenant, representing approximately 19.6% of our annualized rental income as of June 30, 2023. The term annualized rental income as used herein is defined as the annualized contractual base rents from our tenants pursuant to our lease agreements as of June 30, 2023, plus straight line rent adjustments and estimated recurring expense reimbursements to be paid to us, and excluding lease value amortization.

Certain changes in office space utilization that accelerated during the COVID-19 pandemic, including increased remote work arrangements and tenants consolidating their real estate footprint, continue to impact the market. The utilization and demand for office space continues to face headwinds and the duration and ultimate impact of current trends on the demands for office space at our properties remains uncertain and subject to change. Accordingly, we do not yet know what the full extent of the impacts will be on our or our tenants’ businesses and operations nor the long-term outlook for leasing vacant space.

In response to inflationary pressures, the U.S. Federal Reserve has increased the federal funds rate by 525 basis points since March 2022 and has indicated that there may be additional increases. The inflationary pressures and rising interest rates in the United States and globally have given rise to concerns that the U.S. economy may soon enter an economic recession and they have caused disruptions in the financial markets. Sustained inflationary pressures, increased interest rates, an economic recession or continued or intensified disruptions in the financial markets could adversely affect our and our tenants’ financial condition, could adversely impact the ability or willingness of our tenants to renew our leases or pay rent to us, would impair our ability to effectively deploy our capital or realize desirable returns on our investments, may restrict our access to, and would likely increase our cost of, capital and may cause the values of our properties and our securities to decline.

For more information about the risks relating to these dynamics and conditions and their impacts on us and our business, see Part I, Item IA, “Risk Factors”, of our 2022 Annual Report.

On April 11, 2023, we and DHC entered into the Merger Agreement, pursuant to which, on the terms and subject to the satisfaction or waiver of the conditions thereof, DHC will be merged with and into us, with us continuing as the surviving entity. Upon the closing of the Merger, we would acquire DHC’s medical office, senior housing and wellness center portfolios, which, as of March 31, 2023, consisted of 376 properties, including 105 medical office and life science properties containing approximately 8,809,000 rentable square feet, 261 senior living communities containing approximately 27,000 units and ten wellness centers containing approximately 812,000 rentable square feet. The combined company is expected to be a REIT with a diversified tenant base, a broad portfolio, greater scale and strong growth potential.

For more information and risks relating to the Merger, see Notes 1, 9 and 10 to our Condensed Consolidated Financial Statements included in Part I, Item 1 and Part II, Item 1A “Risk Factors,” of this Quarterly Report on Form 10-Q and our joint proxy statement/prospectus that is included in our registration statement on Form S-4 filed with the SEC, or the Form S-4.

Property Operations

Unless otherwise noted, the data presented in this section includes properties classified as held for sale as of June 30, 2023 and excludes three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests. For more information regarding our properties classified as held for sale and our two unconsolidated joint ventures, see Note 3 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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Occupancy data for our properties as of June 30, 2023 and 2022 was as follows (square feet in thousands):


	All Properties (1)				Comparable Properties (2)
	June 30,				June 30,
	2023		2022		2023		2022
Total properties	155		172		148		148
Total rentable square feet (3)	20,784		22,491		19,591		19,541
Percent leased (4)	90.6	%	89.4	%	94.4	%	95.4	%

(1)Based on properties we owned on June 30, 2023 and 2022, respectively.

(2)Based on properties we owned continuously since January 1, 2022; excludes properties classified as held for sale and properties undergoing significant redevelopment, if any, and three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests.

(3)Subject to changes when space is remeasured or reconfigured for tenants.

(4)Percent leased includes (i) space being fitted out for tenant occupancy pursuant to our lease agreements, if any, and (ii) space which is leased, but is not occupied or is being offered for sublease by tenants, if any, as of the measurement date.

The average effective rental rate per square foot for our properties for the three and six months ended June 30, 2023 and 2022 were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Average effective rental rate per square foot (1):
All properties (2)	$	29.39	$	28.80	$	29.12	$	29.11
Comparable properties (3)	$	29.53	$	29.29	$	29.24	$	29.11

(1)Average effective rental rate per square foot represents annualized total rental income during the period specified divided by the average rentable square feet leased during the period specified.

(2)Based on properties we owned on June 30, 2023 and 2022, respectively.

(3)Based on properties we owned continuously since April 1, 2022 and January 1, 2022, respectively; excludes properties classified as held for sale and properties undergoing significant redevelopment, if any, and three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests.

During the three and six months ended June 30, 2023, changes in rentable square feet leased and available for lease at our properties were as follows (square feet in thousands):


	Three Months Ended June 30, 2023			Six Months Ended June 30, 2023
	Leased	Available for Lease	Total	Leased	Available for Lease	Total
Beginning of period	18,905	1,990	20,895	19,004	1,965	20,969
Changes resulting from:

Disposition of properties	(100)	(107)	(207)	(100)	(196)	(296)
Lease expirations	(684)	684	—	(986)	986	—
Redevelopment expansion (1)	—	87	87	—	87	87
Lease renewals (2)	517	(517)	—	629	(629)	—
New leases (2)	196	(196)	—	287	(287)	—
Remeasurements (3)	—	9	9	—	24	24
End of period	18,834	1,950	20,784	18,834	1,950	20,784

(1)Represents additional rentable square feet resulting from the redevelopment of a property in Washington, D.C., which was completed and available for lease as of June 30, 2023.

(2)Based on leases entered during the three and six months ended June 30, 2023.

(3)Rentable square feet are subject to changes when space is remeasured or reconfigured for tenants.

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During the three and six months ended June 30, 2023, we entered into new and renewal leases as summarized in the following table (square feet in thousands):


	Three Months Ended June 30, 2023
	New Leases			Renewals			Total
Rentable square feet leased	196			517			713
Weighted average rental rate change (by rentable square feet)	6.1		%	2.8		%	3.7		%
Tenant leasing costs and concession commitments (1)	$	15,894		$	24,744		$	40,638
Tenant leasing costs and concession commitments per rentable square foot (1)	$	81.10		$	47.87		$	57.01
Weighted (by square feet) average lease term (years)	8.9			10.8			10.3
Total leasing costs and concession commitments per rentable square foot per year (1)	$	9.08		$	4.42		$	5.53


	Six Months Ended June 30, 2023
	New Leases			Renewals			Total
Rentable square feet leased	287			629			916
Weighted average rental rate change (by rentable square feet)	(2.8		%)	(3.7		%)	(3.4		%)
Tenant leasing costs and concession commitments (1)	$	20,889		$	28,496		$	49,385
Tenant leasing costs and concession commitments per rentable square foot (1)	$	72.91		$	45.32		$	53.95
Weighted (by square feet) average lease term (years)	8.4			10.1			9.5
Total leasing costs and concession commitments per rentable square foot per year (1)	$	8.70		$	4.51		$	5.66

(1)Includes commitments made for leasing expenditures and concessions, such as tenant improvements, leasing commissions, tenant reimbursements and free rent.

During the three and six months ended June 30, 2023, changes in effective rental rates per square foot achieved for new leases and lease renewals at our properties that commenced during the three and six months ended June 30, 2023, when compared to prior effective rental rates per square foot in effect for the same space (and excluding space acquired vacant), were as follows (square feet in thousands):


	Three Months Ended June 30, 2023					Six Months Ended June 30, 2023
	Old Effective Rent Per Square Foot (1)		New Effective Rent Per Square Foot (1)		Rentable Square Feet	Old Effective Rent Per Square Foot (1)		New Effective Rent Per Square Foot (1)		Rentable Square Feet
New leases	$	27.34	$	28.72	206	$	28.55	$	29.24	314
Lease renewals	$	21.39	$	22.02	507	$	26.66	$	25.47	756
Total leasing activity	$	23.11	$	23.95	713	$	27.21	$	26.58	1,070

(1)Effective rental rates include contractual base rents from our tenants pursuant to our lease agreements, plus straight line rent adjustments and estimated expense reimbursements to be paid to us, and exclude lease value amortization.

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During the three and six months ended June 30, 2023 and 2022, amounts capitalized at our properties for lease related costs, building improvements and development, redevelopment and other activities were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022


Lease related costs (1)	$	28,252	$	16,131	$	41,293	$	24,795
Building improvements (2)	5,355		4,702		9,937		7,485
Recurring capital expenditures	33,607		20,833		51,230		32,280
Development, redevelopment and other activities (3)	40,435		40,302		89,906		77,826
Total capital expenditures	$	74,042	$	61,135	$	141,136	$	110,106

(1)Lease related costs generally include capital expenditures used to improve tenants’ space or amounts paid directly to tenants to improve their space and leasing related costs, such as brokerage commissions and other tenant inducements.

(2)Building improvements generally include expenditures to replace obsolete building components and expenditures that extend the useful life of existing assets.

(3)Development, redevelopment and other activities generally include capital expenditure projects that reposition a property or result in new sources of revenue.

In addition to the capital expenditures described above, we contributed $1,500 and $3,763 to one of our unconsolidated joint ventures during the three and six months ended June 30, 2023, respectively. Also, as of June 30, 2023, we had estimated unspent leasing related obligations of $151,798, of which we expect to spend $89,129 over the next 12 months.

As of June 30, 2023, we had leases at our properties totaling approximately 2,136,000 rentable square feet that were scheduled to expire through June 30, 2024. As of July 25, 2023, we expect tenants with leases totaling approximately 1,411,000 rentable square feet that are scheduled to expire through June 30, 2024, not to renew or to downsize their leased space upon expiration, and we cannot be sure as to whether other tenants will renew their leases upon expiration. However, we are in advanced discussions to re-lease certain of this space to new tenants, some of which may offset expected vacancies, and we continue to proactively engage with our existing tenants and are focused on our overall tenant retention. Prevailing market conditions and our tenants’ needs at the time we negotiate and enter leases or lease renewals will generally determine rental rates and demand for leased space at our properties, all of which factors are beyond our control. Whenever we renew or enter into new leases for our properties, we intend to seek rents which are equal to or higher than our historical rents for the same properties; however, our ability to maintain or increase the rents for our current properties will depend in large part upon market conditions, which are beyond our control. We cannot be sure of the rental rates that will result from our ongoing negotiations regarding lease renewals or any new or renewed leases we may enter. Also, we may experience material declines in our rental income due to vacancies upon lease expirations or early terminations or lower rents upon lease renewal or reletting. Additionally, we may incur significant costs and make significant concessions to renew our leases with current tenants or lease our properties to new tenants.

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As of June 30, 2023, our lease expirations by year were as follows (square feet in thousands):


Year (1)	Number of Leases Expiring	Leased Square Feet Expiring (2)	Percent of Total		Cumulative Percent of Total		Annualized Rental Income Expiring		Percent of Total		Cumulative Percent of Total
2023	45	1,476	7.8	%	7.8	%	$	48,939	9.0	%	9.0	%
2024	52	2,739	14.5	%	22.3	%	70,366		13.0	%	22.0	%
2025	39	2,091	11.1	%	33.4	%	47,557		8.8	%	30.8	%
2026	38	1,494	7.9	%	41.3	%	40,395		7.5	%	38.3	%
2027	36	2,059	10.9	%	52.2	%	52,515		9.7	%	48.0	%
2028	21	998	5.3	%	57.5	%	45,552		8.4	%	56.4	%
2029	25	988	5.2	%	62.7	%	28,854		5.3	%	61.7	%
2030	27	895	4.8	%	67.5	%	25,821		4.8	%	66.5	%
2031	16	906	4.8	%	72.3	%	25,546		4.7	%	71.2	%
2032 and thereafter	54	5,188	27.7	%	100.0	%	155,746		28.8	%	100.0	%
Total	353	18,834	100.0	%			$	541,291	100.0	%

Weighted average remaining lease term (in years)		6.0					6.4

(1)The year of lease expiration is pursuant to current contract terms. Some of our leases allow the tenants to vacate the leased premises before the stated expirations of their leases with little or no liability. As of June 30, 2023, tenants occupying approximately 3.9% of our rentable square feet and responsible for approximately 3.8% of our annualized rental income as of June 30, 2023 had exercisable rights to terminate their leases before the stated terms of their leases expire. Also, in 2023, 2024, 2025, 2026, 2027, 2028, 2029, 2030, 2031, 2032, 2035, 2037 and 2040, early termination rights become exercisable by other tenants who occupied an additional approximately 2.3%, 2.8%, 3.7%, 1.5%, 0.9%, 3.4%, 0.9%, 0.8%, 0.6%, 0.3%, 0.9%, 0.1% and 0.3% of our rentable square feet, respectively, and contributed an additional approximately 2.6%, 3.0%, 7.2%, 2.0%, 1.4%, 3.9%, 1.4%, 1.0%, 0.5%, 0.6%, 1.2%, 0.2% and 0.4% of our annualized rental income, respectively, as of June 30, 2023. In addition, as of June 30, 2023, pursuant to leases with 8 of our tenants, these tenants had rights to terminate their leases if their respective legislature or other funding authority does not appropriate rent amounts in their respective annual budgets. These 8 tenants occupied approximately 4.8% of our rentable square feet and contributed approximately 5.0% of our annualized rental income as of June 30, 2023.

(2)Leased square feet is pursuant to leases existing as of June 30, 2023, and includes (i) space being fitted out for tenant occupancy pursuant to our lease agreements, if any, and (ii) space which is leased, but is not occupied or is being offered for sublease by tenants, if any. Square feet measurements are subject to changes when space is remeasured or reconfigured for new tenants.

We generally will seek to renew or extend the terms of leases at properties with tenants when they expire. However, market and economic factors, along with increases in remote work, changes in space utilization and government spending and budget priorities, may cause our tenants not to renew or extend their leases when they expire, or to seek to renew their leases for less space than they currently occupy. If we are unable to extend or renew our leases, or we renew leases for reduced space, it may be time consuming and expensive to relet some of these properties.

Over the past several years, government tenants have reduced their space utilization per employee and consolidated government tenants into existing government owned properties. This activity has reduced the demand for government leased space. Our historical experience with respect to properties of the type we own that are majority leased to government tenants has been that government tenants have generally renewed leases for mission critical space to avoid the costs and disruptions that may result from relocating their operations. However, efforts to manage space utilization rates may result in our tenants exercising early termination rights under our leases, vacating our properties upon expiration of our leases in order to relocate to government owned properties or consolidated leased space within a market, or renewing their leases for less space than they currently occupy. Also, our government tenants’ desire to reconfigure leased office space to manage utilization per employee may require us to spend significant amounts for tenant improvements, and tenant relocations are often more prevalent in those circumstances. Increasing uncertainty with respect to government agency budgets and funding to implement relocations, consolidations and reconfigurations has, in some instances, resulted in delayed decisions by some of our government tenants and greater focus on short term lease renewals. Given the significant uncertainties, including the extent to which remote or alternative work arrangements and tenants consolidating their real estate footprint may continue or increase, we are unable to reasonably project what the financial impact of market conditions or changing government circumstances will be on the demand for leased space at our properties and our financial results for future periods.

As of June 30, 2023, we derived 22.4% of our annualized rental income from our properties located in the metropolitan Washington, D.C. market area, which includes Washington, D.C., Northern Virginia and suburban Maryland. Current economic conditions in this area or a possible recession, including as a result of current inflationary conditions or otherwise, could reduce demand from tenants for our properties, reduce rents that our tenants in this area are willing to pay when our leases expire and

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increase lease concessions for new leases and renewals. Additionally, there has been a decrease in demand for new leased office space by the U.S. government in the metropolitan Washington, D.C. market area, and that could increase competition for government tenants and adversely affect our ability to retain government tenants or maintain or increase our rents when our leases expire.

Our manager, RMR, employs a tenant review process for us. RMR assesses tenants on an individual basis based on various applicable credit criteria. In general, depending on facts and circumstances, RMR evaluates the creditworthiness of a tenant based on information concerning the tenant that is provided by the tenant and, in some cases, information that is publicly available or obtained from third party sources. We consider investment grade tenants to include: (a) investment grade rated tenants; (b) tenants with investment grade rated parent entities that guarantee the tenant’s lease obligations; and/or (c) tenants with investment grade rated parent entities that do not guarantee the tenant’s lease obligations. As of June 30, 2023, tenants contributing 53.1% of annualized rental income were investment grade rated (or their payment obligations were guaranteed by an investment grade rated parent) and tenants contributing an additional 9.8% of annualized rental income were subsidiaries of an investment grade rated parent (although these parent entities were not liable for the payment of rents).

As of June 30, 2023, tenants representing 1% or more of our total annualized rental income were as follows (square feet in thousands):


	Tenant	Credit Rating	Sq. Ft.	% of Leased Sq. Ft.		Annualized Rental Income		% of Total Annualized Rental Income
1	U.S. Government	Investment Grade	3,815	20.3	%	$	105,836	19.6	%
2	Alphabet Inc. (Google)	Investment Grade	386	2.0	%	22,119		4.1	%
3	Shook, Hardy & Bacon L.L.P.	Not Rated	596	3.2	%	19,216		3.5	%
4	IG Investments Holdings LLC	Not Rated	338	1.8	%	17,293		3.2	%
5	State of California	Investment Grade	519	2.8	%	16,205		3.0	%
6	Bank of America Corporation	Investment Grade	577	3.1	%	15,911		2.9	%
7	Commonwealth of Massachusetts	Investment Grade	311	1.6	%	12,260		2.3	%
8	Tyson Foods, Inc. (1)	Investment Grade	248	1.3	%	11,954		2.2	%
9	CareFirst Inc.	Not Rated	207	1.1	%	11,622		2.1	%
10	Northrop Grumman Corporation	Investment Grade	337	1.8	%	10,795		2.0	%
11	Sonesta International Hotels Corporation (2)	Not Rated	230	1.2	%	10,745		2.0	%
12	CommScope Holding Company Inc.	Non Investment Grade	228	1.2	%	9,582		1.8	%
13	Sonoma Biotherapeutics, Inc. (3)	Not Rated	107	0.6	%	8,032		1.5	%
14	State of Georgia	Investment Grade	308	1.6	%	7,345		1.4	%
15	PNC Bank	Investment Grade	441	2.3	%	6,927		1.3	%
16	Micro Focus International plc	Non Investment Grade	215	1.1	%	6,836		1.3	%
17	Compass Group plc	Investment Grade	267	1.4	%	6,697		1.2	%
18	ServiceNow, Inc.	Investment Grade	149	0.8	%	6,675		1.2	%
19	Allstate Insurance Co.	Investment Grade	468	2.5	%	6,484		1.2	%
20	Automatic Data Processing, Inc.	Investment Grade	289	1.5	%	6,196		1.1	%
21	Church & Dwight Co., Inc.	Investment Grade	250	1.3	%	6,043		1.1	%
22	Leidos Holdings Inc.	Investment Grade	159	0.8	%	5,950		1.1	%
23	Primerica, Inc.	Investment Grade	344	1.8	%	5,737		1.1	%
	Total		10,789	57.1	%	$	336,460	62.2	%

(1)In July 2023, we received notice from Tyson Foods, Inc. exercising its option to terminate its lease at a property we own in Chicago, IL effective January 2025, prior to the stated lease expiration date of January 31, 2028. We will receive an early termination fee of approximately $8,600.

(2)In June 2021, we entered into a 30-year lease with Sonesta. The lease relates to the redevelopment of a property we own in Washington, D.C to a mixed use and Sonesta's lease relates to the hotel component of the property. We substantially completed the redevelopment in June 2023 and the Sonesta lease is estimated to commence in August 2023. For more information about our lease with Sonesta, see Note 10 to our Condensed Consolidated Financial Statements included in Part I, Item I of this Quarterly Report on Form 10-Q.

(3)In August 2022, we entered into an approximately 10-year lease with Sonoma Biotherapeutics, Inc. at a property we own in Seattle, WA that is currently undergoing redevelopment. The term of the lease is estimated to commence in the fourth quarter of 2023.

