Government Properties Income Trust Exhibit 99.2 Fourth Quarter 2016 Supplemental Operating and Financial Data All amounts in this report are unaudited.
TABLE OF CONTENTS On December 31, 2018, Office Properties Income Trust (formerly Government Properties Income Trust, or GOV), or OPI, we, our or us, completed its previously announced merger with Select Income REIT, or SIR, whereby SIR merged with and into a wholly owned subsidiary of GOV, or the Merger. The Merger was effective after the close of trading on December 31, 2018. Accordingly, the assets acquired and liabilities assumed from SIR in the Merger are included in OPI's consolidated balance sheet as of December 31, 2018; however, SIR's results of operations are excluded from OPI's actual historical consolidated statements of income (loss) for all periods presented. Upon the closing of the Merger, GOV changed its name to Office Properties Income Trust and effected a reverse share split of OPI common shares pursuant to which every four common shares of OPI were converted into one common share of OPI, or the Reverse Share Split. As required under U.S. generally accepted accounting principles, or GAAP, all impacted amounts and share information included in this supplemental operating and financial data report have been retroactively adjusted for the Reverse Share Split, as if the Reverse Share Split occurred on the first day of the first period presented. Certain adjusted amounts may not agree with previously reported amounts due to rounding of fractional shares. Certain pro forma financial information is presented in the Exhibits to this supplemental operating and financial data report, as well as certain property information for SIR, as if the Merger had occurred on October 1, 2018. Such pro forma financial information is not necessarily indicative of our expected financial position or results of operations for any future period. Differences could result from numerous factors, including future changes in our portfolio of investments, our capital structure, our property level operating expenses and revenues, including rents expected to be received on our existing leases or leases we may enter into, changes in interest rates and other reasons. Actual future results are likely to be different from amounts presented in the pro forma financial information and such differences could be significant. TABLE OF CONTENTS TABLE CORPORATE INFORMATION PAGE Company Profile 8 Investor Information 9 Research Coverage 10 FINANCIALS Key Financial Data 12 Consolidated Balance Sheets 13 Consolidated Statements of Income (Loss) 14 Consolidated Statements of Cash Flows 16 Debt Summary 18 Debt Maturity Schedule 20 Leverage Ratios, Coverage Ratios and Public Debt Covenants 21 Capital Expenditures Summary 22 Property Acquisition and Disposition Information Since January 1, 2018 23 Investment in Unconsolidated Joint Ventures 24 Calculation of Consolidated Property Net Operating Income (NOI) and Consolidated Property Cash Basis NOI 25 Calculation of Same Property NOI and Cash Basis NOI 26 Calculation of EBITDA and Adjusted EBITDA 27 Calculation of Funds from Operations (FFO) and Normalized FFO Available for Common Shareholders 28 Definitions of Certain Non-GAAP Financial Measures 29 PORTFOLIO INFORMATION Summary Consolidated Same Property Results 31 Occupancy and Leasing Summary 32 Tenant Diversity and Credit Characteristics 33 Tenants Representing 1% or More of Total Annualized Rental Income 34 Lease Expiration Schedule 35 Office Properties Income Trust 2 Supplemental Operating and Financial Data, December 31, 2018
TABLE OF CONTENTS (CONTINUED) EXHIBITS PAGE A Consolidated Property Detail 37 B Pro Forma Key Financial Data 42 C Pro Forma Consolidated Statement of Income (Loss) 43 D Pro Forma Consolidated Leverage Ratios, Coverage Ratios and Public Debt Covenants 45 E Pro Forma Calculation of Consolidated Property NOI and Consolidated Property Cash NOI and Same Property NOI and Same Property Cash Basis NOI 46 F Pro Forma Calculation of EBITDA and Adjusted EBITDA 48 G Pro Forma Calculation of FFO and Normalized FFO Attributable to the Company 49 H SIR Summary Consolidated and Same Property Results 50 I Pro Forma Summary Same Property Results 51 J SIR Occupancy and Leasing Summary 52 K Pro Forma Leasing Summary 53 L SIR Capital Expenditures Summary 54 TABLE OF CONTENTS (CONTINUED) TABLE Office Properties Income Trust 3 Supplemental Operating and Financial Data, December 31, 2018
WARNING CONCERNING FORWARD LOOKING STATEMENTS THIS PRESENTATION OF SUPPLEMENTAL OPERATING AND FINANCIAL DATA CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. ALSO, WHENEVER WE USE WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE”, “WILL”, “MAY” AND NEGATIVES OR DERIVATIVES OF THESE OR SIMILAR EXPRESSIONS, WE ARE MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON OUR PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. FORWARD LOOKING STATEMENTS IN THIS REPORT RELATE TO VARIOUS ASPECTS OF OUR BUSINESS, INCLUDING: • OUR SALES AND ACQUISITIONS OF PROPERTIES, • OUR ABILITY TO COMPETE FOR ACQUISITIONS AND TENANCIES EFFECTIVELY, • THE LIKELIHOOD THAT OUR TENANTS WILL PAY RENT OR BE NEGATIVELY AFFECTED BY CYCLICAL ECONOMIC CONDITIONS OR GOVERNMENT BUDGET CONSTRAINTS, • THE LIKELIHOOD THAT 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, • THE LIKELIHOOD THAT OUR RENTS WILL INCREASE WHEN WE RENEW OR EXTEND OUR LEASES OR ENTER NEW LEASES, • OUR ABILITY TO PAY DISTRIBUTIONS TO OUR SHAREHOLDERS AND TO SUSTAIN THE AMOUNT OF SUCH DISTRIBUTIONS, • OUR POLICIES AND PLANS REGARDING INVESTMENTS, FINANCINGS AND DISPOSITIONS, • THE FUTURE AVAILABILITY OF BORROWINGS UNDER OUR REVOLVING CREDIT FACILITY, • OUR EXPECTATION THAT THERE WILL BE OPPORTUNITIES FOR US TO ACQUIRE, AND THAT WE WILL ACQUIRE, ADDITIONAL PROPERTIES PRIMARILY LEASED TO SINGLE TENANTS AND TENANTS WITH HIGH CREDIT QUALITY CHARACTERISTICS SUCH AS GOVERNMENTAL ENTITIES, • OUR EXPECTATIONS REGARDING DEMAND FOR LEASED SPACE, • OUR ABILITY TO RAISE DEBT OR EQUITY CAPITAL, • OUR ABILITY TO PAY INTEREST ON AND PRINCIPAL OF OUR DEBT, • OUR ABILITY TO APPROPRIATELY BALANCE OUR USE OF DEBT AND EQUITY CAPITAL, • OUR CREDIT RATINGS, • OUR EXPECTATION THAT OUR SHAREHOLDERS WILL BENEFIT FROM THE MERGER, • OUR EXPECTATION THAT WE BENEFIT FROM OUR OWNERSHIP INTEREST IN AND OTHER RELATIONSHIPS WITH THE RMR GROUP INC., OR RMR INC., • OUR EXPECTATION THAT WE BENEFIT FROM OUR OWNERSHIP INTEREST IN AND OTHER RELATIONSHIPS WITH AFFILIATES INSURANCE COMPANY, OR AIC, AND FROM OUR PARTICIPATION IN INSURANCE PROGRAMS ARRANGED BY AIC, • THE CREDIT QUALITIES OF OUR TENANTS, • OUR QUALIFICATION FOR TAXATION AS A REAL ESTATE INVESTMENT TRUST, OR REIT, • CHANGES IN FEDERAL OR STATE TAX LAWS, AND • OTHER MATTERS. OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY OUR FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FACTORS THAT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR FORWARD LOOKING STATEMENTS AND UPON OUR BUSINESS, RESULTS OF OPERATIONS, FINANCIAL CONDITION, FUNDS FROM OPERATIONS, OR FFO, AVAILABLE FOR COMMON SHAREHOLDERS, NORMALIZED FFO AVAILABLE FOR COMMON SHAREHOLDERS, CONSOLIDATED PROPERTY NET OPERATING INCOME, OR NOI, CONSOLIDATED PROPERTY CASH BASIS WARNING CONCERNING FORWARD LOOKING STATEMENTS CONCERNING FORWARD WARNING NOI, EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION, OR EBITDA, EBITDA AS ADJUSTED, OR ADJUSTED EBITDA, CASH FLOWS, LIQUIDITY AND PROSPECTS INCLUDE, BUT ARE NOT LIMITED TO: • THE IMPACT OF CONDITIONS IN THE ECONOMY AND THE CAPITAL MARKETS ON US AND OUR TENANTS, • THE IMPACT OF A U.S. GOVERNMENT SHUTDOWN ON OUR ABILITY TO COLLECT RENTS OR PAY OUR OPERATING EXPENSES, DEBT OBLIGATIONS AND DISTRIBUTIONS TO SHAREHOLDERS ON A TIMELY BASIS, Office Properties Income Trust 4 Supplemental Operating and Financial Data, December 31, 2018
WARNING CONCERNING FORWARD LOOKING STATEMENTS (CONTINUED) • COMPETITION WITHIN THE REAL ESTATE INDUSTRY, PARTICULARLY IN THOSE MARKETS IN WHICH OUR PROPERTIES ARE LOCATED, • THE IMPACT OF CHANGES IN THE REAL ESTATE NEEDS AND FINANCIAL CONDITIONS OF OUR TENANTS, • COMPLIANCE WITH, AND CHANGES TO, FEDERAL, STATE AND LOCAL LAWS AND REGULATIONS, ACCOUNTING RULES, TAX LAWS AND SIMILAR MATTERS, • ACTUAL AND POTENTIAL CONFLICTS OF INTEREST WITH OUR RELATED PARTIES, INCLUDING OUR MANAGING TRUSTEES, THE RMR GROUP LLC, OR RMR LLC, RMR INC., AIC AND OTHERS AFFILIATED WITH THEM, • LIMITATIONS IMPOSED ON OUR BUSINESS AND OUR ABILITY TO SATISFY COMPLEX RULES IN ORDER FOR US TO QUALIFY FOR TAXATION AS A REIT FOR U.S. FEDERAL INCOME TAX PURPOSES, AND • ACTS OF TERRORISM, OUTBREAKS OF SO CALLED PANDEMICS OR OTHER MANMADE OR NATURAL DISASTERS BEYOND OUR CONTROL. FOR EXAMPLE: • OUR ABILITY TO MAKE FUTURE DISTRIBUTIONS TO OUR SHAREHOLDERS AND TO MAKE PAYMENTS OF PRINCIPAL AND INTEREST ON OUR INDEBTEDNESS DEPENDS UPON A NUMBER OF FACTORS, INCLUDING OUR FUTURE EARNINGS, THE CAPITAL COSTS WE INCUR TO LEASE OUR PROPERTIES AND OUR WORKING CAPITAL REQUIREMENTS. WE MAY BE UNABLE TO PAY OUR DEBT OBLIGATIONS OR TO MAINTAIN OUR CURRENT RATE OF DISTRIBUTIONS ON OUR COMMON SHARES AND FUTURE DISTRIBUTIONS MAY BE REDUCED OR ELIMINATED, • OUR ABILITY TO GROW OUR BUSINESS AND INCREASE OUR DISTRIBUTIONS DEPENDS IN LARGE PART UPON OUR ABILITY TO BUY PROPERTIES AND LEASE THEM FOR RENTS, LESS THEIR PROPERTY OPERATING COSTS, THAT EXCEED OUR CAPITAL COSTS. WE MAY BE UNABLE TO IDENTIFY PROPERTIES THAT WE WANT TO ACQUIRE AND WE MAY FAIL TO REACH AGREEMENT WITH THE SELLERS AND COMPLETE THE PURCHASES OF ANY PROPERTIES WE WANT TO ACQUIRE. IN ADDITION, ANY PROPERTIES WE MAY ACQUIRE MAY NOT PROVIDE US WITH RENTS LESS PROPERTY OPERATING COSTS THAT EXCEED OUR CAPITAL COSTS OR ACHIEVE OUR EXPECTED RETURNS, • AS PART OF OUR LONG TERM FINANCING PLANS TO REDUCE OUR LEVERAGE, WE EXPECT TO DISPOSE OF CERTAIN OF OUR PROPERTIES. CURRENTLY, WE ARE MARKETING OR PLAN TO MARKET FOR SALE CERTAIN PROPERTIES. WE CANNOT BE SURE WE WILL SELL ANY OF THESE PROPERTIES OR WHAT THE TERMS OF ANY SALES MAY BE. WE MAY SELL SOME OR ALL OF THESE PROPERTIES AT PRICES THAT ARE LESS THAN WE EXPECT AND LESS THAN OUR CARRYING VALUES AND WE MAY OTHERWISE INCUR LOSSES AS A RESULT OF CONSIDERING AND PURSUING THESE SALES. FURTHER, WE MAY ELECT TO CHANGE WHICH PROPERTIES WE MAY SEEK TO SELL, WHICH COULD RESULT IN DIFFERENT PROPERTIES AND/OR FEWER OR GREATER NUMBER OF PROPERTIES BEING SOLD OR MARKETED FOR SALE, • SOME OF OUR TENANTS MAY NOT RENEW EXPIRING LEASES, AND WE MAY BE UNABLE TO OBTAIN NEW TENANTS TO MAINTAIN OR INCREASE THE HISTORICAL OCCUPANCY RATES OF, OR RENTS FROM, OUR PROPERTIES, • SOME GOVERNMENT TENANTS MAY EXERCISE THEIR RIGHTS TO VACATE THEIR SPACE BEFORE THE STATED EXPIRATIONS OF THEIR LEASES, AND WE MAY BE UNABLE TO OBTAIN NEW TENANTS TO MAINTAIN THE HISTORICAL OCCUPANCY RATES OF, OR RENTS FROM, OUR PROPERTIES, • RENTS THAT WE CAN CHARGE AT OUR PROPERTIES MAY DECLINE UPON RENEWALS OR EXPIRATIONS BECAUSE OF CHANGING MARKET CONDITIONS OR OTHERWISE, • LEASING FOR SOME OF OUR PROPERTIES DEPENDS ON A SINGLE TENANT AND WE MAY BE ADVERSELY AFFECTED BY THE BANKRUPTCY, INSOLVENCY, A DOWNTURN OF BUSINESS OR A LEASE TERMINATION OF A SINGLE TENANT, • OUR BELIEF THAT THERE IS A LIKELIHOOD THAT TENANTS MAY RENEW OR EXTEND OUR LEASES PRIOR TO THEIR EXPIRATIONS WHENEVER THEY HAVE MADE SIGNIFICANT INVESTMENTS IN THE LEASED PROPERTIES, OR BECAUSE THOSE PROPERTIES MAY BE OF STRATEGIC IMPORTANCE TO THEM, MAY NOT BE REALIZED, • OUR BELIEF THAT THE REDUCTION IN GOVERNMENT TENANT SPACE UTILIZATION AND THE CONSOLIDATION OF GOVERNMENT TENANTS INTO GOVERNMENT OWNED REAL ESTATE IS SUBSTANTIALLY COMPLETE MAY PROVE MISPLACED IF THESE PRIOR TRENDS CONTINUE OR DO NOT MODERATE TO THE EXTENT WE EXPECT, • CONTINGENCIES IN OUR ACQUISITION AND SALE AGREEMENTS MAY NOT BE SATISFIED AND ANY EXPECTED ACQUISITIONS AND SALES AND ANY RELATED LEASE ARRANGEMENTS WE EXPECT TO ENTER MAY NOT OCCUR, MAY BE DELAYED OR THE TERMS OF SUCH TRANSACTIONS OR ARRANGEMENTS MAY CHANGE, • THE COMPETITIVE ADVANTAGES WE BELIEVE WE HAVE MAY NOT IN FACT EXIST OR PROVIDE US WITH THE ADVANTAGES WE EXPECT. WE MAY FAIL TO MAINTAIN ANY OF THESE ADVANTAGES OR OUR COMPETITION MAY OBTAIN OR INCREASE THEIR COMPETITIVE ADVANTAGES RELATIVE TO US, • WE INTEND TO CONDUCT OUR BUSINESS ACTIVITIES IN A MANNER THAT WILL AFFORD US REASONABLE ACCESS TO CAPITAL FOR INVESTMENT AND FINANCING ACTIVITIES. HOWEVER, WE MAY NOT SUCCEED IN THIS REGARD AND WE MAY NOT HAVE REASONABLE ACCESS TO CAPITAL, Office Properties Income Trust 5 WARNING CONCERNING FORWARD LOOKING STATEMENTS (CONTINUED) LOOKING STATEMENTS CONCERNING FORWARD WARNING Supplemental Operating and Financial Data, December 31, 2018
WARNING CONCERNING FORWARD LOOKING STATEMENTS (CONTINUED) • CONTINUED AVAILABILITY OF BORROWINGS UNDER OUR REVOLVING CREDIT FACILITY IS SUBJECT TO OUR SATISFYING CERTAIN FINANCIAL COVENANTS AND OTHER CREDIT FACILITY CONDITIONS THAT WE MAY BE UNABLE TO SATISFY, • ACTUAL COSTS UNDER OUR REVOLVING CREDIT FACILITY OR OTHER FLOATING RATE DEBT WILL BE HIGHER THAN LIBOR PLUS A PREMIUM BECAUSE OF FEES AND EXPENSES ASSOCIATED WITH SUCH DEBT, • THE INTEREST RATES PAYABLE UNDER OUR FLOATING RATE DEBT OBLIGATIONS DEPEND UPON OUR CREDIT RATINGS. WE CURRENTLY HAVE A NEGATIVE CREDIT RATINGS OUTLOOK BY MOODY'S INVESTORS SERVICE WHICH MAY IMPLY THAT OUR CREDIT RATINGS MAY BE DOWNGRADED. IF OUR CREDIT RATINGS ARE DOWNGRADED, OUR BORROWING COSTS WILL INCREASE, • OUR ABILITY TO ACCESS DEBT CAPITAL AND THE COST OF OUR DEBT CAPITAL WILL DEPEND IN PART ON OUR CREDIT RATINGS. IF OUR CREDIT RATINGS ARE DOWNGRADED, WE MAY NOT BE ABLE TO ACCESS DEBT CAPITAL OR THE DEBT CAPITAL WE CAN ACCESS MAY BE EXPENSIVE, • WE MAY BE UNABLE TO REPAY OUR DEBT OBLIGATIONS WHEN THEY BECOME DUE, • THE MAXIMUM BORROWING AVAILABILITY UNDER OUR REVOLVING CREDIT FACILITY AND TERM LOANS MAY BE INCREASED TO UP TO $2.5 BILLION ON A COMBINED BASIS IN CERTAIN CIRCUMSTANCES; HOWEVER, INCREASING THE MAXIMUM BORROWING AVAILABILITY UNDER OUR REVOLVING CREDIT FACILITY AND TERM LOANS IS SUBJECT TO OUR OBTAINING ADDITIONAL COMMITMENTS FROM LENDERS, WHICH MAY NOT OCCUR, • WE HAVE THE OPTION TO EXTEND THE MATURITY DATE OF OUR REVOLVING CREDIT FACILITY UPON PAYMENT OF A FEE AND MEETING OTHER CONDITIONS; HOWEVER, THE APPLICABLE CONDITIONS MAY NOT BE MET, • WE MAY INCUR SIGNIFICANT COSTS TO PREPARE A PROPERTY FOR A TENANT, PARTICULARLY FOR SINGLE TENANT PROPERTIES, • WE MAY SPEND MORE FOR CAPITAL EXPENDITURES THAN WE CURRENTLY EXPECT, • THE BUSINESS AND PROPERTY MANAGEMENT AGREEMENTS BETWEEN US AND RMR LLC HAVE CONTINUING 20 YEAR TERMS. HOWEVER, THOSE AGREEMENTS PERMIT EARLY TERMINATION IN CERTAIN CIRCUMSTANCES. ACCORDINGLY, WE CANNOT BE SURE THAT THESE AGREEMENTS WILL REMAIN IN EFFECT FOR CONTINUING 20 YEAR TERMS, • WE BELIEVE THAT OUR RELATIONSHIPS WITH OUR RELATED PARTIES, INCLUDING RMR LLC, RMR INC., AIC AND OTHERS AFFILIATED WITH THEM MAY BENEFIT US AND PROVIDE US WITH COMPETITIVE ADVANTAGES IN OPERATING AND GROWING OUR BUSINESS. HOWEVER, THE ADVANTAGES WE BELIEVE WE MAY REALIZE FROM THESE RELATIONSHIPS MAY NOT MATERIALIZE, • WE MAY FAIL TO EXECUTE SUCCESSFULLY ON OUR EXPANDED BUSINESS STRATEGY OR INCREASED SCALE OF OUR BUSINESS RESULTING FROM THE MERGER AND THEREFORE MAY NOT REALIZE THE BENEFITS WE EXPECT FROM THE MERGER, AND • AS OF DECEMBER 31, 2018, WE HAD ESTIMATED UNSPENT LEASING RELATED OBLIGATIONS OF $58.4 MILLION. OUR UNSPENT LEASING RELATED OBLIGATIONS MAY COST MORE AND MAY TAKE LONGER TO COMPLETE THAN WE CURRENTLY EXPECT, AND WE MAY INCUR INCREASED AMOUNTS FOR THESE AND SIMILAR PURPOSES IN THE FUTURE. CURRENTLY UNEXPECTED RESULTS COULD OCCUR DUE TO MANY DIFFERENT CIRCUMSTANCES, SOME OF WHICH ARE BEYOND OUR CONTROL, SUCH AS CHANGES IN OUR TENANTS’ NEEDS FOR LEASED SPACE, THE ABILITY OF THE U.S. GOVERNMENT TO APPROVE SPENDING BILLS TO FUND THE U.S. GOVERNMENT'S OBLIGATIONS, ACTS OF TERRORISM, NATURAL DISASTERS OR CHANGES IN CAPITAL MARKETS OR THE ECONOMY GENERALLY. THE INFORMATION CONTAINED IN OUR FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, OR SEC, INCLUDING UNDER THE CAPTION "RISK FACTORS" IN OUR PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE DIFFERENCES FROM OUR FORWARD LOOKING STATEMENTS. 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. Office Properties Income Trust 6 WARNING CONCERNING FORWARD LOOKING STATEMENTS (CONTINUED) LOOKING STATEMENTS CONCERNING FORWARD WARNING Supplemental Operating and Financial Data, December 31, 2018
One Memphis Place, Memphis, TN Square Feet: 204,694 Primary Agency Occupant: U.S. Courts Office Properties Income Trust 7 Supplemental Operating and Financial Data, December 31,CORPORATE 2018 INFORMATION
