10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2018
or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-34364

OFFICE PROPERTIES INCOME TRUST

(Exact Name of Registrant as Specified in Its Charter) 

Maryland (State of Organization) 26-4273474 (IRS Employer Identification No.)

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

(Address of Principal Executive Offices)                                                       (Zip Code)

Registrant’s Telephone Number, Including Area Code 617-219-1440

Securities registered pursuant to Section 12(b) of the Act:

Title Of Each Class	Name Of Each Exchange On Which Registered
Common Shares of Beneficial Interest	The Nasdaq Stock Market LLC
5.875% Senior Notes due 2046	The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒  No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐   No ☒

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ☒

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

Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
	Emerging growth company ☐

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

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

The aggregate market value of the voting common shares of beneficial interest, $.01 par value, or common shares, of the registrant held by non-affiliates was approximately $1.6 billion based on the $63.40 closing price per common share on The Nasdaq Stock Market LLC on June 29, 2018. For purposes of this calculation, an aggregate of 337,101 common shares held directly by, or by affiliates of, the trustees and the executive officers of the registrant have been included in the number of common shares held by affiliates.

Number of the registrant’s common shares outstanding as of February 25, 2019: 48,082,903.

References in this Annual Report on Form 10-K to the Company, OPI, we, us or our mean Office Properties Income Trust and its consolidated subsidiaries unless otherwise expressly stated or the context indicates otherwise. All impacted amounts and share information included in this Annual Report on Form 10-K have been retroactively adjusted for the reverse share split that resulted in the conversion of every four of our common shares into one of our common shares effective December 31, 2018, as if such 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.

DOCUMENTS INCORPORATED BY REFERENCE

Certain information required by Items 10, 11, 12, 13 and 14 of Part III of this Annual Report on Form 10-K is incorporated by reference to our definitive Proxy Statement for the 2019 Annual Meeting of Shareholders, to be filed with the Securities and Exchange Commission within 120 days after the fiscal year ended December 31, 2018.

WARNING CONCERNING FORWARD LOOKING STATEMENTS

THIS ANNUAL REPORT ON FORM 10-K 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 WITH SELECT INCOME REIT, OR SIR,

• 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,

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• 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, 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,

• 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

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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,

• 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,

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• 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 SIR MERGER AND THEREFORE MAY NOT REALIZE THE BENEFITS WE EXPECT FROM THE SIR 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 ELSEWHERE IN THIS ANNUAL REPORT ON FORM 10-K OR IN OUR OTHER FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, OR SEC, INCLUDING UNDER THE CAPTION “RISK FACTORS”, OR INCORPORATED HEREIN OR 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.

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STATEMENT CONCERNING LIMITED LIABILITY

THE AMENDEDAND RESTATED DECLARATION OF TRUST ESTABLISHING OFFICE PROPERTIES INCOME TRUST, DATED JUNE 8, 2009, AS AMENDED, AS FILED WITH THE STATE DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND, PROVIDES THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF OFFICE PROPERTIES INCOME TRUST SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, OFFICE PROPERTIES INCOME TRUST. ALL PERSONS DEALING WITH OFFICE PROPERTIES INCOME TRUST IN ANY WAY SHALL LOOK ONLY TO THE ASSETS OF OFFICE PROPERTIES INCOME TRUST FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

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OFFICE PROPERTIES INCOME TRUST

2018FORM 10-K ANNUAL REPORT

Table of Contents

		Page
	Part I
Item 1.	Business	1
Item 1A.	Risk Factors	28
Item 1B.	Unresolved Staff Comments	48
Item 2.	Properties	48
Item 3.	Legal Proceedings	50
Item 4.	Mine Safety Disclosures	50
	Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	50
Item 6.	Selected Financial Data	51
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	52
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	72
Item 8.	Financial Statements and Supplementary Data	75
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	75
Item 9A.	Controls and Procedures	75
Item 9B.	Other Information	75
	Part III
Item 10.	Directors, Executive Officers and Corporate Governance	76
Item 11.	Executive Compensation	76
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	76
Item 13.	Certain Relationships and Related Transactions, and Director Independence	76
Item 14.	Principal Accountant Fees and Services	76
	Part IV
Item 15.	Exhibits and Financial Statement Schedules	77
Item 16.	Form 10-K Summary	79
	Signatures

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PART I

Item 1. Business

The Company

We are a real estate investment trust, or REIT, formed in 2009 under Maryland law. As of December 31, 2018, our wholly owned properties were comprised of 247 buildings and we had a noncontrolling ownership interest in three buildings through two unconsolidated joint ventures in which we own 50% and 51% interests. As of December 31, 2018, our consolidated properties have an undepreciated carrying value of approximately $3.9 billion and a depreciated carrying value of approximately $3.6 billion. Our consolidated properties have approximately 31.9 million rentable square feet. As of December 31, 2018, our properties were leased to approximately 518 different tenants, with a weighted average remaining lease term (based on annualized rental income) of approximately 5.7 years. The U.S. Government is our largest tenant by annualized rental income and represents approximately 25.6% of our annualized rental income as of December 31, 2018.

Our principal executive offices are located at Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458-1634, and our telephone number is (617) 219-1440.

Merger with Select Income REIT

On September 14, 2018, we and our wholly owned subsidiary, GOV MS REIT, or Merger Sub, entered into an Agreement and Plan of Merger, or the SIR Merger Agreement, with Select Income REIT, or SIR, a REIT that owned properties that are primarily net leased to single tenants, pursuant to which SIR merged with and into Merger Sub, with Merger Sub continuing as the surviving entity in the merger, or the SIR Merger. The aggregate transaction value, based on the closing price of our common shares on December 31, 2018 of $6.87 per share (prior to the Reverse Share Split, as defined below), was approximately $2.4 billion, excluding closing costs of approximately $27.5 million ($14.5 million of which was paid by us and $13.0 million of which was paid by SIR) and including the repayment or assumption of $1.7 billion of SIR debt. Pursuant to the terms of the SIR Merger Agreement, SIR shareholders received 1.04 of our newly issued common shares for each common share of SIR, with cash paid in lieu of fractional shares. Later on December 31, 2018, Merger Sub merged with and into us, with us as the surviving entity and we changed our name to "Office Properties Income Trust." Effective January 1, 2019, the ticker symbol for our common shares, which continue to be traded on The Nasdaq Stock Market LLC, or Nasdaq, was changed to "OPI." As a result of the SIR Merger, we acquired SIR's property portfolio of 99 buildings with approximately 16.5 million rentable square feet. The SIR Merger and the other transactions contemplated by the SIR Merger Agreement, including the Secondary Sale and the ILPT Distribution (each as defined below), are collectively referred to herein as the SIR Transactions.

As a condition of the SIR Merger, on October 9, 2018, we sold all of the 24,918,421 common shares of SIR we then owned, or the Secondary Sale, in an underwritten public offering at a price of $18.25 per share, raising net proceeds of $435.1 million after deducting underwriting discounts and offering expenses. We used the net proceeds from the Secondary Sale to repay amounts outstanding under our revolving credit facility.

In addition, as a condition of the SIR Merger, on December 27, 2018, SIR paid a pro rata distribution to SIR's shareholders of record as of the close of business on December 20, 2018 of all 45,000,000 common shares of beneficial interest of Industrial Logistics Properties Trust, or ILPT, that SIR owned, or the ILPT Distribution.

Following completion of the SIR Merger and the other SIR Transactions, on December 31, 2018, we effected a reverse share split of our common shares, or the Reverse Share Split, pursuant to which every four of our common shares issued and outstanding as of the effective time of the Reverse Share Split were converted and reclassified into one of our common shares. The Reverse Share Split reduced the number of our issued and outstanding common shares from 192,331,612 to 48,082,903.

For more information regarding the SIR Merger and the other SIR Transactions, see Notes 1, 5, 7, 12 and 13 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

Acquisition of First Potomac Realty Trust

On October 2, 2017, we completed our acquisition of First Potomac Realty Trust, or FPO, pursuant to merger transactions, as a result of which we acquired 72 buildings with approximately 6.0 million rentable square feet, and three buildings with approximately 0.4 million rentable square feet owned by joint ventures in which we acquired FPO's 50% and 51% interests, or collectively, the FPO Transaction. The aggregate value we paid for FPO was approximately $1.4 billion, including approximately $651.7 million in cash to FPO shareholders, the repayment of approximately $483.0 million of FPO

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corporate debt, the assumption of approximately $167.5 million of FPO mortgage debt; this amount excludes the $82.0 million of mortgage debt that encumbers the two joint venture properties and the payment of certain transaction fees and expenses, net of FPO cash on hand. See Notes 5 and 11 to the Notes to our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K for more information regarding the FPO Transaction and our related financing activities.  

Our Business Strategy

Our business plan is to focus on owning, operating and leasing office buildings leased to single tenants and multi-tenant buildings leased to tenants with high credit quality characteristics such as governmental entities. We seek to maintain our properties, extend or enter new leases as leases approach expiration as well as enter new leases for our vacant space and selectively acquire additional properties.

As our current lease expirations approach, we will attempt to renew our leases with existing tenants or to enter leases with new tenants, in both circumstances at rents equal to or higher than the rents we now receive. Our ability to renew leases with our existing tenants or to enter new leases with new tenants and the rents we are able to charge will depend in large part upon market conditions which are generally beyond our control. For our buildings that are leased to single tenants, because of the capital improvements in which many of these tenants have invested and because many of our properties that are leased to single tenants appear to have strategic importance to the tenants’ businesses, we believe that there is a greater likelihood that these tenants will renew or extend their leases when they expire as compared to tenants that have not invested capital into a property or where the property location may not be strategic to its business. However, we also believe that if a building previously occupied by a single tenant becomes vacant, it may take longer and cost more to locate a replacement tenant than compared to space for lease in a multi-tenant property because in place improvements designed specifically for the needs of the prior single tenant may not suit a replacement tenant’s needs.

In addition to our current disposition program, which is further discussed below, in the future, we may also selectively dispose of properties when we determine our continued ownership will not achieve desired returns or if we determine we have uses for the sale proceeds which will generate higher long term returns or meet our other business objectives.

Our Growth Strategy

Our internal growth strategy is to attempt to increase the rents we receive from our current properties. To achieve rent increases we may invest in our properties to make improvements requested by existing tenants or to induce lease renewals or new tenant leases when our current leases expire or vacant space is leased. However, as noted above, our ability to maintain or increase the rents we receive from our current properties will depend in large part upon market conditions which are beyond our control.

Our external growth strategy is defined by our investment policies, including our acquisition, disposition and financing policies. 

Our Investment Policies

Our investment objectives include increasing cash flow by acquiring properties that produce yields that are greater than our cost of capital in order to increase per share distributions to our shareholders. To achieve these objectives, we seek to: (1) maintain a strong capital base of shareholders’ equity; (2) invest in institutional quality properties with high credit quality tenants; (3) use moderate debt leverage to fund additional investments; (4) when market conditions permit, refinance debt with additional equity or long term debt; and (5) pursue diversification so that our cash flow from operations comes from diverse properties and tenants.

Acquisition Policies. We currently intend to focus our investments in U.S. office properties primarily in markets we believe have strong economic fundamentals to support growth, including (1) properties leased to single tenants that are strategic to the tenants and which may include built-to-suit properties, corporate headquarters and buildings where tenants have invested meaningful capital, with a minimum remaining lease term of at least seven years and (2) properties leased to government tenants, including single and multi-tenant buildings, with a focus on agencies that have high security needs or a mission strategic to the buildings' locations. We also expect to seek investments primarily in first generation buildings where we believe there is a reasonably high likelihood of renewing the tenants in place and where we expect ongoing capital needs to be relatively modest when compared to older buildings.

We expect to use the extensive nationwide resources of our manager, The RMR Group LLC, or RMR LLC, to locate and manage the acquisition of such properties. We expect most of our future wholly owned acquisitions will be office

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properties; however, we may consider acquiring other types of properties, including properties which have a mix of retail or housing uses. We also expect to further diversify our sources of rents, which we expect would improve the security of our revenues.

In implementing our acquisition strategy, we consider a range of factors relating to proposed property purchases including:

• our cost of capital compared to the projected returns we may realize by owning the property;

• the pricing of comparable properties as evidenced by recent arm’s length market sales;

• the strategic fit of the property with the rest of our properties and portfolio;

• the location of the property;

• the type of property (e.g., single tenant or multi-tenant, etc.);

• the growth, tax and regulatory environments of the market in which the property is located;

• the occupancy and demand for similar properties in the same or nearby markets;

• the current or potential market position of the property;

• the historic and projected rents received and likely to be received from the property;

• the historic and expected operating expenses, including real estate taxes, incurred and expected to be incurred at the property;

• the remaining term of the lease(s) at the property and other lease terms;

• the industry(ies) in which the tenant(s) operate;

• the experience and credit quality of the property’s tenant(s);

• the likelihood of the tenant(s) renewing at lease expiration;

• the current and expected future space utilization at the property by its tenant(s);

• the construction quality, physical condition, age and design of the property;

• expected capital expenditures that may be needed at the property;

• the use and size of the property;

• the price at which the property may be acquired;

• the estimated replacement cost of the property; and

• the existence of alternative sources, uses or needs for our capital, including our debt leverage.

Other Acquisitions. We prefer wholly owned investments in fee interests. However, we may invest in leaseholds, joint ventures, mortgages and other real estate interests. In connection with the FPO Transaction, we acquired FPO's 50% and 51% interests in two unconsolidated joint ventures. In the future, we may invest in or enter into additional real estate joint ventures if we conclude that by doing so we may benefit from the participation of co-venturers, or that our opportunity to participate in the investment is contingent on the use of a joint venture structure or that pre-existing joint venture arrangements may be part of an acquisition we wish to make, such as the FPO Transaction. We may invest in participating, convertible or other types of mortgages if we conclude that by doing so, we may benefit from the cash flow or appreciation in the value of a property which is not available for purchase.

We have in the past considered, and may in the future consider, the possibility of entering into mergers or strategic combinations with other companies. The principal goals of any such transaction will be to increase our cash flow from operations and to further diversify our revenue sources.

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We have no policies which specifically limit the percentage of our assets that may be invested in any individual property, in any one type of property, in properties managed by or leased to any one entity, in properties managed by or leased to any affiliated group of entities or in securities of one or more other persons.

Our Board of Trustees may change our acquisition policies without a vote of, or notice to, our shareholders.

Disposition Policies.We generally consider ourselves to be a long term owner of properties to generate long term earnings from our properties. However, in addition to our current disposition program, we expect to sell properties, from time to time, in order to recycle capital into properties that we believe have better long term earnings potential. We make disposition decisions based on a number of factors including, but not limited to, the following:

• the estimated sales price or value we may receive by selling the property;

• our intended use of the proceeds we may realize from the sale of a property;

• our evaluation of future rent for the property relative to leasing costs;

• the strategic fit of the property or investment with the rest of our portfolio;

• the capital required to maintain the property;

• the remaining length of the current leases and its (their) other terms;

• our expectation regarding tenant lease renewals or the likelihood of finding (a) replacement tenant(s) if the property has significant vacancies or is likely to become substantially vacant;

• the potential costs associated with finding replacement tenant(s), including tenant improvements, leasing commissions and concessions, the cost to operate the property while vacant and building improvement capital, as compared to our projected returns from future rents;

• the occupancy of the property;

• the future expected space utilization of the tenant(s) and the potential impact that may have on occupancy at the property;

• whether the property's tenant(s) is current on its lease obligation(s);

• our evaluation of the property's tenant(s) ability to pay its contractual rents;

• the tax implications to us and our shareholders of any proposed dispositions;

• our financial position and needs from time to time; and

• the existence of alternative sources, uses or needs for capital, including our debt leverage.

During the year ended December 31, 2018, we sold 19 buildings with 2.2 million rentable square feet for approximately $320.3 million, in aggregate, excluding closing costs. Since January 1, 2019, we have sold an additional 34 buildings with 1.6 million rentable square feet for approximately $198.5 million, in aggregate, excluding closing costs. In addition, we are currently marketing 34 buildings, including properties acquired in the SIR Merger, containing approximately 5.3 million square feet that we expect to generate more than $700.0 million of gross proceeds. We expect to substantially complete these dispositions by mid-year 2019 and turn our attention to accretively growing our property portfolio. We cannot be sure we will sell any properties we are marketing for prices in excess of their carrying values.

Our Financing Policies

To qualify for taxation as a REIT under the United States Internal Revenue Code of 1986, as amended, or the IRC, we must distribute at least 90% of our annual REIT taxable income (excluding net capital gains). Accordingly, we generally will not be able to retain sufficient cash to fund our operations, repay our debts, invest in our properties and fund acquisitions and

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development or redevelopment efforts. Instead, we expect to repay our debts, invest in our properties and fund acquisitions and development or redevelopment efforts with borrowings under our revolving credit facility, proceeds from equity or debt securities we may issue or retained cash from operations that may exceed our distributions paid. To the extent we obtain additional debt financing, we may do so on an unsecured or a secured basis. We may seek to obtain lines of credit or to issue securities senior to our common shares, including preferred shares or debt securities, which may be convertible into our common shares or be accompanied by warrants to purchase our common shares. We may also finance acquisitions by assuming debt or through the issuance of equity or other securities. The proceeds from any of our financings may be used to pay distributions, to provide working capital, to refinance existing indebtedness or to finance acquisitions and expansions of existing or new properties.

Although there are no limitations in our organizational documents on the type or amount of indebtedness we may incur, the borrowing limitations established by the covenants in the credit agreement governing our revolving credit facility and term loans, or our credit agreement, and our senior unsecured notes indentures and their supplements currently restrict our ability to incur indebtedness and require us to maintain certain financial ratios. However, we may seek to amend these covenants or seek replacement financings with less restrictive covenants. In the future, we may decide to seek changes in the financial covenants which currently restrict our debt leverage based upon then current economic conditions, the relative availability and costs of debt versus equity capital and our need for capital to take advantage of acquisition opportunities or otherwise.

We currently have a $750.0 million unsecured revolving credit facility, or our revolving credit facility, that we use for working capital and general business purposes, including to fund acquisitions on an interim basis until we may refinance with equity or term debt. In some instances, we may assume outstanding mortgage debt in connection with our acquisitions or place new mortgages on properties we own. For more information regarding our financing sources and activities, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Our Investment and Financing Liquidity and Resources” of this Annual Report on Form 10-K.

Generally, we intend to manage our leverage in a way that may allow us to maintain “investment grade” ratings from nationally recognized statistical rating organizations. As a result of the FPO Transaction and the SIR Merger, our leverage increased through our assumption and issuance of additional debt. As noted above, we have or intend to dispose of certain assets in order to reduce our leverage. Alternatively, we may sell some or all of the approximately 2.8 million shares of class A common stock of RMR Inc. that we own, though any such sale would be subject to the sole discretion and approval of our Board of Trustees. However, we cannot be sure that we will be successful in these efforts or be able to maintain our investment grade ratings.

Our Board of Trustees may change our financing policies at any time without a vote of, or notice to, our shareholders.

Other Information

Employees. We have no employees. Services which would otherwise be provided to us by employees are provided by RMR LLC and by our Managing Trustees and officers. As of December 31, 2018, RMR LLC had more than 600 full time employees in its headquarters and regional offices located throughout the United States.

OurManager. RMR Inc. is a holding company and substantially all of its business is conducted by its majority owned subsidiary, RMR LLC.  One of our Managing Trustees, Adam D. Portnoy, as the sole trustee of ABP Trust, is the controlling shareholder of RMR Inc. and is a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR LLC. David M. Blackman, our other Managing Trustee and our President and Chief Executive Officer, is also an officer and employee of RMR LLC. Our day to day operations are conducted by RMR LLC. RMR LLC originates and presents investment and divestment opportunities to our Board of Trustees and provides management and administrative services to us. RMR LLC has a principal place of business at Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458-1634, and its telephone number is (617) 796-8390. RMR LLC or its subsidiaries also acts as the manager to Hospitality Properties Trust, or HPT, ILPT, Senior Housing Properties Trust, or SNH, and Tremont Mortgage Trust, or TRMT, and provides management and other services to other private and public companies, including Five Star Senior Living Inc., or Five Star, TravelCenters of America LLC, or TA, and Sonesta International Hotels Corporation, or Sonesta. As of the date of this Annual Report on Form 10-K, the executive officers of RMR LLC are: Adam Portnoy, President and Chief Executive Officer; David Blackman, Executive Vice President; Jennifer B. Clark, Executive Vice President, General Counsel and Secretary; Matthew P. Jordan, Executive Vice President, Chief Financial Officer and Treasurer; John G. Murray, Executive Vice President; and Andrew J. Rebholz, Executive Vice President. Our Chief Financial Officer and Treasurer, Jeffrey C. Leer, is a Senior Vice President of RMR LLC. Messrs. Blackman and Leer and other officers of RMR LLC also serve as officers of other companies to which RMR LLC or its subsidiaries provide management services.

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Environmental Matters. Ownership of real estate is subject to risks associated with environmental hazards. Under various laws, owners as well as tenants and operators of real estate may be required to investigate and clean up or remove hazardous substances present at or migrating from properties they own, lease or operate and may be held liable for property damage or personal injuries that result from hazardous substances. These laws also expose us to the possibility that we may become liable to government agencies or third parties for costs and damages they incur in connection with hazardous substances. In addition, these laws also impose various requirements regarding the operation and maintenance of properties and recordkeeping and reporting requirements relating to environmental matters that require us or the tenants of our properties to incur costs to comply with.

It is our usual practice to obtain and review “Phase I” environmental surveys prior to our acquisition of properties in order to assess the possible presence of and cost of removing hazardous substances. Certain of our buildings contain asbestos. We believe any asbestos in our buildings is contained in accordance with applicable laws and regulations, and we have no current plans to remove it. If we remove the asbestos or renovate or demolish the affected properties, certain environmental regulations govern the manner in which the asbestos must be handled and removed, and we could incur substantial costs complying with such regulations.

We do not believe that there are environmental conditions at any of our properties that have had or will have a material adverse effect on us. However, we cannot be sure that conditions are not present at our properties or that costs we may be required to incur in the future to remediate contamination will not have a material adverse effect on our business or financial condition or results of operations. Moreover, our tenants may not have sufficient resources to pay environmental liabilities.

When major weather or climate-related events, such as hurricanes, floods or wildfires, occur near our properties, our tenants may need to suspend operations of the impacted properties until the event has ended and the property is then ready for operation. We or the tenants of our properties may incur significant costs and losses as a result of these activities, both in terms of operating, preparing and repairing our properties in anticipation of, during and after a severe weather or climate-related event and in terms of potential lost business due to the interruption in operating our properties. Our insurance and our tenants’ insurance may not adequately compensate us or them for these costs and losses.

Concerns about climate change have resulted in various treaties, laws and regulations that are intended to limit carbon emissions and address other environmental concerns. These and other laws may cause energy or other costs at our properties to increase. We do not expect the direct impact of these increases to be material to our results of operations, because the increased costs either would be the responsibility of our tenants directly or in the longer term, passed through and paid by tenants of our properties. Although we do not believe it is likely in the foreseeable future, laws enacted to mitigate climate change may make some of our buildings obsolete or cause us to make material investments in our properties, which could materially and adversely affect our financial condition or the financial condition of our tenants and their ability to pay rent to us. For more information regarding climate change and other environmental matters and their possible adverse impact on us, see "Risk Factors—Risks Related to Our Business—Ownership of real estate is subject to environmental risks and liabilities," "Risk Factors—Risks Related to Our Business—Ownership of real estate is subject to risks from adverse weather and climate events" and "Management's Discussion and Analysis of Financial Condition and Results of Operations—Impact of Climate Change."

Sustainability. In reaction to the Energy Policy Act of 2005, the U.S. Government has instituted “green lease” policies which include the “Promotion of Energy Efficiency and Use of Renewable Energy” as one of the factors it considers when leasing property. The Energy Independence and Security Act of 2007 also allows the General Services Administration, or GSA, to give preference to buildings for lease that have received an “ENERGY STAR” certification. The ENERGY STAR program is a joint program of the U.S. Environmental Protection Agency and the U.S. Department of Energy which is focused on promoting energy efficient products and buildings.  Buildings that reach a specified level of energy efficiency may receive the ENERGY STAR recognition for a period of 12 months before the requirement that they be recertified.  Furthermore, certain buildings are not eligible for ENERGY STAR certification.  For example, lab uses, medical office buildings and buildings less than 50% occupied cannot be ENERGY STAR certified.  For the year ended December 31, 2018, 73 of our buildings with an aggregate of 9.8 million rentable square feet (30.8% and 32.1% of our eligible buildings and eligible rentable square feet, respectively) were ENERGY STAR certified.

The U.S. Government’s “green lease” policies also permit government tenants to require leadership in energy and environmental design, or LEED®, designation in selecting new premises or renewing leases at existing premises. The LEED® designation program is administered by the U.S. Green Building Council, a nonprofit organization focused on promoting environmental sustainability for the built environment.  Buildings that reach specified levels of sustainability may receive a LEED® designation. As of December 31, 2018, 29 of our buildings with an aggregate of 4.2 million rentable square feet (12.2% and 13.8% of our total buildings and total rentable square feet, respectively) were LEED®designated.

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In an effort to reduce the effects of any increased energy costs in the future, we continuously study ways to improve the energy efficiency at all of our properties. Our property manager, RMR LLC, is a member of the “ENERGY STAR” partner program, and a member of the U.S. Green Building Council. We believe our effort to obtain additional ENERGY STAR labels and/or LEED® designations and manage our properties in a sustainable manner benefit our business while also bettering the environment. We are also monitoring the U.S. presidential administration policies and practices for potential changes to "green lease" policies. For more information, see “Risk Factors—Risks Related to Our Business—The U.S. Government’s “green lease” policies may adversely affect us.”

Competition. Investing in and operating real estate properties is a highly competitive business. We compete against publicly traded and private REITs, numerous financial institutions, individuals and public and private companies, including entities funded by both domestic and foreign capital, who are actively engaged in this business. Some of our competitors may have greater financial and other resources, or lower costs of capital than us. Also, we compete for investments based on a number of factors including purchase prices, closing terms, underwriting criteria and our reputation. Our ability to successfully compete is also materially impacted by the availability and cost of capital to us. We do not believe we have a dominant position in any of the geographic markets in which we operate, but some of our competitors are dominant in selected markets. We believe the experience and abilities of our management and our manager, the quality of our properties, the diversity and credit qualities of our tenants, and the structure of our leases may afford us some competitive advantages and allow us to operate our business successfully despite the competitive nature of our business. For additional information about competition and other risks associated with our business, please see “Risk Factors” in this Annual Report on Form 10-K.

Insurance. Wegenerally have insurance coverage for our properties and the operations conducted on them, including for casualty, liability, fire and extended coverage. We participate with other companies to which RMR LLC or its subsidiaries provide management services in a combined property insurance program through Affiliates Insurance Company, or AIC, and with respect to which AIC is an insurer or a reinsurer of certain coverage amounts. For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Related Person Transactions” and Note 7 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

Other Matters. Legislative and regulatory developments may occur at the federal, state and local levels that have direct or indirect impact on the ownership, leasing and operation of our properties. We may need to make expenditures, to the extent these costs are not paid by our tenants, due to changes in government regulations, or the application of such regulations to our properties, including the Americans with Disabilities Act, fire and safety regulations, building codes, land use regulations or environmental regulations on containment, abatement or removal.

Segment Information. As of December 31, 2018, we had one operating segment: direct ownership of real estate properties. For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

Internet Website. Our internet website address is www.opireit.com. Copies of our governance guidelines, code of business conduct and ethics, or Code of Conduct, and the charters of our audit, compensation and nominating and governance committees are posted on our website and also may be obtained free of charge by writing to our Secretary, Office Properties Income Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts, 02458-1634 or at our website. We also have a policy outlining procedures for handling concerns or complaints about accounting, internal accounting controls or auditing matters and a governance hotline accessible on our website that shareholders can use to report concerns or complaints about accounting, internal accounting controls or auditing matters or violations or possible violations of our Code of Conduct. We make available, free of charge, on our website, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, as soon as reasonably practicable after these forms are filed with, or furnished to, the Securities and Exchange Commission, or SEC. Security holders may send communications to our Board of Trustees or individual Trustees by writing to the party for whom the communication is intended at c/o Secretary, Office Properties Income Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458-1634 or by email at secretary@opireit.com. Our website address is included several times in this Annual Report on Form 10-K as textual references only and the information in our website is not incorporated by reference into this Annual Report on

Form 10-K.

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following summary of material United States federal income tax considerations is based on existing law, and is limited to investors who own our shares as investment assets rather than as inventory or as property used in a trade or business. The summary does not discuss all of the particular tax considerations that might be relevant to you if you are subject to special rules under federal income tax law, for example if you are:

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• a bank, insurance company or other financial institution;

• a regulated investment company or REIT;

• a subchapter S corporation;

• a broker, dealer or trader in securities or foreign currencies;

• a person who marks-to-market our shares for U.S. federal income tax purposes;

• a U.S. shareholder (as defined below) that has a functional currency other than the U.S. dollar;

• a person who acquires or owns our shares in connection with employment or other performance of services;

• a person subject to alternative minimum tax;

• a person who acquires or owns our shares as part of a straddle, hedging transaction, constructive sale transaction, constructive ownership transaction or conversion transaction, or as part of a “synthetic security” or other integrated financial transaction;

• a person who owns 10% or more (by vote or value, directly or constructively under the IRC) of any class of our shares;

• a U.S. expatriate;

• a non-U.S. shareholder (as defined below) whose investment in our shares is effectively connected with the conduct of a trade or business in the United States;

• a nonresident alien individual present in the United States for 183 days or more during an applicable taxable year;

• a “qualified shareholder” (as defined in Section 897(k)(3)(A) of the IRC);

• a “qualified foreign pension fund” (as defined in Section 897(l)(2) of the IRC) or any entity wholly owned by one or more qualified foreign pension funds;

• a person subject to special tax accounting rules as a result of their use of applicable financial statements (within the meaning of Section 451(b)(3) of the IRC); or

• except as specifically described in the following summary, a trust, estate, tax-exempt entity or foreign person.

The sections of the IRC that govern the federal income tax qualification and treatment of a REIT and its shareholders are complex. This presentation is a summary of applicable IRC provisions, related rules and regulations, and administrative and judicial interpretations, all of which are subject to change, possibly with retroactive effect. Future legislative, judicial or administrative actions or decisions could also affect the accuracy of statements made in this summary. We have not received a ruling from the U.S. Internal Revenue Service, or the IRS, with respect to any matter described in this summary, and we cannot be sure that the IRS or a court will agree with all of the statements made in this summary. The IRS could, for example, take a different position from that described in this summary with respect to our acquisitions, operations, valuations, restructurings or other matters, which, if a court agreed, could result in significant tax liabilities for applicable parties. In addition, this summary is not exhaustive of all possible tax considerations, and does not discuss any estate, gift, state, local or foreign tax considerations. For all these reasons, we urge you and any holder of or prospective acquiror of our shares to consult with a tax advisor about the federal income tax and other tax consequences of the acquisition, ownership and disposition of our shares. Our intentions and beliefs described in this summary are based upon our understanding of applicable laws and regulations that are in effect as of the date of this Annual Report on Form 10-K. If new laws or regulations are enacted which impact us directly or indirectly, we may change our intentions or beliefs.

Your federal income tax consequences generally will differ depending on whether or not you are a “U.S. shareholder.” For purposes of this summary, a “U.S. shareholder” is a beneficial owner of our shares that is:

• an individual who is a citizen or resident of the United States, including an alien individual who is a lawful permanent resident of the United States or meets the substantial presence residency test under the federal income tax laws;

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• an entity treated as a corporation for federal income tax purposes that is created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

• an estate the income of which is subject to federal income taxation regardless of its source; or

• a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or, to the extent provided in Treasury regulations, a trust in existence on August 20, 1996 that has elected to be treated as a domestic trust;

• whose status as a U.S. shareholder is not overridden by an applicable tax treaty. Conversely, a “non-U.S. shareholder” is a beneficial owner of our shares that is notan entity (or other arrangement) treated as a partnership for federal income tax purposes and is not a U.S. shareholder.

If any entity (or other arrangement) treated as a partnership for federal income tax purposes holds our shares, the tax treatment of a partner in the partnership generally will depend upon the tax status of the partner and the activities of the partnership. Any entity (or other arrangement) treated as a partnership for federal income tax purposes that is a holder of our shares and the partners in such a partnership (as determined for federal income tax purposes) are urged to consult their own tax advisors about the federal income tax consequences and other tax consequences of the acquisition, ownership and disposition of our shares.

Merger with Select Income REIT

In September 2018, we and SIR entered into the SIR Merger Agreement. Upon and subject to the terms and conditions of the SIR Merger Agreement, SIR merged with and into Merger Sub on December 31, 2018. The SIR Merger was intended to qualify as a “reorganization” within the meaning of Section 368(a) of the IRC, and our counsel, Sullivan & Worcester LLP, so opined. Accordingly, this summary assumes, unless indicated otherwise, that the SIR Merger qualified as a “reorganization” within the meaning of Section 368(a) of the IRC.