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Disposition Activities

During the six months ended June 30, 2023, we sold five properties containing approximately 296,000 rentable square feet for an aggregate sales price of $13,075, excluding closing costs.

As a result of current commercial real estate market conditions, including rising interest rates, the pace of our dispositions has moderated and we expect that trend to continue until commercial real estate industry conditions generally, and office market conditions specifically, improve. However, we continue to evaluate our portfolio to strategically recycle capital and are currently in various stages of marketing certain of our properties for sale, and we may decide to seek to sell additional properties in the future. As of July 25, 2023, we have entered into an agreement to sell one property containing approximately 80,000 rentable square feet for a sales price of $10,500, excluding closing costs. We cannot be sure we will sell any properties we are marketing for sale for prices in excess of their carrying values or otherwise. In addition, our pending sale is subject to conditions; accordingly, we cannot be sure that we will complete this sale or that this sale will not be delayed or the terms will not change.

For more information about our disposition activities, see Note 3 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Segment Information

We operate in one business segment: ownership of real estate properties.

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RESULTS OF OPERATIONS (amounts in thousands, except per share amounts)

Three Months Ended June 30, 2023, Compared to Three Months Ended June 30, 2022


	Comparable Properties (1) Results Three Months Ended June 30,								Non-Comparable Properties Results Three Months Ended June 30,				Consolidated Results Three Months Ended June 30,

	2023		2022		$ Change		% Change		2023		2022		2023		2022		$ Change		% Change
Rental income	$	133,467	$	132,958	$	509	0.4	%	$	530	$	8,358	$	133,997	$	141,316	$	(7,319)	(5.2	%)
Operating expenses:
Real estate taxes	15,588		15,205		383		2.5	%	313		1,378		15,901		16,583		(682)		(4.1	%)
Utility expenses	5,649		5,325		324		6.1	%	93		495		5,742		5,820		(78)		(1.3	%)
Other operating expenses	26,036		24,143		1,893		7.8	%	598		2,354		26,634		26,497		137		0.5	%
Total operating expenses	47,273		44,673		2,600		5.8	%	1,004		4,227		48,277		48,900		(623)		(1.3	%)
Net operating income (loss) (2)	$	86,194	$	88,285	$	(2,091)	(2.4	%)	$	(474)	$	4,131	85,720		92,416		(6,696)		(7.2	%)

Other expenses:
Depreciation and amortization													51,601		57,536		(5,935)		(10.3	%)
Loss on impairment of real estate													—		4,773		(4,773)		n/m
Acquisition and transaction related costs													11,181		224		10,957		n/m
General and administrative													5,785		7,083		(1,298)		(18.3	%)
Total other expenses													68,567		69,616		(1,049)		(1.5	%)

Loss on sale of real estate													(2,305)		(11,637)		9,332		(80.2	%)


Interest and other income													337		16		321		n/m
Interest expense													(26,525)		(26,515)		(10)		n/m
Loss on early extinguishment of debt													—		(77)		77		n/m

Loss before income tax (expense) benefit and equity in net losses of investees													(11,340)		(15,413)		4,073		(26.4	%)
Income tax (expense) benefit													(211)		190		(401)		n/m
Equity in net losses of investees													(691)		(833)		142		(17.0	%)






Net loss													$	(12,242)	$	(16,056)	$	3,814	(23.8	%)



Weighted average common shares outstanding (basic and diluted)													48,354		48,249		105		0.2	%


Per common share amounts (basic and diluted):
Net loss													$	(0.25)	$	(0.33)	$	0.08	(24.2	%)

n/m - not meaningful

(1)Comparable properties consists of 148 properties we owned on June 30, 2023 and which we owned continuously since April 1, 2022 and excludes properties classified as held for sale and properties undergoing significant redevelopment, if any, and three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests.

(2)Our definition of net operating income, or NOI, and our reconciliation of net loss to NOI are included below under the heading “Non-GAAP Financial Measures.”

References to changes in the income and expense categories below relate to the comparison of consolidated results for the three months ended June 30, 2023, compared to the three months ended June 30, 2022.

Rental income. The decrease in rental income reflects a decrease in rental income of $7,841 as a result of property disposition activities, partially offset by increases in rental income of $509 for comparable properties and $13 for properties undergoing significant redevelopment. The increase in rental income for comparable properties is primarily due to an increase in reimbursement revenue resulting from higher operating expenses, partially offset by reductions in occupied space at certain of our properties and lower early termination income recorded in the 2023 period. Rental income includes non-cash straight line rent adjustments totaling $4,256 in the 2023 period and $2,775 in the 2022 period, and amortization of acquired real estate leases and assumed real estate lease obligations totaling $61 in the 2023 period and $(233) in the 2022 period.

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Real estate taxes. The decrease in real estate taxes primarily reflects a decrease of $1,093 related to property disposition activities, partially offset by increases of $383 for comparable properties and $28 for properties undergoing significant redevelopment. Real estate taxes for comparable properties increased primarily due to refunds received in the 2022 period as a result of successful real estate tax appeals for certain of our properties.

Utility expenses. The decrease in utility expenses primarily reflects a decrease of $429 related to property disposition activities, partially offset by increases of $324 for comparable properties and $27 for properties undergoing significant redevelopment. The increase in utility expenses for comparable properties is primarily due to the impact of inflation in the 2023 period, as well as utility expenses that were previously paid directly by certain of our tenants that are now being paid by us pursuant to lease amendments executed in 2022 with those tenants.

Other operating expenses. Other operating expenses consist of salaries and benefit costs of property level personnel, repairs and maintenance expense, cleaning expense, other direct costs of operating our properties and property management fees. The increase in other operating expenses primarily reflects increases of $1,893 for comparable properties and $50 for properties undergoing significant redevelopment, partially offset by a decrease of $1,806 related to property disposition activities. The increase in other operating expenses for comparable properties is primarily due to the impact of inflation in the 2023 period, higher repairs and maintenance costs and higher insurance costs, as well as other operating expenses that were previously paid directly by certain of our tenants that are now being paid by us pursuant to lease amendments executed in 2022 with those tenants.

Depreciation and amortization. The decrease in depreciation and amortization primarily reflects decreases of $2,413 for comparable properties, $1,995 related to property disposition activities and $1,527 for properties undergoing significant redevelopment. Depreciation and amortization for comparable properties declined due to certain leasing related assets becoming fully depreciated since April 1, 2022, partially offset by depreciation and amortization of improvements made to certain of our properties since April 1, 2022.

Loss on impairment of real estate. We recorded a $4,773 loss on impairment of real estate in the 2022 period to reduce the carrying value of six properties to their estimated fair values less costs to sell.

Acquisition and transaction related costs. Acquisition and transaction related costs consist of costs related to our evaluation of potential acquisitions, dispositions and other strategic transactions, including costs incurred in connection with the Merger and related transactions. For more information regarding the Merger, see Notes 1, 9 and 10 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and our joint proxy statement/prospectus that is included in the Form S-4.

General and administrative. General and administrative expenses consist of fees pursuant to our business management agreement, equity compensation expense, legal and accounting fees, Trustees’ fees and expenses, securities listing and transfer agency fees and other costs relating to our status as a publicly traded company. The decrease in general and administrative expenses is primarily the result of a decrease in base business management fees resulting from a decrease in average total market capitalization and a decrease in share based compensation in the 2023 period compared to the 2022 period.

Loss on sale of real estate. We recorded a $2,305 net loss on sale of real estate resulting from the sale of two properties in the 2023 period. We recorded an $11,637 net loss on sale of real estate resulting from the sale of two properties in the 2022 period.

Interest and other income. The increase in interest and other income is primarily due to the effect of higher interest rates earned on cash balances invested in the 2023 period compared to the 2022 period.

Interest expense. The increase in interest expense reflects higher average amounts outstanding and higher average interest rates on borrowings under our revolving credit facility, as well as the issuance of four mortgage notes with an aggregate principal balance of $108,120 and a weighted average interest rate of 7.9% during the 2023 period, partially offset by the redemption of $300,000 of our senior unsecured notes with an interest rate of 4.0% in June 2022, higher capitalized interest and the repayment of two mortgage notes since July 1, 2022 with an aggregate principal balance of approximately $73,000 and a weighted average interest rate of 4.0%.

Loss on early extinguishment of debt. We recorded a loss on early extinguishment of debt of $77 in the 2022 period from the write off of unamortized discounts and debt issuance costs associated with the redemption of our senior unsecured notes due July 2022.

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Income tax (expense) benefit. Income tax (expense) benefit is primarily the result of operating income earned in jurisdictions where we are subject to state income taxes and can fluctuate based on the timing of our income, including as a result of gains or losses on the sale of real estate.

Equity in net losses of investees. Equity in net losses of investees represents our proportionate share of losses from our investments in two unconsolidated joint ventures.

Net loss. Net loss and net loss per basic and diluted common share decreased in the 2023 period compared to the 2022 period primarily as a result of the changes noted above.

Six Months Ended June 30, 2023, Compared to Six Months Ended June 30, 2022


	Comparable Properties (1) Results Six Months Ended June 30,								Non-Comparable Properties Results Six Months Ended June 30,				Consolidated Results Six Months Ended June 30,
	2023		2022		$ Change		% Change		2023		2022		2023		2022		$ Change		% Change
Rental income	$	265,335	$	264,307	$	1,028	0.4	%	$	1,084	$	24,363	$	266,419	$	288,670	$	(22,251)	(7.7	%)
Operating expenses:
Real estate taxes	30,649		30,012		637		2.1	%	585		3,216		31,234		33,228		(1,994)		(6.0	%)
Utility expenses	12,693		11,165		1,528		13.7	%	309		1,520		13,002		12,685		317		2.5	%
Other operating expenses	51,440		48,089		3,351		7.0	%	1,251		5,771		52,691		53,860		(1,169)		(2.2	%)
Total operating expenses	94,782		89,266		5,516		6.2	%	2,145		10,507		96,927		99,773		(2,846)		(2.9	%)
NOI (2)	$	170,553	$	175,041	$	(4,488)	(2.6	%)	$	(1,061)	$	13,856	169,492		188,897		(19,405)		(10.3	%)

Other expenses:
Depreciation and amortization													103,293		118,005		(14,712)		(12.5	%)
Loss on impairment of real estate													—		21,820		(21,820)		n/m
Acquisition and transaction related costs													14,399		224		14,175		n/m
General and administrative													11,710		12,789		(1,079)		(8.4	%)
Total other expenses													129,402		152,838		(23,436)		(15.3	%)


Gain (loss) on sale of real estate													243		(9,488)		9,731		(102.6	%)


Interest and other income													501		17		484		n/m
Interest expense													(51,756)		(53,954)		2,198		(4.1	%)
Loss on early extinguishment of debt													—		(77)		77		n/m
Loss before income tax expense and equity in net losses of investees													(10,922)		(27,443)		16,521		(60.2	%)
Income tax expense													(241)		(341)		100		(29.3	%)
Equity in net losses of investees													(1,525)		(1,679)		154		(9.2	%)




Net loss													$	(12,688)	$	(29,463)	$	16,775	(56.9	%)

Weighted average common shares outstanding (basic and diluted)													48,345		48,246		99		0.2	%


Per common share amounts (basic and diluted):


Net loss													$	(0.27)	$	(0.61)	$	0.34	(55.7	%)

n/m - not meaningful

(1)Comparable properties consists of 148 properties we owned on June 30, 2023 and which we owned continuously since January 1, 2022 and excludes properties classified as held for sale and properties undergoing significant redevelopment, if any, and three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests.

(2)Our definition of NOI and our reconciliation of net loss to NOI are included below under the heading “Non-GAAP Financial Measures.”

References to changes in the income and expense categories below relate to the comparison of consolidated results for the six months ended June 30, 2023, compared to the six months ended June 30, 2022.

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Rental income. The decrease in rental income primarily reflects decreases in rental income of $16,989 related to property disposition activities and $6,290 for properties undergoing significant redevelopment, partially offset by an increase of $1,028 for comparable properties. The increase in rental income for comparable properties is primarily due to an increase in reimbursement revenue resulting from higher operating expenses, partially offset by reductions in occupied space at certain of our properties and lower early termination income recorded in the 2023 period. The decrease in rental income for properties undergoing significant redevelopment is primarily due to termination fee revenue in the 2022 period and the reduction in occupied space at a property located in Seattle, WA that began a redevelopment project after the former tenant’s lease was terminated in February 2022. Rental income includes non-cash straight line rent adjustments totaling $8,429 in the 2023 period and $5,461 in the 2022 period, and amortization of acquired real estate leases and assumed real estate lease obligations totaling $140 in the 2023 period and $(576) in the 2022 period.

Real estate taxes. The decrease in real estate taxes primarily reflects decreases of $2,446 related to property disposition activities and $185 for properties undergoing significant redevelopment, partially offset by an increase of $637 for comparable properties. Real estate taxes for comparable properties increased primarily due to refunds received in the 2022 period as a result of successful real estate tax appeals for certain of our properties.

Utility expenses. The increase in utility expenses primarily reflects an increase of $1,528 for comparable properties, partially offset by decreases in utility expenses of $1,190 related to property disposition activities and $21 for properties undergoing significant redevelopment. The increase in utility expenses for comparable properties is primarily due to the impact of inflation in the 2023 period, as well as utility expenses that were previously paid directly by certain of our tenants that are now being paid by us pursuant to lease amendments executed in 2022 with those tenants.

Other operating expenses. The decrease in other operating expenses primarily reflects decreases of $4,162 related to property disposition activities and $358 for properties undergoing significant redevelopment, partially offset by an increase of $3,351 for comparable properties. The increase in other operating expenses for comparable properties is primarily due to the impact of inflation in the 2023 period, higher repairs and maintenance costs and higher insurance costs, as well as other operating expenses that were previously paid directly by certain of our tenants that are now being paid by us pursuant to lease amendments executed in 2022 with those tenants, partially offset by lower snow removal costs in the 2023 period.

Depreciation and amortization. The decrease in depreciation and amortization primarily reflects decreases of $6,705 for comparable properties, $4,939 related to property disposition activities and $3,068 for properties undergoing significant redevelopment. Depreciation and amortization for comparable properties decreased due to certain leasing related assets becoming fully depreciated since January 1, 2022, partially offset by depreciation and amortization of improvements made to certain of our properties since January 1, 2022.

Loss on impairment of real estate. We recorded a $21,820 loss on impairment of real estate in the 2022 period to reduce the carrying value of seven properties to their estimated fair values less costs to sell.

General and administrative. The decrease in general and administrative expenses is primarily the result of a decrease in base business management fees resulting from a decrease in average total market capitalization and a decrease in share based compensation in the 2023 period compared to the 2022 period, partially offset by a state franchise tax refund received in the 2022 period.

Gain (loss) on sale of real estate. We recorded a $243 net gain on sale of real estate resulting from the sale of five properties in the 2023 period. We recorded a $9,488 net loss on sale of real estate resulting from the sale of six properties in the 2022 period.

Interest expense. The decrease in interest expense reflects the redemption of our $300,000 senior unsecured notes with an interest rate of 4.0% in June 2022, higher capitalized interest in the 2023 period and the repayment of three mortgage notes since January 1, 2022 with an aggregate principal balance of approximately $98,000 and a weighted average interest rate of 4.2%, partially offset by higher average amounts outstanding and higher average interest rates on borrowings under our

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revolving credit facility, as well as the issuance of four mortgage notes with an aggregate principal balance of $108,120 and a weighted average interest rate of 7.9% during the 2023 period.

Income tax expense. Income tax expense is primarily the result of operating income earned in jurisdictions where we are subject to state income taxes and can fluctuate based on the timing of our income, including as a result of gains or losses on the sale of real estate.

Equity in net losses of investees. Equity in net losses of investees represents our proportionate share of losses from our investments in two unconsolidated joint ventures.

Net loss. Net loss and net loss per basic and diluted common share decreased in the 2023 period compared to the 2022 period primarily as a result of the changes noted above.

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Non-GAAP Financial Measures

We present certain “non-GAAP financial measures” within the meaning of the applicable rules of the SEC, including the calculations below of NOI, funds from operations, or FFO, and normalized funds from operations, or Normalized FFO. These measures do not represent cash generated by operating activities in accordance with GAAP and should not be considered alternatives to net income (loss) as indicators of our operating performance or as measures of our liquidity. These measures should be considered in conjunction with net income (loss) as presented in our condensed consolidated statements of comprehensive income (loss). We consider these non-GAAP measures to be appropriate supplemental measures of operating performance for a REIT, along with net income (loss). We believe these measures provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation and amortization expense, they may facilitate a comparison of our operating performance between periods and with other REITs and, in the case of NOI, reflecting only those income and expense items that are generated and incurred at the property level may help both investors and management to understand the operations of our properties.

Net Operating Income

The calculation of NOI excludes certain components of net income (loss) in order to provide results that are more closely related to our property level results of operations. We calculate NOI as shown below. We define NOI as income from our rental of real estate less our property operating expenses. NOI excludes amortization of capitalized tenant improvement costs and leasing commissions that we record as depreciation and amortization expense. We use NOI to evaluate individual and company-wide property level performance. Other real estate companies and REITs may calculate NOI differently than we do.

The following table presents the reconciliation of net loss to NOI for the three and six months ended June 30, 2023 and 2022:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022

Net loss	$	(12,242)	$	(16,056)	$	(12,688)	$	(29,463)




Equity in net losses of investees	691		833		1,525		1,679
Income tax expense (benefit)	211		(190)		241		341
Loss before income tax expense (benefit) and equity in net losses of investees	(11,340)		(15,413)		(10,922)		(27,443)
Loss on early extinguishment of debt	—		77		—		77
Interest expense	26,525		26,515		51,756		53,954
Interest and other income	(337)		(16)		(501)		(17)


(Gain) loss on sale of real estate	2,305		11,637		(243)		9,488

General and administrative	5,785		7,083		11,710		12,789
Acquisition and transaction related costs	11,181		224		14,399		224
Loss on impairment of real estate	—		4,773		—		21,820
Depreciation and amortization	51,601		57,536		103,293		118,005
NOI	$	85,720	$	92,416	$	169,492	$	188,897

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Funds From Operations and Normalized Funds From Operations

We calculate FFO and Normalized FFO as shown below. FFO is calculated on the basis defined by The National Association of Real Estate Investment Trusts, which is net income (loss), calculated in accordance with GAAP, plus real estate depreciation and amortization of consolidated properties and our proportionate share of the real estate depreciation and amortization of unconsolidated joint venture properties, but excluding impairment charges on real estate assets and any gain or loss on sale of real estate, as well as certain other adjustments currently not applicable to us. In calculating Normalized FFO, we adjust for the other items shown below and include business management incentive fees, if any, only in the fourth quarter versus the quarter when they are recognized as an expense in accordance with GAAP due to their quarterly volatility not necessarily being indicative of our core operating performance and the uncertainty as to whether any such business management incentive fees will be payable when all contingencies for determining such fees are known at the end of the calendar year. FFO and Normalized FFO are among the factors considered by our Board of Trustees when determining the amount of distributions to our shareholders. Other factors include, but are not limited to, requirements to maintain our qualification for taxation as a REIT, limitations in our credit agreement and public debt covenants, the availability to us of debt and equity capital, our expectation of our future capital requirements and operating performance and our expected needs for and availability of cash to pay our obligations. Other real estate companies and REITs may calculate FFO and Normalized FFO differently than we do.