COMPANY PROFILE The Company: Corporate Headquarters: Office Properties Income Trust (formerly Government Properties Income Trust, or GOV), or OPI, we, our, or us, is a real estate Two Newton Place investment trust, or REIT, focused on owning, operating and leasing buildings primarily leased to single tenants and those with high credit quality characteristics, such as government entities. The majority of our properties are office buildings. We have been 255 Washington Street, Suite 300 investment grade rated since 2010, and we are included in the S&P Small Cap 600 Index, the Russell 2000® index and the MSCI Newton, MA 02458-1634 US REIT index. (617) 219-1440 On December 31, 2018, we completed our previously announced merger with Select Income REIT, or SIR, whereby SIR merged Stock Exchange Listing: with and into a wholly owned subsidiary of GOV, or the Merger. The Merger was effective after the close of trading on December COMPANY PROFILE COMPANY Nasdaq 31, 2018. Accordingly, the assets acquired and liabilities assumed from SIR in the Merger are included in OPI's consolidated balance sheet as of December 31, 2018; however, SIR's results of operations are excluded from OPI's actual historical consolidated Trading Symbols: statements of income (loss) for all periods presented. Upon the closing of the Merger, GOV changed its name to Office Properties Income Trust and effected a reverse share split of OPI common shares pursuant to which every four common shares of OPI Common Shares: OPI were converted into one common share of OPI, or the Reverse Share Split. As required under U.S. generally accepted accounting Senior Unsecured Notes due 2046: OPINI principles, or GAAP, all impacted amounts and share information included in this supplemental operating and financial data have been retroactively adjusted for the Reverse Share Split, as if the Reverse Share Split occurred on the first day of the first period Issuer Ratings: presented. Certain adjusted amounts may not agree with previously reported amounts due to the rounding of fractional shares. Moody’s: Baa3 Standard & Poor’s: BBB- Certain pro forma financial information in the Exhibits to this supplemental operating and financial data report, as well as certain stand alone property information for SIR, is presented as if the Merger had occurred on October 1, 2018. Key Data (As of and For the Quarter Ended December 31, 2018): Management: (dollars and sq. ft. in 000s) OPI is managed by The RMR Group LLC, the operating subsidiary of The RMR Group Inc. (Nasdaq: RMR). RMR is an alternative asset management company that was founded in 1986 to manage real estate companies and related businesses. RMR primarily Total consolidated buildings (1) 247 provides management services to four publicly traded equity REITs and three real estate related operating businesses. In addition (1) to managing OPI, RMR manages Hospitality Properties Trust, a REIT that owns hotels and travel centers, Industrial Logistics Total sq. ft. 31,900 Properties Trust, a REIT that owns industrial and logistics properties, and Senior Housing Properties Trust, a REIT that primarily Percent leased (1) 91.0% owns healthcare, senior living and medical office buildings. RMR also provides management services to Five Star Senior Living Q4 2018 total rental income (2) $ 103,656 Inc., a publicly traded operator of senior living communities, Sonesta International Hotels Corporation, a privately owned operator Q4 2018 net loss available for and franchisor of hotels and cruise ships, and TravelCenters of America LLC, a publicly traded operator and franchisor of travel common shareholders (2) $ (57,695) centers along the U.S. Interstate Highway System and restaurants. RMR also advises the RMR Real Estate Income Fund, a Q4 2018 Normalized FFO available publicly traded closed end fund that invests in publicly traded securities of real estate companies, and Tremont Mortgage Trust, for common shareholders (2)(3) $ 39,101 a publicly traded mortgage REIT, through wholly owned SEC registered investment advisory subsidiaries, as well as manages (1) Includes the acquired SIR portfolio and excludes three the RMR Office Property Fund, a private, open end core plus fund focused on the acquisition, ownership and leasing of a diverse buildings owned by unconsolidated joint ventures. portfolio of multi-tenant office properties throughout the U.S. As of December 31, 2018, RMR had $29.7 billion of real estate (2) Excludes the results of the acquired SIR portfolio. assets under management and the combined RMR managed companies had approximately $12 billion of annual revenues, over (3) See page 28 for the calculation of Normalized FFO 1,500 properties and over 50,000 employees. We believe that being managed by RMR is a competitive advantage for OPI available for common shareholders and a reconciliation because of RMR’s depth of management and experience in the real estate industry. We also believe RMR provides management of net income (loss) available for common shareholders determined in accordance with GAAP, to this amount. services to us at costs that are lower than we would have to pay for similar quality services. Office Properties Income Trust 8 Supplemental Operating and Financial Data, December 31, 2018
INVESTOR INFORMATION Board of Trustees Donna D. Fraiche Barbara D. Gilmore John L. Harrington Independent Trustee Independent Trustee Independent Trustee William A. Lamkin Elena Poptodorova Jeffrey P. Somers Independent Trustee Independent Trustee Independent Trustee David M. Blackman Adam D. Portnoy INVESTOR INFORMATION INVESTOR Managing Trustee Managing Trustee Senior Management David M. Blackman Jeffrey C. Leer President and Chief Executive Officer Chief Financial Officer and Treasurer Contact Information Investor Relations Inquiries Office Properties Income Trust Financial inquiries should be directed to Jeffrey C. Leer, Two Newton Place Chief Financial Officer and Treasurer, at (617) 219-1440 255 Washington Street, Suite 300 or jleer@opireit.com. Newton, MA 02458-1634 (617) 219-1410 Investor and media inquiries should be directed to info@opireit.com Olivia Snyder, Manager, Investor Relations, at (617) 219-1410 www.opireit.com or osnyder@opireit.com. . Office Properties Income Trust 9 Supplemental Operating and Financial Data, December 31, 2018
RESEARCH COVERAGE Equity Research Coverage B. Riley FBR Bank of America / Merrill Lynch Bryan Maher James Feldman bmaher@brileyfbr.com James.Feldman@baml.com (646) 885-5423 (646) 855-5808 D.A. Davidson & Co. Jeffries & Company, Inc. James Lykins Jonathan Petersen RESEARCH COVERAGE jlykins@dadco.com jpetersen@jefferies.com (503) 603-3041 (212) 284-1705 JMP Securities Morgan Stanley Mitch Germain Vikram Malhotra mgermain@jmpsecurities.com vikram.malhotra@morganstanley.com (212) 906-3546 (212) 761-7064 RBC Capital Markets Michael Carroll Michael.Carroll@rbccm.com (440) 715-2649 Rating Agencies Moody’s Investors Service Standard & Poor’s Lori Marks Michael Sovers Lori.marks@moodys.com michael.sovers@standardandpoors.com (212) 553-0376 (212) 438-2508 OPI is followed by the analysts and its credit is rated by the rating agencies listed above. Please note that any opinions, estimates or forecasts regarding OPI’s performance made by these analysts or agencies do not represent opinions, forecasts or predictions of OPI or its management. OPI does not by its reference above imply its endorsement of or concurrence with any information, conclusions or recommendations provided by any of these analysts or agencies. Office Properties Income Trust 10 Supplemental Operating and Financial Data, December 31, 2018
625 Indiana Avenue, Washington, DC 9960Square Maryland Feet: Drive, 160,897 Richmond, VA SquarePrimary Feet: Agency 173,932 Occupant: U.S. Courts Agency Occupant: The Commonwealth of Virginia Office Properties Income Trust 11 Supplemental Operating and Financial Data, December 31, 2018 FINANCIALS 11
KEY FINANCIAL DATA (dollars in thousands, except per share data) As of and for the Three Months Ended 12/31/2018 (1) 9/30/2018 6/30/2018 3/31/2018 12/31/2017 Selected Balance Sheet Data:(2) Total gross assets (3) $ 5,613,730 $ 3,847,915 $ 3,866,055 $ 4,008,953 $ 4,045,413 Total assets $ 5,238,583 $ 3,484,425 $ 3,507,769 $ 3,655,624 $ 3,703,565 Total liabilities $ 3,459,615 $ 2,245,064 $ 2,226,119 $ 2,340,770 $ 2,353,026 KEY FINANCIAL DATA FINANCIAL KEY Total shareholders' equity $ 1,778,968 $ 1,239,361 $ 1,281,650 $ 1,294,358 $ 1,330,043 Selected Income Statement Data: Rental income $ 103,656 $ 106,102 $ 108,085 $ 108,717 $ 107,170 Net income (loss) available for common shareholders $ (57,695) $ (449) $ 29,602 $ 6,287 $ (18,266) Consolidated Property NOI (4) $ 62,026 $ 64,462 $ 68,103 $ 66,226 $ 66,093 Adjusted EBITDA (5) $ 57,901 $ 73,573 $ 76,686 $ 73,439 $ 73,458 FFO available for common shareholders (6) $ (21,889) $ 53,792 $ 64,926 $ 66,991 $ 49,802 Normalized FFO available for common shareholders (6) $ 39,101 $ 52,967 $ 51,325 $ 54,065 $ 49,185 Per Share Data (basic and diluted): Net income (loss) available for common shareholders $ (2.31) $ (0.02) $ 1.20 $ 0.25 $ (0.74) FFO available for common shareholders (6) $ (0.87) $ 2.17 $ 2.62 $ 2.71 $ 2.01 Normalized FFO available for common shareholders (6) $ 1.56 $ 2.14 $ 2.07 $ 2.18 $ 1.99 Dividends: Annualized dividends paid per share during period (7) $ 6.88 $ 6.88 $ 6.88 $ 6.88 $ 6.88 Annualized dividend yield (at end of period) (8) 25.0% 15.2% 10.9% 12.6% 9.3% Normalized FFO available for common shareholders payout ratio (6) 110.3% 81.1% 82.7% 78.2% 86.0% (1) See Exhibit B on page 42 for pro forma key financial data as if the Merger had occurred on October 1, 2018. (2) The selected balance sheet data as of December 31, 2018 includes assets acquired and liabilities assumed from SIR in the Merger. (3) Total gross assets is total assets plus accumulated depreciation. (4) See page 25 for the calculation of Consolidated Property NOI and a reconciliation of net income (loss) available for common shareholders determined in accordance with GAAP to that amount. (5) See page 27 for the calculation of Adjusted EBITDA and a reconciliation of net income (loss) determined in accordance with GAAP to that amount. (6) See page 28 for the calculation of FFO available for common shareholders and Normalized FFO available for common shareholders and a reconciliation of net income (loss) available for common shareholders determined in accordance with GAAP to those amounts. (7) On January 18, 2019, we declared a quarterly dividend of $0.55 per share ($2.20 per share per year) which we paid to shareholders of record as of January 28, 2018 on February 21, 2019. (8) Annualized dividend yield is the annualized dividend paid during the period divided by the closing price of our common shares at the end of the period. Office Properties Income Trust 12 Supplemental Operating and Financial Data, December 31, 2018
CONSOLIDATED BALANCE SHEETS (dollars in thousands, except per share data) December 31, 2018 (1) 2017 ASSETS Real estate properties: Land $ 924,164 $ 627,108 Buildings and improvements 3,020,472 2,348,613 Total real estate properties, gross 3,944,636 2,975,721 Accumulated depreciation (375,147) (341,848) Total real estate properties, net 3,569,489 2,633,873 Assets of discontinued operations - Equity investment in Select Income REIT — 467,499 Assets of properties held for sale 253,501 — Investment in unconsolidated joint ventures 43,665 50,202 Acquired real estate leases, net 1,056,558 351,872 Cash and cash equivalents 35,349 16,569 Restricted cash 3,594 3,111 Rents receivable, net 72,051 61,429 Deferred leasing costs, net 25,672 22,977 Other assets, net 178,704 96,033 Total assets $ 5,238,583 $ 3,703,565 LIABILITIES AND SHAREHOLDERS’ EQUITY CONSOLIDATED BALANCE SHEETS CONSOLIDATED Unsecured revolving credit facility $ 175,000 $ 570,000 Unsecured term loans, net 387,152 547,852 Senior unsecured notes, net 2,357,497 944,140 Mortgage notes payable, net 335,241 183,100 Liabilities of properties held for sale 4,271 — Accounts payable and other liabilities 145,536 89,440 Due to related persons 34,887 4,859 Assumed real estate lease obligations, net 20,031 13,635 Total liabilities 3,459,615 2,353,026 Commitments and contingencies Preferred units of limited partnership — 20,496 Shareholders’ equity: Common shares of beneficial interest, $.01 par value: 200,000,000 shares authorized, 48,082,903 and 24,786,479 shares issued and outstanding, respectively 481 248 Additional paid in capital 2,609,801 1,968,960 Cumulative net income 146,882 108,144 Cumulative other comprehensive income 106 60,427 Cumulative common distributions (978,302) (807,736) Total shareholders’ equity 1,778,968 1,330,043 Total liabilities and shareholders’ equity $ 5,238,583 $ 3,703,565 (1) Includes assets acquired and liabilities assumed from SIR in the Merger. Office Properties Income Trust 13 Supplemental Operating and Financial Data, December 31, 2018
CONSOLIDATED STATEMENTS OF INCOME (LOSS) (1) (amounts in thousands, except per share data) Three Months Ended December 31, Year Ended December 31, 2018 2017 2018 2017 Rental income $ 103,656 $ 107,170 $ 426,560 $ 316,532 Expenses: Real estate taxes 12,306 12,962 49,708 37,942 Utility expenses 5,935 6,812 26,425 20,998 Other operating expenses 23,389 21,303 89,610 65,349 Depreciation and amortization 33,044 47,639 162,488 109,588 Loss on impairment of real estate (2) 2,830 9,260 8,630 9,490 Acquisition and transaction related costs (3) 10,695 — 14,508 — General and administrative (4) (11,516) 6,532 24,922 18,847 Total expenses 76,683 104,508 376,291 262,214 Gain on sale of real estate (5) 3,332 — 20,661 — Dividend income 425 304 1,337 1,216 Unrealized loss on equity securities (6) (48,229) — (7,552) — Interest income 234 119 639 1,962 Interest expense (including net amortization of debt premiums, discounts and issuance costs of $877, $814, $3,626 and $3,420, respectively) (20,421) (21,807) (89,865) (65,406) Loss on early extinguishment of debt (709) — (709) (1,715) Loss from continuing operations before income taxes and equity in net losses of investees (38,395) (18,722) (25,220) (9,625) Income tax benefit (expense) 7 (36) (117) (101) Equity in net losses of investees (1,157) (546) (2,269) (13) Loss from continuing operations (39,545) (19,304) (27,606) (9,739) Income (loss) from discontinued operations (7) (18,150) 1,313 5,722 21,829 Net income (loss) (57,695) (17,991) (21,884) 12,090 Preferred units of limited partnership distributions — (275) (371) (275) Net income (loss) available for common shareholders $ (57,695) $ (18,266) $ (22,255) $ 11,815 Weighted average common shares outstanding (basic and diluted) 25,027 24,760 24,830 21,158 CONSOLIDATED STATEMENTS OF INCOME (LOSS) STATEMENTS CONSOLIDATED Per common share amounts (basic and diluted): Loss from continuing operations $ (1.58) $ (0.79) $ (1.13) $ (0.47) Income (loss) from discontinued operations $ (0.73) $ 0.05 $ 0.23 $ 1.03 Net income (loss) available for common shareholders $ (2.31) $ (0.74) $ (0.90) $ 0.56 Additional Data: General and administrative expenses / total assets (at end of period) (4) (0.22%) 0.18% 0.48% 0.51% Non-cash straight line rent adjustments (8) $ 2,339 $ 2,467 $ 10,164 $ 5,582 Lease value amortization included in rental income (8) $ (542) $ (901) $ (2,903) $ (2,764) Non-cash amortization included in other operating expenses (9) $ 121 $ 121 $ 484 $ 484 Non-cash amortization included in general and administrative expenses (9) $ 151 $ 151 $ 603 $ 603 See accompanying notes on the following page. Office Properties Income Trust 14 Supplemental Operating and Financial Data, December 31, 2018
CONSOLIDATED STATEMENTS OF INCOME (LOSS) (CONTINUED) (dollars in thousands) (1) See Exhibit C on page 43 for a pro forma consolidated statement of income (loss) as if the Merger had occurred on October 1, 2018. (2) We recorded an adjustment of $2,830 to reduce the carrying value of an office property portfolio consisting of 34 buildings to its estimated fair value less costs to sell in the three months ended December 31, 2018 and an adjustment of $3,669 to reduce the carrying value of two buildings to their estimated fair value less costs to sell and an adjustment of $2,131 to reduce the carrying value of one building to its estimated fair value during the nine months ended September 30, 2018. We recorded an adjustment of $9,260 to reduce the carrying value of one building to its estimated fair value in the three months ended December 31, 2017 and an adjustment of $230 to reduce the carrying value of one building to its estimated fair value in the three months ended September 30, 2017. (3) Acquisition and transaction related costs for the three months and year ended December 31, 2018 include costs incurred in connection with the Merger. (4) Incentive fees under our business management agreement with RMR LLC are payable after the end of each calendar year, are calculated based on common share total return, as defined, and are included in general and administrative expenses in our consolidated statements of income (loss). In calculating net income (loss) in accordance with GAAP, we recognize estimated business management incentive fee expense, if any, in the first, second and third quarters. Although we recognize this expense, if any, in the first, second and third quarters for purposes of calculating net income (loss), we do not include such expense in the calculation of Normalized FFO until the fourth quarter, when the amount of the business management incentive fee expense for the calendar year, if any, is determined. Net loss for the three months ended December 31, 2018 includes the reversal of $16,973 of previously accrued estimated business management incentive fee expense. Excluding the reversal of $16,973 of previously accrued estimated business management incentive fee expense in the three months ended December 31, 2018, general and administrative expenses and general and administrative expenses as a percent of total assets would have been $5,457 and 0.10%, respectively. No incentive management fee was payable under our business management agreement for the years ended December 31, 2018 and 2017. As successor to SIR as a result of the Merger, we assumed the obligation to pay SIR's business management incentive fee for 2018. SIR's business management incentive fee for 2018 of $25,817 was paid by us in January 2019. Pursuant to GAAP, the business management incentive fee that SIR incurred for 2018 was not recorded in our consolidated statement of income (loss) for the year ended December 31, 2018, but that amount was included in our consolidated balance sheet as of December 31, 2018 within due to related persons. (5) During the quarter ended December 31, 2018, we recorded a $3,332 gain on the sale of one building in November 2018 and the sale of an office property portfolio consisting of 15 buildings in December 2018. We recorded a $17,329 gain on the sale of real estate in the nine months ended September 30, 2018 in connection with the sale of one building in May 2018. (6) Unrealized loss on equity securities represents the adjustment required to adjust the carrying value of our investment in RMR Inc. common stock to its fair value as of December 31, 2018 in accordance with new GAAP standards effective January 1, 2018. (7) Income (loss) from discontinued operations includes operating results related to our equity method investment in SIR. On October 9, 2018, we sold our entire investment in SIR and have included the related operating results of this equity method investment in discontinued operations for all periods presented. We recorded a loss of $18,665 on the sale of SIR shares. Income from discontinued operations for the year ended December 31, 2017 also includes operating results of one building sold in August 2017. (8) We report rental income on a straight line basis over the terms of the respective leases; as a result, rental income includes non-cash straight line rent adjustments. Rental income also includes expense reimbursements, tax escalations, parking revenues, service income and other fixed and variable charges paid to us by our tenants, as well as the net effect of non-cash amortization of intangible lease assets and liabilities. CONSOLIDATED STATEMENTS OF INCOME (LOSS) (CONTINUED) STATEMENTS CONSOLIDATED (9) We recorded a liability for the amount by which the estimated fair value for accounting purposes exceeded the price we paid for our investment in RMR Inc. common stock in June 2015. This liability is being amortized on a straight line basis through December 31, 2035 as an allocated reduction to business management fees and property management fees expense, which are included in general and administrative and other operating expenses, respectively. Office Properties Income Trust 15 Supplemental Operating and Financial Data, December 31, 2018
CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) Year Ended December 31, 2018 2017 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (21,884) $ 12,090 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 66,685 52,427 Net amortization of debt premiums, discounts and issuance costs 3,626 3,420 Gain on sale of real estate (20,661) — Loss on early extinguishment of debt 709 1,715 Straight line rental income (10,164) (5,582) Amortization of acquired real estate leases 94,375 56,174 Amortization of deferred leasing costs 4,833 3,802 Other non-cash expenses, net 250 300 Loss on impairment of real estate 8,630 9,490 Unrealized loss on equity securities 7,552 — Increase in carrying value of property included in discontinued operations — (619) Equity in net losses of investees 2,269 13 Equity in earnings of Select Income REIT included in discontinued operations (20,873) (21,584) Net gain on issuance of shares by Select Income REIT included in discontinued operations (29) (72) Loss on sale of Select Income REIT shares included in discontinued operations 15,180 — Distributions of earnings from Select Income REIT 20,873 21,584 Change in assets and liabilities: Deferred leasing costs (9,203) (5,017) Rents receivable 5,021 (4,990) Other assets 1,127 1,368 Accounts payable and other liabilities (3,303) 11,696 Due to related persons (97) 1,339 CONSOLIDATED STATEMENTS OF CASH FLOWS STATEMENTS CONSOLIDATED Net cash provided by operating activities 144,916 137,554 CASH FLOWS FROM INVESTING ACTIVITIES: Real estate acquisitions and deposits 25,221 (1,187,012) Real estate improvements (47,500) (45,940) Distributions in excess of earnings from Select Income REIT 17,251 29,248 Distributions in excess of earnings from unconsolidated joint ventures 3,751 482 Proceeds from sale of properties, net 304,808 15,083 Proceeds from sale of Select Income REIT shares 435,125 — Net cash provided by (used in) investing activities 738,656 (1,188,139) Office Properties Income Trust 16 Supplemental Operating and Financial Data, December 31, 2018
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (dollars in thousands) Year Ended December 31, 2018 2017 CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of mortgage notes payable (3,708) (11,909) Repayment of unsecured term loan (162,000) — Proceeds from issuance of senior notes, after discounts — 297,954 Proceeds from issuance of common shares, net — 493,866 Borrowings on unsecured revolving credit facility 238,000 645,000 Repayments on unsecured revolving credit facility (741,000) (235,000) Payment of debt issuance costs (3,936) (4,644) Repurchase of common shares (232) (264) Redemption of preferred units of limited partnership (20,221) — Preferred units of limited partnership distributions (646) — Distributions to common shareholders (170,566) (145,209) Net cash (used in) provided by financing activities (864,309) 1,039,794 Increase (decrease) in cash, cash equivalents and restricted cash 19,263 (10,791) Cash, cash equivalents and restricted cash at beginning of period 19,680 30,471 Cash, cash equivalents and restricted cash at end of period $ 38,943 $ 19,680 SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid $ 65,188 $ 55,048 Income taxes paid $ 68 $ 117 NON-CASH INVESTING ACTIVITIES: Working capital assumed $ 30,483 $ (1,596) Real estate and investment acquired by issuance of common shares $ (639,809) $ — Real estate and investment acquired by assumption of debt $ (1,719,772) $ — NON-CASH FINANCING ACTIVITIES: SIR unsecured revolving credit facility $ 108,000 $ — Assumption of mortgage notes payable $ 161,772 $ 167,548 Assumption of senior unsecured notes $ 1,450,000 $ — Preferred units of limited partnership issued $ — $ 20,221 Issuance of common shares $ 639,809 $ — 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 consolidated balance sheets to the amounts shown in the consolidated statements of cash flows: As of December 31, CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) STATEMENTS CONSOLIDATED 2018 2017 Cash and cash equivalents $ 35,349 $ 16,569 Restricted cash 3,594 3,111 Total cash, cash equivalents and restricted cash shown in the statements of cash flows $ 38,943 $ 19,680 Office Properties Income Trust 17 Supplemental Operating and Financial Data, December 31, 2018
DEBT SUMMARY (1) As of December 31, 2018 (dollars in thousands) Coupon Interest Principal Maturity Due at Years to Rate (2) Rate (3) Balance (4) Date Maturity Maturity Unsecured Floating Rate Debt: $750,000 unsecured revolving credit facility (5) (8) 3.578% 3.578% $ 175,000 1/31/2023 $ 175,000 4.1 (6) (8) DEBT SUMMARY $300,000 unsecured term loan 3.922% 3.922% 300,000 3/31/2020 300,000 1.2 $250,000 unsecured term loan (7) (8) 4.322% 4.322% 88,000 3/31/2022 88,000 3.2 Subtotal / weighted average 3.860% 3.878% 563,000 563,000 2.4 Unsecured Fixed Rate Debt: Senior unsecured notes due 2019 3.750% 3.930% 350,000 8/15/2019 350,000 0.6 Senior unsecured notes due 2020 3.600% 3.608% 400,000 2/1/2020 400,000 1.1 Senior unsecured notes due 2022 4.150% 4.196% 300,000 2/1/2022 300,000 3.1 Senior unsecured notes due 2022 4.000% 4.000% 300,000 7/15/2022 300,000 3.5 Senior unsecured notes due 2024 4.250% 4.404% 350,000 5/15/2024 350,000 5.4 Senior unsecured notes due 2025 4.500% 4.770% 400,000 2/1/2025 400,000 6.1 Senior unsecured notes due 2046 5.875% 5.875% 310,000 5/1/2046 310,000 27.4 Subtotal / weighted average 4.276% 4.377% 2,410,000 2,410,000 6.4 Secured Fixed Rate Debt: Mortgage debt - One building in Tampa, FL 7.000 % 5.150% 7,939 3/1/2019 7,890 0.2 Mortgage debt - One building in Washington, D.C. 5.720 % 3.690% 33,703 7/1/2020 32,462 1.5 Mortgage debt - One building in Philadelphia, PA 4.114 % 4.220% 40,772 8/3/2020 39,635 1.6 Mortgage debt - One building in Lakewood, CO 8.150 % 6.150% 2,912 3/1/2021 118 2.2 Mortgage debt - One building in Fairfax, VA 5.877 % 5.877% 13,437 8/11/2021 12,702 2.6 Mortgage debt - One building in Washington, D.C. 4.220 % 4.190% 27,210 7/1/2022 24,668 3.5 Mortgage debt - Three buildings in Seattle, WA 3.550 % 4.210% 71,000 5/1/2023 71,000 4.3 Mortgage debt - One building in Chicago, IL 3.700 % 4.210% 50,000 6/1/2023 50,000 4.4 Mortgage debt - One building in Washington, D.C. 4.800 % 4.190% 24,509 6/1/2023 22,584 4.4 Mortgage debt - One building in Washington, D.C. 4.050 % 4.440% 66,780 9/1/2030 60,566 11.7 Subtotal / weighted average 4.313 % 4.307% 338,262 321,625 4.9 Total / weighted average 4.212 % 4.285% $ 3,311,262 $ 3,294,625 5.6 See accompanying notes on the following page. Office Properties Income Trust 18 Supplemental Operating and Financial Data, December 31, 2018
DEBT SUMMARY (CONTINUED) As of December 31, 2018 (dollars in thousands) (1) The data presented excludes two mortgage notes with an aggregate principal balance of $82,000 which are secured by three buildings owned by two unconsolidated joint ventures in which we own 50% and 51% interests. See page 24 for additional information regarding these unconsolidated joint ventures and related mortgage notes. (2) Reflects the interest rate stated in, or determined pursuant to, the contract terms. (3) Includes the effect of mark to market accounting for certain mortgages and premiums or discounts on senior unsecured notes. Excludes the effect of debt issuance costs amortization. (4) Principal balances exclude unamortized premiums, discounts and issuance costs related to these debts. The carrying value of our total consolidated debt of $3,254,890 as of December 31, 2018 is net of unamortized premiums, discounts and certain issuance costs totaling $56,372. DEBT SUMMARY (CONTINUED) DEBT SUMMARY (5) Represents amount outstanding under our $750,000 revolving credit facility. Interest rate is as of December 31, 2018 and excludes the 25 basis points facility fee. In December 2018, we amended and restated the credit agreement governing our revolving credit facility. As a result of the amendments, the stated maturity date of our revolving credit facility was extended from January 31, 2019 to January 31, 2023. Subject to the payment of an extension fee and meeting certain other conditions, we also have an option to further extend the stated maturity date of our revolving credit facility by two additional six month periods. Also, as a result of the amendments, the interest rate payable on borrowings under our revolving credit facility was reduced from a rate of LIBOR plus a premium of 125 basis points per annum to a rate of LIBOR plus a premium of 110 basis points per annum. The facility fee remained unchanged at 25 basis points per annum on the total amount of lending commitments under the facility. Both the interest rate premium and the facility fee are subject to change based upon changes to our credit ratings. (6) We are required to pay interest on the amounts outstanding under our term loan due March 31, 2020 at an annual rate of LIBOR plus a premium of 140 basis points, subject to adjustment based on changes to our credit ratings. The coupon rate and interest rate are as of December 31, 2018. This term loan is prepayable without penalty at any time. (7) We are required to pay interest on the amounts outstanding under our term loan due March 31, 2022 at an annual rate of LIBOR plus a premium of 180 basis points, subject to adjustment based on changes to our credit ratings. The coupon rate and interest rate are as of December 31, 2018. This term loan is prepayable without penalty at any time. In December 2018, we made a partial payment of $162,000 of the principal without penalty, which reduced the amount outstanding to $88,000. In February 2019, we repaid the remaining $88,000 of outstanding principal under this term loan. (8) The maximum aggregate borrowing availability under the credit agreement governing our revolving credit facility and term loans may be increased up to $2,500,000 on a combined basis in certain circumstances. Office Properties Income Trust 19 Supplemental Operating and Financial Data, December 31, 2018
DEBT MATURITY SCHEDULE (1) As of December 31, 2018 (dollars in thousands) Unsecured Unsecured Secured Floating Fixed Rate Fixed Rate Year Rate Debt (2) Debt (2) Debt (2) Total (3) 2019 $ — $ 350,000 $ 12,054 $ 362,054 2020 300,000 (4) 400,000 75,707 775,707 2021 — — 14,420 14,420 2022 88,000 (4) 600,000 25,518 713,518 2023 175,000 (5) — 143,783 318,783 2024 — 350,000 — 350,000 DEBT MATURITY SCHEDULE DEBT MATURITY 2025 — 400,000 — 400,000 2030 — — 66,780 66,780 2046 — 310,000 — 310,000 Total $ 563,000 $ 2,410,000 $ 338,262 $ 3,311,262 Percent of total debt 17.0% 72.8% 10.2% 100.0% (1) The data presented includes SIR's debt assumed in the Merger and excludes two mortgage notes with an aggregate principal balance of $82,000 which are secured by three buildings owned by two unconsolidated joint ventures in which we own 50% and 51% interests. See page 24 for additional information regarding these unconsolidated joint ventures and related mortgage notes. (2) Principal balances are the amounts actually payable pursuant to the applicable agreements. Our carrying values may differ from these amounts because of the effect of unamortized premiums, discounts and certain issuance costs related to these debts. (3) The carrying value of our total consolidated debt of $3,254,890 as of December 31, 2018 is net of unamortized premiums, discounts and certain issuance costs totaling $56,372. (4) Represents the outstanding balance of our term loans at December 31, 2018. We may prepay these term loans without penalty at any time. In February 2019, we repaid the $88,000 outstanding principal balance of our term loan that was due in 2022. (5) Represents amounts outstanding under our revolving credit facility at December 31, 2018. Subject to the payment of an extension fee and meeting certain other conditions, we have the option to extend the stated maturity date of the facility by two six month periods. Office Properties Income Trust 20 Supplemental Operating and Financial Data, December 31, 2018
LEVERAGE RATIOS, COVERAGE RATIOS AND PUBLIC DEBT COVENANTS As of and for the Three Months Ended 12/31/2018(1) 9/30/2018 6/30/2018 3/31/2018 12/31/2017 Leverage Ratios: Total consolidated debt (2) / total gross assets (3) 59.0% 56.1% 55.4% 56.4% 55.9% Total consolidated debt (2) / total market capitalization (4) 71.5% 65.8% 57.7% 62.6% 55.2% Consolidated secured debt (2) / total assets 6.5% 5.2% 5.2% 5.0% 4.9% Variable rate debt (2) / total consolidated debt (2) 17.0% 47.1% 46.7% 49.5% 49.5% Coverage Ratios: Adjusted EBITDA (5) / interest expense 2.8x 3.1x 3.3x 3.2x 3.4x Total consolidated debt (2) / Annualized Adjusted EBITDA (5) nm (6) 7.3x 7.0x 7.7x 7.7x Public Debt Covenants: Total debt / adjusted total assets (7) (maximum 60.0%) 56.8% 52.1% 51.9% 54.7% 52.8% Secured debt / adjusted total assets (7) (maximum 40.0%) 5.8% 4.4% 4.4% 4.4% 4.2% Consolidated income available for debt service (8) / debt service (minimum 1.50x) 3.2x 2.3x 3.4x 3.2x 3.4x Total unencumbered assets (7) / unsecured debt (minimum 150.0%) 171.9% 184.0% 184.9% 174.8% 181.9% (1) See Exhibit D on page 45 for our pro forma consolidated leverage ratios, coverage ratios and public debt covenants as if the Merger had occurred on October 1, 2018. (2) Debt amounts represent the principal balance as of the date reported. The carrying value of our total consolidated debt of $3,254,890 as of December 31, 2018 is net of unamortized premiums and discounts and certain issuance costs totaling $56,372. Total consolidated debt excludes two mortgage notes with an aggregate principal balance of $82,000 which are secured by three buildings owned by two unconsolidated joint ventures in which we own 50% and 51% interests. See page 24 for more information regarding these joint ventures and related mortgage notes. (3) Total gross assets is total assets plus accumulated depreciation. (4) Total market capitalization is total consolidated debt plus the market value of our common shares at the end of each period. (5) See page 27 for the calculation of Adjusted EBITDA and a reconciliation of net income (loss) determined in accordance with GAAP to that amount. (6) For the three months ended December 31, 2018, total consolidated debt includes SIR's debt assumed in the Merger; however, Annualized Adjusted EBITDA excludes SIR's results of operations. (7) Adjusted total assets and total unencumbered assets include original cost of real estate assets calculated in accordance with GAAP before impairment writedowns, if any, and the lower of cost or market of our former investment in SIR for the applicable periods, and exclude depreciation and amortization, accounts receivable and intangible assets. (8) Consolidated income available for debt service is earnings from operations excluding interest expense, depreciation and amortization, loss on asset impairment, unrealized appreciation on assets held for sale, unrealized gains or losses on equity securities, gains and losses on early extinguishment of debt, gains and losses on sales of properties and gains or losses on equity issuance by SIR and equity in earnings of SIR and including distributions received from SIR and our unconsolidated joint ventures, if any, determined together with debt service for the period presented. Office Properties Income Trust LEVERAGE RATIOS, COVERAGE RATIOS AND PUBLIC DEBT COVENANTS COVERAGE RATIOS LEVERAGE RATIOS, 21 Supplemental Operating and Financial Data, December 31, 2018
CAPITAL EXPENDITURES SUMMARY (1)(2) (dollars and sq. ft. in thousands, except per sq. ft. data) For the Three Months Ended 12/31/2018 9/30/2018 6/30/2018 3/31/2018 12/31/2017 Tenant improvements (3) $ 5,450 $ 2,293 $ 3,854 $ 2,843 $ 9,358 Leasing costs (4) 5,635 1,831 1,626 1,986 1,745 Building improvements (5) 11,250 6,707 4,048 2,707 6,552 Recurring capital expenditures 22,335 10,831 9,528 7,536 17,655 Development, redevelopment and other activities (6) 1,148 664 734 1,416 5,191 Total capital expenditures $ 23,483 $ 11,495 $ 10,262 $ 8,952 $ 22,846 Average sq. ft. during period (7) 16,204 17,046 17,189 17,416 17,443 Building improvements per average sq. ft. during period $ 0.69 $ 0.39 $ 0.24 $ 0.16 $ 0.38 CAPITAL EXPENDITURES SUMMARY CAPITAL (1) See Exhibit L on page 54 for a summary of capital expenditures activity for the SIR properties acquired in the Merger. (2) The data presented exclude capital expenditures of three buildings owned by two unconsolidated joint ventures in which we own 50% and 51% interests. See page 24 for additional information regarding these unconsolidated joint ventures. (3) Tenant improvements include capital expenditures used to improve tenants' space or amounts paid directly to tenants to improve their space. (4) Leasing costs include leasing related costs, such as brokerage commissions and tenant inducements. (5) Building improvements generally include expenditures to replace obsolete building components and expenditures that extend the useful life of existing assets. (6) Development, redevelopment and other activities generally include (i) capital expenditures that are identified at the time of a property acquisition and incurred within a short time period after acquiring the property, or (ii) capital expenditure projects that reposition a property or result in new sources of revenue. (7) Rentable square footage is subject to changes when space is re-measured or re-configured for tenants. Average square footage for the three months ended December 31, 2018 excludes square feet from properties acquired from SIR on December 31, 2018. Office Properties Income Trust 22 Supplemental Operating and Financial Data, December 31, 2018
PROPERTY ACQUISITION AND DISPOSITION INFORMATION SINCE JANUARY 1, 2018 (dollars and sq. ft. in thousands, except per sq. ft. data) ACQUISITIONS: Weighted Average Purchase Remaining Date Number of Purchase Price (1) / Lease Percent Acquired City and State Buildings Sq. Ft. Price (1) Sq. Ft. Term (3) Leased (4) Major Tenant 12/31/2018 Various (2) 99 16,538 $ 2,415,053 $ 146 7.1 89.3% 84 tenants (1) Represents the purchase price, including assumed debt, if any, and excluding acquisition related costs, amounts necessary to adjust assumed liabilities to their fair values and purchase price allocations to intangibles. (2) On December 31, 2018, we completed the Merger, whereby we acquired SIR's property portfolio of 99 buildings located in 29 states. (3) Average remaining lease term in years weighted based on rental income as of the date of acquisition. (4) As of the date of acquisition. DISPOSITIONS: Date Number of Gross Sold City and State Buildings Sq. Ft. Sale Price (1) 3/2/2018 Minneapolis, MN 1 194 $ 20,000 5/15/2018 New York, NY 1 187 118,500 5/30/2018 Sacramento, CA 1 111 10,755 11/30/2018 Golden, CO 1 43 4,000 12/14/2018 Southern Virginia 15 1,640 167,000 2/8/2019 Northern Virginia and Maryland 34 1,636 198,500 Total 53 3,811 $ 518,755 (1) Gross sale price includes purchase price adjustments, if any, and excludes closing costs. PROPERTY ACQUISITION AND DISPOSITION INFORMATION SINCE JANUARY 1, 2018 SINCE JANUARY AND DISPOSITION INFORMATION ACQUISITION PROPERTY Office Properties Income Trust 23 Supplemental Operating and Financial Data, December 31, 2018