The assets that we acquired in the SIR Merger generally (a) qualify as real estate assets that satisfy the REIT asset tests that are described below under the heading “—REIT Qualification Requirements—Asset Tests,” and (b) generate gross income that satisfies the REIT gross income tests that are described below under the heading “—REIT Qualification Requirements—Income Tests.” As a result, we believe that our acquisition of SIR’s assets has not and will not materially impact our qualification for taxation as a REIT.

We inherited the historical tax bases, holding periods, and depreciation schedules of SIR with respect to the properties we acquired in the SIR Merger. As the successor by merger to SIR, we are also generally liable for unpaid taxes, including penalties and interest (if any), of SIR. In addition to inheriting SIR’s tax liabilities, if SIR failed to qualify for taxation as a REIT for federal income tax purposes in any period prior to the consummation of the SIR Merger, we could lose our qualification for taxation as a REIT should the disqualifying activities continue after the SIR Merger. Even if we retain our qualification for taxation as a REIT, if SIR did not qualify for taxation as a REIT for a taxable year before the SIR Merger or for its taxable year that included the SIR Merger and if no relief is available, then we would face the following tax consequences:

• as the successor by merger to SIR, we would generally inherit any corporate income tax liabilities of SIR, including penalties and interest;

• we would be subject to tax on the built-in gain on each asset of SIR existing at the completion of the SIR Merger if we were to dispose of a SIR asset during a specified period (generally five years) following the completion of the SIR Merger; and

• we could be required to pay a special distribution and/or employ applicable deficiency dividend procedures (including interest payments to the IRS) to eliminate any earnings and profits accumulated by SIR for taxable periods for which it did not qualify for taxation as a REIT.

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

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As a condition to closing the SIR Merger, we disposed of our shares in SIR prior to the effective time of the SIR Merger in a taxable sale. We recognized a capital loss for federal income tax purposes in connection with this sale. Subject to limitations under the IRC, we may be able to utilize the capital loss carryover generated from this transaction to offset capital gain that we may recognize in the future.

Reverse Share Split

As described above, we effected the Reverse Share Split on December 31, 2018, following the effective time of the SIR Merger. The Reverse Share Split was a tax-free recapitalization to us and to our shareholders pursuant to Section 368(a)(1)(E) of the IRC. A holder of our common shares generally would not have recognized any gain or loss upon the Reverse Share Split, except in respect of any cash received in lieu of fractional common shares. The aggregate tax basis of the common shares received in the Reverse Share Split, including any fractional share deemed to have been received, is equal to the aggregate tax basis of the common shares exchanged therefor, and the shareholder’s holding period in the common shares received includes the holding period in the common shares exchanged therefor.

A shareholder that received cash in lieu of a fractional common share generally will be treated as having received such fractional share and then as having sold such fractional share in exchange for the cash received. The consequence of this deemed sale are described below under the headings “—Taxation of Taxable U.S. Shareholders” and “—Taxation of Non-U.S. Shareholders—Dispositions of Our Shares”.

Taxation as a REIT

We have elected to be taxed as a REIT under Sections 856 through 860 of the IRC, commencing with our2009taxable year. Our REIT election, assuming continuing compliance with the then applicable qualification tests,has continued and will continue in effect for subsequent taxable years. Although we cannot be sure, we believe that from and after our 2009 taxable year we have been organized and have operated, and will continue to be organized and to operate, in a manner that qualified us and will continue to qualify us to be taxed as a REIT under the IRC.

As a REIT, we generally are not subject to federal income tax on our net income distributed as dividends to our shareholders. Distributions to our shareholders generally are included in our shareholders’ income as dividends to the extent of our available current or accumulated earnings and profits. Our dividends are not generally entitled to the preferential tax rates on qualified dividend income, but a portion of our dividends may be treated as capital gain dividends or as qualified dividend income, all as explained below. In addition, for taxable years beginning after 2017 and before 2026 and pursuant to the deduction-without-outlay mechanism of Section 199A of the IRC, our noncorporate U.S. shareholders are generally eligible for lowereffective tax rates on our dividends that are not treated as capital gain dividends or as qualified dividend income. No portion of any of our dividends is eligible for the dividends received deduction for corporate shareholders. Distributions in excess of our current or accumulated earnings and profits generally are treated for federal income tax purposes as returns of capital to the extent of a recipient shareholder’s basis in our shares, and will reduce this basis. Our current or accumulated earnings and profits are generally allocated first to distributions made on our preferred shares, of which there are none outstanding at this time, and thereafter to distributions made on our common shares. For all these purposes, our distributionsinclude cash distributions, any in kind distributions of property that we might make, and deemed or constructive distributions resulting from capital market activities (such as some redemptions), as described below.

Our counsel, Sullivan & Worcester LLP, is of the opinion that we have been organized and have qualified for taxation as a REIT under the IRC for our 2009 through 2018 taxable years, and that our current and anticipated investments and plan of operation will enable us to continue to meet the requirements for qualification and taxation as a REIT under the IRC. Our counsel’s opinions are conditioned upon the assumption that our leases, our declaration of trust,and all other legal documents to which we have been or are a party have been and will be complied with by all parties to those documents, upon the accuracy and completeness of the factual matters described in this Annual Report on Form 10-K and upon representations made by us to our counsel as to certain factual matters relating to our organization and operations and our expected manner of operation. If this assumption or a description or representation is inaccurate or incomplete, our counsel’s opinions may be adversely affected and may not be relied upon. The opinions of our counsel are based upon the law as it exists today, but the law may change in the future, possibly with retroactive effect. Given the highly complex nature of the rules governing REITs, the ongoing importance of factual determinations, and the possibility of future changes in our circumstances, neither Sullivan & Worcester LLP nor we can be sure that we will qualify as or be taxed as a REIT for any particular year. Any opinion of Sullivan & Worcester LLP as to our qualification or taxation as a REIT will be expressed as of the date issued. Our counsel will have no obligation to advise us or our shareholders of any subsequent change in the matters stated, represented or assumed, or of any subsequent change in the applicable law. Also, the opinions of our counsel are not binding on either the IRS or a court, and either could take a position different from that expressed by our counsel.

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Our continued qualification and taxation as a REIT will depend upon our compliance with various qualification tests imposed under the IRC and summarized below. While we believe that we have satisfied and will satisfy these tests, our counsel does not review compliance with these tests on a continuing basis. If we fail to qualify for taxation as a REIT in any year, we will be subject to federal income taxation as if we were a corporation taxed under subchapter C of the IRC, or a C corporation, and our shareholders will be taxed like shareholders of regular C corporations, meaning that federal income tax generally will be applied at both the corporate and shareholder levels. In this event, we could be subject to significant tax liabilities, and the amount of cash available for distribution to our shareholders could be reduced or eliminated.

If we continue to qualify for taxation as a REIT and meet the tests described below, we generally will not pay federal income tax on amounts we distribute to our shareholders. However, even if we continue to qualify for taxation as a REIT, we may still be subject to federal tax in the following circumstances, as described below:

• We will be taxed at regular corporate income tax rates on any undistributed “real estate investment trust taxable income,” determined by including our undistributed ordinary income and net capital gains, if any.

• If we have net income from the disposition of “foreclosure property,” as described in Section 856(e) of the IRC, that is held primarily for sale to customers in the ordinary course of a trade or business or other nonqualifying income from foreclosure property, we will be subject to tax on this income at the highest regular corporate income tax rate.

• If we have net income from “prohibited transactions”-that is, dispositions at a gain of inventory or property held primarily for sale to customers in the ordinary course of a trade or business other than dispositions of foreclosure property and other than dispositions excepted by statutory safe harbors - we will be subject to tax on this income at a 100% rate.

• If we fail to satisfy the 75% gross income test or the 95% gross income test discussed below, due to reasonable cause and not due to willful neglect, but nonetheless maintain our qualification for taxation as a REIT because of specified cure provisions, we will be subject to tax at a 100% rate on the greater of the amount by which we fail the 75% gross income test or the 95% gross income test, with adjustments, multiplied by a fraction intended to reflect our profitability for the taxable year.

• If we fail to satisfy any of the REIT asset tests described below (other than a de minimis failure of the 5% or 10% asset tests) due to reasonable cause and not due to willful neglect, but nonetheless maintain our qualification for taxation as a REIT because of specified cure provisions, we will be subject to a tax equal to the greater of $50,000 or the highest regular corporate income tax rate multiplied by the net income generated by the nonqualifying assets that caused us to fail the test.

• If we fail to satisfy any provision of the IRC that would result in our failure to qualify for taxation as a REIT (other than violations of the REIT gross income tests or violations of the REIT asset tests described below) due to reasonable cause and not due to willful neglect, we may retain our qualification for taxation as a REIT but will be subject to a penalty of $50,000 for each failure.

• If we fail to distribute for any calendar year at least the sum of 85% of our REIT ordinary income for that year, 95% of our REIT capital gain net income for that year and any undistributed taxable income from prior periods, we will be subject to a 4% nondeductible excise tax on the excess of the required distribution over the amounts actually distributed.

• If we acquire a REIT asset where our adjusted tax basis in the asset is determined by reference to the adjusted tax basis of the asset in the hands of a C corporation, under specified circumstances we may be subject to federal income taxation on all or part of the built-in gain (calculated as of the date the property ceased being owned by the C corporation) on such asset. We generally do not expect to sell assets if doing so would result in the imposition of a material built-in gains tax liability; but if and when we do sell assets that may have associated built-in gains tax exposure, then we expect to make appropriate provision for the associated tax liabilities on our financial statements.

• If we acquire a corporation in a transaction where we succeed to its tax attributes, to preserve our qualification for taxation as a REIT we must generally distribute all of the C corporation earnings and profits inherited in that acquisition, if any, no later than the end of our taxable year in which the acquisition occurs. However, if we fail to do so, relief provisions would allow us to maintain our qualification for taxation as a REIT provided we distribute any subsequently discovered C corporation earnings and profits and pay an interest charge in respect of the period of delayed distribution.

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• Our subsidiaries that are C corporations, including our “taxable REIT subsidiaries”, as defined in Section 856(l) of the IRC, or TRSs, generally will be required to pay federal corporate income tax on their earnings, and a 100% tax may be imposed on any transaction between us and one of our TRSs that does not reflect arm’s length terms.

• If it is determined that SIR or FPO failed to satisfy one or more of the REIT tests described below before their respective mergers into us, the IRS might allow us, as successor to SIR or FPO, the same opportunity for relief as though we were the remediating REIT. In such case, SIR or FPO, as applicable, would be deemed to have retained its qualification for taxation as a REIT and the relevant penalties or sanctions for remediation would fall upon us in a manner comparable to the above.

If we fail to qualify for taxation as a REIT in any year, then we will be subject to federal income tax in the same manner as a regular C corporation. Further, as a regular C corporation, distributions to our shareholders will not be deductible by us, nor will distributions be required under the IRC. Also, to the extent of our current and accumulated earnings and profits, all distributions to our shareholders will generally be taxable as ordinary dividends potentially eligible for the preferential tax rates discussed below under the heading “Taxation of Taxable U.S. Shareholders” and, subject to limitations in the IRC, will be potentially eligible for the dividends received deduction for corporate shareholders. Finally, we will generally be disqualified from taxation as a REIT for the four taxable years following the taxable year in which the termination of our REIT status is effective. Our failure to qualify for taxation as a REIT for even one year could result in us reducing or eliminating distributions to our shareholders, or in us incurring substantial indebtedness or liquidating substantial investments in order to pay the resulting corporate-level income taxes. Relief provisions under the IRC may allow us to continue to qualify for taxation as a REIT even if we fail to comply with various REIT requirements, all as discussed in more detail below. However, it is impossible to state whether in any particular circumstance we would be entitled to the benefit of these relief provisions.

REIT Qualification Requirements

General Requirements. Section 856(a) of the IRC defines a REIT as a corporation, trust or association:

(1) that is managed by one or more trustees or directors;

(2) the beneficial ownership of which is evidenced by transferable shares or by transferable certificates of beneficial interest;

(3) that would be taxable, but for Sections 856 through 859 of the IRC, as a domestic C corporation;

(4) that is not a financial institution or an insurance company subject to special provisions of the IRC;

(5) the beneficial ownership of which is held by 100 or more persons;

(6) that is not “closely held,” meaning that during the last half of each taxable year, not more than 50% in value of the outstanding shares are owned, directly or indirectly, by five or fewer “individuals” (as defined in the IRC to include specified tax-exempt entities); and

(7) that meets other tests regarding the nature of its income and assets and the amount of its distributions, all as described below.

Section 856(b) of the IRC provides that conditions (1) through (4) must be met during the entire taxable year and that condition (5) must be met during at least 335 days of a taxable year of 12 months, or during a proportionate part of a taxable year of less than 12 months.Although we cannot be sure, we believe that we have met conditions (1) through (7) during each of the requisite periods ending on or before the close of our most recently completed taxable year, and that we will continue to meet these conditions in our current and future taxable years.

To help comply with condition (6), our declaration of trust restricts transfers of our shares that would otherwise result in concentrated ownership positions. These restrictions, however, do not ensure that we have previously satisfied, and may not ensure that we will in all cases be able to continue to satisfy, the share ownership requirements described in condition (6). If we comply with applicable Treasury regulations to ascertain the ownership of our outstanding shares and do not know, or by exercising reasonable diligence would not have known, that we failed condition (6), then we will be treated as having met condition (6). Accordingly, we have complied and will continue to comply with these regulations, including by requesting annually from holders of significant percentages of our shares information regarding the ownership of our shares. Under our declaration of trust, our shareholders are required to respond to these requests for information. A shareholder that fails or

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refuses to comply with the request is required by Treasury regulations to submit a statement with its federal income tax return disclosing its actual ownership of our shares and other information.

For purposes of condition (6), an “individual” generally includes a natural person, a supplemental unemployment compensation benefit plan, a private foundation, or a portion of a trust permanently set aside or used exclusively for charitable purposes, but does not include a qualified pension plan or profit-sharing trust. As a result, REIT shares owned by an entity that is not an “individual” are considered to be owned by the direct and indirect owners of the entity that are individuals (as so defined), rather than to be owned by the entity itself. Similarly, REIT shares held by a qualified pension plan or profit-sharing trust are treated as held directly by the individual beneficiaries in proportion to their actuarial interests in such plan or trust. Consequently, five or fewer such trusts could own more than 50% of the interests in an entity without jeopardizing that entity’s qualification for taxation as a REIT.

The IRC provides that we will not automatically fail to qualify for taxation as a REIT if we do not meet conditions (1) through (6), provided we can establish that such failure was due to reasonable cause and not due to willful neglect. Each such excused failure will result in the imposition of a $50,000 penalty instead of REIT disqualification. This relief provision may apply to a failure of the applicable conditions even if the failure first occurred in a year prior to the taxable year in which the failure was discovered.

Our Wholly Owned Subsidiaries and Our Investments Through Partnerships. Except in respect of a TRS as discussed below, Section 856(i) of the IRC provides that any corporation, 100% of whose stock is held by a REIT and its disregarded subsidiaries, is a qualified REIT subsidiary and shall not be treated as a separate corporation for U.S. federal income tax purposes. The assets, liabilities and items of income, deduction and credit of a qualified REIT subsidiary are treated as the REIT’s. We believe that each of our direct and indirect wholly owned subsidiaries, other than the TRSs discussed below (and entities owned in whole or in part by the TRSs), will be either a qualified REIT subsidiary within the meaning of Section 856(i)(2) of the IRC or a noncorporate entity that for federal income tax purposes is not treated as separate from its owner under Treasury regulations issued under Section 7701 of the IRC, each such entity referred to as a QRS. Thus, in applying all of the REIT qualification requirements described in this summary, all assets, liabilities and items of income, deduction and credit of our QRSs are treated as ours, and our investment in the stock and other securities of such QRSs will be disregarded.

We have invested and may in the future invest in real estate through one or more entities that are treated as partnerships for federal income tax purposes. In the case of a REIT that is a partner in a partnership, Treasury regulations under the IRC provide that, for purposes of the REIT qualification requirements regarding income and assets described below, the REIT is generally deemed to own its proportionate share, based on respective capital interests, of the income and assets of the partnership (except that for purposes of the 10% value test, described below, the REIT’s proportionate share of the partnership’s assets is based on its proportionate interest in the equity and specified debt securities issued by the partnership). In addition, for these purposes, the character of the assets and items of gross income of the partnership generally remains the same in the hands of the REIT. In contrast, for purposes of the distribution requirements discussed below, we must take into account as a partner our share of the partnership’s income as determined under the general federal income tax rules governing partners and partnerships under Subchapter K of the IRC.

Subsidiary REITs. When a subsidiary qualifies for taxation as a REIT separate and apart from its REIT parent, the subsidiary’s shares are qualifying real estate assets for purposes of the REIT parent’s 75% asset test described below. However, failure of the subsidiary to separately satisfy the various REIT qualification requirements described in this summary or that are otherwise applicable (and failure to qualify for the applicable relief provisions) would generally result in (a) the subsidiary being subject to regular U.S. corporate income tax, as described above, and (b) the REIT parent’s ownership in the subsidiary (i) ceasing to be qualifying real estate assets for purposes of the 75% asset test, (ii) becoming subject to the 5% asset test, the 10% vote test and the 10% value test generally applicable to a REIT’s ownership in corporations other than REITs and TRSs, and (iii) thereby jeopardizing the REIT parent’s own REIT qualification and taxation on account of the subsidiary’s failure cascading up to the REIT parent, all as described under “—Asset Tests” below.

Until October 2018, we owned a substantial amount of the outstanding common shares of SIR, which we believe qualified for taxation as a REIT under the IRC for all relevant periods prior to the consummation of the SIR Merger. Further, until December 2018, SIR itself owned a substantial amount of the outstanding common shares of ILPT, which we believe has qualified and will remain qualified for taxation as a REIT under the IRC. In addition, we have invested and may in the future invest in real estate through one or more other subsidiary entities that have intended and are intended to qualify for taxation as REITs. We (and our predecessor by merger SIR) have made protective TRS elections with our subsidiary REITs and have implemented other protective arrangements intended to avoid a cascading REIT failure if any of our subsidiary REITs did not qualify for taxation as a REIT, but we cannot be sure that such protective elections and other arrangements were or will be effective in every instance so as to avoid or mitigate the resulting adverse consequences to us.

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Taxable REIT Subsidiaries. As a REIT, we are permitted to own any or all of the securities of a TRS, provided that no more than 20% of the total value of our assets, at the close of each quarter, is comprised of our investments in the stock or other securities of our TRSs. Very generally, a TRS is a subsidiary corporation other than a REIT in which a REIT directly or indirectly holds stock and that has made a joint election with its affiliated REIT to be treated as a TRS. Our ownership of stock and other securities in our TRSs is exempt from the 5% asset test, the 10% vote test and the 10% value test discussed below.

In addition, any corporation (other than a REIT) in which a TRS directly or indirectly owns more than 35% of the voting power or value of the outstanding securities is automatically a TRS. Subject to the discussion below, we believe that we and each of our TRSs have complied with, and will continue to comply with, the requirements for TRS status at all times during which we intend for the subsidiary’s TRS election to be in effect, and we believe that the same will be true for any TRS that we later form or acquire.

We acquired in the second quarter of 2015, and currently own, an ownership position in RMR Inc. that is in excess of 10% of RMR Inc.’s outstanding securities by vote or value. Accordingly, we elected to treat RMR Inc. as a TRS effective as of June 5, 2015. RMR Inc., through its principal subsidiary, RMR LLC, has provided and continues to provide business and property management and other services to us and to other public and private companies, including other public REITs. Among these clients were and are operators of lodging facilities, operators of health care facilities, and owners of such facilities. Our counsel, Sullivan & Worcester LLP, has provided to us an opinion that the activities proscribed to TRSs under Section 856(l)(3) of the IRC relating to operating or managing lodging facilities or health care facilities should include only regular onsite services or day-to-day operational activities at or for lodging facilities or health care facilities. To the best of our knowledge, neither RMR Inc. nor RMR LLC has been or is involved in proscribed activities at or for lodging facilities or health care facilities. Thus, we do not believe that Section 856(l)(3) of the IRC precluded or precludes RMR Inc. from being treated as our TRS. If the IRS or a court determines, contrary to the opinion of our counsel, that RMR Inc. was or is precluded from being treated as our TRS, then our ownership position in RMR Inc. in excess of 10% of RMR Inc.’s outstanding securities by vote or value, except to the extent and for the period that such ownership qualified as a “temporary investment of new capital” under Section 856(c)(5)(B) of the IRC, would have been and would be in violation of the applicable REIT asset tests described below. Under those circumstances, however, we expect that we would qualify for the REIT asset tests’ relief provision described below, and thereby would preserve our qualification for taxation as a REIT. If the relief provision below were to apply to us, we would be subject to tax at the highest regular corporate income tax rate on the net income generated by our investment in RMR Inc. in excess of a 10% ownership position in that company.

As discussed below, TRSs can perform services for our tenants without disqualifying the rents we receive from those tenants under the 75% gross income test or the 95% gross income test discussed below. Moreover, because our TRSs are taxed as C corporations that are separate from us, their assets, liabilities and items of income, deduction and credit generally are not imputed to us for purposes of the REIT qualification requirements described in this summary. Therefore, our TRSs may generally conduct activities that would be treated as prohibited transactions or would give rise to nonqualified income if conducted by us directly. As regular C corporations, TRSs may generally utilize net operating losses and other tax attribute carryforwards to reduce or otherwise eliminate federal income tax liability in a given taxable year. Net operating losses and other carryforwards are subject to limitations, however, including limitations imposed under Section 382 of the IRC following an “ownership change” (as defined in applicable Treasury regulations) and a limitation providing that carryforwards of net operating losses arising in taxable years beginning after 2017 generally cannot offset more than 80% of the current year’s taxable income. Moreover, net operating losses arising in taxable years beginning after 2017 may not be carried back, but may be carried forward indefinitely. As a result, we cannot be sure that our TRSs will be able to utilize, in full or in part, any net operating losses or other carryforwards that they may generate in the future.

Restrictions and sanctions are imposed on TRSs and their affiliated REITs to ensure that the TRSs will be subject to an appropriate level of federal income taxation. For example, if a TRS pays interest, rent or other amounts to its affiliated REIT in an amount that exceeds what an unrelated third party would have paid in an arm’s length transaction, then the REIT generally will be subject to an excise tax equal to 100% of the excessive portion of the payment. Further, if in comparison to an arm’s length transaction, a third-party tenant has overpaid rent to the REIT in exchange for underpaying the TRS for services rendered, and if the REIT has not adequately compensated the TRS for services provided to or on behalf of the third-party tenant, then the REIT may be subject to an excise tax equal to 100% of the undercompensation to the TRS. A safe harbor exception to this excise tax applies if the TRS has been compensated at a rate at least equal to 150% of its direct cost in furnishing or rendering the service. Finally, beginning with our 2016 taxable year, the 100% excise tax also applies to the underpricing of services provided by one of our TRSs to us in contexts where the services are unrelated to services for our tenants. We cannot be sure that arrangements involving our TRSs will not result in the imposition of one or more of these restrictions or sanctions, but we do not believe that we or our TRSs are or will be subject to these impositions.

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Income Tests. We must satisfy two gross income tests annually to maintain our qualification for taxation as a REIT. First, at least 75% of our gross income for each taxable year must be derived from investments relating to real property, including “rents from real property” within the meaning of Section 856(d) of the IRC, interest and gain from mortgages on real property or on interests in real property, income and gain from foreclosure property, gain from the sale or other disposition of real property (including specified ancillary personal property treated as real property under the IRC), or dividends on and gain from the sale or disposition of shares in other REITs (but excluding in all cases any gains subject to the 100% tax on prohibited transactions). When we receive new capital in exchange for our shares or in a public offering of our five-year or longer debt instruments, income attributable to the temporary investment of this new capital in stock or a debt instrument, if received or accrued within one year of our receipt of the new capital, is generally also qualifying income under the 75% gross income test. Second, at least 95% of our gross income for each taxable year must consist of income that is qualifying income for purposes of the 75% gross income test, other types of interest and dividends, gain from the sale or disposition of shares or securities, or any combination of these. Gross income from our sale of property that we hold primarily for sale to customers in the ordinary course of business, income and gain from specified “hedging transactions” that are clearly and timely identified as such, and income from the repurchase or discharge of indebtedness is excluded from both the numerator and the denominator in both gross income tests. In addition, specified foreign currency gains will be excluded from gross income for purposes of one or both of the gross income tests.

Although we will use our best efforts to ensure that the income generated by our investments will be of a type that satisfies both the 75% and 95% gross income tests, we cannot be sure that we will be successfulin this regard.

In order to qualify as “rents from real property” within the meaning of Section 856(d) of the IRC, several requirements must be met:

• The amount of rent received generally must not be based on the income or profits of any person, but may be based on a fixed percentage or percentages of receipts or sales.

• Rents do not qualify if the REIT owns 10% or more by vote or value of stock of the tenant (or 10% or more of the interests in the assets or net profits of the tenant, if the tenant is not a corporation), whether directly or after application of attribution rules. We generally do not intend to lease property to any party if rents from that property would not qualify as “rents from real property,” but application of the 10% ownership rule is dependent upon complex attribution rules and circumstances that may be beyond our control. Our declaration of trust generally disallows transfers or purported acquisitions, directly or by attribution, of our shares to the extent necessary to maintain our qualification for taxation as a REIT under the IRC. Nevertheless, we cannot be sure that these restrictions will be effective to prevent our qualification for taxation as a REIT from being jeopardized under the 10% affiliated tenant rule. Furthermore, we cannot be sure that we will be able to monitor and enforce these restrictions, nor will our shareholders necessarily be aware of ownership of our shares attributed to them under the IRC’s attribution rules.

• There is a limited exception to the above prohibition on earning “rents from real property” from a 10% affiliated tenant where the tenant is a TRS. If at least 90% of the leased space of a property is leased to tenants other than TRSs and 10% affiliated tenants, and if the TRS’s rent to the REIT for space at that property is substantially comparable to the rents paid by nonaffiliated tenants for comparable space at the property, then otherwise qualifying rents paid by the TRS to the REIT will not be disqualified on account of the rule prohibiting 10% affiliated tenants.

• In order for rents to qualify, we generally must not manage the property or furnish or render services to the tenants of the property, except through an independent contractor from whom we derive no income or through one of our TRSs. There is an exception to this rule permitting a REIT to perform customary management and tenant services of the sort that a tax-exempt organization could perform without being considered in receipt of “unrelated business taxable income” as defined in Section 512(b)(3) of the IRC, or UBTI. In addition, a de minimis amount of noncustomary services will not disqualify income as “rents from real property” as long as the value of the impermissible tenant services does not exceed 1% of the gross income from the property.

• If rent attributable to personal property leased in connection with a lease of real property is 15% or less of the total rent received under the lease, then the rent attributable to personal property will qualify as “rents from real property”; if this 15% threshold is exceeded, the rent attributable to personal property will not so qualify. The portion of rental income treated as attributable to personal property is determined according to the ratio of the fair market value of the personal property to the total fair market value of the real and personal property that is rented.

• In addition, “rents from real property” includes both charges we receive for services customarily rendered in connection with the rental of comparable real property in the same geographic area, even if the charges are separately

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stated, as well as charges we receive for services provided by our TRSs when the charges are not separately stated. Whether separately stated charges received by a REIT for services that are not geographically customary and provided by a TRS are included in “rents from real property” has not been addressed clearly by the IRS in published authorities; however, our counsel, Sullivan & Worcester LLP, is of the opinion that, although the matter is not free from doubt, “rents from real property” also includes charges we receive for services provided by our TRSs when the charges are separately stated, even if the services are not geographically customary. Accordingly, we believe that our revenues from TRS-provided services, whether the charges are separately stated or not, qualify as “rents from real property” because the services satisfy the geographically customary standard, because the services have been provided by a TRS, or for both reasons.

We believe that all or substantially all of our rents and related service charges have qualified and will continue to qualify as “rents from real property” for purposes of Section 856 of the IRC.

Absent the “foreclosure property” rules of Section 856(e) of the IRC, a REIT’s receipt of active, nonrental gross income from a property would not qualify under the 75% and 95% gross income tests. But as foreclosure property, the active, nonrental gross income from the property would so qualify. Foreclosure property is generally any real property, including interests in real property, and any personal property incident to such real property:

• that is acquired by a REIT as a result of the REIT having bid on such property at foreclosure, or having otherwise reduced such property to ownership or possession by agreement or process of law, after there was a default or when default was imminent on a lease of such property or on indebtedness that such property secured;

• for which any related loan acquired by the REIT was acquired at a time when the default was not imminent or anticipated; and

• for which the REIT makes a proper election to treat the property as foreclosure property.

Any gain that a REIT recognizes on the sale of foreclosure property held as inventory or primarily for sale to customers, plus any income it receives from foreclosure property that would not otherwise qualify under the 75% gross income test in the absence of foreclosure property treatment, reduced by expenses directly connected with the production of those items of income, would be subject to income tax at the highest regular corporate income tax rate under the foreclosure property income tax rules of Section 857(b)(4) of the IRC. Thus, if a REIT should lease foreclosure property in exchange for rent that qualifies as “rents from real property” as described above, then that rental income is not subject to the foreclosure property income tax.

Property generally ceases to be foreclosure property at the end of the third taxable year following the taxable year in which the REIT acquired the property, or longer if an extension is obtained from the IRS. However, this grace period terminates and foreclosure property ceases to be foreclosure property on the first day:

• on which a lease is entered into for the property that, by its terms, will give rise to income that does not qualify for purposes of the 75% gross income test (disregarding income from foreclosure property), or any nonqualified income under the 75% gross income test is received or accrued by the REIT, directly or indirectly, pursuant to a lease entered into on or after such day;

• on which any construction takes place on the property, other than completion of a building or any other improvement where more than 10% of the construction was completed before default became imminent and other than specifically exempted forms of maintenance or deferred maintenance; or

• which is more than 90 days after the day on which the REIT acquired the property and the property is used in a trade or business which is conducted by the REIT, other than through an independent contractor from whom the REIT itself does not derive or receive any income or a TRS.

Other than sales of foreclosure property, any gain that we realize on the sale of property held as inventory or other property held primarily for sale to customers in the ordinary course of a trade or business, together known as dealer gains, may be treated as income from a prohibited transaction that is subject to a penalty tax at a 100% rate. The 100% tax does not apply to gains from the sale of property that is held through a TRS, but such income will be subject to tax in the hands of the TRS at regular corporate income tax rates; we may therefore utilize our TRSs in transactions in which we might otherwise recognize dealer gains. Whether property is held as inventory or primarily for sale to customers in the ordinary course of a trade or business is a question of fact that depends on all the facts and circumstances surrounding each particular transaction. Sections 857(b)(6)(C) and (E) of the IRC provide safe harbors pursuant to which limited sales of real property held for at least

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two years and meeting specified additional requirements will not be treated as prohibited transactions. However, compliance with the safe harbors is not always achievable in practice. We attempt to structure our activities to avoid transactions that are prohibited transactions, or otherwise conduct such activities through TRSs; but, we cannot be sure whether or not the IRS might successfully assert that one or more of our dispositions is subject to the 100% penalty tax. Gains subject to the 100% penalty tax are excluded from the 75% and 95% gross income tests, whereas real property gains that are not dealer gains or that are exempted from the 100% penalty tax on account of the safe harbors are considered qualifying gross income for purposes of the 75% and 95% gross income tests.

We believe that any gain from dispositions of assets that we have made, or that we might make in the future, including through any partnerships, will generally qualify as income that satisfies the 75% and 95% gross income tests, and will not be dealer gains or subject to the 100% penalty tax. This is because our general intent has been and is to: (a) own our assets for investment with a view to long-term income production and capital appreciation; (b) engage in the business of developing, owning, leasing and managing our existing properties and acquiring, developing, owning, leasing and managing new properties; and (c) make occasional dispositions of our assets consistent with our long-term investment objectives.

If we fail to satisfy one or both of the 75% gross income test or the 95% gross income test in any taxable year, we may nevertheless qualify for taxation as a REIT for that year if we satisfy the following requirements: (a) our failure to meet the test is due to reasonable cause and not due to willful neglect; and (b) after we identify the failure, we file a schedule describing each item of our gross income included in the 75% gross income test or the 95% gross income test for that taxable year. Even if this relief provision does apply, a 100% tax is imposed upon the greater of the amount by which we failed the 75% gross income test or the amount by which we failed the 95% gross income test, with adjustments, multiplied by a fraction intended to reflect our profitability for the taxable year. This relief provision may apply to a failure of the applicable income tests even if the failure first occurred in a year prior to the taxable year in which the failure was discovered.