The following table presents the reconciliation of net loss to FFO and Normalized FFO for the three and six months ended June 30, 2023 and 2022:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net loss	$	(12,242)	$	(16,056)	$	(12,688)	$	(29,463)
Add (less): Depreciation and amortization:
Consolidated properties	51,601		57,536		103,293		118,005
Unconsolidated joint venture properties	868		732		1,698		1,494

Loss on impairment of real estate	—		4,773		—		21,820


(Gain) loss on sale of real estate	2,305		11,637		(243)		9,488

FFO	42,532		58,622		92,060		121,344
Add (less): Acquisition and transaction related costs	11,181		224		14,399		224

Loss on early extinguishment of debt	—		77		—		77





Normalized FFO	$	53,713	$	58,923	$	106,459	$	121,645

Weighted average common shares outstanding (basic and diluted)	48,354		48,249		48,345		48,246


FFO per common share (basic and diluted)	$	0.88	$	1.21	$	1.90	$	2.52

Normalized FFO per common share (basic and diluted)	$	1.11	$	1.22	$	2.20	$	2.52

LIQUIDITY AND CAPITAL RESOURCES

Our Operating Liquidity and Resources (dollar amounts in thousands, except per share amounts)

Our principal sources of funds to meet operating and capital expenses, pay debt service obligations and make distributions to our shareholders are the operating cash flows we generate from our properties, net proceeds from property sales and borrowings under our revolving credit facility. We believe that these sources of funds will be sufficient to meet our operating and capital expenses, pay debt service obligations and make distributions to our shareholders for the next 12 months and for the foreseeable future thereafter. Our future cash flows from operating activities will depend primarily upon:

•our ability to collect rent from our tenants;

•our ability to maintain or increase the occupancy of, and the rental rates at, our properties;

•our ability to control operating and capital expenses at our properties;

•our ability to successfully sell properties that we market for sale;

•our ability to develop, redevelop or reposition properties to produce cash flows in excess of our cost of capital and property operating and capital expenses; and

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•our ability to purchase additional properties which produce cash flows from operations in excess of our cost of acquisition capital and property operating and capital expenses.

On July 13, 2023, we announced a regular quarterly cash distribution of $0.25 per common share ($1.00 per common share per year). We determine our distribution payout ratio with consideration for our expected capital expenditures as well as cash flows from operations and payment of debt obligations. In April 2023, we reduced our quarterly cash distribution to the current level of $0.25 per common share to increase financial flexibility. Following the Merger, we expect the combined company’s annual distribution will remain at $1.00 per common share per year.

Pursuant to our capital recycling program, we selectively sell certain properties from time to time to manage leverage levels and to acquire new properties or portfolios with a goal of improving our asset diversification, our geographical footprint and the average age of our properties, lengthening the weighted average term of our leases and increasing tenant retention. During the six months ended June 30, 2023, we sold five properties for an aggregate sales price of $13,075, excluding closing costs. As a result of current real estate market conditions, including rising interest rates, the pace of our dispositions has moderated and we expect that trend to continue until commercial real estate industry conditions generally, and office market conditions specifically, improve. However, we continue to evaluate our portfolio to strategically recycle capital and are currently in various stages of marketing certain of our properties for sale. As of July 25, 2023, we have entered into an agreement to sell one property for a sales price of $10,500, excluding closing costs. We cannot be sure we will sell any properties we are marketing for sale for prices in excess of their carrying values or otherwise. In addition, our pending sale is subject to conditions; accordingly, we cannot be sure that we will complete this sale or that this sale will not be delayed or the terms will not change. We continue to carefully consider our capital allocation strategy to position us to opportunistically recycle and deploy capital.

Our future purchases of properties cannot be accurately projected because such purchases depend upon purchase opportunities which come to our attention and our ability to successfully complete the acquisitions. We generally do not intend to purchase “turn around” properties, or properties which do not generate positive cash flows.

The following is a summary of our sources and uses of cash flows for the periods presented, as reflected in our condensed consolidated statements of cash flows:


	Six Months Ended June 30,
	2023		2022
Cash, cash equivalents and restricted cash at beginning of period	$	12,249	$	84,515
Net cash provided by (used in):
Operating activities	88,228		108,913
Investing activities	(129,960)		(17,112)
Financing activities	55,305		(148,567)
Cash, cash equivalents and restricted cash at end of period	$	25,822	$	27,749

The decrease in cash provided by operating activities for the 2023 period compared to the 2022 period was primarily due to decreases in NOI in the 2023 period due to property dispositions and an increase in costs incurred in connection with the Merger and related transactions. The increase in cash used in investing activities in the 2023 period compared to the 2022 period was primarily due to lower proceeds received from property sales in the 2023 period and increased capital expenditures in the 2023 period related to our redevelopment project in Seattle, WA. The increase in cash provided by financing activities in the 2023 period was primarily due to the redemption of $300,000 of our senior unsecured notes in the 2022 period and the issuance of $108,120 of mortgage notes and decreased distributions to our common shareholders in the 2023 period.

Our Investment and Financing Liquidity and Resources (dollar amounts in thousands, except per share amounts)

In order to fund acquisitions and to meet cash needs that may result from our desire or need to make distributions or pay operating or capital expenses, we maintain a $750,000 revolving credit facility. In June 2023, we exercised our option to extend the maturity date of our revolving credit facility by six months to January 31, 2024. We can borrow, repay and reborrow funds available under our revolving credit facility until maturity, and no principal repayment is due until maturity. In March 2023, we amended our credit agreement to, among other things, replace LIBOR with SOFR as the benchmark interest rate for calculating interest payable on amounts outstanding under our revolving credit facility. We are required to pay interest at a rate of SOFR plus a premium, which was 145 basis points per annum at June 30, 2023, on the amount outstanding under our revolving credit facility. We also pay a facility fee on the total amount of lending commitments under our revolving credit

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facility, which was 30 basis points per annum at June 30, 2023. Both the interest rate premium and facility fee are subject to adjustment based upon changes to our credit ratings. As of June 30, 2023, the annual interest rate payable on borrowings under our revolving credit facility was 6.6%. As of June 30, 2023 and July 25, 2023, we had $240,000 and $230,000, respectively, outstanding under our revolving credit facility, and $510,000 and $520,000, respectively, available for borrowing.

Our credit agreement includes a feature under which the maximum borrowing availability may be increased to up to $1,950,000 in certain circumstances.

Our credit agreement provides that, with certain exceptions, a subsidiary of ours is required to guaranty our obligations under our $750,000 revolving credit facility only if that subsidiary has separately incurred debt (other than nonrecourse debt), within the meaning specified in our credit agreement, or provided a guarantee of debt incurred by us or any of our other subsidiaries.

Mortgage Notes Issuances

During the six months ended June 30, 2023, we issued four mortgage notes with an aggregate principal balance of $108,120 and a weighted average interest rate of 7.863%. The net proceeds from these mortgage loans were used to repay amounts outstanding under our revolving credit facility. See Note 6 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information regarding our mortgage note issuances.

Mortgage Note Repayment

In June 2023, we repaid at maturity, a mortgage note secured by one property with an outstanding principal balance of $50,000 and an annual interest rate of 3.7% using cash on hand and borrowings under our revolving credit facility.

As of June 30, 2023, our debt maturities (other than our revolving credit facility), consisting of senior unsecured notes and mortgage notes, were as follows:


Year	Debt Maturities
2023	$	—
2024	350,000
2025	650,000
2026	300,000
2027	350,000
2028 and thereafter	670,120
Total	$	2,320,120

None of our unsecured debt obligations require sinking fund payments prior to their maturity dates. Our mortgage debts currently require monthly payments of interest only; however, certain of our mortgages will require payments of principal and interest after a specified date through maturity.

In addition to our debt obligations, as of June 30, 2023, we had estimated unspent leasing related obligations of $151,798, of which we expect to spend $89,129 over the next 12 months.

We substantially completed the redevelopment of a property located in Washington, D.C. containing approximately 427,000 rentable square feet in June 2023. The total project costs associated with this redevelopment, including lease related costs that will continue to be incurred subsequent to the substantial completion date, will be approximately $227,000. As of June 30, 2023, we had incurred $177,165 related to this project. In June 2021, we entered into a 30-year lease for approximately 230,000 rentable square feet at this property that is approximately 25.1% higher than the prior rental rate for the same space, making the redevelopment project 54% pre-leased. See Note 10 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information regarding this lease and related redevelopment costs.

We are also in the process of redeveloping a three-property campus located in Seattle, WA containing approximately 300,000 rentable square feet. This project includes the repositioning of two properties from office to life science and maintaining the third property for office use. We currently estimate the total project costs associated with this redevelopment will be $162,000 and completion of the redevelopment in the fourth quarter of 2023. As of June 30, 2023, we had incurred $97,727 related to this project. In August 2022, we entered into an approximately 10-year lease for approximately 84,000

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rentable square feet at one of the life science properties that is approximately 109.0% higher than the prior rental rate for the same space, making the redevelopment project 28% pre-leased.

We currently expect to use cash balances, borrowings under our revolving credit facility, net proceeds from property sales, incurrences or assumptions of mortgage debt and net proceeds from offerings of debt or equity securities to fund our future operations, capital expenditures, distributions to our shareholders and property acquisitions. When significant amounts are outstanding under our revolving credit facility or the maturities of our indebtedness approach, we expect to explore refinancing alternatives. Such alternatives may include incurring term debt, issuing debt or equity securities, extending the maturity date of our revolving credit facility and entering into a new revolving credit facility. We may assume additional mortgage debt in connection with our acquisitions or elect to place new mortgages on properties we own as a source of financing. We may also seek to participate in additional joint ventures or other arrangements that may provide us with additional sources of financing. Although we cannot be sure that we will be successful in consummating any particular type of financing, we believe that we will have access to financing, such as debt and equity offerings, to fund future acquisitions and capital expenditures and to pay our obligations. We currently have an effective shelf registration statement that allows us to issue public securities on an expedited basis, but it does not assure that there will be buyers for such securities.

In connection with the execution of the Merger Agreement, we entered into a commitment letter, dated as of April 11, 2023, with JPM, pursuant to which JPM has committed to provide, subject to the terms and conditions of the commitment letter, a senior secured bridge facility to us in an aggregate principal amount of $368,000. Our overall financing strategy for the Merger is to separately secure loans on certain of the secured bridge facility collateral properties on more favorable terms. As of June 30, 2023, we have issued mortgage loans with an aggregate principal amount of $108,120, and as a result have amended the commitment letter to reduce the aggregate principal amount of the senior secured bridge facility to $259,880.

As a condition to the Merger, we have agreed to either extend or replace our existing credit agreement, on terms that, among other things, would not be reasonably likely to be materially adverse to the business, operations or financial condition of us after giving effect to the Merger and would not delay or prevent the consummation of the Merger. In addition, in connection with the closing of the Merger, we expect to pay off DHC’s credit facility and to assume $2,350,000 of principal amount of DHC’s unsecured senior notes.

Our ability to obtain, and the costs of, our future debt financings will depend primarily on credit market conditions and our creditworthiness. We have no control over market conditions. Potential investors and lenders likely will evaluate our ability to pay distributions to shareholders, fund required debt service and repay debts when they become due by reviewing our business practices and plans to balance our use of debt and equity capital so that our financial profile and leverage ratios afford us flexibility to withstand any reasonably anticipated adverse changes. Similarly, our ability to raise equity capital in the future will depend primarily upon equity capital market conditions and our ability to conduct our business to maintain and grow our operating cash flows. We intend to conduct our business in a manner that will afford us reasonable access to capital for investment and financing activities, but we cannot be sure that we will be able to successfully carry out this intention. For instance, it is uncertain what the ultimate impacts of inflationary pressures, rising or sustained high interest rates or any economic recession will be. A protracted and extensive economic recession or continued or intensified disruptions in capital markets could limit our access to financing from public sources and would likely increase our cost of capital.

During the six months ended June 30, 2023, we paid quarterly distributions to our shareholders totaling $38,851 using cash on hand and borrowings under our revolving credit facility. On July 13, 2023, we declared a regular quarterly distribution payable to shareholders of record on July 24, 2023 of $0.25 per share, or approximately $12,150. We expect to pay this distribution on or about August 17, 2023 using cash on hand and borrowings under our revolving credit facility. For more information regarding the distributions we paid and declared during 2023, see Note 8 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

We own 51% and 50% interests in two unconsolidated joint ventures which own three properties. The properties owned by these joint ventures are encumbered by an aggregate $82,000 principal amount of mortgage indebtedness, none of which is recourse to us. In July 2023, the maturity date of the mortgage loan secured by the property owned by our unconsolidated joint venture, in which we have a 50% interest, was extended by three years at the same interest rate. We do not control the activities that are most significant to these joint ventures and, as a result, we account for our investments in these joint ventures under the equity method of accounting. For more information on the financial condition and results of operations of these joint ventures, see Note 3 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Other than these joint ventures, as of June 30, 2023, we had no off balance sheet arrangements that have had or that we expect would be reasonably likely to have a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

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Debt Covenants (dollars in thousands)

Our principal debt obligations at June 30, 2023 consisted of $240,000 of borrowings outstanding under our revolving credit facility, an outstanding principal balance of $2,212,000 of public issuances of senior unsecured notes and mortgage notes with an outstanding principal balance $108,120. Also, the three properties owned by two joint ventures in which we own 51% and 50% interests secure two additional mortgage notes. Our publicly issued senior unsecured notes are governed by indentures and their supplements. Our credit agreement and our senior unsecured notes indentures and their supplements provide for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default, such as, in the case of our credit agreement, a change of control of us, which includes RMR ceasing to act as our business and property manager. Our credit agreement and our senior unsecured notes indentures and their supplements also contain a number of covenants, including those that restrict our ability to incur debts, including debts secured by mortgages on our properties, in excess of calculated amounts, require us to comply with certain financial covenants and, in the case of our credit agreement, restrict our ability to make distributions to our shareholders under certain circumstances. As of June 30, 2023, we believe we were in compliance with the terms and conditions of our respective covenants under our credit agreement and senior unsecured notes indentures and their supplements. Our mortgage notes are non-recourse, subject to certain limited exceptions, and do not contain any material financial covenants.

Neither our credit agreement nor our senior unsecured notes indentures and their supplements contain provisions for acceleration which could be triggered by our credit ratings. However, under our credit agreement, our highest senior credit rating is used to determine the fees and interest rates we pay. Accordingly, if that credit rating is downgraded, our interest expense and related costs under our credit agreement would increase. In March 2023, Moody’s Investors Service, or Moody’s, downgraded our senior unsecured debt rating from Ba1 to Ba2 and S&P Global Ratings downgraded our senior unsecured debt rating from BBB- to BB+. As a result, the interest rate premium under our revolving credit facility increased 35 basis points effective April 1, 2023. In April 2023, following the announcement of the Merger, Moody’s downgraded our senior unsecured debt rating from Ba2 to Ba3.

Our credit agreement has cross default provisions to other indebtedness that is recourse of $25,000 or more and indebtedness that is non-recourse of $50,000 or more. Similarly, our senior unsecured notes indentures and their supplements contain cross default provisions to any other debts of more than $25,000 (or up to $50,000 in certain circumstances).

Related Person Transactions

We have relationships and historical and continuing transactions with RMR, RMR Inc. and others related to them. For more information about these and other such relationships and related person transactions, see Notes 9 and 10 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, our 2022 Annual Report, our definitive Proxy Statement for our 2023 Annual Meeting of Shareholders and our other filings with the SEC. In addition, see the section captioned “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q and in Part I, Item 1A of our 2022 Annual Report for a description of risks that may arise as a result of these and other related person transactions and relationships. We may engage in additional transactions with related persons, including businesses to which RMR or its subsidiaries provide management services.

Critical Accounting Estimates

The preparation of our Condensed Consolidated Financial Statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the Condensed Consolidated Financial Statements include purchase price allocations, useful lives of fixed assets and assessment of impairment of real estate and the related intangibles.

A discussion of our critical accounting estimates is included in our 2022 Annual Report. There have been no significant changes in our critical accounting estimates since the year ended December 31, 2022.

Item 3. Quantitative and Qualitative Disclosures About Market Risk (dollar amounts in thousands, except per share data)

We are exposed to risks associated with market changes in interest rates. We manage our exposure to this market risk by monitoring available financing alternatives. Our strategy to manage exposure to changes in interest rates has not materially changed since December 31, 2022. Other than as described below, we do not currently foresee any significant changes in our exposure to fluctuations in interest rates or in how we manage this exposure in the near future.

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Fixed Rate Debt

At June 30, 2023, our outstanding fixed rate debt consisted of the following:


Debt	Principal Balance (1)		Annual Interest Rate (1)	Annual Interest Expense		Maturity	Interest Payments Due




Senior unsecured notes	$	350,000	4.250%	$	14,875	2024	Semi-annually
Senior unsecured notes	650,000		4.500%	29,250		2025	Semi-annually
Senior unsecured notes	300,000		2.650%	7,950		2026	Semi-annually
Senior unsecured notes	350,000		2.400%	8,400		2027	Semi-annually
Senior unsecured notes	400,000		3.450%	13,800		2031	Semi-annually
Senior unsecured notes	162,000		6.375%	10,328		2050	Quarterly
Mortgage note (one property in Landover, MD)	30,680		7.210%	2,212		2033	Monthly
Mortgage note (one property in Sterling, VA)	26,340		8.139%	2,144		2028	Monthly
Mortgage note (one property in Ewing, NJ)	42,700		8.272%	3,532		2028	Monthly
Mortgage note (one property in San Jose, CA)	8,400		7.305%	614		2033	Monthly


Total	$	2,320,120		$	93,105

(1)The principal balances and annual interest rates are the amounts stated in the applicable contracts. In accordance with GAAP, our carrying values and recorded interest expense may differ from these amounts because of market conditions at the time we issued or assumed these debts. For more information, see Notes 6 and 7 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Our senior unsecured notes require semi-annual or quarterly interest payments through maturity. Our mortgage notes require monthly payments of interest only or payments of principal and interest through maturity. Because these debts require interest to be paid at a fixed rate, changes in market interest rates during the term of these debts will not affect our interest obligations. If these debts were refinanced at interest rates which are one percentage point higher or lower than shown above, our annual interest cost would increase or decrease by approximately $23,201.

Changes in market interest rates also would affect the fair value of our fixed rate debt obligations; increases in market interest rates decrease the fair value of our fixed rate debt, while decreases in market interest rates increase the fair value of our fixed rate debt. Since the beginning of 2022, the U.S. Federal Reserve has been raising interest rates in an effort to combat inflation and may continue to do so. Based on the balances outstanding at June 30, 2023, and discounted cash flow analyses through the respective maturity dates, and assuming no other changes in factors that may affect the fair value of our fixed rate debt obligations, a hypothetical immediate one percentage point increase in interest rates would change the fair value of those obligations by approximately $69,266.

Our fixed rate debt arrangements may allow us to make repayments earlier than the stated maturity date. In some cases, we are not allowed to make early repayment prior to a cutoff date and we are generally allowed to make prepayments only at a premium equal to a make whole amount, as defined, which is generally designed to preserve a stated yield to the note holder. These prepayment rights may afford us opportunities to mitigate the risk of refinancing our debts at maturity at a higher rate by refinancing prior to maturity.

In addition to the fixed rate debt presented in the table above, at June 30, 2023, we had noncontrolling ownership interests of 51% and 50% in two unconsolidated joint ventures that own three properties that are secured by fixed rate debt consisting of the following mortgage notes:


Debt	Our JV Ownership Interest	Principal Balance (1)(2)		Annual Interest Rate (1)	Annual Interest Expense		Maturity	Interest Payments Due
Mortgage note (two properties in Fairfax, VA)	51%	$	50,000	4.090%	$	2,045	2029	Monthly
Mortgage note (one property in Washington, D.C.) (3)	50%	32,000		3.690%	1,181		2027	Monthly
Total		$	82,000		$	3,226

(1)The principal balances and annual interest rates are the amounts stated in the applicable contracts. In accordance with GAAP, the joint ventures’ recorded interest expense may differ from these amounts because of market conditions at the time they incurred the debt.

(2)Reflects the entire balance of the debt secured by the properties and is not adjusted to reflect the interests in the joint ventures we do not own. None of the debt is recourse to us.