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (dollars in thousands) Unconsolidated Joint Ventures: OPI Investment Percent Leased Weighted OPI at December 31, Number of Square at December Average Lease Joint Venture Ownership 2018 Office Buildings Location Feet 31, 2018 Term (1) Prosperity Metro Plaza 51% $ 23,969 2 Fairfax, VA 328,456 86.3% 4.1 years 1750 H Street, NW 50% 19,696 1 Washington, D.C. 115,411 100.0% 2.3 years Total / Weighted Average $ 43,665 3 443,867 89.9% 3.4 years Outstanding Unconsolidated Debt: Principal Balance OPI Share of OPI Interest Maturity at December 31, Annualized Balance at Principal Joint Venture Ownership Rate (2) Date 2018 (3) Debt Service Maturity (3) Balance (4) Prosperity Metro Plaza (5) 51% 4.090% 12/1/2029 $ 50,000 $ 2,045 $ 45,246 $ 25,500 1750 H Street, NW 50% 3.690% 8/1/2024 32,000 1,181 32,000 16,000 Total / Weighted Average 3.934% $ 82,000 $ 3,226 $ 77,246 $ 41,500 Results of Operations - Unconsolidated Joint Ventures: (6) For the Three Months Ended December 31, 2018 For the Year Ended December 31, 2018 Prosperity 1750 H Prosperity 1750 H Metro Plaza Street, NW Total Metro Plaza Street, NW Total Equity in losses of affiliates $ (573) $ (218) $ (791) $ (1,796) $ (989) $ (2,785) Depreciation and amortization 1,258 662 1,920 5,558 2,645 8,203 Other expenses, net (7) 250 148 398 1,006 663 1,669 NOI (8) 935 592 1,527 4,768 2,319 7,087 Lease value amortization included in rental income (9) (13) 34 21 (54) 202 148 Non-cash straight-line rent adjustments included in rental income (9) 1 (11) (10) (31) (78) (109) Cash Basis NOI (8) $ 923 $ 615 $ 1,538 $ 4,683 $ 2,443 $ 7,126 Distributions received by OPI $ 280 $ 425 $ 705 $ 2,123 $ 1,628 $ 3,751 (1) Lease term is weighted based on annualized rental income. Annualized rental income is calculated using the annualized contractual base rents from the unconsolidated joint ventures' tenants pursuant to the INVESTMENT IN UNCONSOLIDATED JOINT VENTURES INVESTMENT IN UNCONSOLIDATED lease agreements as of December 31, 2018, plus straight line rent adjustments and estimated recurring expense reimbursements to be paid to the joint ventures, and excluding lease value amortization. (2) Includes the effect of interest rate protection and mark to market accounting. (3) Reflects the entire balance of the debt secured by the properties and is not adjusted to reflect the part of the joint venture arrangement interests we do not own. (4) Reflects our proportionate share of the principal debt balances based on our ownership percentage of the applicable joint venture; none of the debt is recourse to us. (5) The mortgage loan requires interest-only payments through December 2024, at which time the loan requires principal and interest payments through its maturity date. (6) Reflects our proportionate share of operating results for the three months and year ended December 31, 2018 based on our ownership percentage of the respective joint ventures. (7) Includes interest expense, net of other income. (8) See Definitions of Certain Non-GAAP Financial Measures on page 29 for the definitions of NOI and Cash Basis NOI. (9) Our unconsolidated joint ventures report rental income on a straight line basis over the terms of the respective leases; accordingly, rental income includes non-cash straight line rent adjustments. Rental income also includes expense reimbursements, tax escalations, parking revenues, service income and other fixed and variable charges paid to the unconsolidated joint ventures by our tenants, as well as the net effect of non-cash amortization of intangible lease assets and liabilities. Office Properties Income Trust 24 Supplemental Operating and Financial Data, December 31, 2018
CALCULATION OF CONSOLIDATED PROPERTY NET OPERATING INCOME (NOI) AND CONSOLIDATED PROPERTY CASH BASIS NOI (1)(2) (dollars in thousands) For the Three Months Ended For the Year Ended 12/31/2018 9/30/2018 6/30/2018 3/31/2018 12/31/2017 12/31/2018 12/31/2017 Calculation of Consolidated Property NOI and Consolidated Property Cash Basis NOI: (3) Rental income (4) $ 103,656 $ 106,102 $ 108,085 $ 108,717 $ 107,170 $ 426,560 $ 316,532 Property operating expenses (41,630) (41,640) (39,982) (42,491) (41,077) (165,743) (124,289) Consolidated Property NOI 62,026 64,462 68,103 66,226 66,093 260,817 192,243 Non-cash straight line rent adjustments included in rental income (4) (2,339) (1,990) (2,744) (3,091) (2,467) (10,164) (5,582) Lease value amortization included in rental income (4) 542 773 753 835 901 2,903 2,764 Non-cash amortization included in property operating expenses (5) (121) (121) (121) (121) (121) (484) (484) Consolidated Property Cash Basis NOI $ 60,108 $ 63,124 $ 65,991 $ 63,849 $ 64,406 $ 253,072 $ 188,941 Reconciliation of Net Income (Loss) Available for Common Shareholders to Consolidated NOI and Consolidated Property Cash Basis NOI: Net income (loss) available for common shareholders $ (57,695) $ (449) $ 29,602 $ 6,287 $ (18,266) $ (22,255) $ 11,815 Preferred units of limited partnership distributions — — 93 278 275 371 275 Net income (loss) (57,695) (449) 29,695 6,565 (17,991) (21,884) 12,090 Income (loss) from discontinued operations 18,150 (9,274) (4,309) (10,289) (1,313) (5,722) (21,829) Income (loss) from continuing operations (39,545) (9,723) 25,386 (3,724) (19,304) (27,606) (9,739) Equity in net earnings (losses) of investees 1,157 (94) 629 577 546 2,269 13 Income tax benefit (expense) (7) 9 83 32 36 117 101 Loss on early extinguishment of debt 709 — — — — 709 1,715 Interest expense 20,421 23,374 23,304 22,766 21,807 89,865 65,406 Interest income (234) (140) (149) (116) (119) (639) (1,962) Unrealized gain (loss) on equity securities 48,229 (17,425) (10,321) (12,931) — 7,552 — Dividend income (425) (304) (304) (304) (304) (1,337) (1,216) Gain on sale of real estate (3,332) — (17,329) — — (20,661) — General and administrative (11,516) 22,383 4,449 9,606 6,532 24,922 18,847 Acquisition and transaction related costs 10,695 3,813 — — — 14,508 — Loss on impairment of real estate 2,830 — (316) 6,116 9,260 8,630 9,490 Depreciation and amortization 33,044 42,569 42,671 44,204 47,639 162,488 109,588 Consolidated Property NOI 62,026 64,462 68,103 66,226 66,093 260,817 192,243 Non-cash amortization included in property operating expenses (5) (121) (121) (121) (121) (121) (484) (484) Lease value amortization included in rental income (4) 542 773 753 835 901 2,903 2,764 CONSOLIDATED PROPERTY CASH BASIS NOI PROPERTY CONSOLIDATED Non-cash straight line rent adjustments included in rental income (4) (2,339) (1,990) (2,744) (3,091) (2,467) (10,164) (5,582) Consolidated Property Cash Basis NOI $ 60,108 $ 63,124 $ 65,991 $ 63,849 $ 64,406 $ 253,072 $ 188,941 (1) See Exhibit E on page 46 for a pro forma calculation of Consolidated Property NOI and Consolidated Property Cash Basis NOI information as if the Merger had occurred on October 1, 2018. (2) See Definitions of Certain Non-GAAP Financial Measures on page 29 for the definitions of Consolidated Property NOI and Consolidated Property Cash Basis NOI, a description of why we believe they are appropriate supplemental measures and a description of how we use these measures. The data presented exclude three buildings owned by our two unconsolidated joint ventures. See page 24 for more information regarding these joint ventures. (3) Excludes one building classified as discontinued operations for the year ended December 31, 2017, which we sold on August 31, 2017. (4) We report rental income on a straight line basis over the terms of the respective leases; accordingly, rental income includes non-cash straight line rent adjustments. Rental income also includes expense reimbursements, tax escalations, parking revenues, service income and other fixed and variable charges paid to us by our tenants, as well as the net effect of non-cash amortization of intangible lease assets and liabilities. (5) We recorded a liability for the amount by which the estimated fair value for accounting purposes exceeded the price we paid for our investment in RMR Inc. common stock in June 2015. A portion of this liability is being amortized on a straight line basis through December 31, 2035 as a reduction to property management fees expense, which are included in property operating expenses. CALCULATION OF CONSOLIDATED PROPERTY NET OPERATING INCOME (NOI) AND INCOME (NOI) NET OPERATING PROPERTY OF CONSOLIDATED CALCULATION Office Properties Income Trust 25 Supplemental Operating and Financial Data, December 31, 2018
CALCULATION OF SAME PROPERTY NOI AND CASH BASIS NOI (1)(2) (dollars in thousands) For the Three Months Ended (3) For the Year Ended (4) 12/31/2018 12/31/2017 12/31/2018 12/31/2017 Reconciliation of Consolidated Property NOI to Same Property NOI: Rental income $ 103,656 $ 107,170 $ 426,560 $ 316,532 Property operating expenses (41,630) (41,077) (165,743) (124,289) Consolidated Property NOI 62,026 66,093 260,817 192,243 Less: NOI of properties not included in same property results (23,154) (26,308) (103,433) (35,470) Same property NOI $ 38,872 $ 39,785 $ 157,384 $ 156,773 Calculation of Same Property Cash Basis NOI: Same property NOI $ 38,872 $ 39,785 $ 157,384 $ 156,773 Add: Lease value amortization included in rental income (5) 497 507 1,952 2,100 Less: Non-cash straight line rent adjustments included in rental income (5) (654) (257) (2,222) (3,506) Non-cash amortization included in property operating expenses (6) (121) (115) (479) (459) Same property Cash Basis NOI $ 38,594 $ 39,920 $ 156,635 $ 154,908 (1) See Exhibit E on page 47 for a pro forma calculation of Same Property NOI and Same Property Cash Basis NOI information as if the Merger had occurred on October 1, 2018. (2) See Definitions of Certain Non-GAAP Financial Measures on page 29 for the definitions of Consolidated Property NOI and Consolidated Property Cash Basis NOI, a description of why we believe they are appropriate supplemental measures and a description of how we use these measures. (3) Based on consolidated properties we owned as of December 31, 2018 and which we owned continuously since October 1, 2017. (4) Based on consolidated properties we owned as of December 31, 2018 and which we owned continuously since January 1, 2017. (5) We report rental income on a straight line basis over the terms of the respective leases; accordingly, rental income includes non-cash straight line rent adjustments. Rental income also includes expense reimbursements, tax escalations, parking revenues, service income and other fixed and variable charges paid to us by our tenants, as well as the net effect of non-cash amortization of intangible lease assets and liabilities. (6) We recorded a liability for the amount by which the estimated fair value for accounting purposes exceeded the price we paid for our investment in RMR Inc. common stock in June 2015. A portion of this liability is being amortized on a straight line basis through December 31, 2035 as a reduction to property management fees expense, which are included in property operating expenses. CALCULATION OF SAME PROPERTY NOI AND CASH BASIS NOI NOI OF SAME PROPERTY CALCULATION Office Properties Income Trust 26 Supplemental Operating and Financial Data, December 31, 2018
CALCULATION OF EBITDA AND ADJUSTED EBITDA (1)(2) (dollars in thousands) For the Three Months Ended For the Year Ended 12/31/2018 9/30/2018 6/30/2018 3/31/2018 12/31/2017 12/31/2018 12/31/2017 Net income (loss) $ (57,695) $ (449) $ 29,695 $ 6,565 $ (17,991) $ (21,884) $ 12,090 Add (less): Interest expense 20,421 23,374 23,304 22,766 21,807 89,865 65,406 Income tax (benefit) expense (7) 9 83 32 36 117 101 Depreciation and amortization 33,044 42,569 42,671 44,204 47,639 162,488 109,588 EBITDA (4,237) 65,503 95,753 73,567 51,491 230,586 187,185 Add (less): Acquisition and transaction related costs (3) 10,695 3,813 — — — 14,508 — General and administrative expense paid in common shares (4) 334 461 604 (62) 209 1,337 1,377 Estimated business management incentive fees (5) (16,973) 16,236 (2,150) 2,887 — — — Increase in carrying value of property included in discontinued operations — — — — — — (619) Loss on impairment of real estate 2,830 — (316) 6,116 9,260 8,630 9,490 Distributions received from SIR — 12,708 12,708 12,708 12,708 38,124 50,832 Distributions received from unconsolidated joint ventures 705 813 1,410 823 482 3,751 482 Loss on early extinguishment of debt 709 — — — — 709 1,715 Equity in earnings of SIR included in discontinued operations (515) (9,253) (4,301) (10,289) (1,313) (24,358) (21,584) Equity in losses of unconsolidated joint ventures 791 738 636 620 621 2,785 621 Net gain on issuance of shares by SIR included in discontinued operations — (21) (8) — — (29) (72) Gain on sale of real estate (3,332) — (17,329) — — (20,661) — Unrealized (gain) loss on equity securities (6) 48,229 (17,425) (10,321) (12,931) — 7,552 — Loss on sale of SIR common shares included in discontinued operations (7) 18,665 — — — — 18,665 — Adjusted EBITDA $ 57,901 $ 73,573 $ 76,686 $ 73,439 $ 73,458 $ 281,599 $ 229,427 CALCULATION OF EBITDA AND ADJUSTED EBITDA AND OF EBITDA CALCULATION (1) See Exhibit F on page 48 for a pro forma calculation of EBITDA and Adjusted EBITDA as if the Merger had occurred on October 1, 2018. (2) See Definitions of Certain Non-GAAP Financial Measures on page 29 for the definitions of EBITDA and Adjusted EBITDA and a description of why we believe they are appropriate supplemental measures and description of how we use them. (3) Acquisition and transaction related costs for the three months and year ended December 31, 2018 include costs incurred in connection with the Merger. (4) Amounts represent equity compensation awarded to our trustees, officers and certain other employees of RMR LLC. (5) Incentive fees under our business management agreement with RMR LLC are payable after the end of each calendar year, are calculated based on common share total return, as defined, and are included in general and administrative expense in our consolidated statements of income (loss). In calculating net income (loss) in accordance with GAAP, we recognize estimated business management incentive fee expense, if any, in the first, second and third quarters. Although we recognize this expense, if any, in the first, second and third quarters for purposes of calculating net income (loss), we do not include such expense in the calculation of Adjusted EBITDA until the fourth quarter, when the amount of the business management incentive fee expense for the calendar year, if any, is determined. Net loss includes the reversal of $16,973 of previously accrued estimated business management incentive fee expense in the three months ended December 31, 2018. No incentive management fee was payable under our business management agreement for the years ended December 31, 2018 and 2017. As successor to SIR as a result of the Merger, we assumed the obligation to pay SIR's business management incentive fee for 2018. SIR's business management incentive fee for 2018 of $25,817 was paid by us in January 2019. Pursuant to GAAP, the business management incentive fee that SIR incurred for 2018 was not recorded in our consolidated statement of income (loss) for the year ended December 31, 2018, but that amount was included in our consolidated balance sheet as of December 31, 2018 within due to related persons. (6) Unrealized gain (loss) on equity securities represents the adjustment required to adjust the carrying value of our investment in RMR Inc. common shares to its fair value as of the end of the period in accordance with new GAAP standards effective January 1, 2018. (7) On October 9, 2018, we sold our entire investment in SIR at a loss. Office Properties Income Trust 27 Supplemental Operating and Financial Data, December 31, 2018