Based on the discussion above, we believe that we have satisfied, and will continue to satisfy, the 75% and 95% gross income tests outlined above on a continuing basis beginning with our first taxable year as a REIT.

Asset Tests. At the close of each calendar quarter of each taxable year, we must also satisfy the following asset percentage tests in order to qualify for taxation as a REIT for federal income tax purposes:

• At least 75% of the value of our total assets must consist of “real estate assets,” defined as real property (including interests in real property and interests in mortgages on real property or on interests in real property), ancillary personal property to the extent that rents attributable to such personal property are treated as rents from real property in accordance with the rules described above, cash and cash items, shares in other REITs, debt instruments issued by “publicly offered REITs” as defined in Section 562(c)(2) of the IRC, government securities and temporary investments of new capital (that is, any stock or debt instrument that we hold that is attributable to any amount received by us (a) in exchange for our stock or (b) in a public offering of our five-year or longer debt instruments, but in each case only for the one-year period commencing with our receipt of the new capital).

• Not more than 25% of the value of our total assets may be represented by securities other than those securities that count favorably toward the preceding 75% asset test.

• Of the investments included in the preceding 25% asset class, the value of any one non-REIT issuer’s securities that we own may not exceed 5% of the value of our total assets. In addition, we may not own more than 10% of the vote or value of any one non-REIT issuer’s outstanding securities, unless the securities are “straight debt” securities or otherwise excepted as discussed below. Our stock and other securities in a TRS are exempted from these 5% and 10% asset tests.

• Not more than 20% of the value of our total assets may be represented by stock or other securities of our TRSs.

• Not more than 25% of the value of our total assets may be represented by “nonqualified publicly offered REIT debt instruments” as defined in Section 856(c)(5)(L)(ii) of the IRC.

Our counsel, Sullivan & Worcester LLP, is of the opinion that, although the matter is not free from doubt, our investments in the equity or debt of a TRS, to the extent that and during the period in which theyqualify as temporary investments of new capital, will be treated as real estate assets, and not as securities, for purposes of the above REIT asset tests.

The above REIT asset tests must be satisfied at the close of each calendar quarter of each taxable year as a REIT. After a REIT meets the asset tests at the close of any quarter, it will not lose its qualification for taxation as a REIT in any subsequent

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quarter solely because of fluctuations in the values of its assets. This grandfathering rule may be of limited benefit to a REIT such as us that makes periodic acquisitions of both qualifying and nonqualifying REIT assets. When a failure to satisfy the above asset tests results from an acquisition of securities or other property during a quarter, the failure can be cured by disposition of sufficient nonqualifying assets within30days after the close of that quarter.

In addition, if we fail the 5% asset test, the 10% vote test or the 10% value test at the close of any quarter and we do not cure such failure within 30days after the close of that quarter, that failure will nevertheless be excused if (a) the failure is de minimis and (b) within six months after the last day of the quarter in which we identify the failure, we either dispose of the assets causing the failure or otherwise satisfy the 5% asset test, the 10% vote test and the 10% value test. For purposes of this relief provision, the failure will be de minimis if the value of the assets causing the failure does not exceed $10,000,000. If our failure is not de minimis, or if any of the other REIT asset tests have been violated, we may nevertheless qualify for taxation as a REIT if (a) we provide the IRS with a description of each asset causing the failure, (b) the failure was due to reasonable cause and not willful neglect, (c) we pay a tax equal to the greater of (1) $50,000 or (2) the highest regular corporate income tax rate imposed on the net income generated by the assets causing the failure during the period of the failure, and (d) within six months after the last day of the quarter in which we identify the failure, we either dispose of the assets causing the failure or otherwise satisfy all of the REIT asset tests. These relief provisions may apply to a failure of the applicable asset tests even if the failure first occurred in a year prior to the taxable year in which the failure was discovered.

The IRC also provides an excepted securities safe harbor to the 10% value test that includes among other items (a) “straight debt” securities, (b) specified rental agreements in which payment is to be made in subsequent years, (c) any obligation to pay “rents from real property,” (d) securities issued by governmental entities that are not dependent in whole or in part on the profits of or payments from a nongovernmental entity, and (e) any security issued by another REIT. In addition, any debt instrument issued by an entity classified as a partnership for federal income tax purposes, and not otherwise excepted from the definition of a security for purposes of the above safe harbor, will not be treated as a security for purposes of the 10% value test if at least 75% of the partnership’s gross income, excluding income from prohibited transactions, is qualifying income for purposes of the 75% gross income test.

We have maintained and will continue to maintain records of the value of our assets to document our compliance with the above asset tests and intend to take actions as may be required to cure any failure to satisfy the tests within 30 days after the close of any quarter or within the six month periods described above.

Based on the discussion above, we believe that we have satisfied, and will continue to satisfy, the REIT asset tests outlined above on a continuing basis beginning with our first taxable year as a REIT.

Annual Distribution Requirements. In order to qualify for taxation as a REIT under the IRC, we are required to make annual distributions other than capital gain dividends to our shareholders in an amount at least equal to the excess of:    

(1) the sum of 90% of our “real estate investment trust taxable income” and 90% of our net income after tax, if any, from property received in foreclosure, over

(2) the amount by which our noncash income (e.g., imputed rental income or income from transactions inadvertently failing to qualify as like-kind exchanges) exceeds 5% of our “real estate investment trust taxable income.”

For these purposes, our “real estate investment trust taxable income” is as defined under Section 857 of the IRC and is computed without regard to the dividends paid deduction and our net capital gain and will generally be reduced by specified corporate-level income taxes that we pay (e.g., taxes on built-in gains or foreclosure property income).

The IRC generally limits the deductibility of net interest expense paid or accrued on debt properly allocable to a trade or business to 30% of “adjusted taxable income,” subject to specified exceptions. Any deduction in excess of the limitation is carried forward and may be used in a subsequent year, subject to that year’s 30% limitation. Provided a taxpayer makes an election (which is irrevocable), the 30% limitation does not apply to a trade or business involving real property development, redevelopment, construction, reconstruction, acquisition, conversion, rental, operation, management, leasing, or brokerage, within the meaning of Section 469(c)(7)(C) of the IRC. We have not determined whether we or any of our subsidiaries will elect out of the new interest expense limitation or whether each of our subsidiaries is eligible to elect out.

Distributions must be paid in the taxable year to which they relate, or in the following taxable year if declared before we timely file our federal income tax return for the earlier taxable year and if paid on or before the first regular distribution payment after that declaration. If a dividend is declared in October, November or December to shareholders of record during

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one of those months and is paid during the following January, then for federal income tax purposes such dividend will be treated as having been both paid and received on December 31 of the prior taxable year.

The 90% distribution requirements may be waived by the IRS if a REIT establishes that it failed to meet them by reason of distributions previously made to meet the requirements of the 4% excise tax discussed below. To the extent that we do not distribute all of our net capital gain and all of our “real estate investment trust taxable income,” as adjusted, we will be subject to federal income tax at regular corporate income tax rates on undistributed amounts. In addition, we will be subject to a 4% nondeductible excise tax to the extent we fail within a calendar year to make required distributions to our shareholders of 85% of our ordinary income and 95% of our capital gain net income plus the excess, if any, of the “grossed up required distribution” for the preceding calendar year over the amount treated as distributed for that preceding calendar year. For this purpose, the term “grossed up required distribution” for any calendar year is the sum of our taxable income for the calendar year without regard to the deduction for dividends paid and all amounts from earlier years that are not treated as having been distributed under the provision. We will be treated as having sufficient earnings and profits to treat as a dividend any distribution by us up to the amount required to be distributed in order to avoid imposition of the 4% excise tax.

If we do not have enough cash or other liquid assets to meet the 90% distribution requirements, or if we so choose, we may find it necessary or desirable to arrange for new debt or equity financing to provide funds for required distributions in order to maintain our qualification for taxation as a REIT. We cannot be sure that financing would be available for these purposes on favorable terms, or at all.

We may be able to rectify a failure to pay sufficient dividends for any year by paying “deficiency dividends” to shareholders in a later year. These deficiency dividends may be included in our deduction for dividends paid for the earlier year, but an interest charge would be imposed upon us for the delay in distribution. While the payment of a deficiency dividend will apply to a prior year for purposes of our REIT distribution requirements and our dividends paid deduction, it will be treated as an additional distribution to the shareholders receiving it in the year such dividend is paid.

In addition to the other distribution requirements above, to preserve our qualification for taxation as a REIT we are required to timely distribute all C corporation earnings and profits that we inherit from acquired corporations, as described below.

Acquisitions of C Corporations

We may in the future engage in transactions where we acquire all of the outstanding stock of a C corporation. Upon these acquisitions, except to the extent we make an applicable TRS election, each of our acquired entities and their various wholly-owned corporate and noncorporate subsidiarieswill become our QRSs. Thus, after such acquisitions, all assets, liabilities and items of income, deduction and credit of the acquired and then disregarded entities will be treated as ours for purposes of the various REIT qualification tests described above. In addition, we generallywill be treated as the successor to the acquired (and then disregarded) entities’ federal income tax attributes, such as those entities’ (a) adjusted tax bases in their assets and their depreciation schedules; and (b) earnings and profits for federal income tax purposes, if any. The carryover of these attributes creates REIT implications such as built-in gains tax exposure and additional distribution requirements, as described below. However, when we make an election under Section 338(g) of the IRC with respect to corporations that we acquire,we generally will not be subject to such attribute carryovers in respect of attributes existing prior to such election.

Built-in Gains from C Corporations. Notwithstanding our qualification and taxation as a REIT, under specified circumstances we may be subject to corporate income taxation if we acquire a REIT asset where our adjusted tax basis in the asset is determined by reference to the adjusted tax basis of the asset as owned by a C corporation. For instance, we may be subject to federal income taxation on all or part of the built-in gain that was present on the last date an asset was owned by a C corporation, if we succeed to a carryover tax basis in that asset directly or indirectly from such C corporation and if we sell the asset during the five year period beginning on the day the asset ceased being owned by such C corporation. To the extent of our income and gains in a taxable year that are subject to the built-in gains tax, net of any taxes paid on such income and gains with respect to that taxable year, our taxable dividends paid in the following year will be potentially eligible for taxation to noncorporate U.S. shareholders at the preferential tax rates for “qualified dividends” as described below under the heading “—Taxation of Taxable U.S. Shareholders”. We generally do not expect to sell assets if doing so would result in the imposition of a material built-in gains tax liability; but if and when we do sell assets that may have associated built-in gains tax exposure, then we expect to make appropriate provision for the associated tax liabilities on our financial statements.

Earnings and Profits. Following a corporate acquisition, we must generally distribute all of the C corporation earnings and profits inherited in that transaction, if any, no later than the end of our taxable year in which the transaction occurs, in order to preserve our qualification for taxation as a REIT. However, if we fail to do so, relief provisions would allow us to maintain

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our qualification for taxation as a REIT provided we distribute any subsequently discovered C corporation earnings and profits and pay an interest charge in respect of the period of delayed distribution. C corporation earnings and profits that we inherit are, in general, specially allocated under a priority rule to the earliest possible distributions following the event causing the inheritance, and only then is the balance of our earnings and profits for the taxable year allocated among our distributions to the extent not already treated as a distribution of C corporation earnings and profits under the priority rule. The distribution of these C corporation earnings and profits is potentially eligible for taxation to noncorporate U.S. shareholders at the preferential tax rates for “qualified dividends” as described below under the heading “—Taxation of Taxable U.S. Shareholders”.

FPO Transaction

As discussed above, we acquired FPO and its operating partnership in 2017, and subsequently in 2018 we caused the minority partners in the operating partnership to be redeemed in full. As a result of the FPO Transaction, in 2017, we are treated for federal income tax purposes as having acquired the assets of FPO for the cash that we paid plus the assumption of FPO’s liabilities, and FPO was treated as liquidating and distributing the cash to its shareholders. FPO recognized gain or loss on the disposition of its assets based on the sum of the cash paid by us and the value of its liabilities that we assumed. This gain or loss plus FPO’s operating income was offset fully by the dividends paid deduction available to liquidating REITs in their final taxable year. Our initial tax basis in the assets of FPO equaled the sum of the cash we paid to the holders of FPO common shares in conjunction with the FPO Transaction, the value of FPO’s liabilities that we assumed, and the acquisition costs that were capitalized for federal income tax purposes.

As a condition of the closing of the FPO Transaction, FPO’s counsel provided us with an opinion that FPO had been organized and had operated in conformity with the requirements for qualification and taxation as a REIT under the IRC. If, contrary to that opinion and our expectation, FPO failed to qualify for taxation as a REIT for federal income tax purposes for any applicable period, then we may inherit significant tax liabilities in the FPO Transaction because, as the successor by merger to FPO, we would generally inherit any corporate income tax liabilities of FPO, including penalties and interest.

It is unclear whether the IRC provisions that are generally available to remediate REIT compliance failures will be available to us as a successor in respect of any determination that FPO failed to qualify for taxation as a REIT. If and to the extent the remedial provisions are available to us to address FPO’s REIT qualification and taxation for the applicable period prior to or including the FPO Transaction, we may incur significant cash outlays in connection with the remediation, possibly including (a) required distribution payments to shareholders and associated interest payments to the IRS and (b) tax and interest payments to the IRS and state and local tax authorities.

Depreciation and Federal Income Tax Treatment of Leases

Our initial tax bases in our assets will generally be our acquisition cost. We will generally depreciate our depreciable real property on a straight-line basis over 40 years and our personal property over the applicable shorter periods. These depreciation schedules, and our initial tax bases, may vary for properties that we acquire through tax-free or carryover basis acquisitions (for example, the properties we acquired from SIR pursuant to the SIR Merger), or that are the subject of cost segregation analyses.

We are entitled to depreciation deductions from our facilities only if we are treated for federal income tax purposes as the owner of the facilities. This means that the leases of our facilities must be classified for U.S. federal income tax purposes as true leases, rather than as sales or financing arrangements, and we believe this to be the case.

Distributions to our Shareholders

As described above, we expect to make distributions to our shareholders from time to time. These distributions may include cash distributions, in kind distributions of property, and deemed or constructive distributions resulting from capital market activities. The U.S. federal income tax treatment of our distributions will vary based on the status of the recipient shareholder as more fully described below under the headings “—Taxation of Taxable U.S. Shareholders,” “—Taxation of Tax-Exempt U.S. Shareholders,” and “—Taxation of Non-U.S. Shareholders.”

Section 302 of the IRC treats a redemption of our shares for cash only as a distribution under Section 301 of the IRC, and hence taxable as a dividend to the extent of our available current or accumulated earnings and profits, unless the redemption satisfies one of the tests set forth in Section 302(b) of the IRC enabling the redemption to be treated as a sale or exchange of the shares. The redemption for cash only will be treated as a sale or exchange if it (a) is “substantially disproportionate” with respect to the surrendering shareholder’s ownership in us, (b) results in a “complete termination” of the surrendering shareholder’s entire share interest in us, or (c) is “not essentially equivalent to a dividend” with respect to the

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surrendering shareholder, all within the meaning of Section 302(b) of the IRC. In determining whether any of these tests have been met, a shareholder must generally take into account shares considered to be owned by such shareholder by reason of constructive ownership rules set forth in the IRC, as well as shares actually owned by such shareholder. In addition, if a redemption is treated as a distribution under the preceding tests, then a shareholder’s tax basis in the redeemed shares generally will be transferred to the shareholder’s remaining shares in us, if any, and if such shareholder owns no other shares in us, such basis generally may be transferred to a related person or may be lost entirely. Because the determination as to whether a shareholder will satisfy any of the tests of Section 302(b) of the IRC depends upon the facts and circumstances at the time that our shares are redeemed, we urge you to consult your own tax advisor to determine the particular tax treatment of any redemption.

Taxation of Taxable U.S. Shareholders

For noncorporate U.S. shareholders, to the extent that their total adjusted income does not exceed applicable thresholds, the maximum federal income tax rate for long-term capital gains and most corporate dividends is generally 15%. For those noncorporate U.S. shareholders whose total adjusted income exceeds the applicable thresholds, the maximum federal income tax rate for long-term capital gains and most corporate dividends is generally 20%. However, because we are not generally subject to federal income tax on the portion of our “real estate investment trust taxable income” distributed to our shareholders, dividends on our shares generally are not eligible for these preferential tax rates, except that any distribution of C corporation earnings and profits and taxed built-in gain items will potentially be eligible for these preferential tax rates. As a result, our ordinary dividends generally aretaxed at the higher federal income tax rates applicable to ordinary income (subject to the lower effective tax rates applicable to qualified REIT dividends via the deduction-without-outlay mechanism of Section 199A of the IRC, which is generally available to our noncorporate U.S. shareholders for taxable years after 2017 and before 2026). To summarize, the preferential federal income tax rates for long-term capital gains and for qualified dividends generally apply to:

(1) long-term capital gains, if any, recognized on the disposition of our shares;

(2) our distributions designated as long-term capital gain dividends (except to the extent attributable to real estate depreciation recapture, in which case the distributions are subject to a maximum 25% federal income tax rate);

(3) our dividends attributable to dividend income, if any, received by us from C corporations such as TRSs;

(4) our dividends attributable to earnings and profits that we inherit from C corporations; and

(5) our dividends to the extent attributable to income upon which we have paid federal corporate income tax (such as taxes on foreclosure property income or on built-in gains), net of the corporate income taxes thereon.

As long as we qualify for taxation as a REIT, a distribution to our U.S. shareholders that we do not designate as a capital gain dividend generally will be treated as an ordinary income dividend to the extent of our available current or accumulated earnings and profits (subject to the lower effective tax rates applicable to qualified REIT dividends via the deduction-without-outlay mechanism of Section 199A of the IRC, which is available to our noncorporate U.S. shareholders for taxable years after 2017 and before 2026). Distributions made out of our current or accumulated earnings and profits that we properly designate as capital gain dividends generally will be taxed as long-term capital gains, as discussed below, to the extent they do not exceed our actual net capital gain for the taxable year. However, corporate shareholders may be required to treat up to 20% of any capital gain dividend as ordinary income under Section 291 of the IRC.

In addition, we may elect to retain net capital gain income and treat it as constructively distributed. In that case:    

(1) we will be taxed at regular corporate capital gains tax rates on retained amounts;

(2) each of our U.S. shareholders will be taxed on its designated proportionate share of our retained net capital gains as though that amount were distributed and designated as a capital gain dividend;

(3) each of our U.S. shareholders will receive a credit or refund for its designated proportionate share of the tax that we pay;

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(4) each of our U.S. shareholders will increase its adjusted basis in our shares by the excess of the amount of its proportionate share of these retained net capital gains over the U.S. shareholder’s proportionate share of the tax that we pay; and

(5) both we and our corporate shareholders will make commensurate adjustments in our respective earnings and profits for federal income tax purposes.

If we elect to retain our net capital gains in this fashion, we will notify our U.S. shareholders of the relevant tax information within 60days after the close of the affected taxable year.

If for any taxable year we designate capital gain dividends for our shareholders, then a portion of the capital gain dividends we designate will be allocated to the holders of a particular class of shares on a percentage basis equal to the ratio of the amount of the total dividends paid or made available for the year to the holders of that class of shares to the total dividends paid or made available for the year to holders of all outstanding classes of our shares. We will similarly designate the portion of any dividend that is to be taxed to noncorporate U.S. shareholders at preferential maximum rates (including any qualified dividend income and any capital gains attributable to real estate depreciation recapture that are subject to a maximum 25% federal income tax rate) so that the designations will be proportionate among all outstanding classes of our shares.

Distributions in excess of our current or accumulated earnings and profits will not be taxable to a U.S. shareholder to the extent that they do not exceed the shareholder’s adjusted tax basis in our shares, but will reduce the shareholder’s basis in such shares. To the extent that these excess distributions exceed a U.S. shareholder’s adjusted basis in such shares, they will be included in income as capital gain, with long-term gain generally taxed to noncorporate U.S. shareholders at preferential maximum rates. No U.S. shareholder may include on its federal income tax return any of our net operating losses or any of our capital losses. In addition, no portion of any of our dividends is eligible for the dividends received deduction for corporate shareholders.

If a dividend is declared in October, November or December to shareholders of record during one of those months and is paid during the following January, then for federal income tax purposes the dividend will be treated as having been both paid and received on December 31 of the prior taxable year.

A U.S. shareholder will generally recognize gain or loss equal to the difference between the amount realized and the shareholder’s adjusted basis in our shares that are sold or exchanged. This gain or loss will be capital gain or loss, and will be long-term capital gain or loss if the shareholder’s holding period in our shares exceeds one year. In addition, any loss upon a sale or exchange of our shares held for six months or less will generally be treated as a long-term capital loss to the extent of any long-term capital gain dividends we paid on such shares during the holding period.

U.S. shareholders who are individuals, estates or trusts are generally required to pay a 3.8% Medicare tax on their net investment income (including dividends on our shares (without regard to any deduction allowed by Section 199A of the IRC) and gains from the sale or other disposition of our shares), or in the case of estates and trusts on their net investment income that is not distributed, in each case to the extent that their total adjusted income exceeds applicable thresholds. U.S. shareholders are urged to consult their tax advisors regarding the application of the 3.8% Medicare tax.

If a U.S. shareholder recognizes a loss upon a disposition of our shares in an amount that exceeds a prescribed threshold, it is possible that the provisions of Treasury regulations involving “reportable transactions” could apply, with a resulting requirement to separately disclose the loss-generating transaction to the IRS. These Treasury regulations are written quite broadly, and apply to many routine and simple transactions. A reportable transaction currently includes, among other things, a sale or exchange of our shares resulting in a tax loss in excess of (a) $10 million in any single year or $20 million in a prescribed combination of taxable years in the case of our shares held by a C corporation or by a partnership with only C corporation partners or (b) $2 million in any single year or $4 million in a prescribed combination of taxable years in the case of our shares held by any other partnership or an S corporation, trust or individual, including losses that flow through pass through entities to individuals. A taxpayer discloses a reportable transaction by filing IRS Form 8886 with its federal income tax return and, in the first year of filing, a copy of Form 8886 must be sent to the IRS’s Office of Tax Shelter Analysis. The annual maximum penalty for failing to disclose a reportable transaction is generally $10,000 in the case of a natural person and $50,000 in any other case.

Noncorporate U.S. shareholders who borrow funds to finance their acquisition of our shares could be limited in the amount of deductionsallowed for the interest paid on the indebtedness incurred. Under Section 163(d) of the IRC, interest paid or accrued on indebtedness incurred or continued to purchase or carry property held for investment is generally deductible only to the extent of the investor’s net investment income. A U.S. shareholder’s net investment income will include, only if an

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appropriate election is made by the shareholder, capital gain dividend distributions and qualified dividends received from us. In addition, a U.S. shareholder that utilizes the deduction under Section 199A of the IRC with respect to qualified REIT dividends received from us may also be required to make a similar election in order to include such qualified REIT dividends in the calculation of net investment income. Distributions treated as a nontaxable return of the shareholder’s basis will not enter into the computation of net investment income.

Taxation of Tax-Exempt U.S. Shareholders

The rules governing the federal income taxation of tax-exempt entities are complex, and the following discussion is intended only as a summary of material considerations of an investment in our shares relevant to such investors. If you are a tax-exempt shareholder, we urge you to consult your own tax advisor to determine the impact of federal, state, local and foreign tax laws, including any tax return filing and other reporting requirements, with respect to your acquisition of or investment in our shares.

Our distributions made to shareholders that are tax-exempt pension plans, individual retirement accounts or other qualifying tax-exempt entities should not constitute UBTI, provided that the shareholder has not financed its acquisition of our shares with “acquisition indebtedness” within the meaning of the IRC, that the shares are not otherwise used in an unrelated trade or business of the tax-exempt entity, and that, consistent with our present intent, we do not hold a residual interest in a real estate mortgage investment conduit or otherwise hold mortgage assets or conduct mortgage securitization activities that generate “excess inclusion” income.

Taxation of Non-U.S. Shareholders

The rules governing the U.S. federal income taxation of non-U.S. shareholders are complex, and the following discussion is intended only as a summary of material considerations of an investment in our shares relevant to such investors. If you are a non-U.S. shareholder, we urge you to consult your own tax advisor to determine the impact of U.S. federal, state, local and foreign tax laws, including any tax return filing and other reporting requirements, with respect to your acquisition of or investment in our shares.

We expect that a non-U.S. shareholder’s receipt of (a) distributions from us, and (b) proceeds from the sale of our shares, will not be treated as income effectively connected with a U.S. trade or business and a non-U.S. shareholder will therefore not be subject to the often higher federal tax and withholding rates, branch profits taxes and increased reporting and filing requirements that apply to income effectively connected with a U.S. trade or business. This expectation and a number of the determinations below are predicated on our shares being listed on a U.S. national securities exchange, such as Nasdaq. Each class of our shares has been listed on a U.S. national securities exchange; however, we cannot be sure that our shares will continue to be so listed in future taxable years or that any class of our shares that we may issue in the future will be so listed.

Distributions. A distribution by us to a non-U.S. shareholder that is not designated as a capital gain dividend will be treated as an ordinary income dividend to the extent that it is made out of our current or accumulated earnings and profits. A distribution of this type will generally be subject to U.S. federal income tax and withholding at the rate of 30%, or at a lower rate if the non-U.S. shareholder has in the manner prescribed by the IRS demonstrated to the applicable withholding agent its entitlement to benefits under a tax treaty. Because we cannot determine our current and accumulated earnings and profits until the end of the taxable year, withholding at the statutory rate of 30% or applicable lower treaty rate will generally be imposed on the gross amount of any distribution to a non-U.S. shareholder that we make and do not designate as a capital gain dividend. Notwithstanding this potential withholding on distributions in excess of our current and accumulated earnings and profits, these excess portions of distributions are a nontaxable return of capital to the extent that they do not exceed the non-U.S. shareholder’s adjusted basis in our shares, and the nontaxable return of capital will reduce the adjusted basis in these shares. To the extent that distributions in excess of our current and accumulated earnings and profits exceed the non-U.S. shareholder’s adjusted basis in our shares, the distributions will give rise to U.S. federal income tax liability only in the unlikely event that the non-U.S. shareholder would otherwise be subject to tax on any gain from the sale or exchange of these shares, as discussed below under the heading “—Dispositions of Our Shares.” A non-U.S. shareholder may seek a refund from the IRS of amounts withheld on distributions to it in excess of such shareholder’s allocable share of our current and accumulated earnings and profits.

For so long as a class of our shares is listed on a U.S. national securities exchange, capital gain dividends that we declare and pay to a non-U.S. shareholder on those shares, as well as dividends to a non-U.S. shareholder on those shares attributable to our sale or exchange of “United States real property interests” within the meaning of Section 897 of the IRC, or USRPIs, will not be subject to withholding as though those amounts were effectively connected with a U.S. trade or business, and non-U.S. shareholders will not be required to file U.S. federal income tax returns or pay branch profits tax in respect of

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these dividends. Instead, these dividends will generally be treated as ordinary dividends and subject to withholding in the manner described above.

Tax treaties may reduce the withholding obligations on our distributions. Under some treaties, however, rates below 30% that are applicable to ordinary income dividends from U.S. corporations may not apply to ordinary income dividends from a REIT or may apply only if the REIT meets specified additional conditions. A non-U.S. shareholder must generally use an applicable IRS Form W-8, or substantially similar form, to claim tax treaty benefits. If the amount of tax withheld with respect to a distribution to a non-U.S. shareholder exceeds the shareholder’s U.S. federal income tax liability with respect to the distribution, the non-U.S. shareholder may file for a refund of the excess from the IRS. Treasury regulations also provide special rules to determine whether, for purposes of determining the applicability of a tax treaty, our distributions to a non-U.S. shareholder that is an entity should be treated as paid to the entity or to those owning an interest in that entity, and whether the entity or its owners are entitled to benefits under the tax treaty.

If, contrary to our expectation, a class of our shares was not listed on a U.S. national securities exchange and we made a distribution on those shares that was attributable to gain from the sale or exchange of a USRPI, then a non-U.S. shareholder holding those shares would be taxed as if the distribution was gain effectively connected with a trade or business in the United States conducted by the non-U.S. shareholder. In addition, the applicable withholding agent would be required to withhold from a distribution to such a non-U.S. shareholder, and remit to the IRS, up to 21% of the maximum amount of any distribution that was or could have been designated as a capital gain dividend. The non-U.S. shareholder also would generally be subject to the same treatment as a U.S. shareholder with respect to the distribution (subject to any applicable alternative minimum tax and a special alternative minimum tax in the case of a nonresident alien individual), would be subject to fulsome U.S. federal income tax return reporting requirements, and, in the case of a corporate non-U.S. shareholder, may owe the up to 30% branch profits tax under Section 884 of the IRC (or lower applicable tax treaty rate) in respect of these amounts.

Dispositions of Our Shares. If as expected our shares are not USRPIs, then a non-U.S. shareholder’s gain on the sale of these shares generally will not be subject to U.S. federal income taxation or withholding. We expect that our shares will not be USRPIs because one or both of the following exemptions will be available at all times.

First, for so long as a class of our shares is listed on a U.S. national securities exchange, a non-U.S. shareholder’s gain on the sale of those shares will not be subject to U.S. federal income taxation as a sale of a USRPI. Second, our shares will not constitute USRPIs if we are a “domestically controlled” REIT. We will be a “domestically controlled” REIT if less than 50% of the value of our shares (including any future class of shares that we may issue) is held, directly or indirectly, by non-U.S. shareholders at all times during the preceding five years, after applying specified presumptions regarding the ownership of our shares as described in Section 897(h)(4)(E) of the IRC. For these purposes, we believe that the statutory ownership presumptions apply to validate our status as a “domestically controlled” REIT. Accordingly, we believe that we are and will remain a “domestically controlled” REIT.

If, contrary to our expectation, a gain on the sale of our shares is subject to U.S. federal income taxation (for example, because neither of the above exemptions were then available, i.e., that class of our shares were not then listed on a U.S. national securities exchange and we were not a “domestically controlled” REIT), then (a) a non-U.S. shareholder would generally be subject to the same treatment as a U.S. shareholder with respect to its gain (subject to any applicable alternative minimum tax and a special alternative minimum tax in the case of nonresident alien individuals), (b) the non-U.S. shareholder would also be subject to fulsome U.S. federal income tax return reporting requirements, and (c) a purchaser of that class of our shares from the non-U.S. shareholder may be required to withhold 15% of the purchase price paid to the non-U.S. shareholder and to remit the withheld amount to the IRS.

Information Reporting, Backup Withholding and Foreign Account Withholding

Information reporting, backup withholding, and foreign account withholding may apply to distributions or proceeds paid to our shareholders under the circumstances discussed below. If a shareholder is subject to backup or other U.S. federal income tax withholding, then the applicable withholding agent will be required to withhold the appropriate amount with respect to a deemed or constructive distribution or a distribution in kind even though there is insufficient cash from which to satisfy the withholding obligation. To satisfy this withholding obligation, the applicable withholding agent may collect the amount of U.S. federal income tax required to be withheld by reducing to cash for remittance to the IRS a sufficient portion of the property that the shareholder would otherwise receive or own, and the shareholder may bear brokerage or other costs for this withholding procedure.

Amounts withheld under backup withholding are generally not an additional tax and may be refunded by the IRS or credited against the shareholder’s federal income tax liability, provided that such shareholder timely files for a refund or credit

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with the IRS. A U.S. shareholder may be subject to backup withholding when it receives distributions on our shares or proceeds upon the sale, exchange, redemption, retirement or other disposition of our shares, unless the U.S. shareholder properly executes, or has previously properly executed, under penalties of perjury an IRS Form W-9 or substantially similar form that:

• provides the U.S. shareholder’s correct taxpayer identification number;

• certifies that the U.S. shareholder is exempt from backup withholding because (a) it comes within an enumerated exempt category, (b) it has not been notified by the IRS that it is subject to backup withholding, or (c) it has been notified by the IRS that it is no longer subject to backup withholding; and    

• certifies that it is a U.S. citizen or other U.S. person.

If the U.S. shareholder has not provided and does not provide its correct taxpayer identification number and appropriate certifications on an IRS Form W-9 or substantially similar form, it may be subject to penalties imposed by the IRS, and the applicable withholding agent may have to withhold a portion of any distributions or proceeds paid to such U.S. shareholder. Unless the U.S. shareholder has established on a properly executed IRS Form W-9 or substantially similar form that it comes within an enumerated exempt category, distributions or proceeds on our shares paid to it during the calendar year, and the amount of tax withheld, if any, will be reported to it and to the IRS.