(3)In July 2023, the maturity date of this mortgage loan was extended by three years at the same interest rate.

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Floating Rate Debt

At June 30, 2023, our floating rate debt consisted of $240,000 outstanding under our $750,000 revolving credit facility. Our revolving credit facility matures on January 31, 2024. No principal repayments are required under our revolving credit facility prior to maturity, and we can borrow, repay and reborrow funds available under our revolving credit facility, subject to conditions, at any time without penalty.

Borrowings under our revolving credit facility are in U.S. dollars and require interest to be paid at a rate of SOFR plus premiums that are subject to adjustment based upon changes to our credit ratings. Accordingly, we are vulnerable to changes in U.S. dollar based short term rates, specifically SOFR, and to changes in our credit ratings. In addition, upon renewal or refinancing of our revolving credit facility, we are vulnerable to increases in interest rate premiums due to market conditions or our perceived credit characteristics. Generally, a change in interest rates would not affect the value of our floating rate debt but would affect our operating results.

The following table presents the impact a one percentage point increase in interest rates would have on our annual floating rate interest expense as of June 30, 2023:


	Impact of an Increase in Interest Rates
	Annual Interest Rate (1)		Outstanding Debt		Total Interest Expense Per Year		Annual Earnings Per Share Impact (2)
At June 30, 2023	6.6	%	$	240,000	$	15,840	$	0.33
One percentage point increase	7.6	%	$	240,000	$	18,240	$	0.38

(1)Based on SOFR plus a premium, which was 145 basis points per annum, as of June 30, 2023.

(2)Based on the weighted average shares outstanding (diluted) for the six months ended June 30, 2023.

The following table presents the impact a one percentage point increase in interest rates would have on our annual floating rate interest expense as of June 30, 2023 if we were fully drawn on our revolving credit facility:


	Impact of an Increase in Interest Rates
	Annual Interest Rate (1)		Outstanding Debt		Total Interest Expense Per Year		Annual Earnings Per Share Impact (2)
At June 30, 2023	6.6	%	$	750,000	$	49,500	$	1.02
One percentage point increase	7.6	%	$	750,000	$	57,000	$	1.18

(1)Based on SOFR plus a premium, which was 145 basis points per annum, as of June 30, 2023.

(2)Based on the weighted average shares outstanding (diluted) for the six months ended June 30, 2023.

The foregoing tables show the impact of an immediate increase in floating interest rates as of June 30, 2023. If interest rates were to increase gradually over time, the impact would be spread over time. Our exposure to fluctuations in floating interest rates will increase or decrease in the future with increases or decreases in the outstanding amount under our revolving credit facility or our other floating rate debt, if any. Although we have no present plans to do so, we may in the future enter into hedge arrangements from time to time to mitigate our exposure to changes in interest rates.

Item 4. Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, our management carried out an evaluation, under the supervision and with the participation of our Managing Trustees, our President and Chief Operating Officer and our Chief Financial Officer and Treasurer, of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, our Managing Trustees, our President and Chief Operating Officer and our Chief Financial Officer and Treasurer concluded that our disclosure controls and procedures are effective.

There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Warning Concerning Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws that are subject to risks and uncertainties. These statements may include words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “will”, “may” and negatives or derivatives of these or similar expressions. These forward-looking statements include, among others, statements about: the Merger and plans and expectations for the combined entity, including our financing strategy for the Merger; economic and market conditions; demand for office lease space; our future leasing activity; our leverage levels and possible future financings; our liquidity needs and sources; our capital expenditure plans and commitments; our capital recycling program; acquisitions and dispositions; our redevelopment and construction activities and plans; and the amount and timing of future distributions.

Forward-looking statements reflect our current expectations, are based on judgments and assumptions, are inherently uncertain and are subject to risks, uncertainties and other factors, which could cause our actual results, performance or achievements to differ materially from expected future results, performance or achievements expressed or implied in those forward-looking statements. Some of the risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, but are not limited to, the following:

•The likelihood that we will complete the Merger and related transactions, including our and DHC’s ability to obtain shareholder approval, our ability to obtain an amendment or replacement of our credit agreement and obtaining other financing, consents or approvals required in connection with the Merger, and that our shareholders will benefit from the Merger,

•The impact of increasing or sustained high interest rates, inflation, labor market challenges, dislocation and volatility in the public equity and debt markets, conditions in the commercial real estate industry generally and in the sectors we operate, geopolitical instability and economic downturns or recessions on us and our tenants,

•The extent to which changes in office space utilization and needs, including due to remote work arrangements, may impact demand for office space at our properties,

•The financial strength of our tenants,

•Risks and uncertainties regarding the costs and timing of development, redevelopment and repositioning activities, including as a result of inflation, cost overruns, supply chain challenges, labor shortages, construction delays or inability to obtain necessary permits,

•Whether our tenants will renew or extend their leases and not exercise early termination options pursuant to their leases or that we will obtain replacement tenants on terms as favorable to us as our prior leases,

•Our ability to successfully recycle and deploy capital,

•The likelihood that our tenants will pay rent or be negatively affected by cyclical economic conditions or government budget constraints,

•Our ability to pay distributions to our shareholders and to maintain or increase the amount of such distributions,

•Our ability to increase or maintain occupancy at our properties on terms desirable to us,

•Our ability to increase rents when our leases expire or renew,

•Our tenant and geographic concentration,

•Our ability to manage our capital expenditures and other operating costs effectively and to maintain and enhance our properties and their appeal to tenants,

•Our ability to acquire properties that realize our targeted returns,

•Our ability to sell properties at prices we target,

•Our ability to cost effectively raise and balance our use of debt and equity capital,

•Our ability to make required payments on our debt,

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•Our ability to maintain sufficient liquidity, including the availability of borrowings under our revolving credit facility, and otherwise manage leverage,

•Our credit ratings,

•The ability of our manager, RMR, to successfully manage us,

•Our qualification for taxation as a REIT,

•Changes in federal or state tax laws,

•Competition within the commercial real estate industry, particularly in those markets in which our properties are located,

•Compliance with, and changes to, federal, state and local laws and regulations, accounting rules, tax laws and similar matters,

•The impact of any U.S. government shutdown or failure to increase the government debt ceiling on our ability to collect rents and pay our operating expenses, debt obligations and distributions to shareholders on a timely basis,

•Actual and potential conflicts of interest with our related parties, including our Managing Trustees, RMR, Sonesta and others affiliated with them,

•Limitations imposed by and our ability to satisfy complex rules to maintain our qualification for taxation as a REIT for U.S. federal income tax purposes,

•Acts of terrorism, outbreaks or continuation of pandemics or other public health safety events or conditions, war or other hostilities, material or prolonged disruption to supply chains, climate change, or other manmade or natural disasters beyond our control, and

•Other matters.

These risks, uncertainties, and other factors are not exhaustive and should be read in conjunction with other cautionary statements that are included in our periodic filings. The information contained in our filings with the SEC, including under the caption “Risk Factors” in this Quarterly Report on Form 10-Q and our other periodic reports, or incorporated herein or therein, identifies important factors that could cause differences from the forward-looking statements in this Quarterly Report on Form 10-Q. Our filings with the SEC are available on the SEC’s website at www.sec.gov.

You should not place undue reliance upon our forward-looking statements.

Except as required by law, we do not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.

Statement Concerning Limited Liability

The amended and restated declaration of trust establishing Office Properties Income Trust, dated June 8, 2009, as amended, as filed with the State Department of Assessments and Taxation of Maryland, provides that no trustee, officer, shareholder, employee or agent of Office Properties Income Trust shall be held to any personal liability, jointly or severally, for any obligation of, or claim against, Office Properties Income Trust. All persons dealing with Office Properties Income Trust in any way shall look only to the assets of Office Properties Income Trust for the payment of any sum or the performance of any obligation.

Part II. Other Information

Item 1. Legal Proceedings

On July 12, 2023, we and our board of trustees were sued in a lawsuit captioned Stephen Bushansky v. Office Properties Income Trust et al., Case No. 1:23-cv-05993, or the Bushansky Action, filed in the United States District Court for the Southern District of New York in connection with the Merger. The complaint in the Bushansky Action alleges that we and our board of trustees violated federal securities laws by omitting or misstating material information in the Form S-4. The Plaintiff in the Bushansky Action seeks, among other things, (i) to enjoin the Merger until the alleged deficiencies in the Form S-4 are

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corrected and (ii) attorneys’ and experts’ fees and costs in connection with the lawsuit. We believe that such lawsuit is without merit.

Item 1A. Risk Factors

Our business is subject to risks and uncertainties, a number of which are described under the caption “Risk Factors” in our 2022 Annual Report. The Merger may subject us to additional risks that are described below. The risks described in our 2022 Annual Report and below may not be the only risks we face but are risks we believe may be material at this time. Other risks of which we are not yet aware, or that we currently believe are not material, may also materially and adversely impact our business operations or financial results. If any of the events or circumstances described in the risk factors contained in our 2022 Annual Report or included below occurs, our business, financial condition, liquidity, results of operations or ability to pay distributions to our shareholders could be adversely impacted and the value of an investment in our securities could decline. Investors and prospective investors should consider the risks described in our 2022 Annual Report and below and the information contained under the caption “Warning Concerning Forward-Looking Statements” and elsewhere in this Quarterly Report on Form 10-Q before deciding whether to invest in our securities.

Risks Relating to the Merger

The Exchange Ratio is fixed and will not be adjusted for any changes in the market price of either our common shares or the DHC Common Shares.

At the Effective Time, each DHC Common Share outstanding immediately prior to the Effective Time will be converted into the right to receive 0.147 of our newly issued common shares, or the Merger Consideration, subject to adjustment for certain reclassifications, distributions, recapitalizations or similar transactions and other exceptional distributions as described in the Merger Agreement, with cash paid in lieu of fractional shares. The Exchange Ratio is fixed in the Merger Agreement and will not be adjusted for changes in the market price of our common shares or the DHC Common Shares. Changes in the market price of our common shares prior to the consummation of the Merger will affect the market value of the Merger Consideration. As of July 25, 2023, the closing price of our common shares decreased from $11.55 on April 10, 2023, the last trading day before the public announcement of the Merger, to $7.67, and the closing price of the DHC Common Shares increased from $1.24 on April 10, 2023 to $2.36, and, as a result of such changes, the implied value of the merger consideration per DHC Common Share decreased from $1.70 on April 10, 2023 to $1.13 on July 25, 2023.

The market price of our common shares and the DHC Common Shares may change as a result of a variety of factors (many of which are beyond our and DHC’s control), including the following:

•market reaction to the announcement of the Merger and the Share Issuance, approval by our shareholders of the Merger and the Share Issuance and approval by the DHC shareholders of the Merger;

•changes in our or DHC’s respective businesses, operations, assets, liabilities, financial position and prospects, or in the market’s assessments thereof, or of the prospects of the combined company following the Merger;

•changes in the operating performance of us or DHC, or similar companies;

•changes in market valuations of similar companies;

•market assessments of the likelihood that the Merger will be completed;

•the possibility that persons may engage in short sales of our common shares or the DHC Common Shares;

•changes or anticipated changes in interest rates, general market and economic conditions and other factors generally affecting the price of our common shares and the DHC Common Shares;

•market assessments relating to the likelihood and terms of the financing to be obtained in connection with the Merger;

•federal, state and local legislation, governmental regulation and legal developments in the businesses in which we and DHC operate;

•shareholder litigation relating to the Merger or dissident shareholder activity;

•changes that affect the real estate market generally or the sectors applicable to us or DHC;

•changes in the United States or global economy or capital, financial or securities markets generally;

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•any reductions in our regular quarterly cash distribution on our common shares; and

•other factors beyond our or DHC’s control, including those described and referred to above under this “Risk Factors” section.

The market price of our common shares at the consummation of the Merger may vary from the price on the date the Merger Agreement was executed, on the date of the joint proxy statement/prospectus to be included in the Form S-4, on the date of our special meeting of shareholders and on the date of the DHC special meeting of shareholders. As a result, the market value of the Merger Consideration represented by the Exchange Ratio will also vary. Because the Merger will be completed after the date of the special meetings, at the time of the applicable special meeting, the exact market price of our common shares that DHC shareholders will receive upon consummation of the Merger will not be known. You should therefore consider that:

•if the market price of our common shares increases between the date the Merger Agreement was signed or the date of our special meeting or the DHC special meeting and the closing of the Merger, DHC shareholders will receive common shares of ours that have a market value upon consummation of the Merger that is greater than, as applicable, the market value of such shares calculated pursuant to the Exchange Ratio on the date the Merger Agreement was signed or on the date of our special meeting or the DHC special meeting, respectively; and

•if the market price of our common shares declines between the date the Merger Agreement was signed or the date of our special meeting or the DHC special meeting and the closing of the Merger, DHC shareholders will receive a number of our common shares that have a market value upon consummation of the Merger that is less than, as applicable, the market value of such shares calculated pursuant to the Exchange Ratio on the date the Merger Agreement was signed or on the date of our special meeting or the DHC special meeting, respectively.

The Merger is subject to the satisfaction or waiver of conditions which may not be satisfied or completed on a timely basis, if at all. Failure to complete the Merger could have material and adverse effects on us and could result in us being required to pay DHC a termination fee.

The consummation of the Merger is subject to the satisfaction or waiver of conditions, including, among others, (i) the receipt of approvals by our shareholders of the Merger and the Share Issuance, (ii) the receipt of the approval by DHC’s shareholders of the Merger, and (iii) the extension or replacement of our revolving credit agreement on terms that, among other things, would not be reasonably likely to be materially adverse to our business, operations or financial condition after giving effect to the Merger and would not delay or prevent the consummation of the Merger. These conditions make the completion and the timing of the completion of the Merger uncertain. Also, either we or DHC may terminate the Merger Agreement if the Merger is not completed by September 30, 2023, except that this right to terminate the Merger Agreement will not be available to a party if that party failed to fulfill its obligations under the Merger Agreement and that failure was a principal cause of, or resulted in, the failure of the Merger to be completed on or before such date.

We cannot provide assurance that the Merger will be consummated on the terms or timeline currently contemplated, or at all. If the Merger is not completed on a timely basis, or at all, we may be adversely affected and subject to a number of risks, including the following:

•we will be required to pay our costs relating to the Merger, such as financial advisory, legal, accounting and printing fees, whether or not the Merger is completed;

•if the Merger Agreement is terminated under certain circumstances specified therein, we may be required to pay to DHC a termination fee of $11.2 million;

•we may experience negative reactions from the financial markets or our tenants or vendors;

•the time and resources committed by our management to matters relating to the Merger could otherwise have been devoted to pursuing other opportunities;

•we may experience challenges with indebtedness, including compliance with the terms governing existing indebtedness and/or refinancing such indebtedness; and

•the market price of our common shares could decline to the extent that the current market price reflects, and is positively affected by, a market assumption that the Merger will be completed.

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We or DHC may waive one or more of the conditions to the Merger without re-soliciting shareholder approval.

If permitted by applicable law, we or DHC may determine to waive, in whole or in part, one or more of the conditions to our or DHC’s obligations to consummate the Merger. Any determination whether to waive any condition to the Merger and whether to re-solicit shareholder approval or amend the joint proxy statement/prospectus as a result of a waiver will be made by us or DHC, as applicable, at the time of such waiver based on the facts and circumstances as they exist at that time.

The Merger Agreement contains provisions that could discourage a potential competing acquirer of either us or DHC, or could result in any competing proposal being at a lower price than it might otherwise be.

The Merger Agreement contains provisions that, subject to certain exceptions, restrict our ability and the ability of DHC to initiate, solicit, propose, knowingly encourage or knowingly facilitate competing third-party proposals to effect, among other things, a merger, reorganization, share exchange, consolidation or the sale of 20% or more of the shares or consolidated net revenues, net income or total assets of us or DHC. In addition, we and DHC generally each have an opportunity to offer to modify the terms of the Merger Agreement in response to any superior proposal (as defined in the Merger Agreement) that may be made to the other party, and our or DHC’s board of trustees, in each case acting on the recommendation of the special committee of the respective board, or our or DHC’s special committee as the case may be, may withdraw or modify its recommendation in response to such superior proposal or terminate the Merger Agreement to enter into a definitive agreement with respect to such superior proposal. Upon termination of the Merger Agreement under certain circumstances relating to an acquisition proposal, we may be required to pay to DHC a termination fee of $11.2 million, or DHC may be required to pay to us a termination fee of $5.9 million, in each case plus reasonable fees and expenses.

These provisions could discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of us or DHC from considering or proposing such an acquisition, even if it were prepared to pay consideration with a higher per share value or implied premium to our shareholders than the value proposed to be received or expected to be realized in the Merger, or might result in a potential competing acquirer proposing to pay a lower price than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable in certain circumstances under the Merger Agreement.

If the Merger Agreement is terminated and we determine to seek another business combination, we may not be able to negotiate a transaction with another party on terms comparable to, or better than, the terms of the Merger contemplated by the Merger Agreement.

Our and DHC’s business and property management agreements with RMR contain provisions that could discourage a potential competing acquirer of either us or DHC, or could result in any competing proposal being at a significantly lower price than it might otherwise be.

The termination of our or DHC’s business and property management agreements with RMR may require us or DHC, as applicable, to pay a substantial termination fee to RMR. RMR has agreed to waive its right to receive payment of the termination fees under its business and property management agreements with DHC upon the termination of those agreements when the Merger is consummated. This waiver by RMR applies only in respect of the Merger and does not apply in respect of any competing proposal, superior proposal or other transaction or arrangement. The termination provisions of our or DHC’s business and property management agreements with RMR substantially increase the cost to us and DHC of terminating these agreements, which may discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of us or DHC from considering or proposing such an acquisition or could result in any competing proposal being at a significantly lower price than it might otherwise be.

The pendency of the Merger could adversely affect our and DHC’s business and operations.

During the pendency of the Merger, due to operating covenants in the Merger Agreement, we and DHC may each be unable to undertake or pursue certain strategic transactions or significant capital projects, financing transactions or other actions that are not in the ordinary course of business, even if such actions may be beneficial to us or DHC. In addition, some tenants, vendors or other contractual counterparties may delay or defer decisions related to their business dealings with us and DHC, or exercise consent, termination or other contractual rights, during the pendency, or as a result, of the Merger, which could negatively impact the revenues, earnings, cash flows or expenses of us, DHC and/or the combined company, regardless of whether the Merger is completed.

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Our Trustees and executive officers, DHC’s trustees and executive officers and RMR and RMR Inc. may each have interests in the Merger that are different from, or in addition to, the interests of our and DHC’s shareholders, generally. This may create a potential divergence of interest or the appearance thereof.

The interests of our and DHC’s respective trustees and executive officers and of RMR and RMR Inc. include, among other things, the continued service as a trustee or executive officer of the combined company following the Merger, as applicable, certain rights to continuing indemnification and directors’ and officers’ liability insurance for DHC’s trustees and executive officers, continuation of our business and property management agreements with RMR following the Merger, from which RMR earns significant fees, and the potential for increased fees payable to RMR in connection with the Merger. There is a risk that these interests may influence our and DHC’s respective trustees and executive officers and RMR to support the Merger. Although there is no change in the formulas used to determine fees payable by the combined company to RMR compared to our or DHC’s existing management agreements with RMR, improved performance by the combined company compared to the applicable benchmarks could result in the combined company paying an incentive fee (or an increased incentive fee, as applicable) given that the performance of the combined company may be different than our or DHC’s performance on a stand-alone basis.

In addition, certain members of our and DHC’s boards of trustees and special committees serve or have served as members of the boards of trustees or directors of companies managed by RMR. There is a risk that these interests may influence our and DHC’s respective trustees and executive officers and RMR and RMR Inc. to support the Merger.