CALCULATION OF FUNDS FROM OPERATIONS (FFO) AND NORMALIZED FFO AVAILABLE FOR COMMON SHAREHOLDERS (1)(2) (amounts in thousands, except per share data) For the Three Months Ended For the Year Ended 12/31/2018 9/30/2018 6/30/2018 3/31/2018 12/31/2017 12/31/2018 12/31/2017 Net income (loss) available for common shareholders $ (57,695) $ (449) $ 29,602 $ 6,287 $ (18,266) $ (22,255) $ 11,815 Add (less): Depreciation and amortization: Consolidated properties 33,044 42,569 42,671 44,204 47,639 162,488 109,588 Unconsolidated joint venture properties 1,920 1,913 2,185 2,185 2,185 8,203 2,185 FFO attributable to SIR investment 1,859 19,012 12,414 18,488 10,297 51,773 58,279 Loss on impairment of real estate 2,830 — (316) 6,116 9,260 8,630 9,490 Equity in earnings of SIR included in discontinued operations (515) (9,253) (4,301) (10,289) (1,313) (24,358) (21,584) Increase in carrying value of property included in discontinued operations — — — — — — (619) Gain on sale of real estate (3,332) — (17,329) — — (20,661) — FFO available for common shareholders (21,889) 53,792 64,926 66,991 49,802 163,820 169,154 Add (less): Acquisition and transaction related costs (3) 10,695 3,813 — — — 14,508 — Loss on early extinguishment of debt 709 — — — — 709 1,715 Normalized FFO attributable to SIR investment 1,524 15,584 11,292 15,606 9,680 44,006 58,580 FFO attributable to SIR investment (1,859) (19,012) (12,414) (18,488) (10,297) (51,773) (58,279) Net gain on issuance of shares by SIR included in discontinued operations — (21) (8) — — (29) (72) Estimated business management incentive fees (4) (16,973) 16,236 (2,150) 2,887 — — — Unrealized (gain) loss on equity securities (5) 48,229 (17,425) (10,321) (12,931) — 7,552 — Loss on sale of SIR shares included in discontinued operations (6) 18,665 — — — — 18,665 — Normalized FFO available for common shareholders $ 39,101 $ 52,967 $ 51,325 $ 54,065 $ 49,185 $ 197,458 $ 171,098 Weighted average common shares outstanding (basic) 25,027 24,768 24,763 24,760 24,760 24,830 21,158 Weighted average common shares outstanding (diluted) 25,027 24,768 24,766 24,760 24,760 24,830 21,158 Per common share amounts (basic and diluted): Net income (loss) available for common shareholders $ (2.31) $ (0.02) $ 1.20 $ 0.25 $ (0.74) $ (0.90) $ 0.56 FFO available for common shareholders $ (0.87) $ 2.17 $ 2.62 $ 2.71 $ 2.01 $ 6.60 $ 7.99 Normalized FFO available for common shareholders $ 1.56 $ 2.14 $ 2.07 $ 2.18 $ 1.99 $ 7.95 $ 8.09 (1) See Exhibit G on page 49 for a pro forma calculation of FFO and Normalized FFO attributable to the company as if the Merger had occurred on October 1, 2018. (2) See Definitions of Certain Non-GAAP Financial Measures on page 29 for the definitions of FFO available for common shareholders and Normalized FFO available for common shareholders, a description of why we believe they are appropriate supplemental measures and a description of how we use these measures. (3) Acquisition and transaction related costs for the three months and year ended December 31, 2018 include costs incurred in connection with the Merger. AVAILABLE FOR COMMON SHAREHOLDERS AVAILABLE (4) Incentive fees under our business management agreement with RMR LLC are payable after the end of each calendar year, are calculated based on common share total return, as defined, and are included in general and administrative expense in our consolidated statements of income. In calculating net income (loss) available for common shareholders in accordance with GAAP, we recognize estimated business management incentive fee expense, if any, in the first, second and third quarters. Although we recognize this expense, if any, in the first, second and third quarters for purposes of calculating net income (loss) available for common shareholders, we do not include such expense in the calculation of Normalized FFO available for common shareholders until the fourth quarter, when the amount of the business management incentive fee expense for the calendar year, if any, is determined. Net loss includes the reversal of $16,973 of previously accrued estimated business management incentive fee expense in the three months ended December 31, 2018. No incentive management fee was payable under our business management agreement for the years ended December 31, 2018 and 2017. As successor to SIR as a result of the Merger, we assumed the obligation to pay SIR's business management incentive fee for 2018. SIR's business management incentive fee for 2018 of $25,817 was paid by us in January 2019. Pursuant to GAAP, the business management incentive fee that SIR incurred for 2018 was not recorded in our consolidated statement of income (loss) for the year ended December 31, 2018, but that amount was included in our consolidated balance sheet as of December 31, 2018 within due to related persons. (5) Unrealized gain (loss) on equity securities represents the adjustment required to adjust the carrying value of our investment in RMR Inc. common shares to its fair value as of the end of the period in accordance with new GAAP standards effective January 1, 2018. (6) On October 9, 2018, we sold our entire investment in SIR at a loss. CALCULATION OF FUNDS FROM OPERATIONS (FFO) AND NORMALIZED FFO (FFO) OF FUNDS FROM OPERATIONS CALCULATION Office Properties Income Trust 28 Supplemental Operating and Financial Data, December 31, 2018
DEFINITIONS OF CERTAIN NON-GAAP FINANCIAL MEASURES Consolidated Property NOI and Consolidated Property Cash Basis NOI We calculate Consolidated Property NOI and Consolidated Property Cash Basis NOI as shown on page 25 and Same Property NOI and Same Property Cash Basis NOI on page 26. The calculations of Consolidated Property NOI, Consolidated Property Cash Basis NOI, Same Property NOI and Same Property Cash Basis NOI exclude certain components of net income (loss) available for common shareholders in order to provide results that are more closely related to our consolidated property level results of operations. We define Consolidated Property NOI and Same Property NOI as consolidated income from our rental of real estate less our consolidated property operating expenses. Consolidated Property NOI and Same Property NOI excludes amortization of capitalized tenant improvement costs and leasing commissions that we record as depreciation and amortization. We define Consolidated Property Cash Basis NOI as Consolidated Property NOI excluding non-cash straight line rent adjustments, lease value amortization and non-cash amortization included in other operating expenses. We calculate Same Property NOI and Same Property Cash Basis NOI in the same manner that we calculate the corresponding Consolidated Property NOI and Consolidated Property Cash Basis NOI amounts, except that we only include same properties in calculating Same Property NOI and Same Property Cash Basis NOI. We consider Consolidated Property NOI, Consolidated Property Cash Basis NOI, Same Property NOI and Same Property Cash Basis NOI to be appropriate supplemental measures to net income (loss) available for common shareholders because they may help both investors and management to understand the operations of our consolidated properties. We use Consolidated Property NOI, Consolidated Property Cash Basis NOI, Same Property NOI and Same Property Cash Basis NOI to evaluate individual and company wide consolidated property level performance, and we believe that Consolidated Property NOI, Consolidated Property Cash Basis NOI, Same Property NOI and Same Property Cash Basis NOI provide useful information to investors regarding our results of operations because they reflect only those income and expense items that are generated and incurred at the property level and may facilitate comparisons of our operating performance between periods and with other REITs. Consolidated Property NOI, Consolidated Property Cash Basis NOI, Same Property NOI and Same Property Cash Basis NOI do not represent cash generated by operating activities in accordance with GAAP and should not be considered alternatives to net income (loss) or net income (loss) available for common shareholders as indicators of our operating performance or as measures of our liquidity. These measures should be considered in conjunction with net income (loss) and net income (loss) available for common shareholders as presented in our Consolidated Statements of Income (Loss). Other real estate companies and REITs may calculate Consolidated Property NOI, Consolidated Property Cash Basis NOI, Same Property NOI and Same Property Cash Basis NOI differently than we do. In addition, we present our proportionate share of NOI and Cash Basis NOI from our unconsolidated joint ventures. We provide a reconciliation of NOI and Cash Basis NOI from unconsolidated joint ventures to equity in losses from affiliates on page 24. EBITDA and Adjusted EBITDA We calculate EBITDA and Adjusted EBITDA as shown on page 27. We consider EBITDA and Adjusted EBITDA to be appropriate supplemental measures of our operating performance, along with net income (loss) and operating income. We believe that EBITDA and Adjusted EBITDA provide useful information to investors because by excluding the effects of certain historical amounts, such as interest, depreciation and amortization expense, EBITDA and Adjusted EBITDA may facilitate a comparison of current operating performance with our past operating performance. EBITDA and Adjusted EBITDA do not represent cash generated by operating activities in accordance with GAAP and should not be considered alternatives to net income (loss), net income (loss) available to common shareholders or operating income as indicators of operating performance or as measures of OPI’s liquidity. These measures should be considered in conjunction with net income, net income (loss) available to common shareholders and operating income as presented in our Consolidated Statements of Income (Loss). Other REITs and real estate companies may calculate EBITDA and Adjusted EBITDA differently than we do. FFO and Normalized FFO We calculate FFO available for common shareholders and Normalized FFO available for common shareholders as shown on page 28. FFO available for common shareholders is calculated on the basis defined by The National Association of Real Estate Investment Trusts, or Nareit, which is net income (loss) available for common shareholders 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 and the difference between FFO attributable to an equity investment and equity in earnings of SIR included in discontinued operations but excluding impairment charges on and increases in the carrying value of real estate assets, any gain or loss on sale of real estate, as well as certain other adjustments currently not applicable to us. Our calculation of Normalized FFO available for common shareholders differs from Nareit's definition of FFO available for common shareholders because we include Normalized FFO attributable to our equity investment in SIR (net of FFO attributable to our equity investment in SIR) included in discontinued operations, we include business management incentive fees, if any, only in the fourth quarter versus the quarter when they are recognized as 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 and we exclude acquisition and transaction related costs, loss on early extinguishment of debt, gains on issuance of shares by SIR included in discontinued operations, unrealized gains and losses on equity securities and loss on sale of SIR shares included in discontinued operations. We consider FFO available for common shareholders and Normalized FFO available for common shareholders to be appropriate supplemental measures of operating performance for a REIT, along with net income (loss) and net income (loss) available for our common shareholders. We believe that FFO available for common shareholders and Normalized FFO available for common shareholders provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation expense, FFO available for common shareholders and Normalized FFO available for common shareholders may facilitate a comparison of our operating performance between periods and with other REITs. FFO available for common shareholders and Normalized FFO available for common shareholders 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, DEFINITIONS OF CERTAIN NON-GAAP FINANCIAL MEASURES FINANCIAL NON-GAAP DEFINITIONS OF CERTAIN 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. FFO available for common shareholders and Normalized FFO available for common shareholders do not represent cash generated by operating activities in accordance with GAAP and should not be considered alternatives to net income (loss) or net income (loss) available for common shareholders as indicators of our operating performance or as measures of our liquidity. These measures should be considered in conjunction with net income (loss) and net income (loss) available for common shareholders as presented in our Consolidated Statements of Income (Loss). Other real estate companies and REITs may calculate FFO available for common shareholders and Normalized FFO available for common shareholders differently than we do. Office Properties Income Trust 29 Supplemental Operating and Financial Data, December 31, 2018
PORTFOLIO INFORMATION Stevens Center, Richland, WA Square Feet:Office 140,152 Properties Income Trust 30 Agency Occupant:Supplemental Department Operating and of FinancialEnergy Data, December 31, 2018
SUMMARY CONSOLIDATED SAME PROPERTY RESULTS (1) (dollars and sq. ft. in thousands) For the Three Months Ended (2) For the Year Ended (3) 12/31/2018 12/31/2017 12/31/2018 12/31/2017 Consolidated buildings (end of period) 91 91 90 90 Total sq. ft. (4) 10,974 10,937 10,904 10,868 Percent leased (5) 94.1 % 95.0% 94.0% 95.0% Rental income (6) $ 65,670 $ 65,806 $ 263,499 $ 260,024 Consolidated Property NOI (7) $ 38,872 $ 39,785 $ 157,384 $ 156,773 Consolidated Property Cash Basis NOI (7) $ 38,594 $ 39,920 $ 156,635 $ 154,908 Consolidated Property NOI % margin (8) 59.2 % 60.5% 59.7% 60.3% Consolidated Property Cash Basis NOI % margin (8) 58.9 % 60.4% 59.5% 59.9% Consolidated Property NOI % change (2.3%) — 0.4% — Consolidated Property Cash Basis NOI % change (3.3%) — 1.1% — (1) Excludes the SIR properties acquired in the Merger. See Exhibit E on page 46 for certain pro forma information related to the Merger and Exhibit H on page 50 for certain information relating to SIR's properties acquired in the Merger. (2) Based on consolidated properties we owned as of December 31, 2018 and which we had owned continuously since October 1, 2017. Excludes three buildings owned by unconsolidated joint ventures. (3) Based on consolidated properties we owned as of December 31, 2018 and which we had owned continuously since January 1, 2017. Excludes three buildings owned by unconsolidated joint ventures. (4) Subject to changes when space is re-measured or re-configured for tenants. (5) Percent leased includes (i) space being fitted out for 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. (6) We report rental income on a straight line basis over the terms of the respective leases; accordingly, rental income includes non-cash straight line rent adjustments. Rental income also includes expense reimbursements, tax escalations, parking revenues, service income and other fixed and variable charges paid to us by our tenants, as well as the net effect of non- cash amortization of intangible lease assets and liabilities. SUMMARY CONSOLIDATED SAME PROPERTY RESULTS SAME PROPERTY CONSOLIDATED SUMMARY (7) See page 25 for the calculation of Consolidated Property NOI and Consolidated Property Cash Basis NOI and a reconciliation of net income (loss) available for common shareholders determined in accordance with GAAP to those amounts and see page 26 for a calculation and reconciliation of same property NOI and same property Cash Basis NOI. (8) Consolidated Property NOI margin is defined as Consolidated Property NOI as a percentage of rental income. Consolidated Property Cash Basis NOI margin is defined as Consolidated Property Cash Basis NOI as a percentage of cash basis rental income. Cash basis rental income excludes non-cash straight line rent adjustments, non-cash amortization included in property operating expenses and the net effect of non-cash amortization of intangible lease assets and liabilities. Office Properties Income Trust 31 Supplemental Operating and Financial Data, December 31, 2018
OCCUPANCY AND LEASING SUMMARY (1)(2) (dollars and sq. ft. in thousands, except per sq. ft. data) As of and for the Three Months Ended 12/31/2018 9/30/2018 6/30/2018 3/31/2018 12/31/2017 Consolidated buildings (end of period) 247 164 164 166 167 Total sq. ft. (2) 31,900 (3) 17,046 17,046 17,332 17,499 Percentage leased 91.0% (3) 93.3% 94.0% 94.4% 94.2% Leasing Activity (sq. ft.): (4) New leases 117 84 117 83 53 Renewals 407 98 279 197 467 Total 524 182 396 280 520 % Change in GAAP Rent: (5) New leases 1.8% 0.6% (2.5%) 10.3% (4.5%) Renewals (9.9%) (1.1%) 1.6% 2.6% 4.3% Total (8.2%) (0.4%) 0.6% 4.9% 3.3% Leasing Cost and Concession Commitments: (6) New leases $ 5,334 $ 3,796 $ 4,653 $ 3,347 $ 2,249 Renewals 10,514 2,683 2,157 4,651 3,391 Total $ 15,848 $ 6,479 $ 6,810 $ 7,998 $ 5,640 Leasing Cost and Concession Commitments per Sq. Ft.: (6) New leases $ 45.75 $ 44.89 $ 39.76 $ 39.93 $ 42.65 Renewals $ 25.82 $ 27.47 $ 7.72 $ 23.66 $ 7.25 OCCUPANCY AND LEASING SUMMARY AND LEASING SUMMARY OCCUPANCY Total $ 30.25 $ 35.56 $ 17.18 $ 28.52 $ 10.84 Weighted Average Lease Term by Sq. Ft. (years): New leases 7.0 7.0 6.8 5.8 6.1 Renewals 7.6 9.0 5.9 5.5 5.0 Total 7.5 8.1 6.2 5.6 5.1 Leasing Cost and Concession Commitments per Sq. Ft. per Year: (5) New leases $ 6.51 $ 6.46 $ 5.84 $ 6.86 $ 6.96 Renewals $ 3.38 $ 3.05 $ 1.31 $ 4.34 $ 1.44 Total $ 4.03 $ 4.41 $ 2.79 $ 5.13 $ 2.11 (1) Excludes the SIR properties acquired in the Merger, unless otherwise stated. See Exhibit J on page 52 for occupancy and leasing information relating to the SIR properties acquired in the Merger. (2) The data presented excludes three buildings owned by two unconsolidated joint ventures in which we own 50% and 51% interests. See page 24 for more information regarding these joint ventures. (3) The data presented for consolidated buildings, total sq. ft. and percentage leased as of December 31, 2018, includes the buildings and two land parcels acquired in the Merger. (4) Rentable square footage is subject to changes when space is re-measured or re-configured for tenants. (5) Percent difference in prior rents charged for same space or, in the case of space acquired vacant, market rental rates for similar space in the building at the date of acquisition. Rents include estimated recurring expense reimbursements paid to us, exclude lease value amortization and are net of lease concessions. (6) Includes commitments made for leasing expenditures and concessions, such as tenant improvements, leasing commissions, tenant reimbursements and free rent. The above leasing summary is based on leases entered during the periods indicated. Office Properties Income Trust 32 Supplemental Operating and Financial Data, December 31, 2018
TENANT DIVERSITY AND CREDIT CHARACTERISTICS (1) As of December 31, 2018 Percentage of Total Annualized Rental Income (2) Tenant Industry Tenant Credit Characteristics (3) (4) (4) (4) TENANT DIVERSITY AND CREDIT CHARACTERISTICS TENANT DIVERSITY (1) The data presented includes the SIR leases assumed in the Merger. (2) Annualized rental income is calculated using the annualized contractual base rents from our tenants pursuant to our lease agreements as of December 31, 2018, plus straight line rent adjustments and estimated recurring expense reimbursements to be paid to us, and excluding lease value amortization. (3) 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. Tenants contributing 57.5% 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 7.4% of annualized rental income were subsidiaries of an investment grade rated parent (although these parent entities are not liable for the payment of rents). (4) Includes the U.S. Government, state governments, municipalities and government contractors. Office Properties Income Trust 33 Supplemental Operating and Financial Data, December 31, 2018