Distributions on our shares to a non-U.S. shareholder during each calendar year and the amount of tax withheld, if any, will generally be reported to the non-U.S. shareholder and to the IRS. This information reporting requirement applies regardless of whether the non-U.S. shareholder is subject to withholding on distributions on our shares or whether the withholding was reduced or eliminated by an applicable tax treaty. Also, distributions paid to a non-U.S. shareholder on our shares will generally be subject to backup withholding, unless the non-U.S. shareholder properly certifies to the applicable withholding agent its non-U.S. shareholder status on an applicable IRS Form W-8 or substantially similar form. Information reporting and backup withholding will not apply to proceeds a non-U.S. shareholder receives upon the sale, exchange, redemption, retirement or other disposition of our shares, if the non-U.S. shareholder properly certifies to the applicable withholding agent its non-U.S. shareholder status on an applicable IRS Form W-8 or substantially similar form. Even without having executed an applicable IRS Form W-8 or substantially similar form, however, in some cases information reporting and backup withholding will not apply to proceeds that a non-U.S. shareholder receives upon the sale, exchange, redemption, retirement or other disposition of our shares if the non-U.S. shareholder receives those proceeds through a broker’s foreign office.

Non-U.S. financial institutions and other non-U.S. entities are subject to diligence and reporting requirements for purposes of identifying accounts and investments held directly or indirectly by U.S. persons. The failure to comply with these additional information reporting, certification and other requirements could result in a 30% U.S. withholding tax on applicable payments to non-U.S. persons, notwithstanding any otherwise applicable provisions of an income tax treaty. In particular, a payee that is a foreign financial institution that is subject to the diligence and reporting requirements described above must enter into an agreement with the U.S. Department of the Treasury requiring, among other things, that it undertake to identify accounts held by “specified United States persons” or “United States owned foreign entities” (each as defined in the IRC and administrative guidance thereunder), annually report information about such accounts, and withhold 30% on applicable payments to noncompliant foreign financial institutions and account holders. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States with respect to these requirements may be subject to different rules. The foregoing withholding regime generally applies to payments of dividends on our shares. In general, to avoid withholding, any non-U.S. intermediary through which a shareholder owns our shares must establish its compliance with the foregoing regime, and a non-U.S. shareholder must provide specified documentation (usually an applicable IRS Form W-8) containing information about its identity, its status, and if required, its direct and indirect U.S. owners. Non-U.S. shareholders and shareholders who hold our shares through a non-U.S. intermediary are encouraged to consult their own tax advisors regarding foreign account tax compliance.

Other Tax Considerations

Our tax treatment and that of our shareholders may be modified by legislative, judicial or administrative actions at any time, which actions may have retroactive effect. The rules dealing with federal income taxation are constantly under review by the U.S. Congress, the IRS and the U.S. Department of the Treasury, and statutory changes, new regulations, revisions to existing regulations and revised interpretations of established concepts are issued frequently; in fact, significant administrative guidance has been promulgated in response to the substantial December 2017 amendments to the IRC, additional amendments to the IRC have been enacted subsequent to the December 2017 amendments to the IRC, and additional guidance or subsequent amendments to the IRC could be promulgated or enacted in the future. Likewise, the rules regarding taxes other than U.S. federal income taxes may also be modified. No prediction can be made as to the likelihood of passage of new tax legislation or

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other provisions, or the direct or indirect effect on us and our shareholders. Revisions to tax laws and interpretations of these laws could adversely affect our ability to qualify and be taxed as a REIT, as well as the tax or other consequences of an investment in our shares. We and our shareholders may also be subject to taxation by state, local or other jurisdictions, including those in which we or our shareholders transact business or reside. These tax consequences may not be comparable to the U.S. federal income tax consequences discussed above.

ERISA PLANS, KEOGH PLANS AND INDIVIDUAL RETIREMENT ACCOUNTS

General Fiduciary Obligations

The Employee Retirement Income Security Act of 1974, as amended, or ERISA, the IRC and similar provisions to those described below under applicable foreign or state law, individually and collectively, impose certain duties on persons who are fiduciaries of any employee benefit plan subject to Title I of ERISA, or an ERISA Plan, or an individual retirement account or annuity, or an IRA, a Roth IRA, a tax-favored account (such as an Archer MSA, Coverdell education savings account or health savings account), a Keogh plan or other qualified retirement plan not subject to Title I of ERISA, each a Non-ERISA Plan. Under ERISA and the IRC, any person who exercises any discretionary authority or control over the administration of, or the management or disposition of the assets of, an ERISA Plan or Non-ERISA Plan, or who renders investment advice for a fee or other compensation to an ERISA Plan or Non-ERISA Plan, is generally considered to be a fiduciary of the ERISA Plan or Non-ERISA Plan.

Fiduciaries of an ERISA Plan must consider whether:

• their investment in our shares or other securities satisfies the diversification requirements of ERISA;

• the investment is prudent in light of possible limitations on the marketability of our shares;

• they have authority to acquire our shares or other securities under the applicable governing instrument and Title I of ERISA; and

• the investment is otherwise consistent with their fiduciary responsibilities.

Fiduciaries of an ERISA Plan may incur personal liability for any loss suffered by the ERISA Plan on account of a violation of their fiduciary responsibilities. In addition, these fiduciaries may be subject to a civil penalty of up to 20% of any amount recovered by the ERISA Plan on account of a violation. Fiduciaries of any Non-ERISA Plan should consider that the Non-ERISA Plan may only make investments that are authorized by the appropriate governing instrument and applicable law.

Fiduciaries considering an investment in our securities should consult their own legal advisors if they have any concern as to whether the investment is consistent with the foregoing criteria or is otherwise appropriate. The sale of our securities to an ERISA Plan or Non-ERISA Plan is in no respect a representation by us or any underwriter of the securities that the investment meets all relevant legal requirements with respect to investments by the arrangements generally or any particular arrangement, or that the investment is appropriate for arrangements generally or any particular arrangement.

Prohibited Transactions

Fiduciaries of ERISA Plans and persons making the investment decision for Non-ERISA Plans should consider the application of the prohibited transaction provisions of ERISA and the IRC in making their investment decision. Sales and other transactions between an ERISA Plan or a Non-ERISA Plan and disqualified persons or parties in interest, as applicable, are prohibited transactions and result in adverse consequences absent an exemption. The particular facts concerning the sponsorship, operations and other investments of an ERISA Plan or Non-ERISA Plan may cause a wide range of persons to be treated as disqualified persons or parties in interest with respect to it. A non-exempt prohibited transaction, in addition to imposing potential personal liability upon ERISA Plan fiduciaries, may also result in the imposition of an excise tax under the IRC or a penalty under ERISA upon the disqualified person or party in interest. If the disqualified person who engages in the transaction is the individual on behalf of whom an IRA, Roth IRA or other tax-favored account is maintained (or his beneficiary), the IRA, Roth IRA or other tax-favored account may lose its tax-exempt status and its assets may be deemed to have been distributed to the individual in a taxable distribution on account of the non-exempt prohibited transaction, but no excise tax will be imposed. Fiduciaries considering an investment in our securities should consult their own legal advisors as to whether the ownership of our securities involves a non-exempt prohibited transaction.

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“Plan Assets” Considerations

The U.S. Department of Labor has issued a regulation defining “plan assets.” The regulation, as subsequently modified by ERISA, generally provides that when an ERISA Plan or a Non-ERISA Plan otherwise subject to Title I of ERISA and/or Section 4975 of the IRC acquires an interest in an entity that is neither a “publicly offered security” nor a security issued by an investment company registered under the Investment Company Act of 1940, as amended, the assets of the ERISA Plan or Non-ERISA Plan include both the equity interest and an undivided interest in each of the underlying assets of the entity, unless it is established either that the entity is an operating company or that equity participation in the entity by benefit plan investors is not significant. We are not an investment company registered under the Investment Company Act of 1940, as amended.

Each class of our equity (that is, our common shares and any other class of equity that we may issue) must be analyzed separately to ascertain whether it is a publicly offered security. The regulation defines a publicly offered security as a security that is “widely held,” “freely transferable” and either part of a class of securities registered under the Exchange Act,or sold under an effective registration statement under the Securities Act of 1933, as amended, or the Securities Act, provided the securities are registered under the Exchange Act within 120 days after the end of the fiscal year of the issuer during which the offering occurred. Each class of our outstanding shares has been registered under the Exchange Act within the necessary time frame to satisfy the foregoing condition.

The regulation provides that a security is “widely held” only if it is part of a class of securities that is owned by 100 or more investors independent of the issuer and of one another. However, a security will not fail to be “widely held” because the number of independent investors falls below 100 subsequent to the initial public offering as a result of events beyond the issuer’s control. Although we cannot be sure, we believe our common shares have been and will remain widely held, and we expect the same to be true of any future class of equity that we may issue.

The regulation provides that whether a security is “freely transferable” is a factual question to be determined on the basis of all relevant facts and circumstances. The regulation further provides that, where a security is part of an offering in which the minimum investment is $10,000 or less, some restrictions on transfer ordinarily will not, alone or in combination, affect a finding that these securities are freely transferable. The restrictions on transfer enumerated in the regulation as not affecting that finding include:    

• any restriction on or prohibition against any transfer or assignment that would result in a termination or reclassification for federal or state tax purposes, or would otherwise violate any state or federal law or court order;

• any requirement that advance notice of a transfer or assignment be given to the issuer and any requirement that either the transferor or transferee, or both, execute documentation setting forth representations as to compliance with any restrictions on transfer that are among those enumerated in the regulation as not affecting free transferability, including those described in the preceding clause of this sentence;

• any administrative procedure that establishes an effective date, or an event prior to which a transfer or assignment will not be effective; and    

• any limitation or restriction on transfer or assignment that is not imposed by the issuer or a person acting on behalf of the issuer.

We believe that the restrictions imposed under our declaration of truston the transfer of shares do not result in the failure of our shares to be “freely transferable.” Furthermore, we believe that there exist no other facts or circumstances limiting the transferability of our shares that are not included among those enumerated as not affecting their free transferability under the regulation, and we do not expect or intend to impose in the future, or to permit any person to impose on our behalf, any limitations or restrictions on transfer that would not be among the enumerated permissible limitations or restrictions.

Assuming that each class of our shares will be “widely held” and that no other facts and circumstances exist that restrict transferability of these shares, our counsel, Sullivan & Worcester LLP, is of the opinion that our shares will not fail to be “freely transferable” for purposes of the regulation due to the restrictions on transfer of our shares in our declaration of trustand that under the regulation each class of our currently outstanding shares is publicly offered and our assets will not be deemed to be “plan assets” of any ERISA Plan or Non-ERISA Plan that acquires our shares in a public offering. This opinion is conditioned upon certain assumptions and representations, as discussed above in “Material United States Federal Income Tax Considerations—Taxation as a REIT."

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Item 1A. Risk Factors

Our business is subject to a number of risks and uncertainties. Investors and prospective investors should carefully consider the risks described below, together with all of the other information in this Annual Report on Form 10-K. The risks described below may not be the only risks we face but are risks we believe may be material at this time. Additional risks that we do not yet know of, or that we currently think are immaterial, also may impair our business operations or financial results. If any of the events or circumstances described below occurs, our business, financial condition, results of operations or ability to make distributions to our shareholders, and the value of our securities could be adversely affected. Investors and prospective investors should consider the following risks, the information contained under the heading “Warning Concerning Forward Looking Statements” and the risks described elsewhere in this Annual Report on Form 10-K before deciding whether to invest in our securities.

Risks Related to Our Business

We may be unable to lease our properties when our leases expire.

The weighted average remaining term of our leases in effect as of December 31, 2018 is 5.7 years based upon annualized rental income and 6.0 years based upon occupied consolidated square footage. As of December 31, 2018, leases representing approximately 47.1% of our annualized rental income and 45.0% of our occupied consolidated square footage will expire by December 31, 2023. Our leases with government tenants typically have shorter terms than our leases with nongovernment tenants, although the terms of our leases with government contractor tenants tend to be for terms consistent with the tenants’ with government contracts, which are generally three to five years. These shorter terms require more frequent lease renewal or releasing.

Although we typically will seek to renew our leases with current tenants when they expire, we cannot be sure that we will be successful in doing so. If our tenants do not renew their leases, we may be unable to obtain new tenants to maintain or increase the historical occupancy rates of, or rents from, our properties.

We may experience declining rents or incur significant costs to renew our leases or to lease our properties to new tenants.

When we renew our leases with current tenants or lease to new tenants, we may experience rent decreases, and we may have to spend substantial amounts for leasing commissions, tenant improvements or other tenant inducements. Moreover, many of our properties have been specially designed for the particular businesses of our tenants; if the current leases for such properties are terminated or are not renewed, we may be required to renovate such properties at substantial costs, decrease the rents we charge or provide other concessions in order to lease such properties to new tenants. Further, laws and regulations applicable to government leasing often require public solicitations of bids when new or renewal leases are being considered. Market conditions may require us to lower our rents to retain government or other tenants. Some of our current rents include payments to amortize the cost of tenant improvements which government or other tenants may be unwilling to pay or contractually allowed to eliminate when leases are renewed.

Current office space utilization trends may adversely impact our business.

There is a general trend in office real estate for tenants to decrease the space they occupy per employee. This increase in office utilization rates may result in our office tenants renewing their leases for less area than they currently occupy, which could increase the vacancy and decrease rental income at our properties. The need to reconfigure leased office space to increase utilization also may require us to spend increased amounts for tenant improvements. If substantial reconfiguration of the tenant’s space is required to achieve the increase in space utilized, the tenant may find it more advantageous to relocate than to renew its lease and renovate the existing space.

Some of our properties depend upon a single tenant for all or a majority of its rental income; therefore, our financial condition, including our ability to make distributions to shareholders, may be adversely affected by the bankruptcy or insolvency, a downturn in the business, or a lease termination of a single tenant.

As of December 31, 2018, 6.9% of our annualized rental revenue is from our properties leased to private sector single tenants. The value of our private sector single tenant properties is materially dependent on the performance of those tenants under their respective leases. These tenants face competition within their industries and other factors that could reduce their ability to pay us rent. Lease payment defaults by such tenants could cause us to reduce the amount of distributions that we pay to our shareholders. A default by a single or major tenant, the failure of a guarantor to fulfill its obligations or other premature

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termination of a lease to such a tenant or such tenant’s election not to extend a lease upon its expiration could have an adverse effect on our financial condition, results of operations, liquidity and ability to pay distributions to our shareholders.

Government budgetary pressures and priorities and trends in government employment and office leasing may adversely impact our business.

We believe that current government budgetary pressures, enhancements in technology and policy and administrative decisions have resulted in a decrease in government employment, in government tenants reducing their space utilization per employee and in consolidation of government tenants into existing government owned properties, thereby reducing the demand for government leased space. Our historical experience with respect to properties of the type we own that are majority leased to government tenants has been that government tenants frequently renew leases to avoid the costs and disruptions that may result from relocating their operations. However, efforts to reduce space utilization rates may result in our tenants exercising early termination rights under our leases, vacating our properties upon expiration of our leases in order to relocate, or in renewing their leases for less space than they currently occupy. Also, our government tenants’ desire to reconfigure leased office space to reduce utilization per employee may require us to spend significant amounts for tenant improvements, and tenant relocations in such circumstances are more prevalent now than in our past experience. Increasing uncertainty with respect to government agency budgets and funding to implement relocations, consolidations and reconfigurations have recently resulted in delayed decisions by some of our government tenants and their reliance on short term lease renewals. At present, we are unable to reasonably project what the financial impact of market conditions or changing government financial and other circumstances will be on our financial results for future periods.

We currently have a concentration of properties in the metropolitan Washington, D.C. market area and are exposed to changes in market conditions in this area.

Approximately 26.5% of our annualized rental income as of December 31, 2018 was received from our consolidated properties located in the metropolitan Washington, D.C. market area. In addition, the two properties owned by two joint ventures in which we own 50% and 51% interests are also located in the metropolitan Washington, D.C. market area. A downturn in economic conditions in this area could result in reduced demand from tenants for our properties or lower rents that our tenants in this area are willing to pay when our leases expire or terminate and when renewal or new terms are negotiated. Additionally, in recent years there has been a decrease in demand for new leased space by the U.S. Government in the metropolitan Washington, D.C. market area, and that could increase competition for government tenants and adversely affect our ability to retain government tenants when our leases expire.

We may also be subject to changes in the regulatory environment of the metropolitan Washington, D.C. market area (such as increases in real estate and other taxes, costs of complying with government regulations or increased regulation and other factors) or other adverse conditions or events (such as natural disasters). Thus, adverse developments and/or conditions in metropolitan Washington, D.C. market area could reduce demand for space, impact the credit worthiness of our tenants or force our tenants to curtail operations, which could impair their ability to meet their rent obligations to us and, accordingly, could have a material adverse effect on our results of operations.

We may be unable to grow our business by acquisitions of additional properties, and we might encounter unanticipated difficulties and expenditures relating to our acquired properties, including those acquired as part of the FPO Transaction and the SIR Merger.

Our business plans involve the acquisition of additional properties. Our ability to make profitable acquisitions is subject to risks, including, but not limited to, risks associated with:

• competition from other investors, including publicly traded and private REITs, numerous financial institutions, individuals, foreign investors and other public and private companies;

• our long term cost of capital;

• contingencies in our acquisition agreements; and

• the availability and terms of financing.

We might encounter unanticipated difficulties and expenditures relating to our acquired properties, including those acquired as part of the FPO Transaction and the SIR Merger. For example:

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• we do not believe that it is possible to understand fully a property before it is owned and operated for a reasonable period of time, and, notwithstanding pre-acquisition due diligence, we could acquire a property that contains undisclosed defects in design or construction;

• the market in which an acquired property is located may experience unexpected changes that adversely affect the property’s value;

• the occupancy of and rents from properties that we acquire may decline during our ownership;

• property operating costs for our acquired properties may be higher than anticipated and our acquired properties may not yield expected returns;

• we may acquire properties subject to unknown liabilities and without any recourse, or with limited recourse, such as liability for the cleanup of undisclosed environmental contamination or for claims by tenants, vendors or other persons related to actions taken by former owners of the properties; and

• acquired properties might require significant management attention that would otherwise be devoted to our other business activities.

The FPO Transaction and the SIR Merger were significant acquisitions for us. Until we fully implement our long term financing plan for the SIR Merger, including sales of properties, we expect that our acquisition activities may be reduced. As a result, our growth by acquisitions will likely be delayed and thereafter could be further delayed or unattained for the reasons noted above or otherwise.

For these reasons, among others, we might not realize the anticipated benefits of our acquisitions and our business plan to acquire additional properties may not succeed or may cause us to experience losses.

Our plans to sell properties or assets and reduce our leverage may not be successful.

An element of our business plan involves the sale of properties. We cannot be sure that we will be able to find attractive sale opportunities or that any sale will be completed in a timely manner, if at all. For example, we have pending agreements to sell one building and one land parcel in two separate transactions for an aggregate sale price of $77.1 million, subject to, in certain cases, due diligence and customary closing conditions, and we have also identified an additional approximately $700.0 million of assets for sale. Our estimated value for these properties is based on our knowledge of the properties, local markets and multiples on projected cash flows. This estimate involves multiple assumptions and judgments about future events that are inherently uncertain; accordingly, we cannot be sure regarding the actual gross proceeds that will be realized if these sales are consummated. We expect to use the proceeds from these asset sales to reduce our leverage. Our ability to sell these or any of our other properties, and the prices we receive upon a sale, may be affected by many factors, and we may be unable to execute our strategy. In particular, these factors could arise from weakness in or the lack of an established market for a property, changes in the financial condition or prospects of prospective purchasers and the availability of financing to potential purchasers on reasonable terms, the number of prospective purchasers, the number of competing properties on the market, unfavorable local, national or international economic conditions, industry trends, and changes in laws, regulations or fiscal policies of jurisdictions in which the property is located. We may not succeed in selling properties that we have identified, or in the future identify, for sale, the terms of any such sales may not meet our expectations and we may incur losses in connection with these potential sales. Alternatively, in lieu of selling such properties, we may sell some or all of the approximately 2.8 million shares of class A common stock of RMR Inc. that we own. We cannot be sure that we will be able to consummate any such sale on favorable terms or at all. If we are unable to realize proceeds from the sale of properties or other assets sufficient to allow us to reduce our leverage to a level we believe appropriate or which ratings agencies and possible financing sources believe appropriate, our credit ratings may be lowered, we may reduce our acquisition activity, reduce the amount we invest in our properties or pay for expenses and we may reduce the amount of distributions we pay to our shareholders.

REIT distribution requirements and limitations on our ability to access reasonably priced capital may adversely impact our ability to carry out our business plan.

To maintain our qualification for taxation as a REIT under the IRC, we are required to distribute at least 90% of our annual REIT taxable income (excluding capital gains). Accordingly, we may not be able to retain sufficient cash to fund our operations, repay our debts, invest in our properties or fund our acquisitions or development or redevelopment efforts. Our business strategies therefore depend, in part, upon our ability to raise additional capital at reasonable costs. The volatility in the

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availability of capital to businesses on a global basis in most debt and equity markets generally may limit our ability to raise reasonably priced capital. We may also be unable to raise reasonably priced capital because of reasons related to our business, market perceptions of our prospects, the terms of our indebtedness, the extent of our leverage or for reasons beyond our control, such as market conditions. Because the earnings we are permitted to retain are limited by the rules governing REIT qualification and taxation, if we are unable to raise reasonably priced capital, we may not be able to carry out our business plan.

We face significant competition.

We face significant competition for acquisition opportunities from other investors, including publicly traded and private REITs, numerous financial institutions, individuals, foreign investors and other public and private companies. Some of our competitors may have greater financial and other resources than us. Because of competition for acquisitions, we may be unable to acquire desirable properties or we may pay higher prices for, and realize lower net cash flows than we hope to achieve from, acquisitions.

We also face competition for tenants at our properties. Some competing properties may be newer, better located or more attractive to tenants. Competing properties may have lower rates of occupancy than our properties, which may result in competing owners offering available space at lower rents than we offer at our properties. Development activities may increase the supply of properties of the type we own in the leasing markets in which we own properties and increase the competition we face. Competition may make it difficult for us to attract and retain tenants and may reduce the rents we are able to charge. For example, government tenants are generally viewed as desirable tenants and are therefore difficult to attract and retain.

The U.S. Government’s “green lease” policies may adversely affect us.

In recent years, the U.S. Government has instituted “green lease” policies which allow a government tenant to require leadership in energy and environmental design for commercial interiors, or LEED®-CI, designation in selecting new premises or renewing leases at existing premises. In addition, the Energy Independence and Security Act of 2007 allows the GSA to give preference to buildings for lease that have received an “Energy Star” label. Obtaining such designation and labels may be costly and time consuming, but our failure to do so may result in our competitive disadvantage in acquiring new or retaining existing government tenants.

Some government tenants have the right to terminate their leases prior to their lease expiration date and changes in the U.S. Government’s and state governments’ requirements for leased space may adversely affect us.

As of December 31, 2018, 35.4% of our annualized rental income was from government tenants, which includes the U.S. government, state governments and municipalities. Some of our leases with government tenants allow the tenants to vacate the leased premises before the stated terms of the leases expire with little or no liability. In particular:

• Government tenants occupying approximately 4.8% of our consolidated rentable square feet and contributing approximately 4.3% of our annualized rental income as of December 31, 2018 have currently exercisable rights to terminate their leases before the stated term of their leases expire.

• In 2019, 2020, 2021, 2022, 2023, 2024, 2026 and 2028, early termination rights become exercisable by government tenants who currently occupy an additional approximately 1.9%, 2.6%, 0.5%, 0.6%, 0.2%, 0.4%, 0.3% and 0.3% of our consolidated rentable square feet, respectively, and contribute an additional approximately 2.0%, 2.9%, 0.6%, 0.5%, 0.3%, 0.5%, 0.5% and 0.3% of our annualized rental income, respectively, as of December 31, 2018.

• Pursuant to leases with 20 of our government tenants, these tenants have currently exercisable rights to terminate their leases if their respective legislature or other funding authority does not appropriate rent amounts in their respective annual budgets. These 20 tenants represent approximately 6.7% of our consolidated rentable square feet and 7.1% of our annualized rental income as of December 31, 2018.

For fiscal policy reasons, security concerns or other reasons, some or all of our government tenants may decide to exercise early termination rights under our leases or vacate our properties upon expiration of our leases. We believe the U.S. Government is actively trying to reduce their space utilization per employee and consolidate into existing government owned properties. If a significant number of such events occur, our income and cash flow may materially decline and our ability to make or sustain distributions to our shareholders may be jeopardized.

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We may be unable to realize our expected expense savings from the SIR Merger.

We currently expect to realize annual general and administrative expense savings compared to what we and SIR incurred in the aggregate prior to our acquisition of SIR or would have incurred if we had not acquired SIR resulting from reduced corporate and administrative costs, reduced SEC filing requirements and other cost savings due to maintaining one public company rather than two public companies. In fact, we may realize less or no savings and any annual general and administrative expenses incurred may be higher than the aggregate amounts we and SIR incurred prior to our acquisition of SIR or would have incurred if we had not acquired SIR.

Real estate construction and redevelopment creates risks.

We may develop new properties or redevelop some of our existing properties as the existing leases expire, as our tenants’ needs change or to pursue any other opportunities that we believe are desirable. The development and redevelopment of new and existing buildings involves significant risks in addition to those involved in the ownership and operation of leased properties, including the risks that construction may not be completed on schedule or within budget, resulting in increased construction costs and delays in leasing such properties and generating cash flows. Development activities are also subject to risks relating to the inability to obtain, or delays in obtaining, all necessary zoning, land use, building, occupancy, and other required government permits and authorizations. Once completed, any new properties may perform below anticipated financial results. The occurrence of one or more of these circumstances in connection with our development or redevelopment activities could have an adverse effect on our financial condition, results of operations and the value of our securities.

We have debt and we may incur additional debt.

As of December 31, 2018, our consolidated indebtedness was $3.3 billion, our consolidated total debt to total gross assets ratio, was 59.0% and we had $575.0 million available for borrowing under our $750.0 million revolving credit facility. Our credit agreement includes a feature under which the maximum aggregate borrowing availability may be increased to up to $2.5 billion on a combined basis in certain circumstances.

We are subject to numerous risks associated with our debt, including the risk that our cash flows could be insufficient for us to make required payments on our debt. There are no limits in our organizational documents on the amount of debt we may incur, and we may incur substantial debt. Our debt obligations could have important consequences to our securityholders. Our incurring debt may increase our vulnerability to adverse economic, market and industry conditions, limit our flexibility in planning for, or reacting to, changes in our business, and place us at a disadvantage in relation to competitors that have lower debt levels. Our incurring debt could also increase the costs to us of incurring additional debt, increase our exposure to floating interest rates or expose us to potential events of default (if not cured or waived) under covenants contained in debt instruments that could have a material adverse effect on our business, financial condition and operating results. Excessive debt could reduce the available cash flow to fund, or limit our ability to obtain financing for working capital, capital expenditures, acquisitions, construction projects, refinancing, lease obligations or other purposes, and hinder our ability to maintain investment grade ratings from nationally recognized credit rating agencies or to make or sustain distributions to our shareholders.

If we default under any of our debt obligations, we may be in default under the agreements governing other debt obligations of ours which have cross default provisions, including our credit agreement and our senior unsecured notes indentures and their supplements. In such case, our lenders may demand immediate payment of any outstanding indebtedness and we could be forced to liquidate our assets for less than the values we would receive in a more orderly process.

We may fail to comply with the terms of our credit agreement and our senior unsecured notes indentures and their supplements, which could adversely affect our business and may prevent our making distributions to our shareholders.

Our credit agreement and our senior unsecured notes indentures and their supplements include various conditions, covenants and events of default. We may not be able to satisfy all of these conditions or may default on some of these covenants for various reasons, including for reasons beyond our control. For example, our credit agreement and our senior unsecured notes indentures and their supplements require us to maintain certain debt service ratios. Our ability to comply with such covenants will depend upon the net rental income we receive from our properties. If the occupancy at our properties declines or if our rents decline, we may be unable to borrow under our revolving credit facility. Complying with these covenants may limit our ability to take actions that may be beneficial to us and our securityholders.

If we are unable to borrow under our revolving credit facility, we may be unable to meet our obligations or grow our business by acquiring additional properties. If we default under our credit agreement, our lenders may demand immediate payment and may elect not to fund future borrowings. During the continuance of any event of default under our credit

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agreement, we may be limited or in some cases prohibited from making distributions to our shareholders. Any default under our credit agreement that results in acceleration of our obligations to repay outstanding indebtedness or in our no longer being permitted to borrow under our revolving credit facility would likely have serious adverse consequences to us and would likely cause the value of our securities to decline.

In the future, we may obtain additional debt financing, and the covenants and conditions which apply to any such additional debt may be more restrictive than the covenants and conditions that are contained in our credit agreement or our senior unsecured notes indentures and their supplements.

Amounts recoverable under our leases with government tenants for increased operating costs may be less than the actual increased costs.

Under some of our leases with government tenants, the tenant’s obligation to pay us adjusted rent for increased operating costs (e.g., the costs of cleaning services, supplies, materials, maintenance, trash removal, landscaping, snow removal, water, sewer charges, heating, electricity and certain administrative expenses) is increased annually based on a cost of living index rather than the actual amount of our costs. Accordingly, the amount of any rent adjustment may not fully offset any increased costs we may incur in providing these services.

Increasing interest rates may adversely affect us.

Since the most recent U.S. recession, the Board of Governors of the U.S. Federal Reserve System, or the U.S. Federal Reserve, has taken actions which have resulted in low interest rates prevailing in the marketplace for a historically long period of time. Recently, there have been some modest signs of inflationary price movements, and the U.S. Federal Reserve has been raising the federal funds rate since December 2016. Previously, the U.S. Federal Reserve had indicated that it expected to raise the federal funds rate further in 2019, although it recently indicated that it may delay making those increases. Market interest rates may continue to increase. In addition, as noted in Item 7A of this Annual Report on Form 10-K, LIBOR is expected to be phased out in 2021. The interest rate under our revolving credit facility and remaining term loan is based on LIBOR and the interest we may pay on any future debt that we may incur may also be based on LIBOR. An alternate interest rate index that may replace LIBOR may result in our paying increased interest. Interest rate increases may materially and negatively affect us in several ways, including:

• Investors may consider whether to buy or sell our common shares based upon the distribution rate on our common shares relative to the then prevailing market interest rates. If market interest rates go up, investors may expect a higher distribution rate than we are able to pay, which may increase our cost of capital, or they may sell our common shares and seek alternative investments that offer higher distribution rates. Sales of our common shares may cause a decline in the value of our common shares.

• Amounts outstanding under our revolving credit facility and term loans require interest to be paid at floating interest rates. When interest rates increase, our interest costs will increase, which could adversely affect our cash flows, our ability to pay principal and interest on our debt, our cost of refinancing our fixed rate debts when they become due and our ability to make or sustain distributions to our shareholders.

• Property values are often determined, in part, based upon a capitalization of rental income formula. When market interest rates increase, property investors often demand higher capitalization rates and that causes property values to decline. Increases in interest rates could lower the value of our properties and cause the value of our securities to decline.

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Ownership of real estate is subject to environmental risks and liabilities.

Ownership of real estate is subject to risks associated with environmental hazards. Under various laws, owners as well as tenants and operators of real estate may be required to investigate and clean up or remove hazardous substances present at or migrating from properties they own, lease or operate and may be held liable for property damage or personal injuries that result from hazardous substances. These laws also expose us to the possibility that we may become liable to government agencies or third parties for costs and damages they incur in connection with hazardous substances. The costs and damages that may arise from environmental hazards are difficult to assess and estimate for numerous reasons, including uncertainty about the extent of contamination, alternative treatment methods that may be applied, the location of the property which subjects it to differing local laws and regulations and their interpretations, as well as the time it may take to remediate contamination. In addition, these laws also impose various requirements regarding the operation and maintenance of properties and recordkeeping and reporting requirements relating to environmental matters that require us or the tenants of our properties to incur costs to comply with.

In addition, certain of our buildings contain asbestos. We believe any asbestos in our buildings is contained in accordance with applicable laws and regulations, and we have no current plans to remove it. If we remove the asbestos or renovate or demolish the affected properties, certain environmental regulations govern the manner in which the asbestos must be handled and removed, and we could incur substantial costs complying with such regulations.

We may incur substantial liabilities and costs for environmental matters.

We may incur environmental liabilities at our leased properties and our tenants may not indemnify us for those costs.

Our leases with non-government tenants generally require our tenants to operate in compliance with applicable law and to indemnify us against any environmental liabilities arising from their activities on our properties; however, applicable law may subject us to strict liability by virtue of our property ownership interests, and our tenants may fail to indemnify us for environmental liabilities we incur. The U.S. Government is not required to indemnify us for environmental hazards they create at our properties and therefore could hold us liable for environmental hazards they create at our properties and we could have no recourse to them.

Ownership of real estate is subject to risks from adverse weather and climate events.