These interests of our and DHC’s respective trustees and executive officers and of RMR and RMR Inc. in the Merger may increase the risk of litigation intended to enjoin or prevent the Merger and the risk of other dissident shareholder activity related thereto. In the past, and in particular following the announcement of a significant transaction, periods of volatility in the overall market or declines in the market price of a company’s securities, shareholder litigation and dissident shareholder proposals have often been instituted against companies alleging conflicts of interest in business dealings with affiliated or related persons and entities. The relationships described above may precipitate such activities by dissident shareholders and, if instituted against us or DHC or our respective trustees or executive officers, such activities could result in substantial costs, a material delay or prevention of the Merger and a diversion of management’s attention, even if the shareholder action is without merit or unsuccessful.

Lawsuits may be commenced seeking to enjoin or prevent the Merger or seeking other relief which may delay or prevent the completion of the Merger and result in us or DHC incurring substantial costs.

Public company merger and acquisition transactions are often subject to lawsuits initiated by plaintiff’s counsel seeking to enjoin or prevent the transaction or obtain other relief. We, our Trustees, officers and advisors and DHC, its trustees, officers and advisors may become subject to similar litigation with respect to the Merger. We are aware that several law firms have indicated that they are investigating the Merger and related matters, including actions taken by our board of trustees, to determine whether they may seek to assert claims. On July 12, 2023, we and our board of trustees were sued in a lawsuit filed in the United States District Court for the Southern District of New York in which the plaintiff alleges that we and our board of trustees violated federal securities laws by omitting or misstating material information in the Form S-4. In addition, DHC has received several demand letters alleging omissions of material information from the joint proxy statement/prospectus. Any such lawsuit could seek, among other things, injunctive or other equitable relief including a request to rescind parts of the Merger Agreement and to otherwise enjoin the parties from consummating the Merger, as well as require payment of fees and other costs by the defendants. We, DHC and any other defendant may incur substantial costs defending any such lawsuit, as well as the distraction of management’s attention, even if such lawsuits are without merit or unsuccessful. No assurance can be made as to the outcome of any such lawsuits. If the plaintiffs were successful in obtaining an injunction prohibiting the parties from completing the Merger or in obtaining other relief, the completion of the Merger may be prevented or delayed or its terms could change.

Following the Merger, the principal amount of our indebtedness will increase and we may need to incur more debt in the future. Such increase in our indebtedness may increase the risks we face.

We expect to assume DHC’s indebtedness upon consummation of the Merger. As of June 30, 2023, we had approximately $2.6 billion in principal amount of indebtedness and DHC had approximately $2.8 billion in principal amount of indebtedness. Our increased indebtedness could have important consequences to holders of our common shares, including:

•increasing our vulnerability to general adverse economic and industry conditions, including inflationary pressures and rising and sustained high interest rates;

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•requiring us to use a substantial portion of our cash flow from operations to service our indebtedness, which would reduce the available cash flow to fund working capital, capital expenditures, development or redevelopment projects and other general corporate purposes and reduce the cash available for distributions;

•limiting our ability to obtain additional financing on favorable terms or at all in order to refinance existing debts or fund working capital, capital expenditures, development or redevelopment projects, acquisitions, other debt service requirements or for other general corporate purposes;

•increasing the costs to us of incurring additional debt;

•increasing our exposure to floating interest rates;

•limiting our ability to compete with other companies that are not as highly leveraged, as we may be less capable of responding to adverse economic and industry conditions;

•restricting us from making strategic acquisitions, developing or redeveloping properties, or exploiting business opportunities;

•restricting the way in which we conduct our business because of financial and operating covenants in the agreements governing our existing and future indebtedness;

•exposing us to potential events of default (if not cured or waived) under covenants contained in debt instruments that could have a material adverse effect on our business, financial condition and operating results;

•exposing us to operating difficulties due to an increased amount of secured debt; and

•limiting our ability to react to changing market conditions in the real estate industry.

In addition, the agreements governing our future indebtedness may contain covenants and terms that are more restrictive than the covenants and terms governing our existing indebtedness, including restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us or the combined company, among other things, to obtain additional capital, pursue business opportunities and pay distributions.

The impact of any of these potential adverse consequences could have a material adverse effect on our results of operations, financial condition and liquidity. If we default under any of our debt obligations, we may be in default under other debt agreements of ours that have cross default provisions, including our credit agreement and our senior unsecured notes indentures and their supplements. In such case, our lenders or noteholders may demand immediate payment of any outstanding debt and we could be forced to liquidate our assets for less than the values we would receive in a more orderly process.

Risks Relating to Taxation

We may incur adverse tax consequences if DHC has failed or fails to qualify for taxation as a REIT for United States federal income tax purposes.

If DHC has failed or fails to qualify for taxation as a REIT for United States federal income tax purposes and the Merger is completed, we may inherit significant tax liabilities and could lose our qualification for taxation as a REIT should DHC’s disqualifying activities continue after the Merger. Even if we retain our qualification for taxation as a REIT, if DHC does not qualify for taxation as a REIT for a taxable year before the Merger or the taxable year that includes the Merger and if no relief is available, we will face serious tax consequences that could substantially reduce our cash available for distribution to our shareholders because:

•we, as successor by merger to DHC, will inherit any of DHC’s corporate income tax liabilities, including penalties and interest;

•we would be subject to tax on the built-in gain on each asset of DHC existing at the Effective Time if we were to dispose of a DHC asset during the five year period following the Effective Time; and

•we, as successor by merger to DHC, will inherit any DHC earnings and profits and could be required to pay a special distribution and/or employ applicable deficiency dividend procedures (including interest payments to the United States Internal Revenue Service) to eliminate any earnings and profits accumulated by DHC for taxable periods for which DHC did not qualify for taxation as a REIT.

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As a result of these factors, DHC’s failure before the Merger to qualify for taxation as a REIT could impair our ability after the Merger to expand our business and raise capital, and could materially adversely affect the value of our common shares.

Finally, if there is an adjustment to DHC’s real estate investment trust taxable income or dividends paid deductions, we could elect to use the deficiency dividend procedure in respect of preserving DHC’s REIT qualification. That deficiency dividend procedure could require us to make significant distributions to our shareholders and to pay significant interest to the United States Internal Revenue Service.

REITs are subject to a range of complex organizational and operational requirements.

As REITs, we and DHC must distribute to our respective shareholders with respect to each taxable year at least 90% of our REIT taxable income (which does not equal net income, as calculated in accordance with GAAP), without regard to the deduction for dividends paid and excluding net capital gain. A REIT must also meet certain requirements with respect to the nature of its income and assets and the ownership of its shares. For any taxable year that we or DHC fail to qualify for taxation as a REIT, we or DHC, as applicable, will not be allowed a deduction for distributions paid to our or DHC’s shareholders, as applicable, in computing taxable income, and thus would become subject to United States federal income tax as if we or DHC were a regular taxable corporation. In such an event, we or DHC, as the case may be, could be subject to potentially significant tax liabilities. Unless entitled to relief under certain statutory provisions, we or DHC, as the case may be, would also be disqualified from treatment as a REIT for the four taxable years following the year in which we or DHC lost our qualification, and dispositions of assets within five years after requalifying as a REIT could give rise to gain that would be subject to corporate income tax. If we or DHC failed to qualify for taxation as a REIT, the market price of our common shares may decline, and we may need to reduce substantially the amount of distributions to our shareholders because of our potentially increased tax liability.

Risks Relating to an Investment in Our Common Shares Following the Merger

The market price of our common shares may decline as a result of the Merger or the Share Issuance.

The market price of our common shares may decline as a result of the Merger if we do not achieve the perceived benefits of the Merger or the effect of the Merger on our financial results is not consistent with the expectations of financial or industry analysts. In addition, upon consummation of the Merger, our shareholders and DHC shareholders will own our common shares, and we will operate an expanded business with a different mix of assets, liabilities and risks. Our and DHC’s respective current shareholders may not wish to continue to invest in the combined company, or for other reasons may wish to dispose of some or all of our common shares that they own. If, following the Effective Time, large amounts of our common shares are sold, the market price of our common shares could decline.

The combined company may not continue to pay distributions at or above the rate currently paid by us.

Our Board of Trustees reduced our cash distribution rate to $0.25 per share per quarter, or $1.00 per share per year, beginning in the second quarter of 2023. The combined company may not be able to increase or maintain this distribution rate for various reasons, including the following:

•the combined company may not have sufficient cash to pay such distributions due to capital expenditure requirements or changes in its cash requirements, cash flow or financial position, including as a result of the additional indebtedness incurred in connection with the Merger;

•decisions on whether, when and in what amounts to pay any future distributions will remain at all times entirely at the discretion of the combined company’s board of trustees, which reserves the right to change its distribution practices at any time and for any reason, subject to applicable REIT requirements; and

•any of the other risks described herein or in our 2022 Annual Report.

The timing, amount and form of any future combined company distributions will be determined at the discretion of the combined company’s board of trustees, and the combined company’s shareholders will have no contractual or other legal right to distributions that have not been declared by the combined company’s board of trustees.

The market price and trading volume of our common shares may be volatile following the Merger.

Our common shares may experience significant price and volume fluctuations, and investors in our common shares may experience a decrease in the value of their shares, including decreases unrelated to our operating performance or prospects. We cannot assure that the market price of our common shares will not fluctuate or decline significantly in the future.

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In the past, securities class action litigation has often been instituted against companies following periods of volatility in the price of their common shares. This type of litigation could result in substantial costs and divert the combined company’s management’s attention and resources, which could have a material adverse effect on its cash flows, its ability to execute its business strategy and/or its ability to make distributions to its shareholders.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer purchases of equity securities. The following table provides information about our purchases of our equity securities during the quarter ended June 30, 2023:


Calendar Month	Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
May 1, 2023 - May 31, 2023	5,165	$	6.04	—	$	—
June 1, 2023 - June 30, 2023	1,614	7.90		—	—



Total	6,779	$	6.48	—	$	—

(1)These common share withholdings and purchases were made to satisfy tax withholding and payment obligations of one of our Trustees and certain former officers and employees of RMR in connection with the vesting of awards of our common shares to them. We withheld and purchased these shares at their fair market values based upon the trading prices of our common shares at the close of trading on Nasdaq on the purchase dates.

Item 6. Exhibits


Exhibit Number			Description
2.1			Agreement and Plan of Merger, dated as of April 11, 2023, by and among the Company and Diversified Healthcare Trust. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on April 12, 2023.)
3.1			Composite Copy of Amended and Restated Declaration of Trust, dated June 8, 2009, as amended to date. (Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.)

3.2			Second Amended and Restated Bylaws of the Company, adopted June 13, 2023. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 13, 2023.)

4.1			Form of Common Share Certificate. (Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 2018.)

4.2			Indenture, dated as of July 20, 2017, between the Company and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association). (Incorporated by reference to the Company’s Current Report on Form 8-K filed on July 21, 2017.)

4.3			Second Supplemental Indenture, dated as of June 23, 2020, between the Company and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), relating to the Company’s 6.375% Senior Notes due 2050, including form thereof. (Incorporated by reference to the Company’s Registration Statement on Form 8-A filed on June 23, 2020.)

4.4			Third Supplemental Indenture, dated as of May 18, 2021, between the Company and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), relating to the Company’s 2.650% Senior Notes due 2026, including form thereof. (Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2021.)

4.5			Fourth Supplemental Indenture, dated as of August 13, 2021, between the Company and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), relating to the Company’s 2.400% Senior Notes due 2027, including form thereof. (Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.)

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4.6			Fifth Supplemental Indenture, dated as of September 28, 2021, between the Company and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), relating to the Company’s 3.450% Senior Notes due 2031, including form thereof. (Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.)

4.7			Indenture, dated as of February 3, 2015, between the Company (as successor to Select Income REIT) and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association). (Incorporated by reference to Select Income REIT’s Current Report on Form 8-K filed on February 3, 2015.)

4.8			First Supplemental Indenture, dated as of February 3, 2015, between the Company (as successor to Select Income REIT) and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), including the form of 4.50% Senior Notes due 2025. (Incorporated by reference to Select Income REIT’s Current Report on Form 8-K filed on February 3, 2015.)

4.9			Second Supplemental Indenture, dated as of May 15, 2017, between the Company (as successor to Select Income REIT) and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), including the form of 4.250% Senior Notes due 2024. (Incorporated by reference to Select Income REIT’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, filed by Select Income REIT on July 25, 2017.)

4.10			Third Supplemental Indenture, dated as of December 31, 2018, among Select Income REIT, the Company and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association). (Incorporated by reference to the Company’s Current Report on Form 8-K filed on December 31, 2018.)

4.11			Authentication Order, dated as of September 24, 2020, from the Company to U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), relating to the Company’s 4.50% Senior Notes due 2025. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.)

4.12			Registration Rights and Lock-Up Agreement, dated as of June 5, 2015, among the Company, ABP Trust (f/k/a Reit Management & Research Trust) and Adam D. Portnoy. (Incorporated by reference to the Company’s Current Report on Form 8‑K filed on June 8, 2015.)

31.1			Rule 13a-14(a) Certification. (Filed herewith.)

31.2			Rule 13a-14(a) Certification. (Filed herewith.)

31.3			Rule 13a-14(a) Certification. (Filed herewith.)

31.4			Rule 13a-14(a) Certification. (Filed herewith.)

32.1			Section 1350 Certification. (Furnished herewith.)

99.1			Letter Agreement, dated as of May 25, 2023, between the Company and The RMR Group LLC (Filed herewith.)

101.INS			XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH			XBRL Taxonomy Extension Schema Document. (Filed herewith.)
101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document. (Filed herewith.)
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document. (Filed herewith.)
101.LAB			XBRL Taxonomy Extension Label Linkbase Document. (Filed herewith.)
101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document. (Filed herewith.)
104			Cover Page Interactive Data File. (Formatted as Inline XBRL and contained in Exhibit 101.)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			OFFICE PROPERTIES INCOME TRUST


			By:			/s/ Christopher J. Bilotto
						Christopher J. Bilotto
						President and Chief Operating Officer
						Dated: July 26, 2023

			By:			/s/ Matthew C. Brown
						Matthew C. Brown
						Chief Financial Officer and Treasurer
						(principal financial officer and principal accounting officer)
						Dated: July 26, 2023

Exhibit 31.1

CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

I, Adam D. Portnoy, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Office Properties Income Trust;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: July 26, 2023			/s/ Adam D. Portnoy
			Adam D. Portnoy Managing Trustee

Exhibit 31.2

CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

I, Jennifer B. Clark, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Office Properties Income Trust;

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: July 26, 2023			/s/ Jennifer B. Clark
			Jennifer B. Clark Managing Trustee

Exhibit 31.3

CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

I, Christopher J. Bilotto, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Office Properties Income Trust;

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: July 26, 2023			/s/ Christopher J. Bilotto
			Christopher J. Bilotto President and Chief Operating Officer

Exhibit 31.4

CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

I, Matthew C. Brown, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Office Properties Income Trust;

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: July 26, 2023			/s/ Matthew C. Brown
			Matthew C. Brown Chief Financial Officer and Treasurer

Exhibit 32.1

Certification Pursuant to 18 U.S.C. Sec. 1350

In connection with the filing by Office Properties Income Trust (the “Company”) of the Quarterly Report on Form 10-Q for the period ended June 30, 2023 (the “Report”), each of the undersigned hereby certifies, to the best of his or her knowledge:

1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



/s/ Adam D. Portnoy						/s/ Christopher J. Bilotto
Adam D. Portnoy Managing Trustee						Christopher J. Bilotto President and Chief Operating Officer


/s/ Jennifer B. Clark						/s/ Matthew C. Brown
Jennifer B. Clark Managing Trustee						Matthew C. Brown Chief Financial Officer and Treasurer

Date: July 26, 2023

Exhibit 99.1

May 25, 2023

The RMR Group LLC

Two Newton Place

255 Washington Street, Suite 300

Newton, MA 02458

Ladies and Gentlemen:

Reference is made to that certain Second Amended and Restated Property Management Agreement, dated as of June 5, 2015 (as amended, restated or supplemented from time to time, the “Master Property Management Agreement”), by and between Office Properties Income Trust, a Maryland real estate investment trust (the “Trust”), and The RMR Group LLC, a Maryland limited liability company (the “Manager”). The Trust and the Manager acknowledge that from time to time, to accommodate secured financings, the Manager and one or more subsidiaries of the Trust have entered into, and in the future may enter into, separate property management agreements for specific properties (each, a “Property Specific Management Agreement”).

The purpose of this letter is to confirm our understanding and agreement as follows:

1. Notwithstanding anything in a Property Specific Management Agreement to the contrary, the terms and conditions of the Master Property Management Agreement will control the rights and obligations of the Trust and the Manager, as between themselves, including, without limitation, the fees payable, the term of the property management arrangement, the conditions for (and amounts payable upon) termination, and the resolution of disputes.

2. Any fees paid under a Property Specific Management Agreement will be credited against amounts due from the Trust under the Master Property Management Agreement.

[Signature Page Follows]

If the foregoing accurately reflects our understandings and agreements, please confirm your agreement by signing below where indicated and returning a copy of this letter so signed to me.