TENANTS REPRESENTING 1% OR MORE OF TOTAL ANNUALIZED RENTAL INCOME (1) As of December 31, 2018 (dollars in thousands) Annualized % of Total Annualized Tenant Credit Rating (2) Rental Income (3) Rental Income (3) 1 U.S. Government Investment Grade $ 179,620 25.6% 2 State of California Investment Grade 18,933 2.7% 3 Shook, Hardy & Bacon L.L.P. Not Rated 18,574 2.6% 4 Bank of America Corporation Investment Grade 16,283 2.3% 5 Noble Energy, Inc. Investment Grade 14,722 2.1% 6 F5 Networks, Inc. Not Rated 14,238 2.0% 7 Andeavor Investment Grade 14,141 2.0% 8 WestRock Co. Investment Grade 12,837 1.8% 9 Northrop Grumman Corporation Investment Grade 11,375 1.6% 10 CareFirst Inc. Non Investment Grade 11,265 1.6% 11 Tyson Foods, Inc. Investment Grade 10,058 1.4% 12 Technicolor SA Non Investment Grade 10,033 1.4% 13 Commonwealth of Massachusetts Investment Grade 9,693 1.4% 14 Micro Focus International plc Non Investment Grade 8,710 1.2% 15 ARRIS International plc Non Investment Grade 7,913 1.1% 16 PNC Bank Investment Grade 6,959 1.1% 17 Allstate Insurance Co. Investment Grade 6,816 1.1% 18 State of Georgia Investment Grade 6,727 1.0% $ 378,897 54.0% (1) The data presented includes the SIR leases assumed in the Merger. (2) 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 (c) tenants with investment grade rated parent entities that do not guarantee the tenant's lease obligations.Tenants contributing 57.5% 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 7.4% of annualized rental income were subsidiaries of an investment grade rated parent (although these parent entities are not liable for the payment of rents). (3) Annualized rental income is calculated using the annualized contractual base rents from our tenants pursuant to our lease agreements as of December 31, 2018, plus straight line rent adjustments and estimated recurring expense reimbursements to be paid to us, and excluding lease value amortization. Office Properties Income Trust 34 TENANTS REPRESENTING 1% OR MORE OF TOTAL ANNUALIZED RENTAL INCOME ANNUALIZED RENTAL TENANTS REPRESENTING 1% OR MORE OF TOTAL Supplemental Operating and Financial Data, December 31, 2018
LEASE EXPIRATION SCHEDULE (1) As of December 31, 2018 (dollars and sq. ft. in thousands) Number of Expiration of Cumulative Annualized Rental % of Cumulative Year (2) Leases Expiring Leased Square Feet (3) % of Total % of Total Income Expiring (4) Total % of Total 2019 107 3,203 11.0% 11.0% $ 90,837 12.9% 12.9% 2020 85 1,956 6.7% 17.7% 50,152 7.1% 20.0% 2021 85 2,214 7.6% 25.3% 48,938 7.0% 27.0% 2022 93 2,589 8.9% 34.2% 63,965 9.1% 36.1% 2023 78 3,128 10.8% 45.0% 77,082 11.0% 47.1% 2024 62 3,709 12.8% 57.8% 95,269 13.6% 60.7% 2025 40 2,229 7.7% 65.5% 47,387 6.7% 67.4% 2026 36 2,056 7.1% 72.6% 52,096 7.4% 74.8% 2027 35 1,899 6.5% 79.1% 46,558 6.6% 81.4% LEASE EXPIRATION SCHEDULE LEASE EXPIRATION 2028 and thereafter 47 6,041 20.9% 100.0% 129,963 18.6% 100.0% Total 668 29,024 100.0% $ 702,247 100.0% Weighted average remaining lease term (in years) 6.0 5.7 (1) The data presented includes the SIR leases assumed in the Merger and exclude three buildings owned by two unconsolidated joint ventures in which we own 50% and 51% interests. See page 24 for more information regarding these joint ventures. (2) The year of lease expiration is pursuant to current contract terms. Some of our government tenants have the right to vacate their space before the stated expirations of their leases. In addition, certain of our government tenants have the right to terminate their leases if their respective legislature or other funding authority does not appropriate rent in their respective annual budgets. (3) Leased square footage is pursuant to leases existing as of December 31, 2018, 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 footage measurements are subject to changes when space is re-measured or re-configured for new tenants. (4) Annualized rental income is calculated using the annualized contractual base rents from our tenants pursuant to our lease agreements as of December 31, 2018, plus straight line rent adjustments and estimated recurring expense reimbursements to be paid to us, and excluding lease value amortization. Office Properties Income Trust 35 Supplemental Operating and Financial Data, December 31, 2018
EXHIBITS 75 Pleasant Street, Malden, MA Square Feet: 125,521 Occupant: Department of Education, Commonwealth of Massachusetts Office Properties Income Trust 36 Supplemental Operating and Financial Data, December 31, 2018
EXHIBIT A CONSOLIDATED PROPERTY DETAIL(1) As of December 31, 2018 (dollars and square feet in thousands) Annualized Year Built or No. of Rentable Rental Undepreciated Depreciated Date Most Recent Property City, State Buildings Sq. Ft. % Leased Income (2) Carrying Value Carrying Value Acquired (3) Renovation Inverness Center Birmingham, AL 3 448 100.0% $ 6,433 $ 17,618 $ 17,618 12/31/2018 1985 445 Jan Davis Drive Huntsville, AL 1 57 100.0% 1,038 3,016 3,016 12/31/2018 2007 4905 Moores Mill Road Huntsville, AL 1 1,371 100.0% 10,033 41,240 41,240 12/31/2018 2007 131 Clayton Street Montgomery, AL 1 58 100.0% 1,575 10,052 8,344 6/22/2011 2007 4344 Carmichael Road Montgomery, AL 1 49 100.0% 1,529 13,042 11,584 12/17/2013 2009 15451 North 28th Avenue Phoenix, AZ 1 67 100.0% 1,452 9,832 8,996 9/10/2014 2013 16001 North 28th Avenue Phoenix, AZ 1 106 100.0% 1,925 3,798 3,798 12/31/2018 2007 2149 West Dunlap Avenue Phoenix, AZ 1 123 100.0% 2,551 6,824 6,824 12/31/2018 1983 711 S 14th Avenue Safford, AZ 1 36 94.4% 918 8,212 8,022 6/16/2010 1992 Regents Center Tempe, AZ 2 101 100.0% 2,114 7,220 7,220 12/31/2018 1988 Campbell Place Carlsbad, CA 2 95 100.0% 2,763 9,717 9,717 12/31/2018 2007 Folsom Corporate Center Folsom, CA 1 96 100.0% 3,783 8,555 8,555 12/31/2018 2009 Bayside Technology Park Fremont, CA 1 101 100.0% 2,303 11,522 11,522 12/31/2018 1990 5045 East Butler Street Fresno, CA 1 532 100.0% 8,384 68,533 43,502 8/29/2002 1971 10949 N. Mather Boulevard Rancho Cordova, CA 1 94 100.0% 2,609 17,844 15,643 10/30/2013 2012 11020 Sun Center Drive Rancho Cordova, CA 1 83 100.0% 2,007 10,934 10,421 12/20/2016 2016 CONSOLIDATED PROPERTY DETAIL PROPERTY CONSOLIDATED 100 Redwood Shores Parkway Redwood City, CA 1 63 100.0% 3,215 22,351 22,351 12/31/2018 2014 3875 Atherton Road Rocklin, CA 1 19 100.0% 419 1,038 1,038 12/31/2018 1991 801 K Street Sacramento, CA 1 338 91.3% 9,913 72,958 67,036 1/29/2016 2002 9815 Goethe Road Sacramento, CA 1 88 100.0% 1,953 12,438 10,419 9/14/2011 1992 Capitol Place Sacramento, CA 1 164 95.2% 4,920 46,066 36,007 12/17/2009 1988 4181 Ruffin Road San Diego, CA 1 148 100.0% 3,589 20,875 16,961 7/16/2010 2013 4560 Viewridge Road San Diego, CA 1 93 100.0% 3,324 26,904 16,232 3/31/1997 1996 9174 Sky Park Centre San Diego, CA 1 44 96.8% 1,192 8,923 5,677 6/24/2002 1986 2090 Fortune Drive San Jose, CA 1 72 100.0% 1,254 9,074 9,074 12/31/2018 2014 2115 O’Nel Drive San Jose, CA 1 99 100.0% 3,342 17,505 17,505 12/31/2018 2013 6448-6450 Via Del Oro San Jose, CA 1 76 100.0% 1,839 6,774 6,774 12/31/2018 1983 North First Street San Jose, CA 1 64 100.0% 2,191 12,412 12,412 12/31/2018 2013 Rio Robles Drive San Jose, CA 3 186 100.0% 4,803 37,680 37,680 12/31/2018 2011 2450 and 2500 Walsh Avenue Santa Clara, CA 2 132 100.0% 4,815 30,263 30,263 12/31/2018 2014 3250 and 3260 Jay Street Santa Clara, CA 2 149 100.0% 6,326 34,219 34,219 12/31/2018 2013 603 San Juan Avenue Stockton, CA 1 22 100.0% 971 6,033 5,155 7/20/2012 2012 350 West Java Drive Sunnyvale, CA 1 96 100.0% 3,099 25,268 25,268 12/31/2018 2012 7958 South Chester Street Centennial, CO 1 168 100.0% 5,219 13,945 13,945 12/31/2018 2000 350 Spectrum Loop Colorado Springs, CO 1 156 100.0% 2,720 11,472 11,472 12/31/2018 2000 333 Inverness Drive South Englewood, CO 1 140 100.0% 3,037 10,335 10,335 12/31/2018 1998 12795 West Alameda Parkway Lakewood, CO 1 167 100.0% 4,484 27,511 21,952 1/15/2010 1988 Corporate Center Lakewood, CO 3 213 100.0% 4,749 34,313 21,818 10/11/2002 2004 1 Targeting Center Windsor, CT 1 97 100.0% 1,281 1,978 1,978 12/31/2018 1999 11 Dupont Circle, NW Washington, DC 1 153 75.2% 7,018 74,992 73,320 10/2/2017 2004 See notes on page 41. Office Properties Income Trust 37 Supplemental Operating and Financial Data, December 31, 2018
EXHIBIT A CONSOLIDATED PROPERTY DETAIL (CONTINUED) (1) As of December 31, 2018 (dollars and square feet in thousands) Annualized Year Built or No. of Rentable Rental Undepreciated Depreciated Date Most Recent Property City, State Buildings Sq. Ft. % Leased Income (2) Carrying Value Carrying Value Acquired (3) Renovation 1211 Connecticut Avenue, NW Washington, DC 1 132 81.0% 4,889 56,446 55,554 10/2/2017 2014 1401 K Street, NW Washington, DC 1 123 85.8% 5,763 67,081 65,584 10/2/2017 2016 20 Massachusetts Avenue Washington, DC 1 340 77.4% 14,738 84,932 49,795 3/31/1997 1996 440 First Street, NW Washington, DC 1 142 98.4% 8,489 67,820 66,556 10/2/2017 2013 625 Indiana Avenue Washington, DC 1 161 95.1% 7,531 59,248 51,693 8/17/2010 1989 840 First Street, NE Washington, DC 1 253 91.0% 12,468 116,448 114,158 10/2/2017 2003 10350 NW 112th Avenue Miami, FL 1 79 100.0% 3,099 7,615 7,615 12/31/2018 2002 7850 Southwest 6th Court Plantation, FL 1 136 100.0% 4,868 35,775 29,749 5/12/2011 1999 8900 Grand Oak Circle Tampa, FL 1 68 100.0% 1,967 13,161 10,690 10/15/2010 2008 180 Ted Turner Drive SW Atlanta, GA 1 91 100.0% 3,671 25,920 22,691 7/25/2012 2007 Corporate Square Atlanta, GA 5 378 100.0% 8,522 61,574 48,203 7/16/2004 1967 Executive Park Atlanta, GA 1 126 100.0% 1,611 17,343 11,562 7/16/2004 2014 One Georgia Center Atlanta, GA 1 376 97.5% 7,946 44,217 38,798 9/30/2011 2008 One Primerica Parkway Duluth, GA 1 344 100.0% 5,395 30,114 30,114 12/31/2018 2013 4712 Southpark Boulevard Ellenwood, GA 1 352 100.0% 3,131 21,113 17,957 7/25/2012 2005 91-209 Kuhela Street Kapolei, HI 1 — —% — 2,008 2,008 12/31/2018 — 8305 NW 62nd Avenue Johnston, IA 1 199 100.0% 3,283 10,730 10,730 12/31/2018 2011 1185, 1249 & 1387 S. Vinnell Way Boise, ID 3 181 100.0% 4,689 33,238 28,367 9/11/2012 2002 2020 S. Arlington Heights Arlington Heights, IL 1 58 100.0% 2,045 15,482 12,381 12/29/2009 2002 400 South Jefferson Street Chicago, IL 1 248 100.0% 10,058 39,806 39,806 12/31/2018 2012 475 Bond Street Lincolnshire, IL 1 223 100.0% 1,667 5,489 5,489 12/31/2018 2000 1415 West Diehl Road Naperville, IL 1 820 79.8% 14,603 33,180 33,180 12/31/2018 2001 440 North Fairway Drive Vernon Hills, IL 1 100 100.0% 1,840 4,945 4,945 12/31/2018 2009 Intech Park Indianapolis, IN 3 434 81.2% 8,715 77,395 63,970 10/14/2011 2008 7601 and 7635 Interactive Way Indianapolis, IN 2 275 100.0% 4,605 17,999 17,999 12/31/2018 2008 CONSOLIDATED PROPERTY DETAIL (CONTINUED) DETAIL PROPERTY CONSOLIDATED 400 State Street Kansas City, KS 1 171 91.4% 2,936 15,837 12,528 6/16/2010 1971 Capitol Tower Topeka, KS 1 144 100.0% 2,901 4,351 4,351 12/31/2018 2006 The Atrium at Circleport II Erlanger, KY 1 86 100.0% 1,364 3,758 3,758 12/31/2018 1999 7125 Industrial Road Florence, KY 1 168 100.0% 2,572 13,571 11,805 12/31/2012 2002 251 Causeway Street Boston, MA 1 141 95.3% 4,335 24,948 20,887 8/17/2010 1988 300 and 330 Billerica Road Chelmsford, MA 2 209 —% — 4,737 4,737 12/31/2018 2006 75 Pleasant Street Malden, MA 1 126 100.0% 4,972 32,407 25,704 5/24/2010 2008 111 Powdermill Road Maynard, MA 1 287 —% — 4,432 4,432 12/31/2018 1990 25 Newport Avenue Quincy, MA 1 93 100.0% 2,113 13,690 11,669 2/16/2011 2009 See notes on page 41. Office Properties Income Trust 38 Supplemental Operating and Financial Data, December 31, 2018
EXHIBIT A CONSOLIDATED PROPERTY DETAIL (CONTINUED) (1) As of December 31, 2018 (dollars and square feet in thousands) Annualized Year Built or No. of Rentable Rental Undepreciated Depreciated Date Most Recent Property City, State Buildings Sq. Ft. % Leased Income (2) Carrying Value Carrying Value Acquired (3) Renovation One Montvale Avenue Stoneham, MA 1 98 94.1% 2,520 14,939 12,246 6/16/2010 1987 314 Littleton Road Westford, MA 1 175 100.0% 3,759 14,291 14,291 12/31/2018 2013 Annapolis Commerce Center Annapolis, MD 2 101 100.0% 2,461 11,941 11,666 10/2/2017 1990 4201 Patterson Avenue Baltimore, MD 1 85 100.0% 1,270 13,083 8,122 10/15/1998 2014 Hillside Center Columbia, MD 2 87 92.3% 1,698 8,001 7,870 10/2/2017 2014 TenThreeTwenty Columbia, MD 1 140 97.6% 3,881 20,356 19,786 10/2/2017 2013 7001 Columbia Gateway Drive Columbia, MD 1 120 100.0% 4,059 16,120 16,120 12/31/2018 2008 3300 75th Avenue Landover, MD 1 266 100.0% 5,323 41,827 33,546 2/26/2010 2004 1401 Rockville Pike Rockville, MD 1 190 92.3% 4,660 48,987 29,721 2/2/1998 2015 2115 East Jefferson Street Rockville, MD 1 129 84.6% 3,035 14,886 13,365 8/27/2013 2003 Redland 520/530 Rockville, MD 3 352 92.8% 11,605 75,589 73,644 10/2/2017 2017 Redland 540 Rockville, MD 1 132 65.0% 2,700 31,350 30,471 10/2/2017 2017 Rutherford Business Park Windsor Mill, MD 1 80 100.0% 1,969 12,147 10,590 11/16/2012 2011 Meadows Business Park Woodlawn, MD 2 183 83.8% 3,280 27,512 22,811 2/15/2011 1997 3550 Green Court Ann Arbor, MI 1 82 100.0% 1,721 8,555 8,555 12/31/2018 1998 11411 E. Jefferson Avenue Detroit, MI 1 56 100.0% 2,739 19,070 15,140 4/23/2010 2009 Rosedale Corporate Plaza Roseville, MN 1 61 100.0% 1,126 8,222 4,748 12/1/1999 1987 1300 Summit Street Kansas City, MO 1 87 100.0% 2,384 15,761 13,822 9/27/2012 1998 4241-4300 NE 34th Street Kansas City, MO 1 98 100.0% 1,871 11,628 7,429 3/31/1997 1996 2555 Grand Boulevard Kansas City, MO 1 596 100.0% 18,580 56,174 56,174 12/31/2018 2003 1220 Echelon Parkway Jackson, MS 1 110 100.0% 3,997 26,136 22,036 7/25/2012 2009 2300 and 2400 Yorkmont Road Charlotte, NC 2 284 100.0% 6,483 20,571 20,571 12/31/2018 1995 18010 and 18020 Burt Street Omaha, NE 2 203 100.0% 4,201 19,631 19,631 12/31/2018 2012 10-12 Celina Avenue Nashua, NH 1 322 100.0% 2,439 18,621 15,242 8/31/2009 1997 500 Charles Ewing Boulevard Ewing, NJ 1 250 100.0% 6,025 31,054 31,054 12/31/2018 2012 299 Jefferson Road Parsippany, NJ 1 151 100.0% 4,102 7,516 7,516 12/31/2018 2011 CONSOLIDATED PROPERTY DETAIL (CONTINUED) DETAIL PROPERTY CONSOLIDATED One Jefferson Road Parsippany, NJ 1 100 100.0% 4,272 9,741 9,741 12/31/2018 2009 50 West State Street Trenton, NJ 1 267 84.3% 6,537 46,516 38,507 12/30/2010 1989 138 Delaware Avenue Buffalo, NY 1 122 78.8% 2,173 30,855 19,025 3/31/1997 2014 Airline Corporate Center Colonie, NY 1 64 100.0% 1,069 7,596 6,543 6/22/2012 2004 5000 Corporate Court Holtsville, NY 1 264 85.7% 6,063 26,975 23,164 8/31/2011 2000 8687 Carling Road Liverpool, NY 1 38 100.0% 854 571 571 12/31/2018 2007 1212 Pittsford - Victor Road Pittsford, NY 1 55 100.0% 1,051 692 692 12/31/2018 2003 500 Canal View Boulevard Rochester, NY 1 95 17.9% 315 2,453 2,453 12/31/2018 1997 See notes on page 41. Office Properties Income Trust 39 Supplemental Operating and Financial Data, December 31, 2018
EXHIBIT A CONSOLIDATED PROPERTY DETAIL (CONTINUED) (1) As of December 31, 2018 (dollars and square feet in thousands) Annualized Year Built or No. of Rentable Rental Undepreciated Depreciated Date Most Recent Property City, State Buildings Sq. Ft. % Leased Income (2) Carrying Value Carrying Value Acquired (3) Renovation 2231 Schrock Road Columbus, OH 1 42 100.0% 725 940 940 12/31/2018 1999 4600 25th Avenue Salem, OR 1 233 97.8% 5,162 29,648 24,750 12/20/2011 2007 501 Ridge Avenue Hanover, PA 1 502 —% — 8,604 8,604 12/31/2018 1965 8800 Tinicum Boulevard Philadelphia, PA 1 441 100.0% 6,959 28,483 28,483 12/31/2018 2000 Synergy Business Park Columbia, SC 3 181 91.6% 2,171 17,760 13,425 5/10/2006;9/17/2010 1985 9680 Old Bailes Road Fort Mill, SC 1 60 100.0% 790 3,808 3,808 12/31/2018 2007 One Memphis Place Memphis, TN 1 205 73.6% 2,974 10,565 8,823 9/17/2010 1985 16001 North Dallas Parkway Addison, TX 2 554 100.0% 14,835 74,025 74,025 12/31/2018 1996 2115-2116 East Randol Mill Road Arlington, TX 1 183 100.0% 1,062 7,615 7,615 12/31/2018 1989 Research Park Austin, TX 2 149 100.0% 3,211 18,148 18,148 12/31/2018 1999 1001 Noble Energy Way Houston, TX 1 497 100.0% 14,722 34,614 34,614 12/31/2018 2013 10451 Clay Road Houston, TX 1 97 100.0% 2,257 15,873 15,873 12/31/2018 2013 202 North Castlegory Road Houston, TX 1 84 100.0% 2,885 5,934 5,934 12/31/2018 2016 6380 Rogerdale Road Houston, TX 1 206 100.0% 5,867 18,889 18,889 12/31/2018 2006 4221 W. John Carpenter Freeway Irving, TX 1 54 100.0% 840 3,808 3,808 12/31/2018 1995 8675,8701-8711 Freeport Pkwy and 8901 Esters Boulevard Irving, TX 3 458 100.0% 6,270 42,081 42,081 12/31/2018 1990 1511 East Common Street New Braunfels, TX 1 63 100.0% 1,092 6,280 6,280 12/31/2018 2005 2900 West Plano Parkway Plano, TX 1 191 100.0% 1,475 15,774 15,774 12/31/2018 1998 3400 West Plano Parkway Plano, TX 1 235 100.0% 1,542 20,670 20,670 12/31/2018 1994 19100 Ridgewood Parkway San Antonio, TX 1 618 100.0% 14,141 148,742 148,742 12/31/2018 2008 3600 Wiseman Boulevard San Antonio, TX 1 100 100.0% 3,196 10,236 10,236 12/31/2018 2004 701 Clay Road Waco, TX 1 139 100.0% 3,466 14,322 9,302 12/23/1997 1997 1800 Novell Place Provo, UT 1 406 100.0% 8,710 51,377 51,377 12/31/2018 2000 4885-4931 North 300 West Provo, UT 2 125 100.0% 3,953 13,450 13,450 12/31/2018 2009 14660, 14672 & 14668 Lee Road Chantilly, VA 3 409 98.7% 13,574 83,218 79,461 12/22/2016 2006 CONSOLIDATED PROPERTY DETAIL (CONTINUED) DETAIL PROPERTY CONSOLIDATED 1434 Crossways Chesapeake, VA 2 214 100.0% 3,986 24,961 24,121 10/2/2017 2002 Greenbrier Towers Chesapeake, VA 2 172 83.4% 3,153 15,378 14,871 10/2/2017 1987 Enterchange at Meadowville Chester, VA 1 228 100.0% 1,547 11,355 10,046 8/28/2013 2011 Three Flint Hill Fairfax, VA 1 184 77.6% 4,564 33,125 32,050 10/2/2017 2011 3920 Pender Drive Fairfax, VA 1 83 100.0% 2,488 16,034 14,505 3/21/2014 2011 Pender Business Park Fairfax, VA 4 171 83.6% 3,505 24,551 21,678 11/4/2013 2000 7987 Ashton Avenue Manassas, VA 1 69 100.0% 1,654 10,438 9,999 1/3/2017 1989 Two Commercial Place Norfolk, VA 1 289 100.0% 5,840 26,208 26,208 12/31/2018 2016 1759 & 1760 Business Center Drive Reston, VA 2 406 100.0% 12,311 90,447 81,174 5/28/2014 1996 See notes on page 41. Office Properties Income Trust 40 Supplemental Operating and Financial Data, December 31, 2018