Severe weather may have an adverse effect on certain properties we own. Flooding caused by rising sea levels

and severe weather events, including hurricanes, tornadoes and widespread fires, may have an adverse effect on properties we

own and result in significant losses to us and interruption of our business. When major weather or climate-related events, such as hurricanes, floods and wildfires, occur at or near our properties, our tenants may need to suspend operations of the impacted property until the event has ended and the property is then ready for operation. We or the tenants of our properties may incur significant costs and losses as a result of these activities, both in terms of operating, preparing and repairing our properties in anticipation of, during and after a severe weather or climate-related event and in terms of potential lost business due to the interruption in operating our properties. Our insurance and our tenants’ insurance may not adequately compensate us or them for these costs and losses.

Also, concerns about climate change have resulted in various treaties, laws and regulations that are intended to limit carbon emissions and address other environmental concerns. These and other laws may cause energy or other

costs at our properties to increase. Laws enacted to mitigate climate change may make some of our buildings obsolete

or cause us to make material investments in our properties, which could materially and adversely affect our financial condition or the financial condition of our tenants and their ability to pay rent to us and cause the value of our securities to decline.

Real estate ownership creates risks and liabilities.

In addition to the risks discussed above, our business is subject to other risks associated with real estate ownership, including:

• the illiquid nature of real estate markets, which limits our ability to sell our assets rapidly to respond to changing market conditions;

• the subjectivity of real estate valuations and changes in such valuations over time;

• current and future adverse national real estate trends, including increasing vacancy rates, declining rental rates and

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general deterioration of market conditions;

• costs that may be incurred relating to property maintenance and repair, and the need to make expenditures due to changes in government regulations; and

• liabilities and litigations arising from injuries on our properties or otherwise incidental to the ownership of our properties.

RMR LLC relies on information technology and systems in its operations, and any material failure, inadequacy, interruption or security failure of that technology or those systems could materially and adversely affect us.

RMR LLC relies on information technology and systems, including the Internet, commercially available software and its internally developed applications, to process, transmit, store and safeguard information and to manage or support a variety of its business processes (including managing our building systems), including financial transactions and maintenance of records, which may include personal identifying information of employees and tenants and lease data. If RMR LLC experiences material security or other failures, inadequacies or interruptions of its information technology, it could incur material costs and losses and our operations could be disrupted as a result. Further, third party vendors could experience similar events with respect to their information technology and systems that impact the products and services they provide to RMR LLC or us. RMR LLC relies on commercially available systems, software, tools and monitoring, as well as its internally developed applications and internal procedures and personnel, to provide security for processing, transmitting, storing and safeguarding confidential tenant, customer and vendor information, such as personally identifiable information related to its employees and others and information regarding its and our financial accounts. RMR LLC takes various actions, and incurs significant costs, to maintain and protect the operation and security of its information technology and systems, including the data maintained in those systems. However, it is possible that these measures will not prevent the systems’ improper functioning or a compromise in security, such as in the event of a cyberattack or the improper disclosure of personally identifiable information.

Security breaches, computer viruses, attacks by hackers, online fraud schemes and similar breaches can create significant system disruptions, shutdowns, fraudulent transfer of assets or unauthorized disclosure of confidential information. For example, in June 2017, RMR LLC became aware that it had been a victim of criminal fraud in which a person pretending to be a representative of a seller in a property acquisition transaction provided fraudulent money wire instructions that caused money to be wire transferred to an account that was believed to be, but was not, the seller’s account. We were not involved in that transaction and we did not incur any loss from that transaction; however, there may be a risk that similar fraudulent activities could be attempted against us, RMR LLC or others with respect to our assets. The cybersecurity risks to RMR LLC, us and third party vendors are heightened by, among other things, the evolving nature of the threats faced, advances in computer capabilities, new discoveries in the field of cryptography and new and increasingly sophisticated methods used to perpetrate illegal or fraudulent activities against RMR LLC, including cyberattacks, email or wire fraud and other attacks exploiting security vulnerabilities in RMR LLC’s or other third parties’ information technology networks and systems or operations. Any failure to maintain the security, proper function and availability of RMR LLC’s information technology and systems, or certain third party vendors’ failure to similarly protect their information technology and systems that are relevant to RMR LLC’s or our operations, or to safeguard RMR LLC’s or our business processes, assets and information could result in financial losses, interrupt RMR LLC’s operations, damage RMR LLC’s reputation, cause RMR LLC to be in default of material contracts and subject RMR LLC to liability claims or regulatory penalties, any of which could materially and adversely affect our business and the value of our securities.

Current government policies regarding interest rates and trade as well as any prolonged government shutdown may cause a recession.

The U.S. Federal Reserve policy regarding the timing and amount of future increases in interest rates, changing U.S. and other countries’ trade policies and a prolonged U.S. government shutdown may hinder the growth of the U.S. economy. It is unclear whether the U.S. economy will be able to withstand these challenges and continue sustained growth. Economic weakness in the U.S. economy generally or a new U.S. recession would likely adversely affect our financial condition and that of our tenants, could adversely impact the ability of our tenants to renew our leases or pay rent to us, and may cause the values of our properties and of our securities to decline.

Bankruptcy law may adversely impact us.

The occurrence of a tenant bankruptcy could reduce the rent we receive from such tenant’s lease. If a tenant becomes bankrupt, federal law may prohibit us from evicting such tenant based solely upon its bankruptcy. In addition, a bankrupt tenant

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may be authorized to reject and terminate its lease with us. Any claims against a bankrupt tenant for unpaid future rent would be subject to statutory limitations that may be substantially less than the contractually specified rent we are owed under the lease, and any claim we have for unpaid past rent may not be paid in full.

Some of our tenants do not have credit ratings.

As of December 31, 2018, 23.6% of our tenants are not rated by any nationally recognized credit rating organization. It is more difficult to assess the ability of a tenant that is not rated to meet its obligations than that of a rated tenant. Moreover, tenants may be rated when we enter leases with them but their ratings may be later lowered or terminated during the term of the leases. Because we now have a greater number of unrated tenants, we may experience a higher percentage of tenant defaults than we would have had prior to the FPO Transaction and the SIR Merger or than landlords who have a higher percentage of highly rated tenants.

Our use of joint ventures may limit our flexibility with jointly owned investments.

As part of the FPO Transaction, we acquired three buildings which are owned by joint ventures with unrelated third parties, and we may in the future acquire, develop or recapitalize properties in joint ventures with other persons or entities. Our participation in these joint ventures is subject to risks, including the following:

• we may share approval rights over major decisions affecting the ownership or operation of the joint venture and any property owned by the joint venture;

• we may be required to contribute additional capital if our partners fail to fund their share of any required capital contributions;

• our joint venture partners may have economic or other business interests or goals that are inconsistent with our business interests or goals and that could affect our ability to lease or release the property, operate the property or maintain our qualification as a REIT;

• our joint venture partners may be subject to different laws or regulations than us, or may be structured differently than us for tax purposes, which could create conflicts of interest and/or affect our ability to maintain our qualification as a REIT;

• our ability to sell the interest on advantageous terms when we so desire may be limited or restricted under the terms of the applicable joint venture agreements; and

• disagreements with our joint venture partners could result in litigation or arbitration that could be expensive and distracting to management and could delay important decisions.

Any of the foregoing risks could have a material adverse effect on our business, financial condition and results of operations.

Insurance may not adequately cover our losses.

We or our tenants are responsible for the costs of insurance coverage for our properties, including for casualty, liability, fire, extended coverage and rental or business interruption loss insurance. In the future, we may acquire additional properties for which we are responsible for the costs of insurance. Losses of a catastrophic nature, such as those caused by hurricanes, flooding, volcanic eruptions and earthquakes, among other things, may be covered by insurance policies with limitations such as large deductibles or co-payments that we may not be able to pay. Insurance proceeds may not be adequate to restore an affected property to its condition prior to a loss or to compensate us for our losses, including the loss of future revenues from an affected property. Similarly, our other insurance, including our general liability insurance, may not provide adequate insurance to cover our losses. In addition, we do not have any insurance to limit losses that we may incur as a result of known or unknown environmental conditions.

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We may incur significant costs complying with the Americans with Disabilities Act and similar laws.

Under the Americans with Disabilities Act and certain similar state statutes, many commercial properties must meet specified requirements related to access and use by disabled persons. We may be required to make substantial capital expenditures at our properties to comply with these laws. In addition, non-compliance could result in the imposition of fines or an award of damages and costs to private litigants. These expenditures may have an adverse impact on our financial results and the value of our securities.

A prolonged U.S. government shutdown may adversely impact our business and cash position.

As of December 31, 2018, leases with U.S. government tenants represented 25.6% of our annualized rental income. Under these leases, the tenants pay us rent monthly in arrears. If the U.S. government experiences a prolonged shutdown, these tenants may not pay us rent during the pendency of the shutdown. Although we expect that these tenants would pay us any outstanding rents after the shutdown ends, our available cash and leverage targets may be adversely impacted during the period we do not receive rents from these tenants. During the pendency of the shutdown, we may need to borrow amounts under our revolving credit facility or seek alternative financing, which we may not be able to receive timely or on reasonable terms. A failure to receive rents from our government tenants during a government shutdown may impair our ability to fund our operations and investments, pay our debt obligations, make capital expenditures and pay distributions to our shareholders. Moreover, some of our tenants are government contractors that rely on government business. If a government shutdown results in our government contractor tenants not paying us rent, the negative impact on us from a government shutdown may be compounded.

Changes in lease accounting standards may materially and adversely affect us.

The Financial Accounting Standards Board, or FASB, adopted new accounting rules that are effective for fiscal years ending after December 2018, which require companies to capitalize substantially all leases on their balance sheets by recognizing a lessee’s rights and obligations. Many companies that account for certain leases on an “off balance sheet” basis are now required to account for such leases “on balance sheet.” This change removes many of the differences in the way companies account for owned property and leased property and could have a material effect on various aspects of our tenants’ businesses, including the appearance of their credit quality and other factors they consider in deciding whether to own or lease properties. These rules could cause companies that lease properties to prefer shorter lease terms in an effort to reduce the leasing liability required to be recorded on their balance sheets or some companies may decide to prefer property ownership to leasing. Such decisions by our current or prospective tenants may adversely impact our business and the value of our securities.

Our business could be adversely impacted if there are deficiencies in our disclosure controls and procedures or our internal control over financial reporting.

The design and effectiveness of our disclosure controls and procedures and our internal control over financial reporting may not prevent all errors, misstatements or misrepresentations. While management will continue to review the effectiveness of our disclosure controls and procedures and our internal control over financial reporting, we cannot guarantee that our disclosure controls and procedures and internal control over financial reporting will be effective in accomplishing all control objectives all of the time. Deficiencies, including any material weaknesses, in our disclosure controls and procedures or internal control over financial reporting could result in misstatements of our results of operations or our financial statements or could otherwise materially and adversely affect our business, reputation, results of operations, financial condition or liquidity.

Risks Related to Our Relationships with RMR Inc. and RMR LLC.

We are dependent upon RMR LLC to manage our business and implement our growth strategy.

We have no employees. Personnel and services that we require are provided to us by RMR LLC pursuant to our management agreements with RMR LLC. Our ability to achieve our business objectives depends on RMR LLC and its ability to effectively manage our properties, to appropriately identify and complete our acquisitions and dispositions and to execute our growth strategy. Accordingly, our business is dependent upon RMR LLC’s business contacts, its ability to successfully hire, train, supervise and manage its personnel and its ability to maintain its operating systems. If we lose the services provided by RMR LLC or its key personnel, our business and growth prospects may decline. We may be unable to duplicate the quality and depth of management available to us by becoming internally managed or by hiring another manager. In the event RMR LLC is unwilling or unable to continue to provide management services to us, our cost of obtaining substitute services may be greater than the fees we pay RMR LLC under our management agreements, and as a result our expenses may increase.

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RMR LLC has broad discretion in operating our day to day business.

Our manager, RMR LLC, is authorized to follow broad operating and investment guidelines and, therefore, has discretion in identifying the properties that will be appropriate investments for us, as well as our individual operating and investment decisions. Our Board of Trustees periodically reviews our operating and investment guidelines and our operating activities and investments but it does not review or approve each decision made by RMR LLC on our behalf. In addition, in conducting periodic reviews, our Board of Trustees relies primarily on information provided to it by RMR LLC. RMR LLC may exercise its discretion in a manner that results in investment returns that are substantially below expectations or that results in losses.

Our management structure and agreements and relationships with RMR LLC and RMR LLC’s and its controlling shareholder's relationships with others may create conflicts of interest, or the appearance of such conflicts, and may restrict our investment activities.

RMR LLC is a subsidiary of RMR Inc. One of our Managing Trustees, Adam Portnoy, as the sole trustee of ABP Trust, is the controlling shareholder of RMR Inc. and is a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR LLC. RMR LLC or its subsidiary also acts as the manager for four other Nasdaq listed REITs: HPT, which owns hotels and travel centers; ILPT, which owns industrial and logistics properties; SNH, which primarily owns healthcare, senior living properties and medical office buildings; and TRMT, which primarily originates and invests in first mortgage loans secured by middle market and transitional commercial real estate. RMR LLC also provides services to other publicly and privately owned companies, including: Five Star, which operates senior living communities; TA, which operates and franchises travel centers, truck repair facilities and restaurants; and Sonesta, which operates, manages and franchises hotels, resorts and cruise ships. A subsidiary of RMR LLC is an investment adviser to the RMR Real Estate Income Fund, or RIF, a closed end investment company listed on the NYSE American, which invests in securities of real estate companies that are not managed by RMR LLC.

David Blackman, our other Managing Trustee and our President and Chief Executive Officer, and Jeffrey C. Leer, our Chief Financial Officer and Treasurer, are also officers and employees of RMR LLC. David Blackman is also the president and chief executive officer of TRMT. Messrs. Leer and Blackman have duties to RMR LLC, and Mr. Blackman has duties to TRMT, as well as to us, and we do not have their undivided attention. They and other RMR LLC personnel may have conflicts in allocating their time and resources between us and RMR LLC and other companies to which RMR LLC or its subsidiaries provide services. Our Independent Trustees also serve as independent directors or independent trustees of other public companies to which RMR LLC or its subsidiaries provide management services. 

In addition, we may in the future enter into additional transactions with RMR LLC, its affiliates, or entities managed by it or its subsidiaries. In addition to his investments in RMR Inc. and RMR LLC, Adam Portnoy holds equity investments in other companies to which RMR LLC or its subsidiaries provide management services and some of these companies have significant cross ownership interests, including, for example: as of December 31, 2018, Adam Portnoy beneficially owned, in aggregate, 1.5% of our outstanding common shares, 35.7% of Five Star's outstanding common stock, 1.1% of HPT’s outstanding common shares, 1.2% of ILPT’s outstanding common shares, 1.1% of SNH’s outstanding common shares; and 2.2% of RIF’s outstanding common shares; and, through RMR LLC and its subsidiaries, 4.1% of TA’s outstanding common shares and 19.0% of TRMT’s outstanding common shares. Our executive officers may also own equity investments in other companies to which RMR LLC or its subsidiaries provide management services. These multiple responsibilities, relationships and cross ownerships could give rise to conflicts of interest or the perception of such conflicts of interest with respect to matters involving us, RMR Inc., RMR LLC, our Managing Trustees, the other companies to which RMR LLC or its subsidiaries provide management services and their related parties. Conflicts of interest or the perception of conflicts of interest could have a material adverse impact on our reputation, business and the market price of our common shares and other securities and we may be subject to increased risk of litigation as a result.

In our management agreements with RMR LLC, we acknowledge that RMR LLC may engage in other activities or businesses and act as the manager to any other person or entity (including other REITs) even though such person or entity has investment policies and objectives similar to our policies and objectives and we are not entitled to preferential treatment in receiving information, recommendations and other services from RMR LLC. Accordingly, we may lose investment opportunities to, and may compete for tenants with, other businesses managed by RMR LLC or its subsidiaries. We cannot be sure that our Code of Conduct or our Governance Guidelines, or other procedural protections we adopt will be sufficient to enable us to identify, adequately address or mitigate actual or alleged conflicts of interest or ensure that our transactions with related persons are made on terms that are at least as favorable to us as those that would have been obtained with an unrelated person.

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Our management agreements were not negotiated on an arm’s length basis and their fee and expense structure may not create proper incentives for RMR LLC, which may increase the risk of an investment in our common shares.

As a result of our relationships with RMR LLC and its current and former controlling shareholder(s), our management agreements were not negotiated on an arm’s length basis between unrelated parties, and therefore the terms, including the fees payable to RMR LLC, may not be as favorable to us as they would have been if they were negotiated on an arm’s length basis between unrelated parties. Our property management fees are calculated based on rents we receive and construction supervision fees for construction at our properties overseen and managed by RMR LLC, and our base business management fee is calculated based upon the lower of the historical costs of our real estate investments and our market capitalization. We pay RMR LLC substantial base management fees regardless of our financial results. These fee arrangements could incentivize RMR LLC to pursue acquisitions, capital transactions, tenancies and construction projects or to avoid disposing of our assets in order to increase or maintain its management fees and might reduce RMR LLC’s incentive to devote its time and effort to seeking investments that provide attractive returns for us. If we do not effectively manage our investment, disposition and capital transactions and leasing, construction and other property management activities, we may pay increased management fees without proportional benefits to us. In addition, we are obligated under our management agreements to reimburse RMR LLC for employment and related expenses of RMR LLC’s employees assigned to work exclusively or partly at our properties, our share of the wages, benefits and other related costs of RMR LLC’s centralized accounting personnel and our share of RMR LLC’s costs for providing our internal audit function. We are also required to pay for third party costs incurred with respect to us. Our obligation to reimburse RMR LLC for certain of its costs and to pay third party costs may reduce RMR LLC’s incentive to efficiently manage those costs, which may increase our costs.

The termination of our management agreements may require us to pay a substantial termination fee, including in the case of a termination for unsatisfactory performance, which may limit our ability to end our relationship with RMR LLC.

The terms of our management agreements with RMR LLC automatically extend on December 31st of each year so that such terms thereafter end on the 20th anniversary of the date of the extension. We have the right to terminate these agreements: (1) at any time on 60 days’ written notice for convenience, (2) immediately upon written notice for cause, as defined in the agreements, (3) on written notice given within 60 days after the end of any applicable calendar year for a performance reason, as defined in the agreements, and (4) by written notice during the 12 months following a manager change of control, as defined in the agreements. However, if we terminate a management agreement for convenience, or if RMR LLC terminates a management agreement with us for good reason, as defined in such agreement, we are obligated to pay RMR LLC a termination fee in an amount equal to the sum of the present values of the monthly future fees, as defined in the applicable agreement, payable to RMR LLC for the term that was remaining before such termination, which, depending on the time of termination, would be between 19 and 20 years. Additionally, if we terminate a management agreement for a performance reason, as defined in the agreement, we are obligated to pay RMR LLC the termination fee calculated as described above, but assuming a remaining term of 10 years. These provisions substantially increase the cost to us of terminating the management agreements without cause, which may limit our ability to end our relationship with RMR LLC as our manager. The payment of the termination fee could have a material adverse effect on our financial condition, including our ability to pay dividends to our shareholders.

Our management arrangements with RMR LLC may discourage a change of control of us.

Our management agreements with RMR LLC have continuing 20 year terms that renew annually. As noted in the preceding risk factor, if we terminate either of these management agreements other than for cause or upon a change of control of our manager, we are obligated to pay RMR LLC a substantial termination fee. For these reasons, our management agreements with RMR LLC may discourage a change of control of us, including a change of control which might result in payment of a premium for our common shares.

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We may not realize the expected benefits of our acquisition of an interest in RMR Inc.

In June 2015, we participated in a transaction with RMR Inc., RMR LLC, ABP Trust, SIR and two other REITs to which RMR LLC then provided management services in which, among other things, we acquired 1,541,201 and SIR acquired 3,166,891 shares of RMR Inc.’s class A common stock, ABP Trust acquired 700,000 of our common shares and 880,000 of SIR’s common shares and we and SIR amended our management agreements with RMR LLC and extended them for continuing 20 year terms, or the Up-C Transaction. In December 2015, we and SIR distributed 768,032 and 1,580,055, respectively, of the shares of RMR Inc.’s class A common stock that we and SIR received in the Up-C Transaction pro rata to our respective shareholders. As of February 25, 2019, we owned 2,801,061 shares of RMR Inc.’s class A common stock. We believe the Up-C Transaction provided several benefits to us, including an attractive investment in the equity securities of RMR Inc., the further alignment of the interests of RMR LLC and Adam Portnoy with our interests and greater transparency for us and our shareholders into the compensation practices and financial and operating results of RMR LLC. However, our investment in RMR Inc. is subject to various risks, including the highly competitive nature of RMR LLC’s business, the limited public market for RMR Inc.’s securities and the super-voting common shares of RMR Inc. that provide Adam Portnoy with the ability to determine the outcome of all matters requiring RMR Inc. shareholder approval, among others, which may result in us not realizing the benefits we expect from the Up-C Transaction. For further information on the Up-C Transaction, see Note 7 to the Notes to our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

We are and have been party to transactions with related parties that may increase the risk of allegations of conflicts of interest, and such allegations may impair our ability to realize the benefits we expect from these transactions.

We are and have been party to transactions with related parties, including with entities controlled by Adam Portnoy or to which RMR LLC or its subsidiaries provide or provided management services. Our agreements with related parties or in respect of transactions among related parties may not be or have been on terms as favorable to us as they would have been if they had been negotiated among unrelated parties. We are subject to the risk that our shareholders, the former shareholders of SIR, or the shareholders of RMR Inc. or other related parties may challenge any such related party transactions and the agreements entered into as part of them. If such a challenge were to be successful, we might not realize the benefits expected from the transactions being challenged. Moreover, any such challenge could result in substantial costs and a diversion of our management’s attention, could have a material adverse effect on our reputation, business and growth and could adversely affect our ability to realize the benefits expected from the transactions, whether or not the allegations have merit or are substantiated.

We may be at an increased risk for dissident shareholder activities due to perceived conflicts of interest arising from our management structure and relationships.

Companies with business dealings with related persons and entities may more often be the target of dissident shareholder trustee nominations, dissident shareholder proposals and shareholder litigation alleging conflicts of interest in their business dealings. Our relationships with RMR Inc., RMR LLC, AIC, the other companies to which RMR LLC or its subsidiaries provide management services, Adam Portnoy and other related persons of RMR LLC, including the interests of certain of our and SIR's former trustees and executive officers and RMR LLC in the SIR Merger and the other transactions contemplated by the SIR Merger Agreement, have precipitated and may precipitate such activities, including shareholder litigation which results in substantial costs for us even if the shareholder litigation is without merit or unsuccessful. Certain proxy advisory firms which have significant influence over the voting by shareholders of public companies have, in the past, recommended, and in the future may recommend that shareholders withhold votes for the election of our incumbent Trustees, vote against our say on pay vote or other management proposals or vote for shareholder proposals that we oppose. These recommendations by proxy advisory firms in the future may affect the outcome of future Board of Trustees elections and votes on our say on pay, which may increase shareholder activism and litigation. These activities, if instituted against us, could result in substantial costs, and diversion of our management’s attention and could have a material adverse impact on our reputation and business.

We may experience losses from our business dealings with AIC.

We, ABP Trust and five other companies to which RMR LLC provides management services each own 14.3% of AIC, and we have invested approximately $6.0 million in AIC. We and those other AIC shareholders participate in a combined property insurance program arranged and insured or reinsured in part by AIC and we periodically consider the possibilities for expanding our relationship with AIC to other types of insurance. Our principal reason for investing in AIC and for purchasing insurance in these programs is to seek to improve our financial results by obtaining improved insurance coverages at lower costs than may be otherwise available to us or by participating in any profits which we may realize as an owner of AIC. While

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we believe we have in the past benefitted from these arrangements, these beneficial financial results may not occur in the future, and we may need to invest additional capital in order to continue to pursue these results. AIC’s business involves the risks typical of an insurance business, including the risk that it may not operate profitably. Accordingly, financial benefits from our business dealings with AIC may not be achieved in the future, and we may experience losses from these dealings.

Risks Related to Our Organization and Structure

Ownership limitations and certain provisions in our declaration of trust, bylaws and agreements as well as certain provisions of Maryland law, may deter, delay or prevent a change in our control or unsolicited acquisition proposals.

Our declaration of trust prohibits any shareholder other than RMR LLC and its affiliates (as defined under Maryland law) and certain persons who have been exempted by our Board of Trustees from owning, directly and by attribution, more than 9.8% of the number or value of shares (whichever is more restrictive) of any class or series of our outstanding shares of beneficial interest, including our common shares. This provision of our declaration of trust is intended to, among other purposes, assist with our REIT compliance under the IRC and otherwise promote our orderly governance. However, this provision may also inhibit acquisitions of a significant stake in us and may deter, delay or prevent a change in control of us or unsolicited acquisition proposals that a shareholder may consider favorable. Additionally, provisions contained in our declaration of trust and bylaws or under Maryland law may have a similar impact, including, for example, provisions relating to:

• the division of our Trustees into three classes, with the term of one class expiring each year, which could delay a change of control of us;

• limitations on shareholder voting rights with respect to certain actions that are not approved by our Board of Trustees;

• the authority of our Board of Trustees, and not our shareholders, to adopt, amend or repeal our bylaws and to fill vacancies on our Board of Trustees;

• shareholder voting standards which require a supermajority for approval of certain actions;

• the fact that only our Board of Trustees, or, if there are no Trustees, our officers, may call shareholder meetings and that shareholders are not entitled to act without a meeting;

• required qualifications for an individual to serve as a Trustee and a requirement that certain of our Trustees be “Managing Trustees” and other Trustees be “Independent Trustees,” as defined in our governing documents;

• limitations on the ability of our shareholders to propose nominees for election as Trustees and propose other business to be considered at a meeting of our shareholders;

• limitations on the ability of our shareholders to remove our Trustees;

• the authority of our Board of Trustees to create and issue new classes or series of shares (including shares with voting rights and other rights and privileges that may deter a change in control) and issue additional common shares;

• restrictions on business combinations between us and an interested shareholder that have not first been approved by our Board of Trustees (including a majority of Trustees not related to the interested shareholder); and the authority of our Board of Trustees, without shareholder approval, to implement certain takeover defenses.

In addition, our shareholders agreement with respect to AIC provides that AIC and the other shareholders of AIC may have rights to acquire our interests in AIC in the event that anyone acquires more than 9.8% of our shares or we experience some other change in control.

Our ownership interest in AIC may prevent shareholders from accumulating a large stake in us, from nominating or serving as Trustees, or from taking actions to otherwise control our business.

As an owner of AIC, we are licensed and approved as an insurance holding company, and any shareholder who owns or controls 10% or more of our securities or anyone who wishes to solicit proxies for election of, or to serve as, one of our Trustees or for another proposal of business not approved by our Board of Trustees may be required to receive pre-clearance

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from the concerned insurance regulators. These pre-approval procedures may discourage or prevent investors from purchasing our securities, from nominating persons to serve as our Trustees or from taking other actions.

Our rights and the rights of our shareholders to take action against our Trustees and officers are limited.

Our declaration of trust limits the liability of our Trustees and officers to us and our shareholders for money damages to the maximum extent permitted under Maryland law. Under current Maryland law, our Trustees and officers will not have any liability to us and our shareholders for money damages other than liability resulting from:

• actual receipt of an improper benefit or profit in money, property or services; or

• active and deliberate dishonesty by the Trustee or officer that was established by a final judgment as being material to the cause of action adjudicated.

Our declaration of trust authorizes us, and our bylaws and indemnification agreements require us, to indemnify, to the maximum extent permitted by Maryland law, any present or former Trustee or officer who is made or threatened to be made a party to a proceeding by reason of his or her service in those and certain other capacities. In addition, we may be obligated to pay or reimburse the expenses incurred by our present and former Trustees and officers without requiring a preliminary determination of their ultimate entitlement to indemnification. As a result, we and our shareholders may have more limited rights against our present and former Trustees and officers than might otherwise exist absent the provisions in our declaration of trust, bylaws and indemnification agreements or that might exist with other companies, which could limit our shareholders' recourse in the event of actions not in their best interest.

Shareholder litigation against us or our Trustees, officers, manager, other agents or employees may be referred to mandatory arbitration proceedings, which follow different procedures than in-court litigation and may be more restrictive to shareholders asserting claims than in-court litigation.

Our shareholders agree, by virtue of becoming shareholders, that they are bound by our governing documents, including the arbitration provisions of our declaration of trust and bylaws, as they may be amended from time to time. Our governing documents provide that certain actions by one or more of our shareholders against us or any of our Trustees, officers, manager or other agents or employees, other than disputes, or any portion thereof, regarding the meaning, interpretation or validity of any provision of our declaration of trust or bylaws, will be referred to mandatory, binding and final arbitration proceedings if we, or any other party to such dispute, including any of our Trustees, officers, manager, other agents or employees unilaterally so demands. As a result, we and our shareholders would not be able to pursue litigation in state or federal court against us or our Trustees, officers, manager, other agents or employees, including, for example, claims alleging violations of federal securities laws or breach of fiduciary duties or similar director or officer duties under Maryland law, if we or any of our Trustees, officers, manager, other agents or employees against whom the claim is made unilaterally demands the matter be resolved by arbitration. Instead, our shareholders would be required to pursue such claims through binding and final arbitration.

Our governing documents provide that such arbitration proceedings would be conducted in accordance with the procedures of the Commercial Arbitration Rules of the American Arbitration Association, as modified in our bylaws. These procedures may provide materially more limited rights to our shareholders than litigation in a federal or state court. For example, arbitration in accordance with these procedures does not include the opportunity for a jury trial, document discovery is limited, arbitration hearings generally are not open to the public, there are no witness depositions in advance of arbitration hearings and arbitrators may have different qualifications or experiences than judges. In addition, although our governing documents’ arbitration provisions contemplate that arbitration may be brought in a representative capacity or on behalf of a class of our shareholders, the rules governing such representation or class arbitration may be different from, and less favorable to shareholders than, the rules governing representative or class action litigation in courts. Our governing documents also generally provide that each party to such an arbitration is required to bear its own costs in the arbitration, including attorneys’ fees, and that the arbitrators may not render an award that includes shifting of such costs or, in a derivative or class proceeding, award any portion of our award to any shareholder or such shareholder’s attorneys. The arbitration provisions of our governing documents may discourage our shareholders from bringing, and attorneys from agreeing to represent our shareholders wishing to bring, litigation against us or our Trustees, officers, manager, other agents or employees. Our agreements with RMR LLC have and SIR’s former bylaws had similar arbitration provisions to those in our governing documents.

We believe that the arbitration provisions in our governing documents are enforceable under both state and federal law, including with respect to federal securities laws claims. We are a Maryland real estate investment trust and Maryland courts have upheld the enforceability of arbitration provisions in governing documents. In addition, the United States Supreme

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Court has repeatedly upheld agreements to arbitrate other federal statutory claims, including those that implicate important federal policies. However, some academics, legal practitioners and others are of the view that charter or bylaw provisions mandating arbitration are not enforceable with respect to federal securities laws claims. It is possible that the arbitration provisions of our governing documents may ultimately be determined to be unenforceable.

By agreeing to the arbitration provisions of our governing documents, shareholders will not be deemed to have waived compliance by us with federal securities laws and the rules and regulations thereunder.

Our bylaws designate the Circuit Court for Baltimore City, Maryland as the sole and exclusive forum for certain actions and proceedings that may be initiated by our shareholders, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our Trustees, officers, manager, agents or employees.

Our bylaws currently provide that, unless the dispute has been referred to binding arbitration, the Circuit Court for Baltimore City, Maryland will be the sole and exclusive forum for: (1) any derivative action or proceeding brought on our behalf; (2) any action asserting a claim for breach of a fiduciary duty owed by any Trustee, officer, manager, agent or employee of ours to us or our shareholders; (3) any action asserting a claim against us or any Trustee, officer, manager, agent or employee of ours arising pursuant to Maryland law, our declaration of trust or bylaws brought by or on behalf of a shareholder, either on his, her or its own behalf, on behalf of the Trust or on behalf of any series or class of shares of beneficial interest of the Trust or shareholders against the Trust or any Trustee, officer, manager, agent or employee of the Trust, including any disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of the declaration of trust or these bylaws; or (4) any action asserting a claim against us or any Trustee, officer, manager, agent or employee of ours that is governed by the internal affairs doctrine. Our bylaws currently also provide that the Circuit Court for Baltimore City, Maryland will be the sole and exclusive forum for any dispute, or portion thereof, regarding the meaning, interpretation or validity of any provision of our declaration of trust or bylaws. The exclusive forum provision of our bylaws does not apply to any action for which the Circuit Court for Baltimore City, Maryland does not have jurisdiction or to a dispute that has been referred to binding arbitration in accordance with our bylaws. The exclusive forum provision of our bylaws does not establish exclusive jurisdiction in the Circuit Court for Baltimore City, Maryland for claims that arise under the Securities Act, the Exchange Act or other federal securities laws if there is exclusive or concurrent jurisdiction in the federal courts. Any person or entity purchasing or otherwise acquiring or holding any interest in our shares of beneficial interest shall be deemed to have notice of and to have consented to these provisions of our bylaws, as they may be amended from time to time. The arbitration and exclusive forum provisions of our bylaws may limit a shareholder’s ability to bring a claim in a judicial forum that the shareholder believes is favorable for disputes with us or our Trustees, officers, manager, other agents or employees, which may discourage lawsuits against us and our Trustees, officers, manager, other agents or employees. SIR’s former bylaws had similar exclusive forum provisions to those in our bylaws.