Very truly yours,

Office Properties Income Trust



			/s/ Matthew C. Brown
			Matthew C. Brown
			Chief Financial Officer and Treasurer

Acknowledged and agreed:

The RMR Group LLC



/s/ Matthew P. Jordan
Matthew P. Jordan
Executive Vice President, Chief Financial Officer and Treasurer

[Signature Page to OPI/RMR Letter re: Property Management Agreement]

Cover Page - shares	6 Months Ended
Cover Page - shares	Jun. 30, 2023	Jul. 25, 2023
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	1-34364
Entity Registrant Name	OFFICE PROPERTIES INCOME TRUST
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	26-4273474
Entity Address, Address Line One	Two Newton Place
Entity Address, Address Line Two	255 Washington Street
Entity Address, Address Line Three	Suite 300
Entity Address, City or Town	Newton
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	02458-1634
City Area Code	617
Local Phone Number	219-1440
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		48,586,735
Entity Central Index Key	0001456772
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Common shares
Document Information [Line Items]
Title of 12(b) Security	Common Shares of Beneficial Interest
Trading Symbol	OPI
Security Exchange Name	NASDAQ
6.375% Senior Unsecured Notes Due 2050
Document Information [Line Items]
Title of 12(b) Security	6.375% Senior Notes due 2050
Trading Symbol	OPINL
Security Exchange Name	NASDAQ

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Real estate properties:
Land	$ 809,590	$ 821,238
Buildings and improvements	3,225,963	3,114,836
Total real estate properties, gross	4,035,553	3,936,074
Accumulated depreciation	(605,789)	(561,458)
Total real estate properties, net	3,429,764	3,374,616
Assets of properties held for sale	11,731	2,516
Investments in unconsolidated joint ventures	37,367	35,129
Acquired real estate leases, net	318,975	369,333
Cash and cash equivalents	25,212	12,249
Restricted cash	610	0
Rents receivable	110,599	105,639
Deferred leasing costs, net	82,691	73,098
Other assets, net	10,619	7,397
Total assets	4,027,568	3,979,977
LIABILITIES AND SHAREHOLDERS’ EQUITY
Unsecured revolving credit facility	240,000	195,000
Senior unsecured notes, net	2,191,676	2,187,875
Mortgage notes payable, net	106,365	49,917
Liabilities of properties held for sale	28	73
Accounts payable and other liabilities	134,425	140,151
Due to related persons	6,232	6,469
Assumed real estate lease obligations, net	12,887	14,157
Total liabilities	2,691,613	2,593,642
Commitments and contingencies
Shareholders’ equity:
Common shares of beneficial interest, $.01 par value: 200,000,000 shares authorized, 48,587,650 and 48,565,644 shares issued and outstanding, respectively	486	486
Additional paid in capital	2,620,691	2,619,532
Cumulative net income	156,918	169,606
Cumulative common distributions	(1,442,140)	(1,403,289)
Total shareholders’ equity	1,335,955	1,386,335
Total liabilities and shareholders’ equity	$ 4,027,568	$ 3,979,977

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
Shareholders’ equity:
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common shares of beneficial interest, shares authorized (in shares)	200,000,000	200,000,000
Common shares of beneficial interest, shares issued (in shares)	48,587,650	48,565,644
Common shares of beneficial interest, shares outstanding (in shares)	48,587,650	48,565,644

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Statement [Abstract]
Rental income	$ 133,997	$ 141,316	$ 266,419	$ 288,670
Expenses:
Real estate taxes	15,901	16,583	31,234	33,228
Utility expenses	5,742	5,820	13,002	12,685
Other operating expenses	26,634	26,497	52,691	53,860
Depreciation and amortization	51,601	57,536	103,293	118,005
Loss on impairment of real estate	0	4,773	0	21,820
Acquisition and transaction related costs	11,181	224	14,399	224
General and administrative	5,785	7,083	11,710	12,789
Total expenses	116,844	118,516	226,329	252,611
Gain (loss) on sale of real estate	(2,305)	(11,637)	243	(9,488)
Interest and other income	337	16	501	17
Interest expense (including net amortization of debt premiums, discounts and issuance costs of $2,327, $2,366, $4,532 and $4,770, respectively)	(26,525)	(26,515)	(51,756)	(53,954)
Loss on early extinguishment of debt	0	(77)	0	(77)
Loss before income tax (expense) benefit and equity in net losses of investees	(11,340)	(15,413)	(10,922)	(27,443)
Income tax (expense) benefit	(211)	190	(241)	(341)
Equity in net losses of investees	(691)	(833)	(1,525)	(1,679)
Net loss	$ (12,242)	$ (16,056)	$ (12,688)	$ (29,463)
Weighted average common shares outstanding (basic) (in shares)	48,354	48,249	48,345	48,246
Weighted average common shares outstanding (diluted) (in shares)	48,354	48,249	48,345	48,246
Per common share amounts (basic and diluted):
Net loss (basic) (in dollars per share)	$ (0.25)	$ (0.33)	$ (0.27)	$ (0.61)
Net loss (diluted) (in dollars per share)	$ (0.25)	$ (0.33)	$ (0.27)	$ (0.61)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Statement [Abstract]
Net amortization of debt premiums, discounts and issuance costs	$ 2,327	$ 2,366	$ 4,532	$ 4,770

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Shares	Additional Paid In Capital	Cumulative Net Income	Cumulative Common Distributions
Beginning balance (in shares) at Dec. 31, 2021		48,425,665
Beginning balance at Dec. 31, 2021	$ 1,496,709	$ 484	$ 2,617,169	$ 175,715	$ (1,296,659)
Increase (Decrease) in Shareholders' Equity
Share grants	415		415
Share forfeitures (in shares)		(400)
Share forfeitures	(1)		(1)
Net loss	(13,407)			(13,407)
Distributions to common shareholders	(26,634)				(26,634)
Ending balance (in shares) at Mar. 31, 2022		48,425,265
Ending balance at Mar. 31, 2022	1,457,082	$ 484	2,617,583	162,308	(1,323,293)
Beginning balance (in shares) at Dec. 31, 2021		48,425,665
Beginning balance at Dec. 31, 2021	1,496,709	$ 484	2,617,169	175,715	(1,296,659)
Increase (Decrease) in Shareholders' Equity
Net loss	(29,463)
Ending balance (in shares) at Jun. 30, 2022		48,455,075
Ending balance at Jun. 30, 2022	1,415,450	$ 485	2,618,640	146,252	(1,349,927)
Beginning balance (in shares) at Mar. 31, 2022		48,425,265
Beginning balance at Mar. 31, 2022	1,457,082	$ 484	2,617,583	162,308	(1,323,293)
Increase (Decrease) in Shareholders' Equity
Share grants (in shares)		31,500
Share grants	1,079	$ 1	1,078
Share forfeitures (in shares)		(1,690)
Share forfeitures	(21)		(21)
Net loss	(16,056)			(16,056)
Distributions to common shareholders	(26,634)				(26,634)
Ending balance (in shares) at Jun. 30, 2022		48,455,075
Ending balance at Jun. 30, 2022	1,415,450	$ 485	2,618,640	146,252	(1,349,927)
Beginning balance (in shares) at Dec. 31, 2022		48,565,644
Beginning balance at Dec. 31, 2022	1,386,335	$ 486	2,619,532	169,606	(1,403,289)
Increase (Decrease) in Shareholders' Equity
Share grants	477		477
Share forfeitures and repurchases (in shares)		(1,935)
Share forfeitures and repurchases	(15)		(15)
Net loss	(446)			(446)
Distributions to common shareholders	(26,710)				(26,710)
Ending balance (in shares) at Mar. 31, 2023		48,563,709
Ending balance at Mar. 31, 2023	1,359,641	$ 486	2,619,994	169,160	(1,429,999)
Beginning balance (in shares) at Dec. 31, 2022		48,565,644
Beginning balance at Dec. 31, 2022	1,386,335	$ 486	2,619,532	169,606	(1,403,289)
Increase (Decrease) in Shareholders' Equity
Net loss	(12,688)
Ending balance (in shares) at Jun. 30, 2023		48,587,650
Ending balance at Jun. 30, 2023	1,335,955	$ 486	2,620,691	156,918	(1,442,140)
Beginning balance (in shares) at Mar. 31, 2023		48,563,709
Beginning balance at Mar. 31, 2023	1,359,641	$ 486	2,619,994	169,160	(1,429,999)
Increase (Decrease) in Shareholders' Equity
Share grants (in shares)		31,500
Share grants	744		744
Share forfeitures and repurchases (in shares)		(7,559)
Share forfeitures and repurchases	(47)		(47)
Net loss	(12,242)			(12,242)
Distributions to common shareholders	(12,141)				(12,141)
Ending balance (in shares) at Jun. 30, 2023		48,587,650
Ending balance at Jun. 30, 2023	$ 1,335,955	$ 486	$ 2,620,691	$ 156,918	$ (1,442,140)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands

6 Months Ended

Jun. 30, 2023

Jun. 30, 2022

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$ (12,688)

$ (29,463)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation

50,459

49,455

Net amortization of debt premiums, discounts and issuance costs

4,532

4,770

Amortization of acquired real estate leases and assumed real estate lease obligations, net

48,581

65,691

Amortization of deferred leasing costs

4,739

4,096

(Gain) loss on sale of real estate

(243)

9,488

Loss on impairment of real estate

21,820

Loss on early extinguishment of debt

Straight line rental income

(8,429)

(5,461)

Other non-cash expenses, net

673

943

Equity in net losses of investees

1,525

1,679

Change in assets and liabilities:

Rents receivable

3,440

6,770

Deferred leasing costs

(13,106)

(15,194)

Other assets

3,234

4,821

Accounts payable and other liabilities

5,748

(10,460)

Due to related persons

(237)

(119)

Net cash provided by operating activities

88,228

108,913

CASH FLOWS FROM INVESTING ACTIVITIES:

Real estate improvements

(138,724)

(89,144)

Distributions in excess of earnings from unconsolidated joint ventures

Contributions to unconsolidated joint ventures

(3,763)

(2,202)

Proceeds from sale of properties, net

12,527

74,183

Net cash used in investing activities

(129,960)

(17,112)

CASH FLOWS FROM FINANCING ACTIVITIES:

Repayment of mortgage notes payable

(50,000)

(25,283)

Proceeds from issuance of mortgage notes payable

108,120

Repayment of senior unsecured notes

(300,000)

Borrowings on unsecured revolving credit facility

205,000

230,000

Repayments on unsecured revolving credit facility

(160,000)

Payment of debt issuance costs

(8,907)

Repurchase of common shares

(57)

(16)

Distributions to common shareholders

(38,851)

(53,268)

Net cash provided by (used in) financing activities

55,305

(148,567)

Increase (decrease) in cash, cash equivalents and restricted cash

13,573

(56,766)

Cash, cash equivalents and restricted cash at beginning of period

12,249

84,515

Cash, cash equivalents and restricted cash at end of period

25,822

27,749

SUPPLEMENTAL CASH FLOW INFORMATION:

Interest paid

51,134

56,490

Income taxes paid

339

283

NON-CASH INVESTING ACTIVITIES:

Real estate improvements accrued, not paid

30,852

25,706

Capitalized interest

4,732

1,600

SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH:

Cash and cash equivalents

25,212

26,006

Restricted cash

^[1]

610

1,743

Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows

$ 25,822

$ 27,749

[1]	Restricted cash consists of amounts escrowed for future real estate taxes, insurance, leasing costs, capital expenditures and debt service, as required by certain of our mortgage debts.

Basis of Presentation	6 Months Ended
Basis of Presentation	Jun. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	Basis of Presentation The accompanying condensed consolidated financial statements of Office Properties Income Trust and its subsidiaries, or OPI, we, us or our, are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2022, or our 2022 Annual Report. In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair statement of results for the interim period have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. The preparation of these financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the condensed consolidated financial statements include purchase price allocations, useful lives of fixed assets and assessment of impairment of real estate and the related intangibles. Pending Merger with Diversified Healthcare Trust On April 11, 2023, we and Diversified Healthcare Trust, or DHC, entered into an Agreement and Plan of Merger, or the Merger Agreement, pursuant to which, on the terms and subject to the satisfaction or waiver of the conditions thereof, DHC will be merged with and into us, with us continuing as the surviving entity in the merger, or the Merger. Pursuant to the terms and subject to the conditions and limitations set forth in the Merger Agreement, at the date and time the Merger becomes effective, or the Effective Time, each common share of beneficial interest, $0.01 par value per share, of DHC, or the DHC Common Shares, issued and outstanding as of immediately prior to the Effective Time will be automatically converted into the right to receive 0.147 (such ratio, the Exchange Ratio) of our common shares of beneficial interest, $0.01 par value per share, or our common shares, subject to adjustment for certain reclassifications, distributions, recapitalizations or similar transactions and other exceptional distributions as described in the Merger Agreement, with cash paid in lieu of fractional shares. Other than as provided in the Merger Agreement, the Exchange Ratio is fixed and will not be adjusted to reflect changes in the market price of our common shares or the DHC Common Shares prior to the Effective Time. Our common shares issued and outstanding immediately prior to the Effective Time will remain issued and outstanding common shares of beneficial ownership of the surviving entity following the Merger. In connection with the Merger, we expect to change our name to “Diversified Properties Trust” and, following the Effective Time, will change our ticker symbol to “DPT.” The transactions contemplated by the Merger Agreement and the terms thereof were evaluated, negotiated and recommended to our Board of Trustees, or our Board, by a special committee of our Board, or the OPI Special Committee, and to DHC’s board of trustees, or the DHC Board, by a special committee of DHC’s Board, or the DHC Special Committee, each consisting of disinterested, independent trustees of us and DHC, respectively. Following the recommendations of the OPI Special Committee and the DHC Special Committee, our Board and the DHC Board each approved the Merger Agreement and the transactions contemplated thereby and resolved to recommend that the OPI and DHC shareholders, respectively, vote in favor of approval of the Merger and the transactions contemplated thereby. Our shareholders will be asked to vote on the approval of the Merger and related matters, including the issuance of our common shares in the Merger, at a special meeting of our shareholders. The consummation of the Merger is subject to the satisfaction or waiver of certain closing conditions, including, among others: (1) the approval of the Merger by the affirmative vote of at least a majority of all the votes entitled to be cast by holders of outstanding DHC Common Shares at the meeting held for that purpose; (2) the approval of the Merger by the affirmative vote of at least a majority of all the votes entitled to be cast by holders of our outstanding common shares at the meeting held for that purpose; (3) the approval of the issuance of our common shares to be issued in the Merger, or the Share Issuance, by the affirmative vote of at least a majority of all votes cast by holders of our outstanding common shares at the meeting held for that purpose; (4) the absence of any statute, rule or regulation by any governmental entity of competent jurisdiction or any temporary, preliminary or permanent judgment, order or decree by any court of competent jurisdiction which would prohibit or make illegal or prevent the consummation of the Merger or any of the transactions contemplated by the Merger Agreement; (5) the effectiveness of the registration statement on Form S-4, as amended, or the Form S-4, filed by us with the Securities and Exchange Commission, or the SEC, in connection with the Share Issuance; (6) the approval (subject to notice of issuance) of The Nasdaq Stock Market LLC, or Nasdaq, of the listing of our common shares to be issued in the Merger; (7) the replacement of our existing revolving credit agreement, on terms that, among other things, would not be reasonably likely to be materially adverse to the business, operations or financial condition of us after giving effect to the Merger and would not delay or prevent the consummation of the Merger; (8) the receipt of certain tax opinions by us and DHC; and (9) the other party’s representations and warranties being accurate (subject to certain customary materiality exceptions) and the other party having performed or complied in all material respects with its agreements and covenants in the Merger Agreement. The Merger Agreement contains certain customary representations, warranties and covenants, including covenants providing that we and DHC will use reasonable best efforts to conduct our and its respective businesses in all material respects in the ordinary course during the period between the execution of the Merger Agreement and the earlier of the Effective Time or the termination of the Merger Agreement, and to refrain from taking certain types of actions without the other party’s consent during the period between the execution of the Merger Agreement and the earlier of the Effective Time or the termination of the Merger Agreement, subject in each case to specified exceptions. In connection with the execution of the Merger Agreement, we entered into a commitment letter, dated as of April 11, 2023, with JPMorgan Chase Bank, N.A., or JPM, pursuant to which JPM committed to provide, subject to the terms and conditions of the commitment letter, a senior secured bridge facility to us in an aggregate principal amount of $368,000. As of June 30, 2023, we have issued four mortgage notes with an aggregate principal balance of $108,120 secured by properties that previously collateralized the senior secured bridge facility, and as a result, we subsequently amended the commitment letter to reduce the principal amount of the senior secured bridge facility to $259,880. For more information regarding our mortgage notes, see Note 6.

Per Common Share Amounts

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Per Common Share Amounts

Per Common Share AmountsWe calculate basic earnings per common share using the two class method. We calculate diluted earnings per share using the more dilutive of the two class method or the treasury stock method. Unvested share awards and other potentially dilutive common shares, together with the related impact on earnings, are considered when calculating diluted earnings per share. The calculation of basic and diluted earnings per share is as follows (amounts in thousands, except per share data):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Numerators:
Net loss	$	(12,242)	$	(16,056)	$	(12,688)	$	(29,463)
Income attributable to unvested participating securities	(56)		(100)		(182)		(200)
Net loss used in calculating earnings per share	$	(12,298)	$	(16,156)	$	(12,870)	$	(29,663)

Denominators:
Weighted average common shares outstanding - basic and diluted	48,354		48,249		48,345		48,246



Net loss per common share - basic and diluted	$	(0.25)	$	(0.33)	$	(0.27)	$	(0.61)

Real Estate Properties

6 Months Ended

Jun. 30, 2023

Real Estate [Abstract]

Real Estate Properties

Real Estate PropertiesAs of June 30, 2023, our wholly owned properties were comprised of 155 properties containing approximately 20,784,000 rentable square feet, with an undepreciated carrying value of $4,050,183, including $14,630 classified as held for sale. We also had noncontrolling ownership interests of 51% and 50% in two unconsolidated joint ventures that own three properties containing approximately 444,000 rentable square feet. We generally lease space at our properties on a gross lease, modified gross lease or net lease basis pursuant to fixed term contracts expiring between 2023 and 2053. Some of our leases generally require us to pay all or some property operating expenses and to provide all or most property management services. During the three months ended June 30, 2023, we entered into 23 leases for approximately 713,000 rentable square feet for a weighted (by rentable square feet) average lease term of 10.3 years and we made commitments of $40,638 for leasing related costs. During the six months ended June 30, 2023, we entered into 39 leases for approximately 916,000 rentable square feet for a weighted

Disposition Activities


Date of Sale	Number of Properties	Location	Rentable Square Feet	Gross Sales Price(1)		Gain (Loss) on Sale of Real Estate
January 2023	3	Richmond, VA	89,000	$	5,350	$	2,548
April 2023	1	Phoenix, AZ	107,000	4,900		511
June 2023	1	Vernon Hills, IL	100,000	2,825		(2,816)
	5		296,000	$	13,075	$	243

(1)Gross sales price is the gross contract price, excluding closing costs.

Unconsolidated Joint Ventures


		OPI Carrying Value of Investments at
Joint Venture	OPI Ownership	June 30, 2023		December 31, 2022		Number of Properties	Location	Rentable Square Feet
Prosperity Metro Plaza	51%	$	18,810	$	19,237	2	Fairfax, VA	329,000
1750 H Street, NW	50%	18,557		15,892		1	Washington, D.C.	115,000
Total		$	37,367	$	35,129	3		444,000

The following table provides a summary of the mortgage debt of our two unconsolidated joint ventures:


Joint Venture	Interest Rate (1)	Maturity Date	Principal Balance at June 30, 2023 and December 31, 2022 (2)
Prosperity Metro Plaza	4.09%	12/1/2029	$	50,000
1750 H Street, NW (3)	3.69%	8/1/2027	32,000
Weighted Average / Total	3.93%		$	82,000

(1)Includes the effect of mark to market purchase accounting.

(2)Reflects the entire balance of the debt secured by the properties and is not adjusted to reflect the interests in the joint ventures we do not own. None of the debt is recourse to us.

(3)In July 2023, the maturity date of this mortgage loan was extended by three years at the same interest rate.

Leases	6 Months Ended
Leases	Jun. 30, 2023
Leases [Abstract]
Leases	Leases Our leases provide for base rent payments and in addition may include variable payments. Rental income from operating leases, including any payments derived by index or market-based indices, is recognized on a straight line basis over the lease term when we have determined that the collectability of substantially all of the lease payments is probable. Some of our leases have options to extend or terminate the lease exercisable at the option of our tenants, which are considered when determining the lease term. Allowances for bad debts are recognized as a direct reduction of rental income. In certain circumstances, some leases provide the tenant with the right to terminate if the legislature or other funding authority does not appropriate the funding necessary for the tenant to meet its lease obligations; we have determined the fixed non-cancelable lease term of these leases to be the full term of the lease because we believe the occurrence of early terminations to be a remote contingency based on both our historical experience and our assessments of the likelihood of lease cancellation on a separate lease basis. We increased rental income to record revenue on a straight line basis by $4,256 and $2,775 for the three months ended June 30, 2023 and 2022, respectively, and $8,429 and $5,461 for the six months ended June 30, 2023 and 2022, respectively. Rents receivable, excluding properties classified as held for sale, included $94,705 and $86,305 of straight line rent receivables at June 30, 2023 and December 31, 2022, respectively. We do not include in our measurement of our lease receivables certain variable payments, including payments determined by changes in the index or market-based indices after the inception of the lease, certain tenant reimbursements and other income until the specific events that trigger the variable payments have occurred. Such payments totaled $22,190 and $43,560 for the three and six months ended June 30, 2023, respectively, of which tenant reimbursements totaled $20,853 and $40,919, respectively. For the three and six months ended June 30, 2022, such payments totaled $22,101 and $44,637, respectively, of which tenant reimbursements totaled $21,009 and $42,484, respectively.
Leases	Leases Our leases provide for base rent payments and in addition may include variable payments. Rental income from operating leases, including any payments derived by index or market-based indices, is recognized on a straight line basis over the lease term when we have determined that the collectability of substantially all of the lease payments is probable. Some of our leases have options to extend or terminate the lease exercisable at the option of our tenants, which are considered when determining the lease term. Allowances for bad debts are recognized as a direct reduction of rental income. In certain circumstances, some leases provide the tenant with the right to terminate if the legislature or other funding authority does not appropriate the funding necessary for the tenant to meet its lease obligations; we have determined the fixed non-cancelable lease term of these leases to be the full term of the lease because we believe the occurrence of early terminations to be a remote contingency based on both our historical experience and our assessments of the likelihood of lease cancellation on a separate lease basis. We increased rental income to record revenue on a straight line basis by $4,256 and $2,775 for the three months ended June 30, 2023 and 2022, respectively, and $8,429 and $5,461 for the six months ended June 30, 2023 and 2022, respectively. Rents receivable, excluding properties classified as held for sale, included $94,705 and $86,305 of straight line rent receivables at June 30, 2023 and December 31, 2022, respectively. We do not include in our measurement of our lease receivables certain variable payments, including payments determined by changes in the index or market-based indices after the inception of the lease, certain tenant reimbursements and other income until the specific events that trigger the variable payments have occurred. Such payments totaled $22,190 and $43,560 for the three and six months ended June 30, 2023, respectively, of which tenant reimbursements totaled $20,853 and $40,919, respectively. For the three and six months ended June 30, 2022, such payments totaled $22,101 and $44,637, respectively, of which tenant reimbursements totaled $21,009 and $42,484, respectively.