CONSOLIDATED PROPERTY DETAIL (CONTINUED) (1) EXHIBIT A As of December 31, 2018 (dollars and square feet in thousands) Annualized Year Built or No. of Rentable Rental Undepreciated Depreciated Date Most Recent Property City, State Buildings Sq. Ft. % Leased Income (2) Carrying Value Carrying Value Acquired (3) Renovation 1775 Wiehle Avenue Reston, VA 1 130 62.8% 3,213 31,014 30,186 10/2/2017 2001 9960 Mayland Drive Richmond, VA 1 174 94.4% 3,338 20,435 18,380 5/20/2014 1994 501 South 5th Street Richmond, VA 1 311 100.0% 12,837 54,295 54,295 12/31/2018 2009 9201 Forest Hill Avenue Richmond, VA 1 50 100.0% 1,120 1,731 1,731 12/31/2018 1985 Parham Place Richmond, VA 3 89 100.0% 1,585 2,027 2,027 12/31/2018 2014 1751 Blue Hills Drive Roanoke, VA 1 399 100.0% 1,949 10,533 10,533 12/31/2018 2003 Aquia Commerce Center Stafford, VA 2 65 100.0% 1,843 10,323 8,774 6/22/2011 1999 Atlantic Corporate Park Sterling, VA 2 221 99.5% 6,209 35,253 34,322 10/2/2017 2008 Sterling Business Park Lots 8 and 9 Sterling, VA 1 167 100.0% 5,505 53,552 52,167 10/2/2017 2016 Orbital Sciences Campus Sterling, VA 3 337 100.0% 11,375 31,845 31,845 12/31/2018 2001 65 Bowdoin Street S. Burlington, VT 1 27 100.0% 1,129 9,256 7,383 4/9/2010 2009 840 North Broadway Everett, WA 2 112 100.0% 2,686 20,852 17,753 6/28/2012 1990 Stevens Center Richland, WA 2 140 100.0% 2,922 25,142 15,288 3/31/1997 1995 351, 401, 501 Elliott Ave West Seattle, WA 3 300 100.0% 14,272 80,008 80,008 12/31/2018 2000 11050 West Liberty Drive Milwaukee, WI 1 29 100.0% 803 5,587 4,706 6/9/2011 2006 882 TJ Jackson Drive Falling Waters, WV 1 40 —% — 5,062 2,847 3/31/1997 1993 5353 Yellowstone Road Cheyenne, WY 1 106 100.0% 2,147 10,897 6,239 3/31/1997 1995 Total 211 29,609 667,958 3,944,636 3,569,489 Held for Sale (4) 500 First Street, NW Washington, DC 1 129 100.0% 7,745 46,182 45,734 10/2/2017 2010 91-008 Hanua Street Kapolei, HI 1 526 —% — 6,846 6,846 12/31/2018 — Ammendale Commerce Center Beltsville, MD 3 129 100.0% 2,150 14,476 14,197 10/2/2017 1987 Indian Creek Technology Park Beltsville, MD 4 186 99.9% 3,818 18,453 18,090 10/2/2017 1988 Gateway 270 West Clarksburg, MD 6 252 95.7% 4,774 22,308 22,051 10/2/2017 2002 Snowden Center Columbia, MD 5 145 88.7% 2,961 18,202 17,944 10/2/2017 2008 20400 Century Boulevard Germantown, MD 1 81 —% — 13,499 7,979 3/31/1997 1995 Cloverleaf Center Germantown, MD 4 174 59.2% 2,538 17,010 16,843 10/2/2017 2000 CONSOLIDATED PROPERTY DETAIL (CONTINUED) DETAIL PROPERTY CONSOLIDATED Metro Park North Rockville, MD 4 192 83.4% 3,890 19,018 18,782 10/2/2017 2001 Sterling Park Business Center Sterling, VA 7 476 95.8% 6,413 40,961 40,318 10/2/2017 2011 36 2,291 34,289 216,955 208,784 Grand Total 247 31,900 91.0% $ 702,247 $ 4,161,591 $ 3,778,273 (1) The data presented excludes three buildings owned by two unconsolidated joint ventures in which we own 50% and 51% interests. See page 24 for more information regarding these joint ventures. (2) Annualized rental income is calculated using the annualized contractual base rents from our tenants pursuant to our lease agreements as of December 31, 2018, plus straight line rent adjustments and estimated recurring expense reimbursements to be paid to us, and excluding lease value amortization. (3) Date acquired is the date we acquired the property or the date our former parent entity acquired the property for those properties that our former parent entity contributed to us in June 2009 in connection with our initial public offering. (4) Carrying values exclude intangible and other assets. Office Properties Income Trust 41 Supplemental Operating and Financial Data, December 31, 2018
PRO FORMA KEY FINANCIAL DATA AS IF THE MERGER HAD OCCURRED ON OCTOBER 1, 2018 EXHIBIT B (dollars in thousands, except per share data) As of and for the Three Months Ended December 31, 2018 As Reported Pro Forma Selected Balance Sheet Data: Total gross assets (1) $ 5,613,730 $ 5,613,730 Total assets $ 5,238,583 $ 5,238,583 Total liabilities $ 3,459,615 $ 3,459,615 Total shareholders' equity $ 1,778,968 $ 1,778,968 Selected Income Statement Data: Rental income $ 103,656 $ 187,183 PRO FORMA KEY FINANCIAL DATA FINANCIAL KEY PRO FORMA Net loss attributable to the company $ (57,695) $ (131,622) Consolidated Property NOI (2) $ 62,026 $ 124,087 Consolidated Property Cash Basis NOI (2) $ 60,108 $ 119,896 Adjusted EBITDA (3) $ 57,901 $ 89,610 FFO attributable to the company (4) $ (21,889) $ (62,485) Normalized FFO attributable to the company (4) $ 39,101 $ 49,583 Per Share Data (basic and diluted): Net loss attributable to the company $ (2.31) $ (2.74) FFO attributable to the company (4) $ (0.87) $ (1.30) Normalized FFO attributable to the company (4) $ 1.56 $ 1.03 (1) Total gross assets is total assets plus accumulated depreciation. (2) See page 46 for the pro forma calculation of Consolidated Property NOI and Consolidated Property Cash Basis NOI and a reconciliation of net loss attributable to the company determined in accordance with GAAP to those amounts. (3) See page 48 for the pro forma calculation of Adjusted EBITDA and a reconciliation of net loss determined in accordance with GAAP to that amount. (4) See page 49 for the pro forma calculation of FFO attributable to the company and Normalized FFO attributable to the company and a reconciliation of pro forma net loss attributable to the company determined in accordance with GAAP to those amounts. Office Properties Income Trust 42 Supplemental Operating and Financial Data, December 31, 2018
PRO FORMA CONSOLIDATED STATEMENT OF INCOME (LOSS) AS IF THE MERGER HAD OCCURRED ON OCTOBER 1, 2018 EXHIBIT C (amounts in thousands, expect per share data) For the Three Months Ended December 31, 2018 Sale of OPI ILPT SIR Pro Forma OPI SIR Shares (1) Adjusted SIR Distribution (2) Adjusted Adjustments Pro Forma Rental income $ 103,656 $ — $ 103,656 $ 122,493 $ (40,245) $ 82,248 $ 1,279 $ 187,183 Expenses: Real estate taxes 12,306 — 12,306 12,279 (5,005) 7,274 — 19,580 Utility expenses 5,935 — 5,935 2,868 (67) 2,801 — 8,736 Other operating expenses 23,389 — 23,389 14,533 (3,142) 11,391 — 34,780 Depreciation and amortization 33,044 — 33,044 36,220 (7,327) 28,893 5,782 (3) 67,719 Loss on impairment of real estate 2,830 — 2,830 — — — — 2,830 Acquisition and transaction related costs 10,695 — 10,695 9,193 — 9,193 — 19,888 General and administrative (11,516) — (11,516) 12,545 (2,794) 9,751 — (1,765) Total expenses 76,683 — 76,683 87,638 (18,335) 69,303 5,782 151,768 — — — Gain on sale of real estate 3,332 — 3,332 — — — — 3,332 Dividend income 425 — 425 555 — 555 — 980 Unrealized loss on equity securities (48,229) — (48,229) (63,029) — (63,029) — (111,258) Interest income 234 — 234 145 (63) 82 — 316 Interest expense (20,421) 376 (20,045) (23,701) 4,472 (19,229) (241) (4) (39,515) Loss on early extinguishment of debt (709) — (709) — — — — (709) Income (loss) from continuing operations before income tax expense and equity in net losses of investees (38,395) 376 (38,019) (51,175) (17,501) (68,676) (4,744) (111,439) Income tax benefit (expense) 7 — 7 (10) 8 (2) — 5 Equity in net losses of investees (1,157) — (1,157) (366) — (366) — (1,523) Income (loss) from continuing operations (39,545) 376 (39,169) (51,551) (17,493) (69,044) (4,744) (112,957) Loss from discontinued operations (18,150) (515) (18,665) — — — — (18,665) Net loss (57,695) (139) (57,834) (51,551) (17,493) (69,044) (4,744) (131,622) Noncontrolling interest — — — (5,395) 5,395 — — — Net loss attributable to the company $ (57,695) $ (139) $ (57,834) $ (56,946) $ (12,098) $ (69,044) $ (4,744) $ (131,622) Weighted average common shares outstanding (basic and diluted) 25,027 23,030 (5) 48,057 Net loss attributable to the company per common share (basic and diluted) $ (2.31) $ (2.74) PRO FORMA CONSOLIDATED STATEMENT OF INCOME (LOSS) STATEMENT CONSOLIDATED PRO FORMA See accompanying notes on the following page. Office Properties Income Trust 43 Supplemental Operating and Financial Data, December 31, 2018
PRO FORMA CONSOLIDATED STATEMENT OF INCOME (LOSS) EXHIBIT C AS IF THE MERGER HAD OCCURRED ON OCTOBER 1, 2018 (CONTINUED) (dollars in thousands) (1) The adjustment represents the effect on interest expense related to the application of net proceeds from our sale of 24,918,421 SIR common shares to repay approximately $435,125 of borrowings outstanding under our revolving credit facility, as if this transaction had occurred on October 1, 2018. (2) The adjustments represent the deconsolidation of Industrial Logistics Properties Trust, or ILPT, as a result of SIR's distribution to its shareholders of its 45,000,000 common shares of beneficial interest of ILPT, or the ILPT Distribution, as if the ILPT Distribution had occurred on October 1, 2018. The amounts being adjusted are directly attributable to revenue and expenses of ILPT properties and ILPT debt. (3) The adjustment eliminates SIR's historical depreciation and amortization expenses of $28,893. The adjustment also includes estimated depreciation and amortization expenses of $34,675 based on the estimated fair value of the acquired assets. Real estate investments are depreciated on a straight line basis over estimated useful lives ranging up to forty years. (4) The adjustments to interest expense represent: (i) the elimination of SIR's historical interest expense related to its revolving credit facility and historical senior unsecured note discount amortization, (ii) an increase in interest expense related to borrowings under our revolving credit facility which was used to repay SIR's outstanding revolving credit facility balance at the closing of the Merger, and (iii) an increase in senior unsecured note discount amortization due to the adjustments to reduce SIR's senior unsecured notes to reflect changes in market interest rates as of December 31, 2018. The amortization is calculated with the assumption that the SIR senior unsecured notes were assumed at their fair value on October 1, 2018. (5) The adjustment represents the issuance of 23,282,704 of our common shares issued to SIR shareholders as part of the Merger. PRO FORMA CONSOLIDATED STATEMENT OF INCOME (LOSS) STATEMENT CONSOLIDATED PRO FORMA Office Properties Income Trust 44 Supplemental Operating and Financial Data, December 31, 2018
PRO FORMA CONSOLIDATED LEVERAGE RATIOS, COVERAGE RATIOS AND EXHIBIT D PUBLIC DEBT COVENANTS AS IF THE MERGER HAD OCCURRED ON OCTOBER 1, 2018 As of and for the Three Months Ended December 31, 2018 As Reported Pro Forma Leverage Ratios: Total consolidated debt (1) / total gross assets (2) 59.0% 59.0% Total consolidated debt (1) / total market capitalization (3) 71.5% 71.5% Consolidated secured debt (1) / total assets 6.5% 6.5% Variable rate debt (1) / total debt (1) 17.0% 17.0% Coverage Ratios: Adjusted EBITDA (4) / interest expense 2.8x 2.3x Total consolidated debt (1) / Annualized Adjusted EBITDA (4) nm 7.6x Public Debt Covenants: Total debt / adjusted total assets (5) (maximum 60.0%) 56.8% 56.8% Secured debt / adjusted total assets (5) (maximum 40.0%) 5.8% 5.8% Consolidated income available for debt service (6) / debt service (minimum 1.50x) 3.2x 2.8x Total unencumbered assets (5) / unsecured debt (minimum 150.0%) 171.9% 171.9% (1) Debt amounts represent the principal balance as of the date reported. The carrying value of our total consolidated debt of $3,254,890 as of December 31, 2018 is net of unamortized PRO FORMA CONSOLIDATED LEVERAGE RATIOS, CONSOLIDATED PRO FORMA premiums, discounts and certain issuance costs totaling $56,372. Total consolidated debt excludes two mortgage notes with an aggregate principal balance of $82,000, which are secured by three buildings owned by two unconsolidated joint ventures in which we own 50% and 51% interests. See page 24 for more information regarding these joint ventures and related COVERAGE RATIOS AND PUBLIC DEBT COVENANTS COVERAGE RATIOS mortgage notes. (2) Total gross assets is total assets plus accumulated depreciation. (3) Total market capitalization is total consolidated debt plus the market value of our common shares at the end of the period. (4) See page 48 for the calculation of Adjusted EBITDA and a reconciliation of net loss determined in accordance with GAAP to that amount. (5) Adjusted total assets and total unencumbered assets include original cost of real estate assets calculated in accordance with GAAP before impairment writedowns, if any, and exclude depreciation and amortization, accounts receivable and intangible assets. (6) Consolidated income available for debt service is earnings from operations excluding interest expense, depreciation and amortization, loss on asset impairment, unrealized appreciation on assets held for sale, unrealized gains or losses on equity securities, gains and losses on early extinguishment of debt, gains and losses on sales of properties and gains or losses on equity issuance by SIR and equity in earnings of SIR and including distributions received from SIR and our unconsolidated joint ventures, if any, determined together with debt service for the period presented. Office Properties Income Trust 45 Supplemental Operating and Financial Data, December 31, 2018
PRO FORMA CALCULATION OF CONSOLIDATED PROPERTY NOI AND CONSOLIDATED PROPERTY CASH BASIS NOI (1) AS IF THE MERGER HAD OCCURRED ON OCTOBER 1, 2018 EXHIBIT E (dollars in thousands) For the Three Months Ended December 31, 2018 Sale of OPI ILPT SIR Pro Forma OPI SIR Shares Adjusted SIR Distribution Adjusted Adjustments Pro Forma Calculation of Consolidated Property NOI and Consolidated Property Cash Basis NOI: Rental income (2) $ 103,656 — $ 103,656 $ 122,493 $ (40,245) $ 82,248 $ 1,279 $ 187,183 Property operating expenses (41,630) — (41,630) (29,680) 8,214 (21,466) — (63,096) Consolidated Property NOI 62,026 — 62,026 92,813 (32,031) 60,782 1,279 124,087 Non-cash straight line rent adjustments included in rental income (2) (2,339) — (2,339) (3,100) 1,379 (1,721) — (4,060) Lease value amortization included in rental income (2) 542 — 542 (584) 106 (478) — 64 Non-cash amortization included in property operating expenses (3) (121) — (121) (74) — (74) — (195) Consolidated Property Cash Basis NOI $ 60,108 — $ 60,108 $ 89,055 $ (30,546) $ 58,509 $ 1,279 $ 119,896 Reconciliation of Net Loss Attributable to the Company to Consolidated NOI and Consolidated Property Cash Basis NOI: Net loss attributable to the company $ (57,695) $ (139) $ (57,834) $ (56,946) $ (12,098) $ (69,044) $ (4,744) $ (131,622) Noncontrolling interest — — — (5,395) 5,395 — — — Net loss (57,695) (139) (57,834) (51,551) (17,493) (69,044) (4,744) (131,622) Loss from discontinued operations 18,150 515 18,665 — — — — 18,665 Income (loss) from continuing operations (39,545) 376 (39,169) (51,551) (17,493) (69,044) (4,744) (112,957) Equity in net losses of investees 1,157 — 1,157 366 — 366 — 1,523 Income tax expense (benefit) (7) — (7) 10 (8) 2 — (5) Loss on early extinguishment of debt 709 — 709 — — — — 709 Interest expense 20,421 (376) 20,045 23,701 (4,472) 19,229 241 39,515 Interest income (234) — (234) (145) 63 (82) — (316) Unrealized loss on equity securities 48,229 — 48,229 63,029 — 63,029 — 111,258 Dividend income (425) — (425) (555) — (555) — (980) Gain on sale of real estate (3,332) — (3,332) — — — — (3,332) General and administrative (11,516) — (11,516) 12,545 (2,794) 9,751 — (1,765) PROPERTY CASH BASIS NOI PROPERTY Acquisition and transaction related costs 10,695 — 10,695 9,193 — 9,193 — 19,888 Loss on impairment of real estate 2,830 — 2,830 — — — — 2,830 Depreciation and amortization 33,044 — 33,044 36,220 (7,327) 28,893 5,782 67,719 Consolidated Property NOI 62,026 — 62,026 92,813 (32,031) 60,782 1,279 124,087 Non-cash amortization included in property operating expenses (3) (121) — (121) (74) — (74) — (195) Lease value amortization included in rental income (2) 542 — 542 (584) 106 (478) — 64 Non-cash straight line rent adjustments included in rental income (2) (2,339) — (2,339) (3,100) 1,379 (1,721) — (4,060) Consolidated Property Cash Basis NOI $ 60,108 — $ 60,108 $ 89,055 $ (30,546) $ 58,509 $ 1,279 $ 119,896 (1) See Definitions of Certain Non-GAAP Financial Measures on page 29 for the definitions of Consolidated Property NOI and Consolidated Property Cash Basis NOI, a description of why we believe they are appropriate supplemental measures and a description of how we use these measures. The data presented exclude three buildings owned by our two unconsolidated joint ventures. See page 24 for more information regarding these joint ventures. (2) We report rental income on a straight line basis over the terms of the respective leases; accordingly, rental income includes non-cash straight line rent adjustments. Rental income also includes expense reimbursements, tax escalations, parking revenues, service income and other fixed and variable charges paid to us by our tenants, as well as the net effect of non-cash amortization of intangible lease assets and liabilities. (3) We recorded a liability for the amount by which the estimated fair value for accounting purposes exceeded the price we paid for our investment in RMR Inc. common stock in June 2015. A portion of this liability is being amortized on a straight line basis through December 31, 2035 as a reduction to property management fees expense, which are included in property operating expenses. PRO FORMA CALCULATION OF CONSOLIDATED PROPERTY NOI AND CONSOLIDATED NOI PROPERTY OF CONSOLIDATED CALCULATION PRO FORMA Office Properties Income Trust 46 Supplemental Operating and Financial Data, December 31, 2018
PRO FORMA CALCULATION OF SAME PROPERTY NOI AND SAME PROPERTY CASH BASIS NOI (1) EXHIBIT E AS IF THE MERGER HAD OCCURRED ON OCTOBER 1, 2018 (dollars in thousands) For the Three Months Ended December 31, 2018 Sale of OPI ILPT SIR Pro Forma OPI SIR Shares Adjusted SIR Distribution Adjusted Adjustments Pro Forma Reconciliation of Consolidated Property NOI to Same Property NOI (2): Rental income $ 103,656 $ — $ 103,656 $ 122,493 $ (40,245) $ 82,248 $ 1,279 $ 187,183 Property operating expenses (41,630) — (41,630) (29,680) 8,214 (21,466) — (63,096) Consolidated Property NOI 62,026 — 62,026 92,813 (32,031) 60,782 1,279 124,087 Less: NOI of properties not included in same property results (23,154) — (23,154) (32,031) 32,031 — — (23,154) PROPERTY CASH BASIS NOI PROPERTY Same property NOI $ 38,872 $ — $ 38,872 $ 60,782 $ — $ 60,782 $ 1,279 $ 100,933 Calculation of Same Property Cash Basis NOI (2): Same property NOI $ 38,872 $ — $ 38,872 $ 60,782 $ — $ 60,782 $ 1,279 $ 100,933 Add: Lease value amortization included in rental income (3) 497 — 497 (479) — (479) 1,403 1,421 Less: Non-cash straight line rent adjustments included in rental income (3) (654) — (654) (1,722) — (1,722) (2,682) (5,058) Non-cash amortization included in property operating expenses (4) (121) — (121) (75) — (75) — (196) Same property Cash Basis NOI $ 38,594 $ — $ 38,594 $ 58,506 $ — $ 58,506 $ — $ 97,100 (1) See Definitions of Certain Non-GAAP Financial Measures on page 29 for the definitions of Consolidated Property NOI and Consolidated Property Cash Basis NOI, a description of why we believe they are appropriate supplemental measures and a description of how we use these measures. (2) Same property NOI and same property Cash Basis NOI are based on consolidated properties OPI and SIR owned as of December 31, 2018 and which OPI and SIR had owned continuously since October 1, 2017. (3) We report rental income on a straight line basis over the terms of the respective leases; accordingly, rental income includes non-cash straight line rent adjustments. Rental income also includes expense reimbursements, tax escalations, parking revenues, service income and other fixed and variable charges paid to us by our tenants, as well as the net effect of non-cash amortization of intangible lease assets and liabilities. (4) We recorded a liability for the amount by which the estimated fair value for accounting purposes exceeded the price we paid for our investment in RMR Inc. common stock in June 2015. A portion of this liability is being amortized on a straight line basis through December 31, 2035 as a reduction to property management fees expense, which are included in property operating expenses. PRO FORMA CALCULATION OF SAME PROPERTY NOI AND SAME NOI OF SAME PROPERTY CALCULATION PRO FORMA Office Properties Income Trust 47 Supplemental Operating and Financial Data, December 31, 2018