We may change our operational, financing and investment policies without shareholder approval and we may become more highly leveraged, which may increase our risk of default under our debt obligations.

Our Board of Trustees determines our operational, financing and investment policies and may amend or revise our policies, including our policies with respect to our intention to remain qualified for taxation as a REIT, acquisitions, dispositions, growth, operations, indebtedness, capitalization and distributions, or approve transactions that deviate from these policies, without a vote of, or notice to, our shareholders. Policy changes could adversely affect the market price of our common shares and our ability to make distributions to our shareholders. Further, our organizational documents do not limit the amount or percentage of indebtedness, funded or otherwise, that we may incur. Our Board of Trustees may alter or eliminate our current policy on borrowing at any time without shareholder approval. If this policy changes, we could become more highly leveraged, which could result in an increase in our debt service costs. Higher leverage also increases the risk of default on our obligations. In addition, a change in our investment policies, including the manner in which we allocate our resources across our portfolio or the types of assets in which we seek to invest, may increase our exposure to interest rate risk, real estate market fluctuations and liquidity risk.

Risks Related to Our Taxation

Our failure to remain qualified for taxation as a REIT under the IRC could have significant adverse consequences.

As a REIT, we generally do not pay federal or most state income taxes as long as we distribute all of our REIT taxable income and meet other qualifications set forth in the IRC. However, actual qualification for taxation as a REIT under the IRC depends on our satisfying complex statutory requirements, for which there are only limited judicial and administrative interpretations. We believe that we have been organized and have operated, and will continue to be organized and to operate, in a manner that qualified and will continue to qualify us to be taxed as a REIT under the IRC. However, we cannot be sure that

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the IRS, upon review or audit, will agree with this conclusion. Furthermore, we cannot be sure that the federal government, or any state or other taxation authority, will continue to afford favorable income tax treatment to REITs and their shareholders.

Maintaining our qualification for taxation as a REIT under the IRC will require us to continue to satisfy tests concerning, among other things, the nature of our assets, the sources of our income and the amounts we distribute to our shareholders. In order to meet these requirements, it may be necessary for us to sell or forgo attractive investments.

If we cease to qualify for taxation as a REIT under the IRC, then our ability to raise capital might be adversely affected, we will be in breach under our credit agreement, we may be subject to material amounts of federal and state income taxes and the market price of our common shares could decline. In addition, if we lose or revoke our qualification for taxation as a REIT under the IRC for a taxable year, we will generally be prevented from requalifying for taxation as a REIT for the next four taxable years.

Distributions to shareholders generally will not qualify for reduced tax rates applicable to “qualified dividends.”

Dividends payable by U.S. corporations to noncorporate shareholders, such as individuals, trusts and estates, are generally eligible for reduced federal income tax rates applicable to “qualified dividends.” Distributions paid by REITs generally are not treated as “qualified dividends” under the IRC and the reduced rates applicable to such dividends do not generally apply. However, for tax years beginning after 2017 and before 2026, REIT dividends paid to noncorporate shareholders are generally taxed at an effective tax rate lower than applicable ordinary income tax rates due to the availability of a deduction under the IRC for specified forms of income from passthrough entities. More favorable rates will nevertheless continue to apply to regular corporate “qualified” dividends, which may cause some investors to perceive that an investment in a REIT is less attractive than an investment in a non-REIT entity that pays dividends, thereby reducing the demand and market price of our common shares.

REIT distribution requirements could adversely affect our ability to execute our business plan.

We generally must distribute annually at least 90% of our REIT taxable income, subject to specified adjustments and excluding any net capital gain, in order to maintain our qualification for taxation as a REIT under the IRC. To the extent that we satisfy this distribution requirement, federal corporate income tax will not apply to the earnings that we distribute, but if we distribute less than 100% of our REIT taxable income, then we will be subject to federal corporate income tax on our undistributed taxable income. We intend to make distributions to our shareholders to comply with the REIT requirements of the IRC. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our shareholders in a calendar year is less than a minimum amount specified under federal tax laws.

From time to time, we may generate taxable income greater than our income for financial reporting purposes prepared in accordance with U.S. generally accepted accounting principles, or GAAP, or differences in timing between the recognition of taxable income and the actual receipt of cash may occur. If we do not have other funds available in these situations, among other things, we may borrow funds on unfavorable terms, sell investments at disadvantageous prices or distribute amounts that would otherwise be invested in future acquisitions in order to make distributions sufficient to enable us to pay out enough of our taxable income to satisfy the REIT distribution requirement and to avoid corporate income tax and the 4% excise tax in a particular year. These alternatives could increase our costs or reduce our shareholders’ equity. Thus, compliance with the REIT distribution requirements may hinder our ability to grow, which could cause the market price of our common shares to decline.

Even if we remain qualified for taxation as a REIT under the IRC, we may face other tax liabilities that reduce our cash flow.

Even if we remain qualified for taxation as a REIT under the IRC, we may be subject to federal, state and local taxes on our income and assets, including taxes on any undistributed income, excise taxes, state or local income, property and transfer taxes, and other taxes. Also, some jurisdictions may in the future limit or eliminate favorable income tax deductions, including the dividends paid deduction, which could increase our income tax expense. In addition, in order to meet the requirements for qualification and taxation as a REIT under the IRC, prevent the recognition of particular types of non-cash income, or avert the imposition of a 100% tax that applies to specified gains derived by a REIT from dealer property or inventory, we may hold or dispose of some of our assets and conduct some of our operations through our TRSs or other subsidiary corporations that will be subject to corporate level income tax at regular rates. In addition, while we intend that our transactions with our TRSs will be conducted on arm’s length bases, we may be subject to a 100% excise tax on a transaction that the IRS or a court determines was not conducted at arm’s length. Any of these taxes would decrease cash available for distribution to our shareholders.

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We may incur adverse tax consequences as a result of our merger and acquisition transactions.

We received opinions of counsel that each of SIR and FPO, respectively, were organized and operated in conformity with the requirements for qualification and taxation as a REIT under the IRC prior to the time that we acquired those entities. If, contrary to those opinions, either SIR or FPO failed to qualify for taxation as a REIT under the IRC, then we may inherit significant tax liabilities as a result of those transactions because, as the successor by merger to SIR and FPO, we would generally inherit any corporate income tax liabilities of those entities, including penalties and interest.

If it is determined that one or both of SIR and FPO failed to satisfy one or more of the REIT qualification requirements before the applicable merger into us, the IRS might allow us, as successor, to utilize remedial provisions under the IRC to remediate the REIT compliance failure. However, if and to the extent remedial provisions are available to us to address any REIT qualification matter stemming from the periods before we acquired SIR or FPO, we may have to expend significant resources in connection with such remediation, including, among other things, (a) required distribution payments to shareholders and associated interest payments to the IRS, and (b) tax and interest payments to the IRS and state and local tax authorities.

The failure of SIR or FPO to qualify for taxation as a REIT under the IRC for the applicable periods prior to or including the time we acquired these entities and our efforts to remedy any such failure could have a material adverse effect on our financial condition and results of operations.

Legislative or other actions affecting REITs could materially and adversely affect us and our shareholders.

The rules dealing with U.S. federal, state, and local taxation are constantly under review by persons involved in the legislative process and by the IRS, the U.S. Department of the Treasury, and other taxation authorities. Changes to the tax laws, with or without retroactive application, could materially and adversely affect us and our shareholders. We cannot predict how changes in the tax laws might affect us or our shareholders. New legislation, Treasury regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to qualify or to remain qualified for taxation as a REIT or the tax consequences of such qualification.

In addition, December 2017 legislation made substantial changes to the IRC. Among those changes are a significant permanent reduction in the generally applicable corporate income tax rate and the modification of tax policies, credits and deductions for businesses and individuals.  This legislation also imposes additional limitations on the deduction of net operating losses, which may in the future cause us to make additional distributions that will be taxable to our shareholders to the extent of our current or accumulated earnings and profits in order to comply with the REIT distribution requirements. The effect of these and other changes made in this legislation is still uncertain in many respects, both in terms of their direct effect on the taxation of an investment in our common shares and their indirect effect on the value of properties owned by us. Furthermore, many of the provisions of the new law will require additional guidance in order to assess their effect. It is also possible that there will be technical corrections legislation proposed with respect to the new law, the effect of which cannot be predicted and may be adverse to us or our shareholders.

Risks Related to Our Securities

Our distributions to our shareholders may decline.

We intend to continue to make regular quarterly distributions to our shareholders. However:

• our ability to make or sustain the rate of distributions will be adversely affected if any of the risks described in this Annual Report on Form 10-K occur;

• our making of distributions is subject to compliance with restrictions contained in our credit agreement and may be subject to restrictions in future debt obligations we may incur; and

• the timing and amount of any distributions will be determined at the discretion of our Board of Trustees and will depend on various factors that our Board of Trustees deems relevant, including our financial condition, our results of operations, our liquidity, our capital requirements, our FFO, our Normalized FFO, restrictive covenants in our financial or other contractual arrangements, general economic conditions in the United States, requirements under the IRC to remain qualified for taxation as a REIT and restrictions under the laws of Maryland.

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For example, our annual distribution rate is lower than our and SIR’s combined rates prior to the SIR Merger due to various reasons, including liquidity constraints due to our expected capital expenditures, changes in cash requirements, cash flow and our financial position.

For the above reasons, among others, our distribution rate may decline further or we may cease making distributions to our shareholders.

Changes in market conditions could adversely affect the value of our securities.

As with other publicly traded equity securities and REIT securities, the value of our common shares and other securities depends on various market conditions that are subject to change from time to time, including:

• the extent of investor interest in our securities;

• the general reputation of REITs and externally managed companies and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate based companies or by other issuers less sensitive to rises in interest rates;

• our underlying asset value;

• investor confidence in the stock and bond markets, generally;

• market interest rates;

• national economic conditions;

• changes in tax laws;

• changes in our credit ratings; and

• general market conditions.

We believe that one of the factors that investors consider important in deciding whether to buy or sell equity securities of a REIT is the distribution rate, considered as a percentage of the price of the equity securities, relative to market interest rates. Interest rates have been at historically low levels for an extended period of time. There is a general market perception that REIT shares outperform in low interest rate environments and underperform in rising interest rate environments when compared to the broader market. Recently, there have been some modest signs of inflationary price movements, and the U.S. Federal Reserve has been raising the federal funds rate since December 2016. Previously, the U.S. Federal Reserve had indicated that it expected to raise the federal funds rate further in 2019, although it recently indicated that it may delay making those increases. If market interest rates continue to increase, or if there continues to be market expectation of such increases, prospective purchasers of REIT equity securities may want to achieve a higher distribution rate. Thus, higher market interest rates, or the expectation of higher interest rates, could cause the value of our securities to decline.

Further issuances of equity securities may be dilutive to current shareholders.

The interests of our existing shareholders could be diluted if we issue additional equity securities to finance future acquisitions or to repay indebtedness. For example, in the SIR Merger, we issued a significant number of additional common shares of beneficial interest. Our ability to execute our business strategy depends on our access to an appropriate blend of debt financing, which may include secured and unsecured debt, and equity financing, which may include common and preferred shares.

The Notes are structurally subordinated to the payment of all indebtedness and other liabilities and any preferred equity of our subsidiaries.

We are the sole obligor on our outstanding senior unsecured notes, and our outstanding senior unsecured notes and any notes or other debt securities we may issue in the future, or, together with our outstanding senior unsecured notes, the Notes, and such Notes are not, and any Notes we may issue in the future may not be guaranteed by any of our subsidiaries. Our subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due on the Notes, or to make any funds available therefor, whether by dividend, distribution, loan or other payments. The rights of

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holders of Notes to benefit from any of the assets of our subsidiaries are subject to the prior satisfaction of claims of our subsidiaries’ creditors and any preferred equity holders. As a result, the Notes are, and, except to the extent that future Notes are guaranteed by our subsidiaries, will be, structurally subordinated to all of the debt and other liabilities and obligations of our subsidiaries, including guarantees of other indebtedness of ours, payment obligations under lease agreements, trade payables and preferred equity. As of December 31, 2018, our subsidiaries had total indebtedness and other liabilities (excluding security and other deposits and guaranties) of $427.8 million.

The Notes are unsecured and effectively subordinated to all of our existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness.

The outstanding Notes are not secured and any Notes we may issue in the future may not be secured. Upon any distribution to our creditors in a bankruptcy, liquidation, reorganization or similar proceeding relating to us or our property, the holders of our secured debt will be entitled to exercise the remedies available to a secured lender under applicable law and pursuant to the instruments governing such debt and to be paid in full from the assets securing that secured debt before any payment may be made with respect to Notes that are not secured by those assets. In that event, because such Notes will not be secured by any of our assets, it is possible that there will be no assets from which claims of holders of such Notes can be satisfied or, if any assets remain, that the remaining assets will be insufficient to satisfy those claims in full. If the value of such remaining assets is less than the aggregate outstanding principal amount of such Notes and accrued interest and all future debt ranking equally with such Notes, we will be unable to fully satisfy our obligations under such Notes. In addition, if we fail to meet our payment or other obligations under our secured debt, the holders of that secured debt would be entitled to foreclose on our assets securing that secured debt and liquidate those assets. Accordingly, we may not have sufficient funds to pay amounts due on such Notes. As a result, noteholders may lose a portion or the entire value of their investment in such Notes. Further, the terms of the outstanding Notes permit, and the terms of any Notes we may issue in the future may permit us to incur additional secured indebtedness subject to compliance with certain debt ratios. The Notes that are not secured will be effectively subordinated to any such additional secured indebtedness. As of December 31, 2018, we had $335.2 million in secured mortgage debt.

There may be no public market for certain of the Notes, and one may not develop, be maintained or be liquid.

We have not applied for listing of certain of the Notes on any securities exchange or for quotation on any automatic dealer quotation system, and we may not do so for Notes issued in the future. We cannot be sure that the liquidity of any market that may develop for such Notes, the ability of any holder to sell such Notes or the price at which holders would be able to sell such Notes. If a market for such Notes does not develop, holders may be unable to resell such Notes for an extended period of time, if at all. If a market for such Notes does develop, it may not continue or it may not be sufficiently liquid to allow holders to resell such Notes. Consequently, holders of the Notes may not be able to liquidate their investment readily, and lenders may not readily accept such Notes as collateral for loans.

The Notes may trade at a discount from their initial issue price or principal amount, depending upon many factors, including prevailing interest rates, the ratings assigned by rating agencies, the market for similar securities and other factors, including general economic conditions and our financial condition, performance and prospects. Any decline in market prices, regardless of cause, may adversely affect the liquidity and trading markets for the Notes.

A downgrade in credit ratings could materially adversely affect the market price of the Notes and may increase our cost of capital.

The outstanding Notes are rated by two rating agencies and any Notes we may issue in the future may be rated by one or more rating agencies. These credit ratings are continually reviewed by rating agencies and may change at any time based upon, among other things, our results of operations and financial condition. In June 2017, both Moody’s Investors Service, or Moody’s, and Standard & Poor’s Ratings Services published reviews of our credit ratings and assigned negative outlooks to our ratings. These negative outlooks imply that our credit ratings may be downgraded to below “investment grade.” If our credit ratings are downgraded, we may have difficulty accessing debt capital markets to meet our obligations and the costs of any debt we do obtain may be increased. For example, the interest rates we are required to pay on our revolving credit facility and our other floating rate debt obligations will increase if our credit ratings are downgraded. We intend to sell some assets, to pay certain debt, to otherwise adjust our capital structure and to take other actions which we believe may avoid any credit ratings downgrade; however, we cannot be sure that these efforts will be successful to avoid our credit ratings being downgraded. Negative changes in the ratings assigned to our debt securities could have an adverse effect on the market price of the Notes and our cost and availability of capital, which could in turn have a material adverse effect on our results of operations and our ability to satisfy our debt service obligations.

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Redemption may adversely affect noteholders’ return on the Notes.

We have the right to redeem some or all of the outstanding Notes prior to maturity and may have such a right with respect to any Notes we issue in the future. We may redeem such Notes at times when prevailing interest rates may be relatively low compared to the interest rate of such Notes. Accordingly, noteholders may not be able to reinvest the redemption proceeds in a comparable security at an effective interest rate as high as that of the Notes.

Item 1B. Unresolved Staff Comments

None.

 Item 2. Properties

As of December 31, 2018, our wholly owned properties were comprised of 247 buildings located in 38 states and the District of Columbia containing approximately 31.9 million rentable square feet and had a noncontrolling ownership interest in three buildings containing approximately 0.4 million rentable square feet through two unconsolidated joint ventures in which we own 50% and 51% interests. The following table provides certain information about our properties as of December 31, 2018 (dollars in thousands):

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Consolidated Properties
State	Number of Buildings	Undepreciated Carrying Value (1)		Depreciated Carrying Value (1)		Annualized Rental Income (2)
Alabama	7	$	84,968	$	81,802	$	20,608
Arizona	6	35,886		34,860		8,960
California	28	517,886		453,431		79,014
Colorado	7	97,576		79,522		20,209
Connecticut	1	1,978		1,978		1,281
District of Columbia	7	526,967		476,660		60,896
Florida	3	56,551		48,054		9,934
Georgia	10	200,281		169,325		30,276
Hawaii (3)	1	2,008		2,008		—
Iowa	1	10,730		10,730		3,283
Idaho	3	33,238		28,367		4,689
Illinois	5	98,902		95,801		30,213
Indiana	5	95,394		81,969		13,320
Kansas	2	20,188		16,879		5,837
Kentucky	2	17,329		15,563		3,936
Maryland	17	321,799		277,712		45,941
Massachusetts	8	109,444		93,966		17,699
Michigan	2	27,625		23,695		4,460
Minnesota	1	8,222		4,748		1,126
Mississippi	1	26,136		22,036		3,997
Missouri	3	83,563		77,425		22,835
Nebraska	2	19,631		19,631		4,201
New Hampshire	1	18,621		15,242		2,439
New Jersey	4	94,827		86,818		20,936
New York	6	69,142		52,448		11,525
North Carolina	2	20,571		20,571		6,483
Ohio	1	940		940		725
Oregon	1	29,648		24,750		5,162
Pennsylvania	2	37,087		37,087		6,959
South Carolina	4	21,568		17,233		2,961
Tennessee	1	10,565		8,823		2,974
Texas	19	437,011		431,991		76,861
Utah	3	64,827		64,827		12,663
Vermont	1	9,256		7,383		1,129
Virginia	34	586,723		558,373		101,596
Washington	7	126,002		113,049		19,880
West Virginia	1	5,062		2,847		—
Wisconsin	1	5,587		4,706		803
Wyoming	1	10,897		6,239		2,147
Total	211	3,944,636		3,569,489		667,958
Held for sale
District of Columbia	1	46,182		45,734		7,745
Hawaii (3)	1	6,846		6,846		—
Maryland	27	122,966		115,886		20,131
Virginia	7	40,961		40,318		6,413
	36	216,955		208,784		34,289
Grand Total	247	$	4,161,591	$	3,778,273	$	702,247

(1) Excludes value assigned to real estate intangibles in purchase price allocations.

(2) Annualized rental income is defined as 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) Leasable land parcel.

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At December 31, 2018, 12 of our consolidated buildings with an aggregate undepreciated carrying value of $520.0 million were encumbered by mortgages totaling $335.2 million. The three buildings owned by our unconsolidated joint ventures were encumbered by two mortgages totaling $82.0 million at December 31, 2018. See Note 5 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K for more information regarding our unconsolidated joint ventures.

Item 3. Legal Proceedings

From time to time, we may become involved in litigation matters incidental to the ordinary course of our business. Although we are unable to predict with certainty the eventual outcome of any litigation, we are currently not a party to any litigation which we expect to have a material adverse effect on our business.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common shares are traded on Nasdaq (symbol: OPI).

As of February 11, 2019, there were 2,368 shareholders of record of our common shares.

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Item 6. Selected Financial Data

The following table sets forth selected financial data for the periods and dates indicated. This data should be read in conjunction with, and is qualified in its entirety by reference to, Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements and accompanying notes included in Part IV, Item 15 of this Annual Report on Form 10-K (amounts are in thousands, except per share data).

	Year Ended December 31,
	2018			2017			2016			2015				2014
Income statement data:
Rental income	$	426,560		$	316,532		$	258,180		$	248,549			$	251,031
Expenses:
Real estate taxes	49,708			37,942			30,703			29,906				28,389
Utility expenses	26,425			20,998			17,269			17,916				19,369
Other operating expenses	89,610			65,349			54,290			50,425				45,982
Depreciation and amortization	162,488			109,588			73,153			68,696				66,593
Loss on impairment of real estate	8,630			9,490			—			—				2,016
Acquisition and transaction related costs	14,508			—			1,191			811				1,344
General and administrative	24,922			18,847			14,897			14,826				15,809
Total expenses	376,291			262,214			191,503			182,580				179,502
Gain on sale of real estate	20,661			—			79			—				—
Dividend income	1,337			1,216			971			811				—
Unrealized loss on equity securities	(7,552		)	—			—			—				—
Interest income	639			1,962			158			14				69
Interest expense	(89,865		)	(65,406		)	(45,060		)	(37,008		)		(28,048		)
Gain (loss) on early extinguishment of debt	(709		)	(1,715		)	104			34				(1,307		)
Loss on distribution to common shareholders of The RMR Group Inc. common stock	—			—			—			(12,368		)		—
Income (loss) from continuing operations before income taxes and equity
in net earnings (losses) of investees	(25,220		)	(9,625		)	22,929			17,452				42,243
Income tax expense	(117		)	(101		)	(101		)	(86		)		(117		)
Equity in net earnings (losses) of investees	(2,269		)	(13		)	137			20				87
Income (loss) from continuing operations	(27,606		)	(9,739		)	22,965			17,386				42,213
Income (loss) from discontinued operations	5,722			21,829			34,878			(227,347		)		14,321
Net income (loss)	(21,884		)	12,090			57,843			(209,961		)		56,534
Preferred units of limited partnership distributions	(371		)	(275		)	—			—				—
Net income (loss) available for common shareholders	$	(22,255	)	$	11,815		$	57,843		$	(209,961	)		$	56,534
Weighted average common shares outstanding (basic)	24,830			21,158			17,763			17,675				15,328
Weighted average common shares outstanding (diluted)	24,830			21,158			17,768			17,675				15,350
Per common share amounts:
Income (loss) from continuing operations (basic and diluted)	$	(1.13	)	$	(0.47	)	$	1.29		$	0.98			$	2.75
Income (loss) from discontinued operations (basic and diluted)	$	0.23		$	1.03		$	1.96		$	(12.86	)		$	0.93
Net income (loss) available for common shareholders (basic)	$	(0.90	)	$	0.56		$	3.26		$	(11.88	)		$	3.69
Net income (loss) available for common shareholders (diluted)	$	(0.90	)	$	0.56		$	3.26		$	(11.88	)		$	3.68
Common distributions paid	$	6.88		$	6.88		$	6.88		$	6.88		(1)	$	6.88
	As of December 31,
Balance sheet data:	2018			2017			2016			2015				2014
Total real estate investments, gross (2)	$	3,944,636		$	2,975,721		$	1,888,760		$	1,696,132			$	1,682,480
Real estate investments, net (2)	3,569,489			2,633,873			1,591,956			1,440,253				1,462,689
Total assets	5,238,583			3,703,565			2,385,066			2,168,510				2,419,908
Debt, net	3,254,890			2,245,092			1,381,852			1,145,598				1,077,410
Shareholders' equity	1,778,968			1,330,043			935,004			956,651				1,297,449

(1) Excludes a non-cash distribution of $0.5136 per share related to the distribution of shares of RMR Inc. class A common stock to our shareholders on December 14, 2015.

(2) Excludes properties classified as assets held for sale or discontinued operations and properties owned by unconsolidated joint ventures.

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Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction with our Consolidated Financial Statements and accompanying notes included in Part IV, Item 15 of this Annual Report on Form 10-K.

OVERVIEW

We are a REIT organized under Maryland law. As of December 31, 2018, our wholly owned properties were comprised of 247 buildings and we had a noncontrolling ownership interest in three buildings totaling 0.4 million rentable square feet through two unconsolidated joint ventures in which we owned 50% and 51% interests. As of December 31, 2018, our consolidated properties are located in 38 states and the District of Columbia and contain approximately 31.9 million rentable square feet. As of December 31, 2018, our properties were leased to approximately 518 different tenants, with a weighted average remaining lease term (based on annualized rental income) of approximately 5.7 years. The U.S. Government is our largest tenant by annualized rental income and represents approximately 25.6% of our annualized rental income as of December 31, 2018. The term annualized rental income as used herein is defined as the annualized contractual base rents from our tenants pursuant to our lease agreements as of the measurement date, plus straight line rent adjustments and estimated recurring expense reimbursements to be paid to us, and excluding lease value amortization.

Merger with Select Income REIT (dollars in thousands, except per share data)

In September 2018, we and our wholly owned subsidiary, Merger Sub, entered into the SIR Merger Agreement, pursuant to which SIR merged with and into Merger Sub, with Merger Sub continuing as the surviving entity in the SIR Merger. The aggregate transaction value, based on the closing price of our common shares on December 31, 2018 of $6.87 per share (prior to the Reverse Share Split), was approximately $2,415,053, excluding closing costs of $27,497 ($14,508 of which was paid by us and $12,989 of which was paid by SIR) and including the repayment or assumption of $1,719,772 of SIR debt. Pursuant to the terms of the SIR Merger Agreement, SIR shareholders received 1.04 of our newly issued common shares for each common share of SIR, with cash paid in lieu of fractional shares. Following the SIR Merger and the other SIR Transactions, we acquired SIR's property portfolio of 99 buildings with approximately 16.5 million rentable square feet.

As a condition of the SIR Merger, on October 9, 2018, we completed the Secondary Sale, raising net proceeds of $435,125 after deducting underwriting discounts and offering expenses. We used the net proceeds from the Secondary Sale to repay amounts outstanding under our revolving credit facility. We accounted for our investment in SIR under the equity method. As a result of the Secondary Sale, our equity method investment in SIR has been classified in discontinued operations in our Consolidated Financial Statements.

After the SIR Merger, on December 31, 2018, we effected the Reverse Share Split, pursuant to which every four of our common shares issued and outstanding as of the effective time of the Reverse Share Split were converted and reclassified into one of our common shares. The Reverse Share Split reduced the number of our issued and outstanding common shares from 192,331,612 to 48,082,903.

The financial and property data presented in this section as of December 31, 2018 include the assets acquired and liabilities assumed in the SIR Merger; however, our consolidated statements of income (loss) exclude SIR's results of operations for all periods presented.

For more information regarding the SIR Merger and the other SIR Transactions, see Notes 1, 5, 7, 12 and 13 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

FPO Transaction

On October 2, 2017, we completed the FPO Transaction, as a result of which we acquired 72 buildings with 6.0 million rentable square feet and FPO's 50% and 51% interests in two joint ventures that owned three buildings with 0.4 million rentable square feet. The properties we acquired in the FPO Transaction significantly increased our property portfolio and the proportion of our total annualized rental income that we earn from properties located in the metropolitan Washington, D.C. market area, which includes Washington, D.C., Northern Virginia and suburban Maryland.

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Consolidated Property Operations

Unless otherwise noted, the data presented in this section exclude three buildings owned by two unconsolidated joint ventures in which we own 50% and 51% interests. See Note 5 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K for more information regarding our unconsolidated joint ventures.

As of December 31, 2018, 91.0% of our rentable square feet was leased, compared to 94.2% of our consolidated rentable square feet as of December 31, 2017.  Occupancy data for our consolidated properties as of December 31, 2018 and 2017 was as follows (square feet in thousands):

	All Consolidated Properties (1)				Comparable Consolidated Properties (2)
	December 31,				December 31,
	2018		2017		2018		2017
Total buildings (3)	247		167		90		90
Total rentable square feet (4)	31,900		17,499		10,904		10,868
Percent leased (5)	91.0	%	94.2	%	94.0	%	95.0	%

(1) Based on consolidated properties we owned on December 31, 2018 and 2017, respectively. 2018 includes the properties acquired in the SIR Merger.

(2) Based on consolidated properties we owned on December 31, 2018 and which we owned continuously since January 1, 2017. Excludes the properties acquired in the SIR Merger.

(3) Includes two leasable land parcels.

(4) Subject to changes when space is re-measured or re-configured for tenants.

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

The average effective rental rate per square foot for our consolidated properties for the years ended December 31, 2018 and 2017 are as follows:

	Year Ended December 31,
Average effective rental rate per square foot (1):	2018		2017
All properties (2)	$	29.23	$	25.99
Comparable properties (3)	$	25.74	$	25.34

(1) Average effective rental rate per square foot represents total rental income during the period specified divided by the average rentable square feet leased during the period specified. Excludes the properties acquired in the SIR Merger.

(2) Based on consolidated properties we owned on December 31, 2018 and 2017, respectively.

(3) Based on consolidated properties we owned on December 31, 2018 and which we owned continuously since January 1, 2017.

During the year endedDecember 31, 2018, changes in rentable square feet leased and available for lease at our consolidated properties were as follows (square feet in thousands):

	Year Ended December 31, 2018
	Leased		Available for Lease		Total
Beginning of year	16,477		1,022		17,499
Changes resulting from:
Acquisition of properties (including the properties acquired in the SIR Merger)	14,771		1,767		16,538
Disposition of properties	(2,022	)	(153	)	(2,175	)
Lease expirations	(1,611	)	1,611		—
Lease renewals (1)	981		(981	)	—
New leases (1)	428		(402	)	26
Re-measurements (2)	—		12		12
End of year	29,024		2,876		31,900

(1) Based on leases entered during the year endedDecember 31, 2018 and an expansion of 26 rentable square feet completed at an existing property during the first quarter of 2018.

(2) Rentable square feet are subject to changes when space is re-measured or re-configured for tenants.

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Excluding the properties acquired in the SIR Merger, leases totaling approximately 1.6 million rentable square feet expired during the year endedDecember 31, 2018. During the year endedDecember 31, 2018, excluding the properties acquired in the SIR Merger, we entered leases totaling 1.4 million rentable square feet, including lease renewals of 1.0 million rentable square feet. The weighted (by rentable square feet) average lease term for new and renewal leases entered during the year ended December 31, 2018 was 6.8 years.

During the year endedDecember 31, 2018, changes in effective rental rates per square foot achieved for new leases and lease renewals at our consolidated properties that commenced during the year endedDecember 31, 2018, when compared to prior effective rental rates per square foot in effect for the same space (and excluding space acquired vacant), were as follows (square feet in thousands): 

	Year Ended December 31, 2018 (1)
	Old Effective Rent Per Square Foot (2)	New Effective Rent Per Square Foot (2)	Rentable Square Feet
New leases	$21.06	$24.21	330
Lease renewals	$27.58	$27.40	1,015
Total leasing activity	$25.98	$26.61	1,345

(1) Excludes the properties acquired in the SIR Merger.

(2) Effective rental rate includes contractual base rents from our tenants pursuant to our lease agreements, plus straight line rent adjustments and estimated expense reimbursements to be paid to us, and excluding lease value amortization.

During the year endedDecember 31, 2018, commitments made for expenditures, such as tenant improvements and leasing costs, in connection with leasing space at our consolidated properties were as follows (square feet and dollars in thousands, except per square foot amounts):

	Year Ended December 31, 2018 (1)
	New Leases		Renewals		Total
Rentable square feet leased during the year	402		981		1,383
Tenant leasing costs and concession commitments (2)	$	17,130	$	20,005	$	37,135
Tenant leasing costs and concession commitments per rentable square foot (2)	$	42.61	$	20.40	$	26.85
Weighted (by square feet) average lease term (years)	6.7		6.8		6.8
Total leasing costs and concession commitments per rentable square foot per year (2)	$	6.36	$	2.98	$	3.95

(1) Excludes the properties acquired in the SIR Merger.

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

During the years ended December 31, 2018 and 2017, amounts capitalized at our consolidated properties for tenant improvements, leasing costs, building improvements and development and redevelopment activities were as follows (dollars in thousands):

	Year Ended December 31,
	2018 (1)		2017
Tenant improvements (2)	$	14,440	$	16,050
Leasing costs (3)	$	11,078	$	5,796
Building improvements (4)	$	24,712	$	15,435
Development, redevelopment and other activities (5)	$	3,962	$	21,553

(1) Excludes the properties acquired in the SIR Merger.