Concentration	6 Months Ended
Concentration	Jun. 30, 2023
Risks and Uncertainties [Abstract]
Concentration	Concentration Tenant and Credit Concentration We define annualized rental income as the annualized contractual base rents from our tenants pursuant to our lease agreements as of the measurement date, plus straight line rent adjustments and estimated recurring expense reimbursements to be paid to us, and excluding lease value amortization. As of June 30, 2023 and 2022, the U.S. government and certain state and other government tenants combined were responsible for approximately 28.5% and 28.4%, respectively, of our annualized rental income. The U.S. government is our largest tenant by annualized rental income and represented approximately 19.6% and 18.5% of our annualized rental income as of June 30, 2023 and 2022, respectively. Geographic Concentration At June 30, 2023, our 155 wholly owned properties were located in 30 states and the District of Columbia. Properties located in California, Virginia, Illinois, the District of Columbia and Georgia were responsible for approximately 11.9%, 11.1%, 10.7%, 10.3% and 9.2% of our annualized rental income as of June 30, 2023, respectively.

Indebtedness

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Indebtedness

Mortgage Note Issuances

During the six months ended June 30, 2023, we issued the following four mortgage notes with an aggregate principal balance of $108,120 and a weighted average interest rate of 7.863%:


Issuance Date	Principal Balance		Interest Rate	Maturity
May 2023	$	30,680	7.210%	7/1/2033
June 2023	26,340		8.139%	7/1/2028
June 2023	42,700		8.272%	7/1/2028
June 2023	8,400		7.305%	7/1/2033


Total / Weighted Average	$	108,120	7.863%

Mortgage Note Repayment

In June 2023, we repaid at maturity, a mortgage note secured by one property with an outstanding principal balance of $50,000 and an annual interest rate of 3.70%.

Fair Value of Assets and Liabilities

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value of Assets and Liabilities


	As of June 30, 2023				As of December 31, 2022
Financial Instrument	Carrying Value (1)		Fair Value		Carrying Value (1)		Fair Value


Senior unsecured notes, 4.25% interest rate, due in 2024	$	348,004	$	330,082	$	346,863	$	331,601
Senior unsecured notes, 4.50% interest rate, due in 2025	644,542		561,672		642,818		589,388
Senior unsecured notes, 2.650% interest rate, due in 2026	298,151		221,097		297,839		232,770
Senior unsecured notes, 2.400% interest rate, due in 2027	347,776		235,344		347,466		256,606
Senior unsecured notes, 3.450% interest rate, due in 2031	396,396		210,204		396,178		268,004

Senior unsecured notes, 6.375% interest rate, due in 2050	156,807		79,704		156,711		113,075
Mortgage notes payable (2) (3)	106,365		111,230		49,917		49,099
Total	$	2,298,041	$	1,749,333	$	2,237,792	$	1,840,543

(1)Includes unamortized debt premiums, discounts and issuance costs totaling $22,079 and $24,208 as of June 30, 2023 and December 31, 2022, respectively.

(2)Balances as of December 31, 2022 include a mortgage note secured by one property with an outstanding principal balance of $50,000 that was repaid in June 2023.

(3)Balances as of June 30, 2023 include four mortgage notes issued during the six months ended June 30, 2023 with an aggregate outstanding principal balance of $108,120.

Shareholders' Equity

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Shareholders' Equity

Shareholders’ Equity

Share Awards

Share Purchases

Distributions

During the six months ended June 30, 2023, we declared and paid regular quarterly distributions to common shareholders as follows:


Declaration Date	Record Date	Paid Date	Distributions Per Common Share		Total Distributions
January 12, 2023	January 23, 2023	February 16, 2023	$	0.55	$	26,710
April 13, 2023	April 24, 2023	May 18, 2023	0.25		12,141


			$	0.80	$	38,851

Business and Property Management Agreements with RMR	6 Months Ended
Business and Property Management Agreements with RMR	Jun. 30, 2023
Property Management Fee [Abstract]
Business and Property Management Agreements with RMR	Business and Property Management Agreements with RMR We have no employees. The personnel and various services we require to operate our business are provided to us by RMR. We have two agreements with RMR to provide management services to us: (1) a business management agreement, which relates to our business generally; and (2) a property management agreement, which relates to our property level operations. Pursuant to our business management agreement with RMR, we recognized net business management fees of $3,592 and $7,543 for the three and six months ended June 30, 2023, respectively, and $4,492 and $9,202 for the three and six months ended June 30, 2022, respectively. Based on our common share total return, as defined in our business management agreement, as of June 30, 2023, no estimated incentive fees are included in the net business management fees we recognized for the three and six months ended June 30, 2023. The actual amount of annual incentive fees for 2023, if any, will be based on our common share total return for the three year period ending December 31, 2023, and will be payable in January 2024. We did not incur an incentive fee payable to RMR for the year ended December 31, 2022. We include business management fees in general and administrative expenses in our condensed consolidated statements of comprehensive income (loss). Pursuant to our property management agreement with RMR, we recognized aggregate net property management and construction supervision fees of $6,163 and $12,482 for the three and six months ended June 30, 2023, respectively, and $6,394 and $12,522 for the three and six months ended June 30, 2022, respectively. Of these amounts, for the three and six months ended June 30, 2023, $3,801 and $7,534, respectively, were expensed to other operating expenses in our condensed consolidated statements of comprehensive income (loss) and $2,362 and $4,948, respectively, were capitalized as building improvements in our condensed consolidated balance sheet. For the three and six months ended June 30, 2022, $4,015 and $8,241, respectively, were expensed to other operating expenses in our condensed consolidated statements of comprehensive income (loss) and $2,379 and $4,281, respectively, were capitalized as building improvements in our condensed consolidated balance sheet. The amounts capitalized are being depreciated over the estimated useful lives of the related capital assets. In connection with the Merger, on April 11, 2023, we and RMR entered into a Third Amended and Restated Property Management Agreement, or the Amended Property Management Agreement. For more information about the Amended Property Management Agreement, refer to Note 10. We are generally responsible for all of our operating expenses, including certain expenses incurred or arranged by RMR on our behalf. We are generally not responsible for payment of RMR’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR’s employees assigned to work exclusively or partly at our properties, our share of the wages, benefits and other related costs of RMR’s centralized accounting personnel, our share of RMR’s costs for providing our internal audit function and as otherwise agreed. Our property level operating expenses are generally incorporated into the rents charged to our tenants, including certain payroll and related costs incurred by RMR. We reimbursed RMR $6,617 and $12,964 for these expenses and costs for the three and six months ended June 30, 2023, respectively, and $6,047 and $12,013 for the three and six months ended June 30, 2022, respectively. We included these amounts in other operating expenses and general and administrative expenses, as applicable, in our condensed consolidated statements of comprehensive income (loss). Management Agreements Between Our Joint Ventures and RMR. RMR provides management services to our two unconsolidated joint ventures. We are not obligated to pay management fees to RMR under our management agreements with RMR for the services it provides regarding the joint ventures. The joint ventures pay management fees directly to RMR.

Related Person Transactions	6 Months Ended
Related Person Transactions	Jun. 30, 2023
Related Party Transactions [Abstract]
Related Person Transactions	Related Person Transactions We have relationships and historical and continuing transactions with RMR, The RMR Group Inc., or RMR Inc., and others related to them, including other companies to which RMR or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. RMR is a majority owned subsidiary of RMR Inc. The Chair of our Board of Trustees and one of our Managing Trustees, Adam D. Portnoy, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., the chair of the board of directors, a managing director, the president and chief executive officer of RMR Inc. and an officer and employee of RMR. Jennifer B. Clark, our other Managing Trustee and our Secretary, also serves as a managing director and the executive vice president, general counsel and secretary of RMR Inc., an officer and employee of RMR and an officer of ABP Trust. Each of our officers is an officer and employee of RMR. Some of our Independent Trustees also serve as independent trustees of other public companies to which RMR or its subsidiaries provide management services. Mr. Portnoy serves as chair of the boards and as a managing trustee of these public companies. Other officers of RMR serve as managing trustees or officers of certain of these companies. Our Manager, RMR. We have two agreements with RMR to provide management services to us. RMR also provides management services to our two unconsolidated joint ventures. See Note 9 for more information regarding our and our unconsolidated joint ventures’ management agreements with RMR. Leases with RMR. We lease office space to RMR in certain of our properties for RMR’s property management offices. Pursuant to our lease agreements with RMR, we recognized rental income from RMR for leased office space of $244 and $467 for the three and six months ended June 30, 2023, respectively, and $285 and $569 for the three and six months ended June 30, 2022, respectively. Sonesta. In June 2021, we entered into a 30-year lease agreement with a subsidiary of Sonesta International Hotels Corporation, or Sonesta, in connection with the redevelopment of an office property we own in Washington, D.C. as a mixed-use property. Sonesta’s lease is for the full-service hotel component of the property that includes approximately 230,000 rentable square feet, which represents approximately 54% of the total square feet upon completion of the redevelopment. We substantially completed the redevelopment in June 2023 and the term of the lease is estimated to commence in August 2023. Sonesta has two options to extend the term for 10 years each. Pursuant to the lease agreement, Sonesta will pay us annual base rent of approximately $6,436 beginning 18 months after the lease commences. The annual base rent will increase by 10% every five years throughout the term. Sonesta is also obligated to pay its pro rata share of the operating costs for the building. We estimate that the total cost to build the hotel space will be approximately $77,000, of which approximately $73,000 has been incurred as of June 30, 2023. Mr. Portnoy is a director and controlling shareholder of Sonesta and Ms. Clark is also a director of Sonesta. Merger Agreement with Diversified Healthcare Trust. As described further in Note 1, on April 11, 2023, we and DHC entered into the Merger Agreement, pursuant to which, on the terms and subject to the satisfaction or waiver of the conditions thereof, DHC will be merged with and into us, with us continuing as the surviving entity in the merger. Subject to the satisfaction or waiver of the conditions to closing, the Merger is expected to close during the third quarter of 2023. RMR serves as our and DHC’s manager and will continue to manage the surviving entity following the Merger. Contemporaneously with the execution of the Merger Agreement, on April 11, 2023, we and RMR entered into the Amended Property Management Agreement. The effectiveness of the Amended Property Management Agreement is conditioned upon and will be concurrent with the consummation of the Merger. If the Merger is not consummated, the Amended Property Management Agreement will not become effective and the Second Amended and Restated Property Management Agreement, or the Current Property Management Agreement, will remain in effect. Pursuant to the Amended Property Management Agreement, at the Effective Time, properties currently owned by DHC that are subject to its existing property management agreement, including its medical office and life science properties, will become subject to the terms and conditions of the Amended Property Management Agreement. Also pursuant to the Amended Property Management Agreement, RMR will be entitled to a renovation and repositioning fee equal to 3% of the cost of any major capital projects and repositionings at senior living communities currently owned by DHC that the surviving entity may request RMR to oversee from time to time, consistent with DHC’s existing property management agreement with RMR. The terms of the Amended Property Management Agreement are otherwise consistent with the terms of the Current Property Management Agreement. In addition, contemporaneously with the execution of the Merger Agreement, we, DHC and RMR entered into a letter agreement pursuant to which, on the terms and subject to conditions contained therein, DHC and RMR have acknowledged and agreed that, effective upon consummation of the Merger, DHC shall have terminated its business and property management agreements with RMR for convenience, and RMR shall have waived its right to receive payment of the termination fee pursuant to each such agreement upon such termination. The foregoing terminations and waivers apply only in respect of the Merger and do not apply to any other transaction or arrangement. For more information about these and other such relationships and certain other related person transactions, refer to our 2022 Annual Report and our joint proxy statement/prospectus that is included in our registration statement on Form S-4 filed with the SEC.

Basis of Presentation (Policies)	6 Months Ended
Basis of Presentation (Policies)	Jun. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Consolidation	The accompanying condensed consolidated financial statements of Office Properties Income Trust and its subsidiaries, or OPI, we, us or our, are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2022, or our 2022 Annual Report. In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair statement of results for the interim period have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.
Basis of Presentation	The preparation of these financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the condensed consolidated financial statements include purchase price allocations, useful lives of fixed assets and assessment of impairment of real estate and the related intangibles.
Revenue Recognition	Our leases provide for base rent payments and in addition may include variable payments. Rental income from operating leases, including any payments derived by index or market-based indices, is recognized on a straight line basis over the lease term when we have determined that the collectability of substantially all of the lease payments is probable. Some of our leases have options to extend or terminate the lease exercisable at the option of our tenants, which are considered when determining the lease term. Allowances for bad debts are recognized as a direct reduction of rental income. In certain circumstances, some leases provide the tenant with the right to terminate if the legislature or other funding authority does not appropriate the funding necessary for the tenant to meet its lease obligations; we have determined the fixed non-cancelable lease term of these leases to be the full term of the lease because we believe the occurrence of early terminations to be a remote contingency based on both our historical experience and our assessments of the likelihood of lease cancellation on a separate lease basis.

Per Common Share Amounts (Tables)

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Schedule of earnings per share, basic and diluted

The calculation of basic and diluted earnings per share is as follows (amounts in thousands, except per share data):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Numerators:
Net loss	$	(12,242)	$	(16,056)	$	(12,688)	$	(29,463)
Income attributable to unvested participating securities	(56)		(100)		(182)		(200)
Net loss used in calculating earnings per share	$	(12,298)	$	(16,156)	$	(12,870)	$	(29,663)

Denominators:
Weighted average common shares outstanding - basic and diluted	48,354		48,249		48,345		48,246



Net loss per common share - basic and diluted	$	(0.25)	$	(0.33)	$	(0.27)	$	(0.61)

Real Estate Properties (Tables)

6 Months Ended

Jun. 30, 2023

Real Estate [Abstract]

Schedule of disposition activities


Date of Sale	Number of Properties	Location	Rentable Square Feet	Gross Sales Price(1)		Gain (Loss) on Sale of Real Estate
January 2023	3	Richmond, VA	89,000	$	5,350	$	2,548
April 2023	1	Phoenix, AZ	107,000	4,900		511
June 2023	1	Vernon Hills, IL	100,000	2,825		(2,816)
	5		296,000	$	13,075	$	243

(1)Gross sales price is the gross contract price, excluding closing costs.

Schedule of joint ventures

As of June 30, 2023 and December 31, 2022, our investments in unconsolidated joint ventures consisted of the following:


		OPI Carrying Value of Investments at
Joint Venture	OPI Ownership	June 30, 2023		December 31, 2022		Number of Properties	Location	Rentable Square Feet
Prosperity Metro Plaza	51%	$	18,810	$	19,237	2	Fairfax, VA	329,000
1750 H Street, NW	50%	18,557		15,892		1	Washington, D.C.	115,000
Total		$	37,367	$	35,129	3		444,000

The following table provides a summary of the mortgage debt of our two unconsolidated joint ventures:


Joint Venture	Interest Rate (1)	Maturity Date	Principal Balance at June 30, 2023 and December 31, 2022 (2)
Prosperity Metro Plaza	4.09%	12/1/2029	$	50,000
1750 H Street, NW (3)	3.69%	8/1/2027	32,000
Weighted Average / Total	3.93%		$	82,000

(1)Includes the effect of mark to market purchase accounting.

(2)Reflects the entire balance of the debt secured by the properties and is not adjusted to reflect the interests in the joint ventures we do not own. None of the debt is recourse to us.

(3)In July 2023, the maturity date of this mortgage loan was extended by three years at the same interest rate.

Indebtedness (Tables)

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Schedule of mortgage note issuances

During the six months ended June 30, 2023, we issued the following four mortgage notes with an aggregate principal balance of $108,120 and a weighted average interest rate of 7.863%:


Issuance Date	Principal Balance		Interest Rate	Maturity
May 2023	$	30,680	7.210%	7/1/2033
June 2023	26,340		8.139%	7/1/2028
June 2023	42,700		8.272%	7/1/2028
June 2023	8,400		7.305%	7/1/2033


Total / Weighted Average	$	108,120	7.863%

Fair Value of Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Schedule of fair value and carrying value of financial instruments

At June 30, 2023 and December 31, 2022, the fair values of our financial instruments approximated their carrying values in our condensed consolidated financial statements, due to their short term nature or floating interest rates, except as follows:


	As of June 30, 2023				As of December 31, 2022
Financial Instrument	Carrying Value (1)		Fair Value		Carrying Value (1)		Fair Value


Senior unsecured notes, 4.25% interest rate, due in 2024	$	348,004	$	330,082	$	346,863	$	331,601
Senior unsecured notes, 4.50% interest rate, due in 2025	644,542		561,672		642,818		589,388
Senior unsecured notes, 2.650% interest rate, due in 2026	298,151		221,097		297,839		232,770
Senior unsecured notes, 2.400% interest rate, due in 2027	347,776		235,344		347,466		256,606
Senior unsecured notes, 3.450% interest rate, due in 2031	396,396		210,204		396,178		268,004

Senior unsecured notes, 6.375% interest rate, due in 2050	156,807		79,704		156,711		113,075
Mortgage notes payable (2) (3)	106,365		111,230		49,917		49,099
Total	$	2,298,041	$	1,749,333	$	2,237,792	$	1,840,543

(1)Includes unamortized debt premiums, discounts and issuance costs totaling $22,079 and $24,208 as of June 30, 2023 and December 31, 2022, respectively.

(2)Balances as of December 31, 2022 include a mortgage note secured by one property with an outstanding principal balance of $50,000 that was repaid in June 2023.

(3)Balances as of June 30, 2023 include four mortgage notes issued during the six months ended June 30, 2023 with an aggregate outstanding principal balance of $108,120.