PRO FORMA CALCULATION OF EBITDA AND ADJUSTED EBITDA (1) AS IF THE MERGER HAD OCCURRED ON OCTOBER 1, 2018 EXHIBIT F (dollars in thousands) For the Three Months Ended December 31, 2018 Sale of OPI ILPT SIR Pro Forma OPI SIR Shares Adjusted SIR Distribution Adjusted Adjustments Pro Forma Net loss $ (57,695) $ (139) $ (57,834) $ (51,551) $ (17,493) $ (69,044) $ (4,744) $ (131,622) Add (less): Interest expense 20,421 (376) 20,045 23,701 (4,472) 19,229 241 39,515 Income tax (benefit) expense (7) — (7) 10 (8) 2 — (5) Depreciation and amortization 33,044 — 33,044 36,220 (7,327) 28,893 5,782 67,719 EBITDA (4,237) (515) (4,752) 8,380 (29,300) (20,920) 1,279 (24,393) Add (less): Acquisition and transaction related costs (2) 10,695 — 10,695 9,193 — 9,193 — 19,888 General and administrative expense paid in common shares (3) 334 — 334 842 (235) 607 — 941 Estimated business management incentive fees (4) (16,973) — (16,973) (21,479) — (21,479) — (38,452) Loss on impairment of real estate 2,830 — 2,830 — — — — 2,830 Distributions received from unconsolidated joint ventures 705 — 705 — — — — 705 Loss on extinguishment of debt 709 — 709 — — — — 709 Equity in earnings of SIR included in discontinued operations (515) 515 — — — — — — Equity in losses of unconsolidated joint ventures 791 — 791 — — — — 791 Gain on sale of real estate (3,332) — (3,332) — — — — (3,332) Unrealized loss on equity securities (5) 48,229 — 48,229 63,029 — 63,029 — 111,258 Loss on sale of SIR common shares included in discontinued operations (6) 18,665 — 18,665 — — — — 18,665 Adjusted EBITDA $ 57,901 $ — $ 57,901 $ 59,965 $ (29,535) $ 30,430 $ 1,279 $ 89,610 (1) See Definitions of Certain Non-GAAP Financial Measures on page 29 for the definitions of EBITDA and Adjusted EBITDA and a description of why we believe they are appropriate supplemental measures and a description of how we use them. (2) Acquisition and transaction related costs include costs incurred in connection with the Merger. (3) Amounts represent equity compensation awarded to our trustees, officers and certain other employees of RMR LLC. (4) Incentive fees under our business management agreement with RMR LLC are payable after the end of each calendar year, are calculated based on common share total return, as defined, and are included in general and administrative expense in our consolidated statements of income (loss). In calculating net loss in accordance with GAAP, we recognize estimated business management incentive fee expense, if any, in the first, second and third quarters. Although we recognize this expense, if any, in the first, second and third quarters for purposes of calculating net income (loss), we do not include such expense in the calculation of Adjusted EBITDA until the fourth quarter, when the amount of the business management incentive fee expense for the calendar year, if any, is determined. No incentive management fee was payable under our business management agreement for the year ended December 31, 2018. As successor to SIR as a result of the Merger, we assumed the obligation to pay SIR's business management incentive fee for 2018. SIR's business management incentive fee for 2018 of $25,817 was paid by us in January 2019 and is reflected in the pro forma calculation of Adjusted EBITDA as shown above in the SIR and SIR Adjusted columns. PRO FORMA CALCULATION OF EBITDA AND ADJUSTED EBITDA AND OF EBITDA CALCULATION PRO FORMA (5) Unrealized loss on equity securities represents the adjustment required to adjust the carrying value of our investment in RMR Inc. common shares to its fair value as of the end of the period in accordance with new GAAP standards effective January 1, 2018. (6) On October 9, 2018, we sold our entire investment in SIR at a loss. Office Properties Income Trust 48 Supplemental Operating and Financial Data, December 31, 2018
PRO FORMA CALCULATION OF FFO AND NORMALIZED FFO ATTRIBUTABLE TO THE COMPANY (1) EXHIBIT G AS IF THE MERGER HAD OCCURRED ON OCTOBER 1, 2018 (amounts in thousands, except per share data) For the Three Months Ended December 31, 2018 Sale of OPI ILPT SIR Pro Forma OPI SIR Shares Adjusted SIR Distribution Adjusted Adjustments Pro Forma Net loss attributable to the company $ (57,695) $ (139) $ (57,834) $ (56,946) $ (12,098) $ (69,044) $ (4,744) $ (131,622) Add (less): Depreciation and amortization: Consolidated properties 33,044 — 33,044 36,220 (7,327) 28,893 5,782 67,719 Unconsolidated joint venture properties 1,920 — 1,920 — — — — 1,920 FFO attributable to SIR investment 1,859 (1,859) — — — — — — Loss on impairment of real estate 2,830 — 2,830 — — — — 2,830 Equity in earnings of SIR included in discontinued operations (515) 515 — — — — — — Gain on sale of real estate (3,332) — (3,332) — — — — (3,332) Net income allocated to noncontrolling interest — — — 5,395 (5,395) — — — FFO allocated to noncontrolling interest — — — (7,613) 7,613 — — — Funds from Operations (FFO) attributable to the company (21,889) (1,483) (23,372) (22,944) (17,207) (40,151) 1,038 (62,485) Add (less): Acquisition and transaction related costs (2) 10,695 — 10,695 9,193 — 9,193 — 19,888 Loss on early extinguishment of debt 709 — 709 — — — — 709 Normalized FFO attributable to SIR investment 1,524 (1,524) — — — — — — FFO attributable to SIR investment (1,859) 1,859 — — — — — — Estimated business management incentive fees (3) (16,973) — (16,973) (21,479) — (21,479) — (38,452) Unrealized loss on equity securities (4) 48,229 — 48,229 63,029 — 63,029 — 111,258 Loss on sale of SIR common shares included in discontinued operations (5) 18,665 — 18,665 — — — — 18,665 Normalized Funds from Operations (FFO) attributable to the company $ 39,101 $ (1,148) $ 37,953 $ 27,799 $ (17,207) $ 10,592 $ 1,038 $ 49,583 Weighted average common shares outstanding (basic and diluted) 25,027 23,030 48,057 Per common share amounts (basic and diluted): Net loss attributable to the company $ (2.31) $ (2.74) FFO attributable to the company $ (0.87) $ (1.30) Normalized FFO attributable to the company $ 1.56 $ 1.03 (1) See Definitions of Certain Non-GAAP Financial Measures on page 29 for the definitions of FFO available for common shareholders and Normalized FFO available for common shareholders, a description of why we believe they are appropriate supplemental measures and a description of how we use these measures. (2) Acquisition and transaction related costs include costs incurred in connection with the Merger. (3) Incentive fees under our business management agreement with RMR LLC are payable after the end of each calendar year, are calculated based on common share total return, as defined, and are included in general and administrative expense in NORMALIZED FFO ATTRIBUTABLE TO THE COMPANY TO ATTRIBUTABLE NORMALIZED FFO our consolidated statements of income (loss). In calculating net loss attributable to the company in accordance with GAAP, we recognize estimated business management incentive fee expense, if any, in the first, second and third quarters. Although we recognize this expense, if any, in the first, second and third quarters for purposes of calculating net loss attributable to the company, we do not include such expense in the calculation of Normalized FFO attributable to the company until the fourth quarter, when the amount of the business management incentive fee expense for the calendar year, if any, is determined. No incentive management fee was payable under our business management agreement for the year ended December 31, 2018. As successor to SIR as a result of the Merger, we assumed the obligation to pay SIR's business management incentive fee for 2018. SIR's business management incentive fee for 2018 of $25,817 was paid by us in January 2019 and is reflected in the pro forma calculation of Normalized FFO attributable to the company as shown above in the SIR and SIR Adjusted columns. (4) Unrealized loss on equity securities represents the adjustment required to adjust the carrying value of our and SIR's investment in RMR Inc. common shares to its fair value as of the end of the period in accordance with new GAAP standards effective January 1, 2018. PRO FORMA CALCULATION OF FUNDS FROM OPERATIONS (FFO) AND (FFO) OF FUNDS FROM OPERATIONS CALCULATION PRO FORMA (5) On October 9, 2018, we sold our entire investment in SIR at a loss. Office Properties Income Trust 49 Supplemental Operating and Financial Data, December 31, 2018
SIR SUMMARY CONSOLIDATED AND SAME PROPERTY RESULTS EXHIBIT H (dollars and sq. ft. in thousands) For the Three Months Ended For the Year Ended Consolidated 12/31/2018 12/31/2017 12/31/2018 12/31/2017 Leasable buildings (1) 99 100 99 100 Total sq. ft. (2) 16,538 16,956 16,538 16,956 Percent leased (3) 89.3% 89.8% 89.3% 89.8% Consolidated Property Cash Basis NOI (4) $ 58,509 $ 56,618 $ 231,515 $ 223,510 Consolidated Property Cash Basis NOI % change 3.2% — 3.6% — For the Three Months Ended (5) For the Year Ended (6) Same Property 12/31/2018 12/31/2017 12/31/2018 12/31/2017 Leasable buildings (1) 99 99 95 95 Total sq. ft. (2) 16,538 16,538 15,890 15,890 Percent leased (3) 89.3% 92.1% 88.9% 91.8% Consolidated Property Cash Basis NOI (4) $ 58,506 $ 56,699 $ 222,748 $ 220,425 Consolidated Property Cash Basis NOI % change 3.2% — 1.1% — (1) Includes two leasable land parcels. (2) Subject to changes when space is re-measured or re-configured for tenants. (3) Percent leased includes (i) space being fitted out for 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. (4) See Definitions of Certain Non-GAAP Financial Measures on page 29 for the definition of Consolidated Property Cash Basis NOI, a description of why we believe it is an appropriate supplemental measure and a description of how we use this measure. (5) Based on consolidated properties SIR owned prior to the Merger as of December 31, 2018 and which it had owned continuously since October 1, 2017. (6) Based on consolidated properties SIR owned prior to the Merger as of December 31, 2018 and which it had owned continuously since January 1, 2017. SIR SUMMARY CONSOLIDATED AND SAME PROPERTY RESULTS AND SAME PROPERTY CONSOLIDATED SIR SUMMARY Office Properties Income Trust 50 Supplemental Operating and Financial Data, December 31, 2018
PRO FORMA SUMMARY SAME PROPERTY RESULTS (1) EXHIBIT I (dollars and sq. ft. in thousands) For the Three Months Ended For the Year Ended OPI 12/31/2018 12/31/2017 12/31/2018 12/31/2017 Leasable buildings 91 91 90 90 Total sq. ft. (2) 10,974 10,937 10,904 10,868 Percent leased (3) 94.1 % 95.0% 94.0% 95.0% Consolidated Property Cash Basis NOI (4) $ 38,594 $ 39,920 $ 156,635 $ 154,908 Consolidated Property Cash Basis NOI % change (3.3%) — 1.1% — For the Three Months Ended For the Year Ended SIR 12/31/2018 12/31/2017 12/31/2018 12/31/2017 Leasable buildings (5) 99 99 95 95 Total sq. ft. (2) 16,538 16,538 15,890 15,890 Percent leased (3) 89.3% 92.1% 88.9% 91.8% Consolidated Property Cash Basis NOI (4) $ 58,506 $ 56,699 $ 222,748 $ 220,425 Consolidated Property Cash Basis NOI % change 3.2% — 1.1% — For the Three Months Ended For the Year Ended Pro Forma 12/31/2018 12/31/2017 12/31/2018 12/31/2017 Leasable buildings (5) 190 190 185 185 Total sq. ft. (2) 27,512 27,475 26,794 26,758 Percent leased (3) 91.2 % 93.3% 91.0% 93.1% Consolidated Property Cash Basis NOI (4) $ 97,100 $ 96,619 $ 379,383 $ 375,333 Consolidated Property Cash Basis NOI % change 0.5 % — 1.1% — PRO FORMA SUMMARY SAME PROPERTY RESULTS SAME PROPERTY SUMMARY PRO FORMA (1) OPI same property results for the three months and years ended December 31, 2018 and 2017, are based on consolidated properties owned as of December 31, 2018 and which we had owned continuously since October 1, 2017 and January 1, 2017, respectively. SIR same property results for the three months and years ended December 31, 2018 and 2017, are based on consolidated properties SIR owned prior to the Merger as of December 31, 2018 and which it had owned continuously since October 1, 2017 and January 1, 2017, respectively. Pro forma same property results combine the same property results of OPI and SIR for the three months and years ended December 31, 2018 and 2017, as if the Merger had occurred on October 1, 2017 and January 1, 2017, respectively. (2) Subject to changes when space is re-measured or re-configured for tenants. (3) Percent leased includes (i) space being fitted out for 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. (4) See Definitions of Certain Non-GAAP Financial Measures on page 29 for the definition of Consolidated Property Cash Basis NOI, a description of why we believe it is an appropriate supplemental measure and a description of how we use this measure. (5) Includes two leasable land parcels. Office Properties Income Trust 51 Supplemental Operating and Financial Data, December 31, 2018
SIR OCCUPANCY AND LEASING SUMMARY EXHIBIT J (dollars and sq. ft. in thousands, except per sq. ft. data) As of and for the Three Months Ended 12/31/2018 9/30/2018 6/30/2018 3/31/2018 12/31/2017 Leasable buildings (1) 99 99 100 100 100 Total sq. ft. 16,538 16,538 16,956 16,956 16,956 Square feet leased 14,771 14,843 14,843 15,046 15,234 Percentage leased 89.3% 89.8% 87.5% 88.7% 89.8% Leasing Activity (Sq. ft.): (2) New leases — — — — 113 Renewals 24 72 2 55 287 Total 24 72 2 55 400 % Change in GAAP Rent: (3) New leases —% —% —% —% 12.9% Renewals 4.1% 39.8% 14.9% 10.7% 25.7% Weighted average (by square feet) 4.1% 39.8% 14.9% 10.7% 21.9% Leasing Costs and Concession Commitments: (4) New leases $ — $ — $ — $ — $ 7,519 Renewals 523 191 2 335 6,229 Total $ 523 $ 191 $ 2 $ 335 $ 13,748 Leasing Costs and Concession Commitments per Sq. Ft.: (4) New leases $ — $ — $ — $ — $ 66.54 Renewals $ 21.62 $ 2.65 $ 1.00 $ 6.09 $ 21.70 SIR OCCUPANCY AND LEASING SUMMARY AND LEASING SUMMARY SIR OCCUPANCY Total $ 21.62 $ 2.65 $ 1.00 $ 6.09 $ 34.37 Weighted Average Lease Term by Sq. Ft. (Years): New leases — — — — 11.0 Renewals 8.0 7.6 5.7 4.0 4.9 Total 8.0 7.6 5.7 4.0 6.6 Leasing Costs and Concession Commitments per Sq. Ft. per Year: (4) New leases $ — $ — $ — $ — $ 6.05 Renewals $ 2.70 $ 0.35 $ 0.18 $ 1.52 $ 4.43 Total $ 2.70 $ 0.35 $ 0.18 $ 1.52 $ 5.21 (1) Includes two leasable land parcels. (2) Rentable square feet is subject to changes when space is re-measured or re-configured for tenants. (3) Percent difference in prior rents charged for same space or, in the case of space acquired vacant, market rental rates for similar space in the building at the date of acquisition. Rents include estimated recurring expense reimbursements paid to us, exclude lease value amortization and are net of lease concessions. (4) Includes commitments made for leasing expenditures and concessions, such as tenant improvements, leasing commissions, tenant reimbursements and free rent. The above leasing summary is based on leases entered during the periods indicated. Office Properties Income Trust 52 Supplemental Operating and Financial Data, December 31, 2018
PRO FORMA LEASING SUMMARY EXHIBIT K (dollars and sq. ft. in thousands, except per sq. ft. data) For the Three Months Ended December 31, 2018 OPI SIR Pro Forma Leasing Activity (Sq. ft.): (1) New leases 117 — 117 Renewals 407 24 431 Total 524 24 548 % Change in GAAP Rent: (2) New leases 1.8% —% 1.8% Renewals (9.9%) 4.1% (9.4%) Weighted average (by square feet) (8.2%) 4.1% (7.8%) Leasing Costs and Concession Commitments: (3) New leases $ 5,334 $ — $ 5,334 Renewals 10,514 523 11,037 PRO FORMA LEASING SUMMARY LEASING SUMMARY PRO FORMA Total $ 15,848 $ 523 $ 16,371 Leasing Costs and Concession Commitments per Sq. Ft.: (3) New leases $ 45.75 $ — $ 45.75 Renewals $ 25.82 $ 21.62 $ 25.58 Total $ 30.25 $ 21.62 $ 29.87 Weighted Average Lease Term by Sq. Ft. (Years): New leases 7.0 — 7.0 Renewals 7.6 8.0 7.7 Total 7.5 8.0 7.5 Leasing Costs and Concession Commitments per Sq. Ft. per Year: (3) New leases $ 6.51 $ — $ 6.51 Renewals $ 3.38 $ 2.70 $ 3.34 Total $ 4.03 $ 2.70 $ 3.97 (1) Rentable square feet is subject to changes when space is re-measured or re-configured for tenants. (2) Percent difference in prior rents charged for same space or, in the case of space acquired vacant, market rental rates for similar space in the building at the date of acquisition. Rents include estimated recurring expense reimbursements paid to us or SIR, as the case may be, exclude lease value amortization and are net of lease concessions. (3) Includes commitments made for leasing expenditures and concessions, such as tenant improvements, leasing commissions, tenant reimbursements and free rent. The above leasing summary is based on leases entered during the periods indicated. Office Properties Income Trust 53 Supplemental Operating and Financial Data, December 31, 2018
SIR CAPITAL EXPENDITURES SUMMARY EXHIBIT L (dollars in thousands) For the Three Months Ended 12/31/2018 9/30/2018 6/30/2018 3/31/2018 12/31/2017 Tenant improvements (1) $ 1,109 $ 3,318 $ 6,671 $ 1,734 $ — Leasing costs (2) 893 211 308 571 3,160 Building improvements (3) 1,261 1,464 660 385 1,330 Recurring capital expenditures 3,263 4,993 7,639 2,690 4,490 Development, redevelopment and other activities (4) 392 950 1,067 72 462 Total capital expenditures $ 3,655 $ 5,943 $ 8,706 $ 2,762 $ 4,952 (1) Tenant improvements include capital expenditures used to improve tenants' space or amounts paid directly to tenants to improve their space. (2) Leasing costs include leasing related costs, such as brokerage commissions and tenant inducements. (3) Building improvements generally include expenditures to replace obsolete building components and expenditures that extend the useful life of existing assets. (4) Development, redevelopment and other activities generally include (i) capital expenditures that are identified at the time of a property acquisition and incurred within a short time period after acquiring the property, and (ii) capital expenditure projects that reposition a property or result in new sources of revenue. SIR CAPITAL EXPENDITURES SUMMARY SIR CAPITAL Office Properties Income Trust 54 Supplemental Operating and Financial Data, December 31, 2018