(2) Tenant improvements include capital expenditures used to improve tenants’ space or amounts paid directly to tenants to improve their space.

(3) Leasing costs include leasing related costs, such as brokerage commissions and other tenant inducements.

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

(5) 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. 

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As of December 31, 2018, inclusive of the properties acquired in the SIR Merger, we have estimated unspent leasing related obligations of $58,380.     

As of December 31, 2018, inclusive of properties acquired in the SIR Merger, we had leases at our consolidated properties totaling 3.2 million rentable square feet that were scheduled to expire during 2019. As of February 25, 2019, tenants with leases totaling 1.3 million rentable square feet that are scheduled to expire during 2019 have notified us that they do not plan to renew their leases upon expiration and we cannot be sure as to whether other tenants may or may not renew their leases upon expiration. Based upon current market conditions and tenant negotiations for leases scheduled to expire through December 31, 2019, we expect that the rental rates we are likely to achieve on new or renewed leases for space under leases expiring through December 31, 2019 will, in the aggregate and on a weighted (by annualized revenues) average basis, be equivalent to the rates currently being paid, thereby generally resulting in unchanged revenue from the same space. We cannot be sure of the rental rates which will result from our ongoing negotiations regarding lease renewals or any new leases we may enter; also, we may experience material declines in our rental income due to vacancies upon lease expirations or early terminations. Prevailing market conditions and our tenants' needs at the time we negotiate and enter leases or lease renewals will generally determine rental rates and demand for leased space at our properties, and market conditions and government and other tenants' needs are beyond our control. Whenever we extend, renew or enter into new leases for our properties, we intend to seek rents which are equal to or higher than our historical rents for the same properties; however, our ability to maintain or increase the rents for our current properties will depend in large part upon market conditions, which are beyond our control.

As shown in the table below, approximately 11.0% of our total rented square feet and approximately 12.9% of our total annualized rental revenues as of December 31, 2018 are included in leases scheduled to expire by December 31, 2019. As of December 31, 2018, our lease expirations by year are as follows (dollars and square feet in thousands):

Year (1)	Number of Leases Expiring	Expirations of Leased Square Feet (2)	Percent of Total	Cumulative Percent of Total	Annualized Rental Income Expiring		Percent of Total	Cumulative Percent 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%
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) Includes the properties acquired in the SIR Merger. The year of lease expiration is pursuant to current contract terms. Some tenants have the right to vacate their space before the stated expirations of their leases. As of December 31, 2018, tenants occupying approximately 9.6% of our consolidated rentable square feet and responsible for approximately 5.4% of our annualized rental income as of December 31, 2018, currently have exercisable rights to terminate their leases before the stated terms of their leases expire. Also, in 2019, 2020, 2021, 2022, 2023, 2024, 2025, 2026 and 2028, early termination rights become exercisable by other tenants who currently occupy an additional approximately 2.4%, 5.1%, 1.5%, 2.3%, 0.3%, 0.6%, 1.7%, 0.7% and 0.8% of our consolidated rentable square feet, respectively, and contribute an additional approximately 2.5%, 6.2%, 2.1%, 2.0%, 0.4%, 0.8%, 2.8%, 0.9% and 0.8% of our annualized rental income, respectively, as of December 31, 2018. In addition, as of December 31, 2018, 22 of our tenants have currently exercisable rights to terminate their leases if the legislature or other funding authority does not appropriate rent amounts in their respective annual budgets. These 22 tenants occupy approximately 6.8% of our consolidated rentable square feet and contribute approximately 7.2% of our annualized rental income as of December 31, 2018.

(2) Leased square feet 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 feet measurements are subject to changes when space is re-measured or re-configured for new tenants.

We generally will seek to renew or extend the terms of leases in our single tenant properties when they expire. Because of the capital many of the tenants in these properties have invested in the properties and because many of these properties appear to be of strategic importance to the tenants’ businesses, we believe that it is likely that these tenants will renew or extend their leases prior to when they expire. If we are unable to extend or renew our leases, it may be time consuming and expensive to relet some of these properties.

We believe that current government budgetary methodology, spending priorities and the current U.S. presidential administration's views on the size and scope of government employment have resulted in a decrease in government employment. Furthermore, for the past five years, government tenants have reduced their space utilization per employee and

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consolidated government tenants into existing government owned properties. This activity has reduced the demand for government leased space. Our historical experience with respect to properties of the type we own that are majority leased to government tenants has been that government tenants frequently renew leases to avoid the costs and disruptions that may result from relocating their operations. However, efforts to reduce space utilization rates may result in our tenants exercising early termination rights under our leases, vacating our properties upon expiration of our leases in order to relocate, or renewing their leases for less space than they currently occupy. Also, our government tenants' desires to reconfigure leased office space to reduce utilization per employee may require us to spend significant amounts for tenant improvements, and tenant relocations have become more prevalent than our past experiences in instances where efforts by government tenants to reduce their space utilization require a significant reconfiguration of currently leased space. Increasing uncertainty with respect to government agency budgets and funding to implement relocations, consolidations and reconfigurations recently has resulted in delayed decisions by some of our government tenants and their reliance on short term lease renewals. We believe the reduction in government tenant space utilization and the consolidation of government tenants into government owned real estate is substantially complete; however, these activities may impact us for some time into the future. At present, we are unable to reasonably project what the financial impact of market conditions or changing government circumstances will be on our financial results for future periods.

As of December 31, 2018, including the properties acquired in the SIR Merger, we derive 26.5% of our annualized rental income from our consolidated properties located in the metropolitan Washington, D.C. market area, which includes Washington, D.C., Northern Virginia and suburban Maryland. A downturn in economic conditions in this area could result in reduced demand from tenants for our properties or reduce the rents that our tenants in this area are willing to pay when our leases expire or terminate and when renewal or new terms are negotiated. Additionally, in recent years there has been a decrease in demand for new leased space by the U.S. Government in the metropolitan Washington, D.C. market area, and that could increase competition for government tenants and adversely affect our ability to retain government tenants when our leases expire.

Our manager, RMR LLC, employs a tenant review process for us. RMR LLC assesses tenants on an individual basis and does not employ a standardized set of credit criteria. In general, depending on facts and circumstances, RMR LLC evaluates the creditworthiness of a tenant based on information concerning the tenant that is provided by the tenant and, in some cases, information that is publicly available or obtained from third party sources. RMR LLC also often uses a third party service to monitor the credit ratings of debt securities of our existing tenants whose debt securities are rated by a nationally recognized credit rating agency. We consider investment grade tenants to include: (a) investment grade rated tenants; (b) tenants with investment grade rated parent entities that guarantee the tenant's lease obligations; and/or (c) tenants with investment grade rated parent entities that do not guarantee the tenant's lease obligations. As of December 31, 2018, including tenants resulting from the SIR Merger, 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).

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As of December 31, 2018, tenants representing 1% or more of our total annualized rental income, including tenants resulting from the SIR Merger, were as follows (dollars in thousands):

	Tenant	Credit Rating	Annualized Rental Income		% of Total Annualized Rental Income
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	%

Acquisition Activities (dollars in thousands)

As described above, we completed the SIR Merger on December 31, 2018, pursuant to which we acquired SIR's portfolio of 99 buildings with approximately 16.5 million rentable square feet for total consideration of $2,415,053, excluding acquisition related costs of $27,497 and including the repayment or assumption of $1,719,772 of SIR debt. For more information regarding the SIR Merger and the other SIR Transactions, see Notes 1, 5, 7, 12 and 13 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

Disposition Activities (dollars in thousands)

During the year ended December 31, 2018, we sold 19 buildings with 2.2 million rentable square feet for approximately $320.3 million, in aggregate, excluding closing costs. Since January 1, 2019, we have sold 34 of the 36 buildings classified as held for sale as of December 31, 2018 with 1.6 million rentable square feet for approximately $198.5 million, in aggregate, excluding closing costs. In addition, we are currently marketing 34 buildings, including properties acquired in the SIR Merger, containing approximately 5.3 million square feet that we expect to generate more than $700.0 million of gross proceeds. We expect to substantially complete these dispositions by mid-year 2019 and turn our attention to accretively growing our property portfolio. We cannot be sure we will sell any properties we are marketing for prices in excess of their carrying values or otherwise.

For more information about our disposition activities, please see “Business —Disposition Policies” in Part 1, Item 1 of this Annual Report on Form 10-K and Note 5 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

Financing Activities (dollars in thousands, except per unit amounts)

On May 1, 2018, one of our subsidiaries redeemed all 1,813,504 of its outstanding 5.5% Series A Cumulative Preferred Units, or the Preferred Units, for $11.15 per unit (plus accrued and unpaid distributions), or $20,310 in aggregate, using cash on hand and borrowings under our revolving credit facility.

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In December 2018, we amended and restated the credit agreement governing our $750,000 revolving credit facility and $300,000 and $250,000 term loans. 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 LIBOR plus a premium of 125 basis points per annum to 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 facility fee are subject to adjustment based upon changes to our credit ratings.

Also in December 2018, we repaid $162,000 of the principal balance outstanding on our $250,000 unsecured term loan due in 2022 and $2,984 of the principal balance of a mortgage note due in 2020, in each case using proceeds from our disposition program. In February 2019, we repaid the remaining principal balance outstanding of $88,000 on our $250,000 unsecured term loan due 2022 and repaid amounts outstanding under our revolving credit facility with proceeds from our disposition program.

Segment Information

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

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

Year Ended December 31, 2018, Compared to Year Ended December 31, 2017

									Acquired Properties  Results (2)				Disposed Properties Results (3)
	Comparable Properties Results (1)								Year Ended				Year Ended				Consolidated Results
	Year Ended December 31,								December 31,				December 31,				Year Ended December 31,
					$		%																$			%
	2018		2017		Change		Change		2018		2017		2018		2017		2018			2017			Change			Change
Rental income	$	263,499	$	260,024	$	3,475	1.3	%	$	132,868	$	32,587	$	30,193	$	23,921	$	426,560		$	316,532		$	110,028		34.8	%
Operating expenses:
Real estate taxes	30,977		30,189		788		2.6	%	15,489		4,042		3,242		3,711		49,708			37,942			11,766			31.0	%
Utility expenses	18,189		17,647		542		3.1	%	6,745		2,180		1,491		1,171		26,425			20,998			5,427			25.8	%
Other operating expenses	56,949		55,415		1,534		2.8	%	26,591		5,785		6,070		4,149		89,610			65,349			24,261			37.1	%
Total operating expenses	106,115		103,251		2,864		2.8	%	48,825		12,007		10,803		9,031		165,743			124,289			41,454			33.4	%
Net operating income (4)	$	157,384	$	156,773	$	611	0.4	%	$	84,043	$	20,580	$	19,390	$	14,890	260,817			192,243			68,574			35.7	%
Other expenses:
Depreciation and amortization																	162,488			109,588			52,900			48.3	%
Loss on impairment of real estate																	8,630			9,490			(860		)	(9.1	%)
Acquisition and transaction related costs																	14,508			—			14,508			nm
General and administrative																	24,922			18,847			6,075			32.2	%
Total other expenses																	210,548			137,925			72,623			52.7	%
Gain on sale of real estate																	20,661			—			20,661			nm
Dividend income																	1,337			1,216			121			10.0	%
Unrealized loss on equity securities																	(7,552		)	—			(7,552		)	nm
Interest income																	639			1,962			(1,323		)	(67.4	%)
Interest expense																	(89,865		)	(65,406		)	(24,459		)	37.4	%
Loss on early extinguishment of debt																	(709		)	(1,715		)	1,006			(58.7	%)
Loss from continuing operations before income taxes and equity in net losses of investees																	(25,220		)	(9,625		)	(15,595		)	162.0	%
Income tax expense																	(117		)	(101		)	(16		)	15.8	%
Equity in net losses of investees																	(2,269		)	(13		)	(2,256		)	nm
Loss from continuing operations																	(27,606		)	(9,739		)	(17,867		)	183.5	%
Income from discontinued operations																	5,722			21,829			(16,107		)	(73.8	%)
Net income (loss)																	(21,884		)	12,090			(33,974		)	(281.0	%)
Preferred units of limited partnership distributions																	(371		)	(275		)	(96		)	34.9	%
Net income (loss) available for common shareholders																	$	(22,255	)	$	11,815		$	(34,070	)	(288.4	%)
Weighted average common shares outstanding (basic and diluted)																	24,830			21,158			3,672			17.4 %
Per common share amounts (basic and diluted):
Loss from continuing operations																	$	(1.13	)	$	(0.47	)	$	(0.66	)	140.4	%
Income from discontinued operations																	$	0.23		$	1.03		$	(0.80	)	(77.7	%)
Net income (loss) available for common shareholders																	$	(0.90	)	$	0.56		$	(1.46	)	(260.7	%)
Reconciliation of Net Income (Loss) Available for Common Shareholders to Consolidated Property NOI:
Net income (loss) available for common shareholders																	$	(22,255	)	$	11,815
Preferred units of limited partnership distributions																	371			275
Net income (loss)																	(21,884		)	12,090
Income from discontinued operations																	(5,722		)	(21,829		)
Loss from continuing operations																	(27,606		)	(9,739		)
Equity in net losses of investees																	2,269			13
Income tax expense																	117			101
Loss from continuing operations before income taxes and equity in net losses of investees																	(25,220		)	(9,625		)
Loss on early extinguishment of debt																	709			1,715
Interest expense																	89,865			65,406
Interest income																	(639		)	(1,962		)
Unrealized loss on equity securities																	7,552			—
Dividend income																	(1,337		)	(1,216		)
Gain on sale of real estate																	(20,661		)	—
General and administrative																	24,922			18,847
Acquisition and transaction related costs																	14,508			—
Loss on impairment of real estate																	8,630			9,490
Depreciation and amortization																	162,488			109,588
Consolidated Property NOI																	$	260,817		$	192,243

59

Calculation of Funds From Operations Available for Common Shareholders and Normalized Funds From Operations Available for Common Shareholders(5)
	2018			2017
Net income (loss) available for common shareholders	$	(22,255	)	$	11,815
Add (less): Depreciation and amortization:
Consolidated properties	162,488			109,588
Unconsolidated joint venture properties	8,203			2,185
FFO attributable to Select Income REIT	51,773			58,279
Loss on impairment of real estate	8,630			9,490
Equity in earnings from Select Income REIT included in discontinued operations	(24,358		)	(21,584		)
Increase in carrying value of property included in discontinued operations	—			(619		)
Gain on sale of real estate	(20,661		)	—
Funds from operations available for common shareholders	163,820			169,154
Add (less): Acquisition and transaction related costs	14,508			—
Loss on early extinguishment of debt	709			1,715
Normalized FFO attributable to Select Income REIT	44,006			58,580
FFO attributable to Select Income REIT	(51,773		)	(58,279		)
Unrealized loss on equity securities	7,552			—
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	18,665			—
Normalized funds from operations available for common shareholders	$	197,458		$	171,098
Funds from operations available for common shareholders per common share (basic and diluted)	$	6.60		$	7.99
Normalized funds from operations available for common shareholders per common share (basic and diluted)	$	7.95		$	8.09

(1) Comparable properties consists of 90 buildings we owned on December 31, 2018 and which we owned continuously since January 1, 2017.

(2) Acquired properties consist of 157 buildings we acquired since January 1, 2017 and which we owned as of December 31, 2018. On December 31, 2018, we acquired 99 of these buildings in connection with the SIR Merger. In October 2017, we acquired 57 of these buildings in connection with the FPO Transaction. We acquired one of these buildings in a separate transaction during 2017.

(3) Disposed properties consist of one building which we sold in October 2017 and 19 buildings which we sold during the year ended December 31, 2018. Excludes one building classified as discontinued operations which we sold in August 2017.

(4) The calculation of Consolidated Property Net Operating Income, or NOI, excludes 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 as consolidated income from our rental of real estate less our consolidated property operating expenses. Consolidated Property NOI excludes amortization of capitalized tenant improvement costs and leasing commissions that we record as depreciation and amortization. We consider Consolidated Property NOI to be an appropriate supplemental measure to net income (loss) available for common shareholders because it may help both investors and management to understand the operations of our consolidated properties. We use Consolidated Property NOI to evaluate individual and company wide consolidated property level performance, and we believe that Consolidated Property NOI provides useful information to investors regarding our results of operations because it reflects 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 does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income (loss) or net income (loss) available for common shareholders as an indicator of our operating performance or as a measure of our liquidity. This measure should be considered in conjunction with net income (loss) and net income (loss) available for common shareholders as presented in our consolidated statements of comprehensive income (loss). Other real estate companies and REITs may calculate Consolidated Property NOI differently than we do.

(5) We calculate FFO available for common shareholders and Normalized FFO available for common shareholders as shown above. 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, 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 comprehensive 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.

60

We refer to the 90 buildings we owned on December 31, 2018 and which we have owned continuously since January 1, 2017, as comparable properties. We refer to the 157 buildings that we acquired during the period from January 1, 2017 to December 31, 2018, as the acquired properties. We refer to the 20 buildings we sold during the period from January 1, 2017 to December 31, 2018, as the disposed properties.

Our consolidated statements of comprehensive income (loss) for the year endedDecember 31, 2018 include the operating results of 58 acquired properties for the entire year, as we acquired those properties during 2017, exclude the operating results of 99 acquired properties for the entire year, as we acquired those properties on December 31, 2018 in connection with the SIR Merger, exclude the operating results of one disposed property for the entire period, as we sold that property in 2017, and include the operating results of 19 disposed properties for less than the entire period, as we sold those properties during 2018. Our consolidated statements of comprehensive income (loss) for the year ended December 31, 2017 include the operating results of 58 acquired properties for less than the entire year, as we acquired those properties during 2017, exclude the operating results of 99 acquired properties for the entire year, as we acquired those properties in 2018, include the operating results of one disposed property for less than the entire year, as we sold that property during 2017, and exclude the operating results of 19 disposed properties for the entire year, as we sold those properties during 2018.

References to changes in the income and expense categories below relate to the comparison of consolidated results for the year ended December 31, 2018, compared to the year ended December 31, 2017. As a result of certain properties acquired in the fourth quarter of 2017 as part of the FPO Transaction that we subsequently disposed of in the fourth quarter of 2018, our operating results increased from 2017 to 2018 for the disposed properties.

Rental income.The increase in rental income reflects an increase in rental income for comparable properties, acquired properties and disposed properties. Rental income for comparable properties increased$3,475 due primarily to increases in rental rates and occupied space at certain of our properties in 2018. Rental income increased $100,281 as a result of the acquired properties. Rental income increased $6,272 for the disposed properties. Rental income includes non-cash straight line rent adjustments totaling $10,164 in 2018 and $5,582 in 2017, and amortization of acquired leases and assumed lease obligations totaling ($2,903) in 2018 and ($2,764) in 2017. 

Real estate taxes.The increase in real estate taxes reflects the increase in real estate taxes for comparable properties and acquired properties, partially offset by a decrease in real estate taxes for the disposed properties. Real estate taxes for comparable properties increased$788 due primarily to the effect of higher real estate tax valuation assessments at certain of our properties in 2018. Real estate taxes increased $11,447 as a result of the acquired properties. Real estate taxes declined $469 for the disposed properties.

Utility expenses.The increase in utility expenses reflects an increase in utility expenses for comparable properties, acquired properties and disposed properties. Utility expenses at comparable properties increased$542 primarily due to an increase in electricity and gas usage and rates at certain of our properties during 2018. Utility expenses increased $4,565 as a result of the acquired properties. Utility expenses increased $320 for the disposed properties.

Other operating expenses. Other operating expenses consist of salaries and benefit costs of property level personnel, repairs and maintenance expense, cleaning expense, other direct costs of operating our properties and property management fees. The increase in other operating expenses reflects an increase in expenses for comparable properties, acquired properties and disposed properties. Other operating expenses at comparable properties increased$1,534 primarily as a result of higher repairs and maintenance costs in 2018. Other operating expenses increased $20,806 as a result of the acquired properties. Other operating expenses increased $1,921 for the disposed properties.

Depreciation and amortization.The increase in depreciation and amortization reflects the depreciation and amortization from the acquired properties and the effect of improvements made to certain of our comparable properties, partially offset by the effect of certain assets becoming fully depreciated and property dispositions. Depreciation and amortization increased $49,025 as a result of the acquired properties. Depreciation and amortization at comparable properties increased$755 due primarily to depreciation and amortization of improvements made to certain of our properties after January 1, 2017, partially offset by certain leasing related assets becoming fully depreciated in 2017 and 2018. Depreciation and amortization also increased $3,120 for the disposed properties.

Loss on impairment of real estate. We recorded an $8,630 loss on impairment of real estate in 2018 to reduce the carrying value of 37 buildings to their estimated fair value less costs to sell. We recorded a $9,490 loss on impairment of real estate in 2017 to reduce the carrying value of two buildings to their estimated fair value.

61

Acquisition and transaction related costs. Acquisition and transaction related costs in 2018 include costs incurred in connection with the SIR Merger and the other SIR Transactions. For further information regarding the SIR Merger and the SIR Transactions, see Notes 1, 5, 7, 12 and 13 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

General and administrative.  General and administrative expenses consist of fees pursuant to our business management agreement, equity compensation expense, legal and accounting fees, Trustees’ fees and expenses, securities listing and transfer agency fees and other costs relating to our status as a publicly traded company. The increase in general and administrative expenses is primarily the result of an increase in business management fees in 2018 resulting from our acquisition activity and an increase in other professional service costs.

Gain on sale of real estate. We recorded a $20,661 gain on sale of real estate in 2018 resulting from the sale of 17 buildings in 2018.

Dividend income. Dividend income consists of dividends received from our investment in RMR Inc.

Unrealized loss on equity securities. Unrealized loss on equity securities represents the unrealized loss to adjust our investment in RMR Inc. to its fair value in accordance with a change in GAAP effective January 1, 2018. For further information, see Notes 2 and 10 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

Interest income. The decrease in interest income is primarily the result of lower cash balances in 2018 compared to 2017 .

Interest expense. The increase in interest expense reflects higher average outstanding debt balances and higher weighted average interest rates on borrowings during 2018 compared to 2017.

Loss on early extinguishment of debt.  We recorded a loss on early extinguishment of debt of $709 in 2018 from the write-off of debt issuance costs associated with the partial paydown of one of our unsecured term loans and the amendment to our revolving credit facility in December 2018. We recorded a loss on early extinguishment of debt in 2017 of $1,715 in connection with the termination of a bridge loan facility that we entered into in connection with the FPO Transaction.

Income tax expense. Income tax expense is the result of operating income we earned in certain jurisdictions that is subject to state income taxes.

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

Income from discontinued operations. Income from discontinued operations consists of our proportionate share of earnings from our investment in SIR, loss on the Secondary Sale, gain on issuance of shares by SIR as a result of the issuance of common shares by SIR at prices which were in the aggregate above the then per share carrying value of our SIR common shares and the operating results for one building we sold during 2017. During 2017, we recorded an adjustment of $619 to increase the carrying value of this property to its estimated fair value less costs to sell. See Notes 1, 12 and 13 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K for further information about our equity method investment in SIR.

Preferred units of limited partnership distributions. Preferred units of limited partnership distributions represent distributions to the holders of the Preferred Units. See Note 5 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K for more information regarding the Preferred Units.

Net income (loss) and net income (loss) available for common shareholders. Our net income (loss), net income (loss) available for common shareholders and net income (loss) available for common shareholders per basic and diluted common share decreased in 2018 compared to 2017 primarily as a result of the changes noted above.

62

Year Ended December 31, 2017, Compared to Year Ended December 31, 2016

										Acquired Properties  Results (2)				Disposed Properties Results (3)
	Comparable Properties Results (1)									Year Ended				Year Ended						Consolidated Results
	Year Ended December 31,									December 31,				December 31,						Year Ended December 31,
					$			%																		$			%
	2017		2016		Change			Change		2017		2016		2017			2016			2017			2016			Change			Change
Rental income	$	253,197	$	249,429	$	3,768		1.5	%	$	63,335	$	8,751	$	—		$	—		$	316,532		$	258,180		$	58,352		22.6	%
Operating expenses:
Real estate taxes	30,814		29,725		1,089			3.7	%	7,128		978		—			—			37,942			30,703			7,239			23.6	%
Utility expenses	16,535		16,652		(117		)	(0.7	%)	4,463		617		—			—			20,998			17,269			3,729			21.6	%
Other operating expenses	54,027		52,129		1,898			3.6	%	11,173		1,936		149			225			65,349			54,290			11,059			20.4	%
Total operating expenses	101,376		98,506		2,870			2.9	%	22,764		3,531		149			225			124,289			102,262			22,027			21.5	%
Net operating income (loss) (4)	$	151,821	$	150,923	$	898		0.6	%	$	40,571	$	5,220	$	(149	)	$	(225	)	192,243			155,918			36,325			23.3	%
Other expenses:
Depreciation and amortization																				109,588			73,153			36,435			49.8	%
Loss on impairment of real estate																				9,490			—			9,490			nm
Acquisition and transaction related costs																				—			1,191			(1,191		)	nm
General and administrative																				18,847			14,897			3,950			26.5	%
Total other expenses																				137,925			89,241			48,684			54.6	%
Gain on sale of real estate																				—			79			(79		)	nm
Dividend income																				1,216			971			245			25.2	%
Interest income																				1,962			158			1,804			nm
Interest expense																				(65,406		)	(45,060		)	(20,346		)	45.2	%
Gain (loss) on early extinguishment of debt																				(1,715		)	104			(1,819		)	nm
Income (loss) from continuing operations before income taxes and equity in net earnings (losses) of investees																				(9,625		)	22,929			(32,554		)	(142.0	%)
Income tax expense																				(101		)	(101		)	—			—	%
Equity in net earnings (losses) of investees																				(13		)	137			(150		)	(109.5	%)
Income (loss) from continuing operations																				(9,739		)	22,965			(32,704		)	(142.4	%)
Income from discontinued operations																				21,829			34,878			(13,049		)	(37.4	%)
Net income																				12,090			57,843			(45,753		)	(79.1	%)
Preferred units of limited partnership distributions																				(275		)	—			(275		)	nm
Net income available for common shareholders																				$	11,815		$	57,843		$	(46,028	)	(79.6	%)
Weighted average common shares outstanding (basic)																				21,158			17,763			3,395			19.1	%
Weighted average common shares outstanding (diluted)																				21,158			17,768			3,390			19.1	%
Per common share amounts (basic and diluted):
Income (loss) from continuing operations																				$	(0.47	)	$	1.29		$	(1.76	)	(136.4	%)
Income from discontinued operations																				$	1.03		$	1.96		$	(0.93	)	(47.4	%)
Net income available for common shareholders																				$	0.56		$	3.26		$	(2.70	)	(82.8	%)
Reconciliation of Net Income Available for Common Shareholders to Consolidated Property NOI:
Net income available for common shareholders																				$	11,815		$	57,843
Preferred units of limited partnership distributions																				275			—
Net income																				12,090			57,843
Income from discontinued operations																				(21,829		)	(34,878		)
Income (loss) from continuing operations																				(9,739		)	22,965
Equity in net earnings (losses) of investees																				13			(137		)
Income tax expense																				101			101
Income (loss) from continuing operations before income taxes and equity in net earnings (losses) of investees																				(9,625		)	22,929
(Gain) loss on early extinguishment of debt																				1,715			(104		)
Interest expense																				65,406			45,060
Interest income																				(1,962		)	(158		)
Dividend income																				(1,216		)	(971		)
Gain on sale of real estate																				—			(79		)
General and administrative																				18,847			14,897
Acquisition and transaction related costs																				—			1,191
Loss on impairment of real estate																				9,490			—
Depreciation and amortization																				109,588			73,153
Consolidated Property NOI																				$	192,243		$	155,918

63

Calculation of Funds From Operations Available for Common Shareholders and Normalized Funds From Operations Available for Common Shareholders(5)
	2017			2016
Net income available for common shareholders	$	11,815		$	57,843
Add (less): Depreciation and amortization:
Consolidated properties	109,588			73,153
Unconsolidated joint venture properties	2,185			—
FFO attributable to Select Income REIT	58,279			71,227
Loss on impairment of real estate	9,490			—
Equity in earnings from Select Income REIT included in discontinued operations	(21,584		)	(35,381		)
Increase in carrying value of property included in discontinued operations	(619		)	—
Gain on sale of real estate	—			(79		)
Funds from operations available for common shareholders	169,154			166,763
Add (less): Acquisition and transaction related costs	—			1,191
Normalized FFO attributable to Select Income REIT	58,580			71,313
FFO attributable to Select Income REIT	(58,279		)	(71,227		)
(Gain) loss on early extinguishment of debt	1,715			(104		)
Net gain on issuance of shares by Select Income REIT included in discontinued operations	(72		)	(86		)
Normalized funds from operations available for common shareholders	$	171,098		$	167,850
Funds from operations available for common shareholders per common share (basic and diluted)	$	7.99		$	9.39
Normalized funds from operations available for common shareholders per common share (basic and diluted)	$	8.09		$	9.45

(1) Comparable properties consist of 89 buildings we owned on December 31, 2017 and which we owned continuously since January 1, 2016.

(2) Acquired properties consist of 78 buildings we acquired since January 1, 2016. In October 2017, we acquired 72 of these buildings in connection with the FPO Transaction. We acquired one of these buildings in a separate transaction during 2017. The remaining five buildings were acquired during 2016.

(3) Disposed properties consist of one building we sold during 2016 and one building we sold during 2017. Excludes one building classified as discontinued operations which was sold in August 2017.

(4) See footnote (4) on page 60 for the definition of NOI.

(5) See footnote (5) on page 60 for the definitions of FFO and Normalized FFO.

We refer to the 89 buildings we owned on December 31, 2017 and which we have owned continuously since January 1, 2016 as comparable properties. We refer to the 78 buildings that we acquired during the period from January 1, 2016 to December 31, 2017 as the acquired properties. We refer to the two buildings we sold during the period from January 1, 2016 to December 31, 2017 as the disposed properties.

Our consolidated statements of comprehensive income for the year ended December 31, 2017 include the operating results of five acquired properties for the entire year, as we acquired those properties during 2016, include 73 properties for less than the entire year, as we acquired those properties during 2017, exclude the operating results of one disposed property for the entire year, as we sold that property during 2016, and include the operating results of one disposed property for less than the entire year, as we sold the property during 2017. Our consolidated statements of comprehensive income for the year ended December 31, 2016 exclude the operating results of 73 acquired properties for the entire year, as we acquired these properties during 2017, include five acquired properties for less than the entire year, as we acquired these properties during 2016, include the operating results of one disposed property for the entire year, as we sold that property during 2017, and include the operating results of one disposed property for less than the entire year, as we sold that property during 2016.

References to changes in the income and expense categories below relate to the comparison of consolidated results for the year ended December 31, 2017, compared to the year ended December 31, 2016.

Rental income. The increase in rental income reflects an increase in rental income for comparable properties and the rental income from the acquired properties. Rental income for comparable properties increased $3,768 due primarily to increases in rental rates and occupied space at certain of our properties in 2017. Rental income increased $54,584 as a result of the acquired properties. Rental income includes non-cash straight line rent adjustments totaling $5,582 in 2017 and $2,691 in 2016, and amortization of acquired leases and assumed lease obligations totaling ($2,764) in 2017 and ($1,457) in 2016. 

Real estate taxes. The increase in real estate taxes reflects the increase in real estate taxes for comparable properties and the taxes for acquired properties. Real estate taxes for comparable properties increased $1,089 due primarily to the effect of higher real estate tax valuation assessments at certain of our properties in 2017. Real estate taxes increased $6,150 as a result of the acquired properties.  

Utility expenses. The increase in utility expenses reflects the utility expenses of the acquired properties partially offset by a decrease in utility expenses for comparable properties. Utility expenses at comparable properties declined $117 primarily due to a decrease in electricity usage and rates at certain of our properties during 2017. Utility expenses increased $3,846 as a result of the acquired properties.  

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Other operating expenses. Other operating expenses at comparable properties increased $1,898 primarily as a result of higher repairs and maintenance costs in 2017. Other operating expenses increased $9,237 as a result of the acquired properties. We also realized a decrease of $76 in other operating expenses as a result of the disposed properties.

Depreciation and amortization. The increase in depreciation and amortization reflects the depreciation and amortization from the acquired properties and the effect of improvements made to certain of our comparable properties, partially offset by the effect of certain assets becoming fully depreciated. Depreciation and amortization at comparable properties increased $1,477 due primarily to depreciation and amortization of improvements made to certain of our properties after January 1, 2016, partially offset by certain leasing related assets becoming fully depreciated in 2016 and 2017. Depreciation and amortization increased $34,958 as a result of the acquired properties.

Loss on impairment of real estate. We recorded a $9,490 loss on impairment of real estate in 2017 to reduce the carrying value of two properties to their estimated fair value.