Shareholders' Equity (Tables)

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Schedule of Dividends

During the six months ended June 30, 2023, we declared and paid regular quarterly distributions to common shareholders as follows:


Declaration Date	Record Date	Paid Date	Distributions Per Common Share		Total Distributions
January 12, 2023	January 23, 2023	February 16, 2023	$	0.55	$	26,710
April 13, 2023	April 24, 2023	May 18, 2023	0.25		12,141


			$	0.80	$	38,851

Basis of Presentation (Details) $ / shares in Units, $ in Thousands	Jun. 30, 2023 USD ($) mortgage_note $ / shares	Apr. 11, 2023 USD ($) $ / shares	Dec. 31, 2022 $ / shares
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Common stock, par value (in dollars per share) \| $ / shares	$ 0.01		$ 0.01
Number of mortgage notes \| mortgage_note	4
Mortgages
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Principal balance	$ 108,120
Outstanding principal amount	108,120
Senior Secured Bridge Facility \| Bridge Loan
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Principal balance	$ 259,880	$ 368,000
Diversified Healthcare Trust
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Common stock, par value (in dollars per share) \| $ / shares		$ 0.01
Business combination, exchange ratio		0.147

Per Common Share Amounts - Income (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022
Numerators:
Net loss	$ (12,242)	$ (446)	$ (16,056)	$ (13,407)	$ (12,688)	$ (29,463)
Income attributable to unvested participating securities	(56)		(100)		(182)	(200)
Net loss used in calculating earnings per share	$ (12,298)		$ (16,156)		$ (12,870)	$ (29,663)
Denominators:
Weighted average common shares outstanding - basic (in shares)	48,354		48,249		48,345	48,246
Weighted average common shares outstanding (diluted) (in shares)	48,354		48,249		48,345	48,246
Net loss (basic) (in dollars per share)	$ (0.25)		$ (0.33)		$ (0.27)	$ (0.61)
Net loss (diluted) (in dollars per share)	$ (0.25)		$ (0.33)		$ (0.27)	$ (0.61)

Real Estate Properties - Additional Information (Details) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2023 USD ($) ft² lease property	Jun. 30, 2023 USD ($) ft² joint_venture property lease	Dec. 31, 2022 USD ($)
Real Estate Properties [Line Items]
Real estate aggregate undepreciated carrying value	$ 4,035,553	$ 4,035,553	$ 3,936,074
Number of joint ventures \| joint_venture		2
Number of leases entered \| lease	23	39
Rentable square feet (in square feet) \| ft²	713,000	916,000
Weighted average lease term	10 years 3 months 18 days	9 years 6 months
Expenditures committed on leases	$ 40,638	$ 49,385
Committed but unspent tenant related obligations estimated	$ 151,798	$ 151,798
Unconsolidated Joint Ventures
Real Estate Properties [Line Items]
Number of properties (in properties) \| property	3	3
Rentable square feet (in square feet) \| ft²	444,000	444,000
Number of buildings, noncontrolling interest \| property		3
Joint Venture 1
Real Estate Properties [Line Items]
Ownership percentage	51.00%	51.00%
Joint Venture 2
Real Estate Properties [Line Items]
Ownership percentage	50.00%	50.00%
Disposal Group, Held-for-sale, Not Discontinued Operations
Real Estate Properties [Line Items]
Number of properties (in properties) \| property	2	2
Real estate held-for-sale	$ 14,630	$ 14,630
Continuing operations
Real Estate Properties [Line Items]
Number of properties (in properties) \| property	155	155
Rentable square feet (in square feet) \| ft²	20,784,000	20,784,000
Real estate aggregate undepreciated carrying value	$ 4,050,183	$ 4,050,183

Real Estate Properties - Disposition Activities (Details) $ in Thousands		3 Months Ended		6 Months Ended
	Jul. 25, 2023 USD ($) ft² property	Jun. 30, 2023 USD ($) ft² property	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) ft² property	Jun. 30, 2022 USD ($)
Real Estate Properties [Line Items]
Gain (loss) on sale of real estate		$ (2,305)	$ (11,637)	$ 243	$ (9,488)
Disposal Group, Disposed of by Sale, Not Discontinued Operations
Real Estate Properties [Line Items]
Number of properties (in properties) \| property		5		5
Rentable square feet (in square feet) \| ft²		296,000		296,000
Gross sales price				$ 13,075
Gain (loss) on sale of real estate				$ 243
Disposal Group, Disposed of by Sale, Not Discontinued Operations \| Subsequent Event
Real Estate Properties [Line Items]
Rentable square feet (in square feet) \| ft²	80,000
Gross sales price	$ 10,500
Disposal Group, Disposed of by Sale, Not Discontinued Operations \| Richfield, VA
Real Estate Properties [Line Items]
Number of properties (in properties) \| property		3		3
Rentable square feet (in square feet) \| ft²		89,000		89,000
Gross sales price				$ 5,350
Gain (loss) on sale of real estate				$ 2,548
Disposal Group, Disposed of by Sale, Not Discontinued Operations \| Phoenix, AZ
Real Estate Properties [Line Items]
Number of properties (in properties) \| property		1		1
Rentable square feet (in square feet) \| ft²		107,000		107,000
Gross sales price				$ 4,900
Gain (loss) on sale of real estate				$ 511
Disposal Group, Disposed of by Sale, Not Discontinued Operations \| Vernon Hills, IL
Real Estate Properties [Line Items]
Number of properties (in properties) \| property		1		1
Rentable square feet (in square feet) \| ft²		100,000		100,000
Gross sales price				$ 2,825
Gain (loss) on sale of real estate				$ (2,816)
Disposal Group, Held-for-sale, Not Discontinued Operations
Real Estate Properties [Line Items]
Number of properties (in properties) \| property		2		2
Disposal Group, Held-for-sale, Not Discontinued Operations \| Subsequent Event
Real Estate Properties [Line Items]
Number of properties (in properties) \| property	1

Real Estate Properties - Unconsolidated Joint Ventures (Details) $ in Thousands	1 Months Ended	6 Months Ended
	Jul. 31, 2023	Jun. 30, 2023 USD ($) ft² joint_venture property	Dec. 31, 2022 USD ($)
Real Estate [Line Items]
Number of joint ventures \| joint_venture		2
Mortgages
Real Estate [Line Items]
Interest rate (as a percent)		7.863%
Principal balance		$ 108,120
Unconsolidated Joint Ventures
Real Estate [Line Items]
Number of properties (in properties) \| property		3
Investment at carrying value		$ 37,367	$ 35,129
Rentable Square Feet (in square feet) \| ft²		444,000
Unamortized basis difference		$ 6,245
Unconsolidated Joint Ventures \| Mortgages
Real Estate [Line Items]
Interest rate (as a percent)		3.93%
Principal balance		$ 82,000	82,000
Unconsolidated Joint Ventures \| Prosperity Metro Plaza
Real Estate [Line Items]
Number of properties (in properties) \| property		2
Ownership percentage		51.00%
Investment at carrying value		$ 18,810	19,237
Rentable Square Feet (in square feet) \| ft²		329,000
Unconsolidated Joint Ventures \| Prosperity Metro Plaza \| Mortgages
Real Estate [Line Items]
Interest rate (as a percent)		4.09%
Principal balance		$ 50,000	50,000
Unconsolidated Joint Ventures \| 1750 H Street, NW
Real Estate [Line Items]
Number of properties (in properties) \| property		1
Ownership percentage		50.00%
Investment at carrying value		$ 18,557	15,892
Rentable Square Feet (in square feet) \| ft²		115,000
Unconsolidated Joint Ventures \| 1750 H Street, NW \| Mortgages
Real Estate [Line Items]
Interest rate (as a percent)		3.69%
Principal balance		$ 32,000	$ 32,000
Unconsolidated Joint Ventures \| 1750 H Street, NW \| Mortgages \| Subsequent Event
Real Estate [Line Items]
Extension term	3 years

Leases - Lease Receivables (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Leases [Abstract]
Straight line rent adjustments	$ 4,256	$ 2,775	$ 8,429	$ 5,461
Straight line rent receivables	94,705		94,705		$ 86,305
Variable lease, income	22,190	22,101	43,560	44,637
Tenant reimbursements and other income	$ 20,853	$ 21,009	$ 40,919	$ 42,484

Concentration (Details)	6 Months Ended
Concentration (Details)	Jun. 30, 2023 state property	Jun. 30, 2022
Continuing operations
Concentration
Number of wholly owned properties \| property	155
Number of states in which acquired properties located \| state	30
Annualized rental income, excluding properties classified as discontinued operations \| Tenant concentration \| U.S. Government, State Governments and Four Other Governments
Concentration
Concentration risk percentage	28.50%	28.40%
Annualized rental income, excluding properties classified as discontinued operations \| Tenant concentration \| U.S. Government
Concentration
Concentration risk percentage	19.60%	18.50%
Annualized rental income, excluding properties classified as discontinued operations \| Geographic concentration \| California
Concentration
Concentration risk percentage	11.90%
Annualized rental income, excluding properties classified as discontinued operations \| Geographic concentration \| Virginia
Concentration
Concentration risk percentage	11.10%
Annualized rental income, excluding properties classified as discontinued operations \| Geographic concentration \| Illinois
Concentration
Concentration risk percentage	10.70%
Annualized rental income, excluding properties classified as discontinued operations \| Geographic concentration \| District of Columbia
Concentration
Concentration risk percentage	10.30%
Annualized rental income, excluding properties classified as discontinued operations \| Geographic concentration \| Georgia
Concentration
Concentration risk percentage	9.20%

Indebtedness - Narrative (Details) $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended		25 Months Ended
Indebtedness - Narrative (Details) $ in Thousands	Jun. 30, 2023 USD ($) property	Jun. 30, 2023 USD ($) property	Jun. 30, 2022	Jun. 30, 2023 USD ($) property	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) property	Jul. 26, 2023 USD ($)	Dec. 31, 2022 USD ($)
Debt Instrument [Line Items]
Borrowings outstanding	$ 240,000	$ 240,000		$ 240,000		$ 240,000		$ 195,000
Repayment of mortgage notes payable				$ 50,000	$ 25,283
Number of buildings secured by mortgage notes \| property	4	4		4		4
Aggregate net book value of secured properties	$ 153,078	$ 153,078		$ 153,078		$ 153,078
Mortgages
Debt Instrument [Line Items]
Outstanding principal amount	$ 108,120	$ 108,120		$ 108,120		$ 108,120
Interest rate (as a percent)	7.863%	7.863%		7.863%		7.863%
Weighted average interest rate				7.863%
Principal balance	$ 108,120	$ 108,120		$ 108,120		$ 108,120
Mortgages \| 7.210% Mortgage Notes Payable
Debt Instrument [Line Items]
Interest rate (as a percent)	7.21%	7.21%		7.21%		7.21%
Principal balance	$ 30,680	$ 30,680		$ 30,680		$ 30,680
Mortgages \| 3.700% Mortgage Notes Payable
Debt Instrument [Line Items]
Interest rate (as a percent)	3.70%	3.70%		3.70%		3.70%
Repayment of mortgage notes payable	$ 50,000
Number of buildings secured by mortgage notes \| property	1	1		1		1
Unsecured revolving credit facility
Debt Instrument [Line Items]
Borrowings outstanding	$ 240,000	$ 240,000		$ 240,000		$ 240,000
Maximum borrowing capacity on revolving credit facility	750,000	750,000		750,000		750,000
Aggregate principal amount on secured properties	1,950,000	1,950,000		1,950,000		$ 1,950,000
Extension term						6 months
Extension fee	$ 469	$ 469		$ 469		$ 469
Facility fee (as a percent)				0.30%
Interest rate (as a percent)	6.60%	6.60%		6.60%		6.60%		5.40%
Weighted average annual interest rate		6.50%	2.40%	6.20%	2.40%
Line of credit facility, remaining borrowing capacity	$ 510,000	$ 510,000		$ 510,000		$ 510,000
Unsecured revolving credit facility \| Subsequent Event
Debt Instrument [Line Items]
Borrowings outstanding							$ 230,000
Line of credit facility, remaining borrowing capacity							$ 520,000
Unsecured revolving credit facility \| SOFR
Debt Instrument [Line Items]
Interest rate premium (as a percent)				1.45%
Senior unsecured notes
Debt Instrument [Line Items]
Borrowings outstanding	$ 2,212,000	$ 2,212,000		$ 2,212,000		$ 2,212,000

Indebtedness - Mortgage Note Issuances (Details) - Mortgages $ in Thousands	Jun. 30, 2023 USD ($)
Debt Instrument [Line Items]
Principal balance	$ 108,120
Interest rate (as a percent)	7.863%
7.210% Mortgage Notes Payable
Debt Instrument [Line Items]
Principal balance	$ 30,680
Interest rate (as a percent)	7.21%
8.139% Mortgage Notes Payable
Debt Instrument [Line Items]
Principal balance	$ 26,340
Interest rate (as a percent)	8.139%
8.272% Mortgage Notes Payable
Debt Instrument [Line Items]
Principal balance	$ 42,700
Interest rate (as a percent)	8.272%
7.305% Mortgage Notes Payable
Debt Instrument [Line Items]
Principal balance	$ 8,400
Interest rate (as a percent)	7.305%

Fair Value of Assets and Liabilities - Financial Instruments (Details) $ in Thousands	1 Months Ended	6 Months Ended
	Jun. 30, 2023 USD ($) mortgage_note property	Jun. 30, 2023 USD ($) mortgage_note property	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Fair Value of Financial Instruments
Senior notes	$ 2,191,676	$ 2,191,676		$ 2,187,875
Mortgage notes payable	$ 106,365	106,365		49,917
Repayment of mortgage notes payable		$ 50,000	$ 25,283
Number of mortgage notes \| mortgage_note	4	4
4.25% Senior Unsecured Notes Due 2024
Fair Value of Financial Instruments
Interest rate (as a percent)	4.25%	4.25%
4.50% Senior Unsecured Notes Due 2025
Fair Value of Financial Instruments
Interest rate (as a percent)	4.50%	4.50%
2.650% Senior Unsecured Notes Due 2026
Fair Value of Financial Instruments
Interest rate (as a percent)	2.65%	2.65%
2.400% Senior Unsecured Notes Due 2027
Fair Value of Financial Instruments
Interest rate (as a percent)	2.40%	2.40%
3.450% Senior Unsecured Notes Due 2031
Fair Value of Financial Instruments
Interest rate (as a percent)	3.45%	3.45%
6.375% Senior Unsecured Notes Due 2050
Fair Value of Financial Instruments
Interest rate (as a percent)	6.375%	6.375%
3.700% Mortgage Notes Payable
Fair Value of Financial Instruments
Number of properties (in properties) \| property	1	1
Mortgages
Fair Value of Financial Instruments
Interest rate (as a percent)	7.863%	7.863%
Outstanding principal amount	$ 108,120	$ 108,120
Mortgages \| 3.700% Mortgage Notes Payable
Fair Value of Financial Instruments
Interest rate (as a percent)	3.70%	3.70%
Repayment of mortgage notes payable	$ 50,000
Senior Notes And Mortgages
Fair Value of Financial Instruments
Unamortized debt premiums, discounts and issuance costs	22,079	$ 22,079		24,208
Carrying Value
Fair Value of Financial Instruments
Fair value of financial instruments	2,298,041	2,298,041		2,237,792
Carrying Value \| 4.25% Senior Unsecured Notes Due 2024
Fair Value of Financial Instruments
Senior notes	348,004	348,004		346,863
Carrying Value \| 4.50% Senior Unsecured Notes Due 2025
Fair Value of Financial Instruments
Senior notes	644,542	644,542		642,818
Carrying Value \| 2.650% Senior Unsecured Notes Due 2026
Fair Value of Financial Instruments
Senior notes	298,151	298,151		297,839
Carrying Value \| 2.400% Senior Unsecured Notes Due 2027
Fair Value of Financial Instruments
Senior notes	347,776	347,776		347,466
Carrying Value \| 3.450% Senior Unsecured Notes Due 2031
Fair Value of Financial Instruments
Senior notes	396,396	396,396		396,178
Carrying Value \| 6.375% Senior Unsecured Notes Due 2050
Fair Value of Financial Instruments
Senior notes	156,807	156,807		156,711
Carrying Value \| Mortgages
Fair Value of Financial Instruments
Mortgage notes payable	106,365	106,365		49,917
Fair Value
Fair Value of Financial Instruments
Fair value of financial instruments	1,749,333	1,749,333		1,840,543
Fair Value \| 4.25% Senior Unsecured Notes Due 2024
Fair Value of Financial Instruments
Senior notes	330,082	330,082		331,601
Fair Value \| 4.50% Senior Unsecured Notes Due 2025
Fair Value of Financial Instruments
Senior notes	561,672	561,672		589,388
Fair Value \| 2.650% Senior Unsecured Notes Due 2026
Fair Value of Financial Instruments
Senior notes	221,097	221,097		232,770
Fair Value \| 2.400% Senior Unsecured Notes Due 2027
Fair Value of Financial Instruments
Senior notes	235,344	235,344		256,606
Fair Value \| 3.450% Senior Unsecured Notes Due 2031
Fair Value of Financial Instruments
Senior notes	210,204	210,204		268,004
Fair Value \| 6.375% Senior Unsecured Notes Due 2050
Fair Value of Financial Instruments
Senior notes	79,704	79,704		113,075
Fair Value \| Mortgages
Fair Value of Financial Instruments
Mortgage notes payable	$ 111,230	$ 111,230		$ 49,099

Shareholders' Equity (Details) $ / shares in Units, $ in Thousands					3 Months Ended	6 Months Ended
	Jul. 13, 2023 USD ($) $ / shares	Jun. 13, 2023 trustee $ / shares shares	May 18, 2023 USD ($) $ / shares	Feb. 16, 2023 USD ($) $ / shares	Jun. 30, 2023 trustee	Jun. 30, 2023 USD ($) trustee $ / shares shares	Jun. 30, 2022 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share repurchases (in shares) \| shares						6,779	7,754
Stock repurchase price (in dollars per share)						$ 6.48	$ 7.37
Stock repurchased during period, number of trustees \| trustee					1	1
Cash distribution to common shareholders (in dollars per share)			$ 0.25	$ 0.55		$ 0.80
Distributions to common shareholders \| $			$ 12,141	$ 26,710		$ 38,851	$ 53,268
Subsequent Event
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Dividends declared (in dollars per share)	$ 0.25
Dividends declared \| $	$ 12,150
Share Award Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of trustees \| trustee		9
Trustees \| Share Award Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares) \| shares		3,500
Share price (in dollars per share)		$ 7.90

Business and Property Management Agreements with RMR (Details) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) joint_venture agreement employee	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Related Party Transaction [Line Items]
Number of joint ventures \| joint_venture			2
RMR LLC
Related Party Transaction [Line Items]
Number of employees \| employee			0
Number of agreements \| agreement			2
Incentive fee	$ 0		$ 0		$ 0
Reimbursement expense	6,617	$ 6,047	12,964	$ 12,013
RMR LLC \| Net Business Management Fees
Related Party Transaction [Line Items]
Related party transaction amount	3,592	4,492	7,543	9,202
RMR LLC \| Net Property Management and Construction Supervision Fees
Related Party Transaction [Line Items]
Related party transaction amount	6,163	6,394	12,482	12,522
RMR LLC \| Net Property Management and Construction Supervision Fees \| Buildings and Improvements
Related Party Transaction [Line Items]
Related party transaction amount	2,362	2,379	4,948	4,281
RMR LLC \| Net Property Management and Construction Supervision Fees \| Other Operating Income (Expense)
Related Party Transaction [Line Items]
Related party transaction amount	$ 3,801	$ 4,015	$ 7,534	$ 8,241

Related Person Transactions (Details) $ in Thousands		1 Months Ended	3 Months Ended		6 Months Ended		25 Months Ended
Related Person Transactions (Details) $ in Thousands	Apr. 11, 2023	Jun. 30, 2021 USD ($) ft² renewal_option	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) agreement joint_venture	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($)
Related Party Transaction [Line Items]
Number of joint ventures \| joint_venture					2
Rental income			$ 133,997	$ 141,316	$ 266,419	$ 288,670
Real estate payments incurred					$ 138,724	89,144
Related Party \| RMR LLC
Related Party Transaction [Line Items]
Number of agreements \| agreement					2
Rental income			$ 244	$ 285	$ 467	$ 569
Related Party \| Sonesta
Related Party Transaction [Line Items]
Lessor, operating lease, lease not yet commenced, term of contract		30 years
Rentable Square Feet (in square feet) \| ft²		230,000
Area of real estate property percentage upon completion of re-development		54.00%
Number of renewal options \| renewal_option		2
Renewal term		10 years
Annual base rent		$ 6,436
Deferred payment plan period		18 months
Annual percentage increase		10.00%
Annual base rent increase period		5 years
Estimated build cost							$ 77,000
Real estate payments incurred					$ 73,000
Related Party \| Diversified Healthcare Trust
Related Party Transaction [Line Items]
Renovation and reposition fee percent	3.00%