Acquisition and transaction related costs. Acquisition and transaction related costs include legal and due diligence costs incurred in connection with our 2016 property acquisition activities that were expensed in accordance with GAAP. Pursuant to changes in GAAP, beginning in 2017, we generally capitalize our property acquisition related costs.

General and administrative.  The increase in general and administrative expenses is primarily the result of an increase in business management fees in 2017 resulting from our acquisition activity, increases in accounting expense, higher stock compensation and an increase in other professional service costs.

Gain on sale of real estate. Gain on sale of real estate represents the portion of the gain recognized from the sale of one of the disposed properties during 2016.

Dividend income. Dividend income consists of dividends received from our investment in RMR Inc.

Interest income. The increase in interest income is primarily the result of higher average cash balances in 2017 due to our financing activities related to the FPO Transaction.

Interest expense. The increase in interest expense reflects higher average outstanding debt balances and higher weighted average interest rates on borrowings in 2017.

Gain (loss) on early extinguishment of debt.  We recorded a loss on early extinguishment of debt in 2017 of $1,715 in connection with the termination of a bridge loan facility that we entered into in connection with the FPO Transaction. We recorded a $104 gain on early extinguishment of debt in 2016 in connection with the prepayment of two mortgage notes. 

Income tax expense. Income tax expense is the result of operating income we earned in certain jurisdictions that is subject to state income taxes.

Equity in net earnings (losses) of investees. Equity in net earnings (losses) of investees represents our proportionate share of earnings or losses from our investments in AIC and our two unconsolidated joint ventures.

Income from discontinued operations. Income from discontinued operations consists of our proportionate share of earnings from the SIR investment, gain on issuance of shares by SIR as a result of the issuance of common shares by SIR at prices which were in the aggregate above the then per share carrying value of our SIR common shares and the operating results for one building we sold in 2017. During 2017, we recorded an adjustment of $619 to increase the carrying value of this property to its estimated fair value less costs to sell. We sold this property on August 31, 2017. See Notes 1, 12 and 13 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K, for further information about our equity method investment in SIR.

Preferred units of limited partnership distributions. Preferred units of limited partnership distributions represent distributions to the holders of the Preferred Units. See Note 5 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K for more information regarding the Preferred Units.

Net income and net income available for common shareholders. Our net income, net income available for common shareholders and net income available for common shareholders per basic and diluted common share decreased in 2017 compared to 2016 primarily as a result of the changes noted above. The percentage decrease in net income available for

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common shareholders per common share (basic and diluted) is higher primarily as a result of the higher number of weighted average common shares outstanding as result of our issuance of common shares in an underwritten public offering during 2017.

LIQUIDITY AND CAPITAL RESOURCES

Our Operating Liquidity and Resources (dollar amounts in thousands)

Our principal sources of funds to meet operating and capital expenses, pay debt service obligations and make distributions to our shareholders are the operating cash flows we generate as rental income from our properties, net proceeds from property sales and borrowings under our revolving credit facility. Including certain assets acquired from SIR in the SIR Merger, we have identified approximately $700,000 of assets to be sold by us. Alternatively, in lieu of selling such properties, we may sell some or all of the approximately 2.8 million shares of class A common stock of RMR Inc. that we own. We believe that these sources of funds will be sufficient to meet our operating and capital expenses, pay debt service obligations and (except as described below) make distributions to our shareholders for the next 12 months and for the foreseeable future thereafter. Our future cash flows from operating activities will depend primarily upon:

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

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

• our ability to successfully complete our pending property sales and to sell properties that we market for sale; and

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

Upon the consummation of the SIR Merger, we announced a regular quarterly distribution of $0.55 per common share ($2.20 per common share per year), based on a target payout ratio of 75% of projected cash available for distribution. We determine our distribution payout ratio with consideration for our expected liquidity needs attributable to expected capital expenditures in conjunction with cash flows from operations and debt obligations.

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

Our changes in cash flows for the year endedDecember 31, 2018 compared to the prior year were as follows: (i) cash provided by operating activities increased from $137,554 in 2017 to $144,916 in 2018; (ii) cash flows from investing changed from $1,188,139 of cash used in investing activities in 2017 to $738,656 of cash provided by investing activities in 2018; and (iii) cash flows from financing activities changed from $1,039,794 of cash provided by financing activities in 2017 to $864,309 of cash used in financing activities in 2018.

The increase in cash provided by operating activities for the year endedDecember 31, 2018 compared to the prior year was due primarily to an increase in Consolidated Property NOI from our acquisition activities and an increase in distributions we received from our investment in SIR classified as an operating activity in our consolidated statements of cash flows as a result of an increase in the equity in earnings of SIR we recognized in 2018, partially offset by an increase in interest paid due to higher average outstanding debt balances and higher weighted average interest rates on borrowings in 2018 and unfavorable changes in working capital. The change from cash used in investing activities for the year ended December 31, 2017 to cash provided by investing activities for the year endedDecember 31, 2018 was due primarily to the sale of 19 buildings and the Secondary Sale in 2018, compared to our use of cash for the cash consideration for the FPO Transaction in 2017. The change from cash provided by financing activities for the year ended December 31, 2017 to cash used in financing activities for the year endedDecember 31, 2018 was due to an increase in net debt repayments using the sale proceeds from property sales and the Secondary Sale in 2018, compared to our financing activities related to the FPO Transaction during 2017, including issuances of common shares and senior unsecured notes and borrowings under our revolving credit facility.

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

In order to fund acquisitions and to meet cash needs that may result from our desire or need to make distributions or pay operating or capital expenses, we maintain a $750,000 revolving credit facility. On December 13, 2018, we amended and

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restated the credit agreement governing our $750,000 revolving credit facility and $300,000 and $250,000 term loans. 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 LIBOR plus a premium of 125 basis points per annum to 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 facility fee are subject to adjustment based upon changes to our credit ratings. We can borrow, repay and reborrow funds available under our revolving credit facility until maturity, and no principal repayment is due until maturity. As of December 31, 2018, the annual interest rate payable on borrowings under our revolving credit facility was 3.6%. As of December 31, 2018 and February 25, 2019, we had $175,000 and $110,000, respectively, outstanding under our revolving credit facility, and $575,000 and $640,000, respectively, available for borrowing under our revolving credit facility.

Our revolving credit facility is governed by our credit agreement, which is with a syndicate of institutional lenders, and which also governs our two unsecured term loans:

• Our term loan which matures on March 31, 2020 is prepayable without penalty at any time and has an outstanding principal balance of $300,000 as of December 31, 2018. We are required to pay interest at a rate of LIBOR plus a premium, which was 140 basis points per annum at December 31, 2018, on the amount outstanding under this term loan. The interest rate premium is subject to adjustment based upon changes to our credit ratings. As of December 31, 2018, the annual interest rate for the amount outstanding under this term loan was 3.9%.

• Our term loan that was scheduled to mature on March 31, 2022 was prepayable without penalty at any time and had an outstanding principal balance of $250,000 until December 18, 2018. We were required to pay interest at a rate of LIBOR plus a premium, which was 180 basis points per annum at December 31, 2018, on the amount outstanding under this term loan. The interest rate premium is subject to adjustment based upon changes to our credit ratings. As of December 31, 2018, the annual interest rate for the amount outstanding under this term loan was 4.3%. On December 18, 2018, we partially repaid this term loan with a principal payment of $162,000 without penalty using proceeds from the sale of a property portfolio located in southern Virginia. On February 11, 2019, we repaid the remaining outstanding principal balance of $88,000 without penalty using proceeds from the sale of a property portfolio located in Northern Virginia and Maryland.

Our credit agreement also includes a feature under which the maximum borrowing availability may be increased to up to $2,500,000 on a combined basis in certain circumstances.

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

In connection with the SIR Merger, we repaid SIR's outstanding borrowings under its revolving credit facility with borrowings under our revolving credit facility and assumed $1,450,000 of principal amount of SIR’s senior unsecured notes and $161,772 of principal amount of SIR's mortgage debt.

As of December 31, 2018, our debt maturities (other than our revolving credit facility) are as follows: $362,054 in 2019, $775,707 in 2020, $14,420 in 2021, $713,518 in 2022, $143,783 in 2023 and $1,126,780 thereafter. 

None of our unsecured debt obligations require sinking fund payments prior to their maturity dates. Our $338,262 in mortgage debts, including $161,772 we assumed from SIR, generally require monthly payments of principal and interest through maturity.

In addition to our debt obligations, as of December 31, 2018, inclusive of the properties acquired in the SIR Merger, we have estimated unspent leasing related obligations of $58,380.

On May 1, 2018, one of our subsidiaries redeemed all of the outstanding Preferred Units for $11.15 per unit (plus accrued and unpaid distributions) for an aggregate of $20,310 using cash on hand and borrowings under our revolving credit facility.

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On October 9, 2018, we completed the Secondary Sale, pursuant to which we sold all 24,918,421 SIR common shares that we then owned in an underwritten public offering at a price of $18.25 per share, raising net proceeds of $435,125 after deducting underwriting discounts and offering expenses. We used the net proceeds from the Secondary Sale to repay amounts outstanding under our revolving credit facility. We recorded a loss on the Secondary Sale of $18,665 for the year ended December 31, 2018.

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

Our ability to obtain, and the costs of, our future debt financings will depend primarily on credit market conditions and our creditworthiness. We have no control over market conditions. Potential investors and lenders likely will evaluate our ability to pay distributions to shareholders, fund required debt service and repay debts when they become due by reviewing our business practices and plans to balance our use of debt and equity capital so that our financial profile and leverage ratios afford us flexibility to withstand any reasonably anticipated adverse changes. Similarly, our ability to raise equity capital in the future will depend primarily upon equity capital market conditions and our ability to conduct our business to maintain and grow our operating cash flows. We intend to conduct our business in a manner that will afford us reasonable access to capital for investment and financing activities, but we cannot be sure that we will be able to successfully carry out this intention.

In September 2018, as a result of the announcement of the SIR Merger, S&P affirmed our credit ratings and revised its outlook on our debt to stable and Moody's affirmed our credit ratings and maintained its negative outlook on our debt. A negative credit rating outlook may imply that our credit ratings may be downgraded unless we are successful in improving the perceived credit quality of our financial profile.

During the year ended December 31, 2018, we paid quarterly cash distributions to our shareholders aggregating $170,566 using existing cash on hand and borrowings under our revolving credit facility. For further information regarding the distributions we paid during 2018, see Note 11 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

On January 18, 2019, we declared a distribution payable to common shareholders of record on January 28, 2019 in the amount of $0.55 per share, or $26,446. We paid this distribution on February 21, 2019 using existing cash on hand and borrowings under our revolving credit facility.

As of December 31, 2018, our contractual obligations were as follows:

	Payments Due by Period
Contractual Obligations	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Long term debt obligations	$	3,311,262	$	362,054	$	790,127	$	1,032,301	$	1,126,780
Tenant related obligations (1)	58,380		31,821		11,836		4,002		10,721
Operating leases (2)	3,350		1,584		1,766		—		—
Projected interest expense (3)	895,303		133,796		197,250		131,454		432,803
Total	$	4,268,295	$	529,255	$	1,000,979	$	1,167,757	$	1,570,304

(1) Committed tenant related obligations includes leasing commissions and tenant improvements and are based on leases in effect as of December 31, 2018.

(2) Reflects the lease obligations we assumed related to FPO's former corporate headquarters, net of sublease income.

(3) Projected interest expense is attributable to only our debt obligations at existing rates as of December 31, 2018 and is not intended to project future interest costs which may result from debt prepayments, additional borrowings under our revolving credit facility, new debt issuances or changes in interest rates. 

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Off BalanceSheet Arrangements (dollars in thousands)

We own 50% and 51% interests in two unconsolidated joint ventures which own three buildings. The properties owned by these joint ventures are encumbered by an aggregate $82,000 principal amount of mortgage indebtedness. We do not control the activities that are most significant to these joint ventures and, as a result, we account for our investment in these joint ventures under the equity method of accounting. See Note 5 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K for more information on the financial condition and results of operations of these joint ventures. Other than these joint ventures, as of December 31, 2018, we had no off balance sheet arrangements that have had or that we expect would be reasonably likely to have a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Debt Covenants (dollars in thousands)

Our principal debt obligations at December 31, 2018 consisted of borrowings under our $750,000 revolving credit facility, our two term loans, an aggregate outstanding principal amount of $2,410,000 of public issuances of senior unsecured notes and mortgage notes with an aggregate outstanding principal amount of $338,262 that were assumed in connection with certain of our acquisitions. Also, the three buildings which are owned by joint ventures secure two additional mortgage notes. Our publicly issued senior unsecured notes are governed by indentures and their supplements. Our credit agreement and our senior unsecured notes indentures and their supplements provide for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default, such as, in the case of our credit agreement, a change of control of us, which includes RMR LLC ceasing to act as our business and property manager. Our credit agreement and our senior unsecured notes indentures and their supplements also contain a number of covenants which generally restrict our ability to incur debts, including debts secured by mortgages on our properties, in excess of calculated amounts, require us to maintain various financial ratios, and, in the case of our credit agreement, restrict our ability to make distributions to our shareholders in certain circumstances. Our mortgage notes are non-recourse, subject to certain limited exceptions, and do not contain any material financial covenants.  As of December 31, 2018, we believe we were in compliance with the terms and conditions of our respective covenants under our credit agreement and senior unsecured notes indentures and their supplements.

Neither our credit agreement nor our senior unsecured notes indentures and their supplements contain provisions for acceleration which could be triggered by our credit ratings. However, under our credit agreement our highest senior credit rating is used to determine the fees and interest rates we pay. Accordingly, if that credit rating is downgraded, our interest expense and related costs under our credit agreement would increase. As noted above, although in September 2018 S&P revised its outlook on our debt to stable, Moody's reaffirmed its negative rating, which may imply that our credit ratings may be downgraded unless we are successful in improving the perceived credit quality of our financial profile.

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

Related Person Transactions

We have relationships and historical and continuing transactions with RMR LLC, RMR Inc. and others related to them. For example: we have no employees and the personnel and various services we require to operate our business are provided to us by RMR LLC pursuant to our business and property management agreements with RMR LLC; RMR Inc. is the managing member of RMR LLC; Adam Portnoy, one of our Managing Trustees, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., and he is also a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR LLC; David M. Blackman, our other Managing Trustee and our President and Chief Executive Officer, and each of our other officers is also an officer and employee of RMR LLC; and we own shares of class A common stock of RMR Inc. We have relationships and historical and continuing transactions with other companies to which RMR LLC or its subsidiaries provide management services and some of which may have trustees, directors or officers who are also trustees, directors or officers of us, RMR LLC or RMR Inc. For example, on December 31, 2018, SIR, then a REIT managed by RMR LLC, merged with and into our wholly owned subsidiary pursuant to the SIR Merger Agreement. At the time we entered into the SIR Merger Agreement, we owned 24,918,421 common shares of SIR, all of which shares we sold on October 9, 2018 pursuant to the Secondary Sale. These transactions are further described in Note 1 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K. In addition, we, ABP Trust and five other companies to which RMR LLC provides management services each own 14.3% of AIC, which arranges and insures or reinsures in part a combined property insurance program for us and its six other shareholders.

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For further information about these and other such relationships and related person transactions, see Notes 1, 6, 7 and 12 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K, which are incorporated herein by reference and our other filings with the SEC, including our definitive Proxy Statement for our 2019 Annual Meeting of Shareholders, or our definitive Proxy Statement, to be filed with the SEC within 120 days after the fiscal year ended December 31, 2018. For further information about the risks that may arise as a result of these and other related person transactions and relationships, see elsewhere in this Annual Report on Form 10-K, including “Warning Concerning Forward Looking Statements,” Part I, Item 1, “Business” and Part I, Item 1A, “Risk Factors.” Our filings with the SEC and copies of certain of our agreements with these related persons, including our business and property management agreements with RMR LLC, the SIR Merger Agreement, and our shareholders agreement with AIC and its six other shareholders, are available as exhibits to our public filings with the SEC and accessible at the SEC’s website, www.sec.gov. We may engage in additional transactions with related persons, including businesses to which RMR LLC or its subsidiaries provide management services.

Critical Accounting Policies

Our critical accounting policies are those that will have the most impact on the reporting of our financial condition and results of operations and those requiring significant judgments and estimates. We believe that our judgments and estimates have been and will be consistently applied and produce financial information that fairly presents our results of operations. Our most critical accounting policies involve our investments in real property. These policies affect our:

• allocation of purchase prices between various asset categories, including allocations to above and below market leases and the related impact on the recognition of rental income and depreciation and amortization expenses; and

• assessment of the carrying values and impairments of long lived assets.

We allocate the acquisition cost of each property investment to various property components such as land, buildings and improvements and intangibles based on their fair values, and each component generally has a different useful life. For acquired real estate, we record building, land and improvements, and, if applicable, the value of in place leases, the fair market value of above or below market leases and tenant relationships at fair value. For transactions that qualify as business combinations, we allocate the excess, if any, of the consideration over the fair value of assets acquired to goodwill. We base purchase price allocations and the determination of useful lives on our estimates and, under some circumstances, studies from independent real estate appraisers to provide market information and evaluations that are relevant to our purchase price allocations and determinations of useful lives; however, our management is ultimately responsible for the purchase price allocations and determination of useful lives.

We compute depreciation expense using the straight line method over estimated useful lives of up to 40 years for buildings and improvements, and up to 12 years for personal property. We do not depreciate the allocated cost of land. We amortize capitalized above market lease values as a reduction to rental income over the terms of the respective leases. We amortize capitalized below market lease values as an increase to rental income over the terms of the respective leases. We amortize the value of acquired in place leases exclusive of the value of above market and below market acquired leases to expense over the periods of the respective leases. If a lease is terminated prior to its stated expiration, all unamortized amounts relating to that lease are written off. Purchase price allocations require us to make certain assumptions and estimates. Incorrect assumptions and estimates may result in inaccurate depreciation and amortization charges over future periods.

We periodically evaluate our properties for impairment. Impairment indicators may include declining tenant occupancy, our concerns about a tenant’s financial condition (which may be endangered by a rent default or other information which comes to our attention) or our decision to dispose of an asset before the end of its estimated useful life and legislative, as well as market or industry changes that could permanently reduce the value of a property. If indicators of impairment are present, we evaluate the carrying value of the related property by comparing it to the expected future undiscounted cash flows to be generated from that property. If the sum of these expected future cash flows is less than the carrying value, we reduce the net carrying value of the property to its fair value. This analysis requires us to judge whether indicators of impairment exist and to estimate likely future cash flows. If we misjudge or estimate incorrectly or if future tenant operations, market or industry factors differ from our expectations we may record an impairment charge that is inappropriate or fail to record a charge when we should have done so, or the amount of any such charges may be inaccurate.

These accounting policies involve significant judgments made based upon our experience and the experience of our management and our Board of Trustees, including judgments about current valuations, ultimate realizable value, estimated useful lives, salvage or residual value, the ability and willingness of our tenants to perform their obligations to us, current and future economic conditions and competitive factors in the markets in which our properties are located. Competition, economic

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conditions, changing government priorities and other factors may cause occupancy declines in the future. In the future, we may need to revise our carrying value assessments to incorporate information which is not now known, and such revisions could increase or decrease our depreciation expense related to properties we own or decrease the carrying values of our assets.

Impact of Inflation

Inflation in the past several years in the United States has been modest, but recently there have been indications of inflation in the U.S. economy and some market forecasts indicate an expectation of increased inflation in the near to intermediate term. Future inflation might have both positive and negative impacts on our business. Inflation might cause the value of our real estate assets to increase. Our government leases generally provide for annual rent increases based on a cost of living index calculation which may mitigate the impact upon us of increased costs as a result of inflation. Further, inflation may permit us to increase rents upon renewal or enter new leases for the leased space for increased rent amounts.

Increases in operating costs as a result of inflation are likely to have modest, if any, impacts on our operating results. This is because most of the operating costs arising in our business are incurred at our properties and our tenants pay most of the property operating cost increases directly or indirectly when we pass through such costs as additional rent under our leases. Increased debt capital costs as a result of inflation are not directly or immediately paid by, or passed through, to our tenants; therefore, such cost increases are more likely to impact our financial results. Over time, however, inflationary debt capital cost increases may be mitigated as leases at our properties expire and new leases are entered which reflect inflationary increases in market rents.

To mitigate the adverse impact of any increased cost of debt capital in the event of material inflation, we may enter into interest rate hedge arrangements in the future. The decision to enter into these agreements will be based on various factors, including the amount of our floating rate debt outstanding, our belief that material interest rate increases are likely to occur, the costs of, and our expected benefit from, these agreements and upon possible requirements of our borrowing arrangements.

Generally, we do not expect inflation to have a material impact on our financial results for the next 12 months or for the current foreseeable future thereafter.

Impact of Climate Change

Concerns about climate change have resulted in various treaties, laws and regulations that are intended to limit carbon emissions and address other environmental concerns. These and other laws may cause energy or other costs at our properties to increase. We do not expect the direct impact of these increases to be material to our results of operations, because the increased costs either would be the responsibility of our tenants directly or in the longer term, passed through and paid by tenants of our properties. Although we do not believe it is likely in the foreseeable future, laws enacted to mitigate climate change may make some of our buildings obsolete or cause us to make material investments in our properties, which could materially and adversely affect our financial condition or the financial condition of our tenants and their ability to pay rent to us.

In an effort to reduce the effects of any increased energy costs in the future, we continuously study ways to improve the energy efficiency at all of our properties. Our property manager, RMR LLC, is a member of the Energy Star program, a joint program of the U.S. Environmental Protection Agency and the U.S. Department of Energy that is focused on promoting energy efficiency at commercial properties through its “ENERGY STAR” program, and a member of the U.S. Green Building Council, a nonprofit organization focused on promoting energy efficiency at commercial properties through its LEED® green building program.

Some observers believe severe weather in different parts of the world over the last few years is evidence of global climate change. Severe weather may have an adverse effect on certain properties we own. Rising sea levels could cause flooding at some of our properties, which may have an adverse effect on individual properties we own. We mitigate these risks by procuring, or requiring our tenants to procure, insurance coverage we believe adequate to protect us from material damages and losses resulting from the consequences of losses caused by climate change. However, we cannot be sure that our mitigation efforts will be sufficient or that future storms, rising sea levels or other changes that may occur due to future climate change could not have a material adverse effect on our financial results.

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Item7A. Quantitative and Qualitative Disclosures About Market Risk(dollar amounts in thousands, except per share data)

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

Fixed Rate Debt

At December 31, 2018, our outstanding fixed rate debt consisted of the following:

Indebtedness	Principal Balance (1)		Annual Interest Rate (1)	Annual Interest Expense (1)		Maturity	Interest Payments Due
Senior unsecured notes	$	350,000	3.750%	$	13,125	2019	Semi-annually
Senior unsecured notes	400,000		3.600%	14,400		2020	Semi-annually
Senior unsecured notes	300,000		4.000%	12,000		2022	Semi-annually
Senior unsecured notes	300,000		4.150%	12,450		2022	Semi-annually
Senior unsecured notes	350,000		4.250%	14,875		2024	Semi-annually
Senior unsecured notes	400,000		4.500%	18,000		2025	Semi-annually
Senior unsecured notes	310,000		5.875%	18,213		2046	Quarterly
Mortgage note (one building in Tampa, FL)	7,939		7.000%	556		2019	Monthly
Mortgage note (one building in Washington, D.C.)	33,703		5.720%	1,928		2020	Monthly
Mortgage note (one building in Philadelphia, PA)	40,772		4.160%	1,696		2020	Monthly
Mortgage note (one building in Lakewood, CO)	2,912		8.150%	237		2021	Monthly
Mortgage note (one building in Fairfax, VA)	13,437		5.877%	790		2021	Monthly
Mortgage note (one building in Washington, D.C.)	27,210		4.220%	1,148		2022	Monthly
Mortgage note (three buildings in Seattle, WA)	71,000		3.550%	2,521		2023	Monthly
Mortgage note (one building in Chicago, IL)	50,000		3.700%	1,850		2023	Monthly
Mortgage note (one building in Washington, D.C.)	24,509		4.800%	1,176		2023	Monthly
Mortgage note (one building in Washington, D.C.)	66,780		4.050%	2,705		2030	Monthly
	$	2,748,262		$	117,670

(1) The principal balances and interest rates are the amounts stated in the contracts. In accordance with GAAP, our carrying values and recorded interest expense may differ from these amounts because of market conditions at the time we issued or assumed these debts.  For more information, see Notes 9 and 10 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

Our senior unsecured notes require semi-annual or quarterly interest payments through maturity. Our mortgages generally require principal and interest payments through maturity pursuant to amortization schedules. Because these debts require interest to be paid at a fixed rate, changes in market interest rates during the term of these debts will not affect our interest obligations.  If these debts were refinanced at interest rates which are one percentage point higher or lower than shown above, our annual interest cost would increase or decrease by approximately $27,483.

Changes in market interest rates also would affect the fair value of our fixed rate debt obligations; increases in market interest rates decrease the fair value of our fixed rate debt, while decreases in market interest rates increase the fair value of our fixed rate debt.  Based on the balances outstanding at December 31, 2018, and discounted cash flow analyses through the respective maturity dates, and assuming no other changes in factors that may affect the fair value of our fixed rate debt obligations, a hypothetical immediate one percentage point increase in interest rates would change the fair value of those obligations by approximately $66,552.

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

72

At December 31, 2018, we owned 50% and 51% interests in two joint venture arrangements which own three buildings that are secured by fixed rate debt consisting of the following mortgage notes:

Debt	Our JV Ownership Interest	Principal Balance (1)(2)		Annual Interest Rate (1)		Annual Interest Expense (1)		Maturity	Interest Payments Due
Mortgage note (one building in Washington, D.C.)	50%	$	32,000	3.920	%	$	1,254	2024	Monthly
Mortgage note (two buildings in Fairfax, VA)	51%	50,000		3.910	%	1,955		2029	Monthly
		$	82,000			$	3,209

(1) The principal balance, annual interest rate and annual interest expense are the amounts stated in the applicable contract. In accordance with GAAP, recorded interest expense may differ from these amounts because of market conditions at the time they incurred the debt.

(2) Reflects the entire balance of the debt secured by the properties and is not adjusted to reflect the part of the joint venture arrangement interests we do not own.

Floating Rate Debt

At December 31, 2018, our floating rate debt consisted of $175,000 of borrowings under our $750,000 revolving credit facility and an aggregate of $388,000 outstanding under our term loans. Our revolving credit facility matures on January 31, 2023 and, 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. No principal repayments are required under our revolving credit facility or our term loans prior to maturity, and we can borrow, repay and reborrow funds available under our revolving credit facility, subject to conditions, at any time without penalty. One of our term loans, with an outstanding principal balance of $300,000 as of December 31, 2018, matures on March 31, 2020. Our other term loan, with an outstanding principal balance of $88,000 as of December 31 2018, was scheduled to mature on March 31, 2022. We repaid the remaining balance of this term loan in February 2019. Amounts outstanding under our term loans may be repaid without penalty at any time, but after they are repaid amounts may not be redrawn.

Borrowings under our $750,000 revolving credit facility and term loans are in U.S. dollars and require interest to be paid at a rate of LIBOR plus premiums that are subject to adjustment based upon changes to our credit ratings. Accordingly, we are vulnerable to changes in U.S. dollar based short term rates, specifically LIBOR. In addition, upon renewal or refinancing of our revolving credit facility or term loans, we are vulnerable to increases in interest rate premiums due to market conditions or our perceived credit characteristics. Generally, a change in interest rates would not affect the value of our floating rate debt but would affect our operating results.

The following table presents the impact a one percentage point increase in interest rates would have on our annual floating rate interest expense as of December 31, 2018:

	Impact of Changes in Interest Rates
	Annual	Outstanding		Total Interest		Annual Earnings
	Interest Rate (1)	Debt		Expense Per Year		Per Share Impact (2)
At December 31, 2018	3.9 %	$	563,000	$	21,957	$	0.88
One percentage point increase	4.9 %	$	563,000	$	27,587	$	1.11

(1) Weighted based on the respective interest rates and outstanding borrowings under our revolving credit facility and our term loans as of December 31, 2018.

(2) Based on the weighted average shares outstanding (diluted) for the year endedDecember 31, 2018.

The following table presents the impact a one percentage point increase in interest rates would have on our annual floating rate interest expense as of December 31, 2018 if we were fully drawn on our revolving credit facility and our term loans remained outstanding:

	Impact of an Increase in Interest Rates
	Annual	Outstanding		Total Interest		Annual Earnings
	Interest Rate (1)	Debt		Expense Per Year		Per Share Impact (2)
At December 31, 2018	3.7 %	$	1,138,000	$	42,106	$	1.70
One percentage point increase	4.7 %	$	1,138,000	$	53,486	$	2.15

(1) Weighted based on the respective interest rates and outstanding borrowings under our revolving credit facility (assuming fully drawn) and our term loans as of December 31, 2018. 

(2) Based on the weighted average shares outstanding (diluted) for the year endedDecember 31, 2018.

73

The foregoing tables show the impact of an immediate increase in floating interest rates as of December 31, 2018. If interest rates were to increase gradually over time, the impact would be spread over time. Our exposure to fluctuations in floating interest rates will increase or decrease in the future with increases or decreases in the outstanding amount under our revolving credit facility, our term loans or our other floating rate debt, if any. Although we have no present plans to do so, we may in the future enter into hedge arrangements from time to time to mitigate our exposure to changes in interest rates.

LIBOR Phase Out

LIBOR is currently expected to be phased out in 2021. We are required to pay interest on borrowings under our revolving credit facility and remaining term loan at floating rates based on LIBOR. Future debt that we may incur may also require that we pay interest based upon LIBOR. We currently expect that the determination of interest under our revolving credit facility and remaining term loan would be revised as provided under our credit agreement or amended as necessary to provide for an interest rate that approximates the existing interest rate as calculated in accordance with LIBOR. Despite our current expectations, we cannot be sure that, if LIBOR is phased out or transitioned, the changes to the determination of interest under our agreements would approximate the current calculation in accordance with LIBOR. We do not know what standard, if any, will replace LIBOR if it is phased out or transitioned.

74

Item 8. Financial Statements and Supplementary Data

The information required by this item is included in Item 15 of this Annual Report on Form 10-K.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

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

There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management Report on Assessment of Internal Control Over Financial Reporting

We are responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system is designed to provide reasonable assurance to our management and Board of Trustees regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2018. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) in Internal Control—Integrated Framework. Based on this assessment, we believe that, as of December 31, 2018, our internal control over financial reporting is effective.

Ernst & Young LLP, the independent registered public accounting firm that audited our 2018 Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K, has issued an attestation report on our internal control over financial reporting. Its report appears elsewhere herein.

Item 9B. Other Information

None.

75

PART III

Item 10. Directors, Executive Officers and Corporate Governance

We have a Code of Conduct that applies to our officers and Trustees, RMR Inc. and RMR LLC, senior level officers of RMR LLC, senior level officers and directors of RMR Inc. and certain other officers and employees of RMR LLC. Our Code of Conduct is posted on our website, www.opireit.com. A printed copy of our Code of Conduct is also available free of charge to any person who requests a copy by writing to our Secretary, Office Properties Income Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, MA 02458-1634. We intend to satisfy the requirements under Item 5.05 of Form 8-K regarding disclosure of any amendments to, or waivers from, our Code of Conduct that apply to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, on our website.

The remainder of the information required by Item 10 is incorporated by reference to our definitive Proxy Statement.

Item 11. Executive Compensation

The information required by Item 11 is incorporated by reference to our definitive Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Equity Compensation Plan Information.  We may grant common shares to our officers and other employees of RMR LLC under our 2009 Incentive Share Award Plan, or the 2009 Plan. In addition, each of our Trustees receives common shares as part of his or her annual compensation for serving as a Trustee and such shares are awarded under the 2009 Plan. The terms of awards made under the 2009 Plan are determined by the Compensation Committee of our Board of Trustees, at the time of the awards. The following table is as of December 31, 2018.

Plan Category	Number of securities to be issued upon exercise of outstandingoptions,  warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remainingavailable forfuture issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)	(b)	(c)
Equity compensation plans approved by securityholders— 2009 Plan	None.	None.	330,372 (1)
Equity compensation plans not approved by securityholders	None.	None.	None.
Total	None.	None.	330,372 (1)

(1) Consists of common shares available for issuance pursuant to the terms of the 2009 Plan.  Share awards that are repurchased or forfeitedwill be added to the common shares available for issuance under the 2009 Plan.

Payments by us to RMR LLC and RMR LLC employees are described in Notes 6, 7 and 11 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K. The remainder of the information required by Item 12 is incorporated by reference to our definitive Proxy Statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by Item 13 is incorporated by reference to our definitive Proxy Statement.

Item 14. Principal Accountant Fees and Services

The information required by Item 14 is incorporated by reference to our definitive Proxy Statement.

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PART IV

Item 15.  Exhibits and Financial Statement Schedules

(a) Index to Financial Statements and Financial Statement Schedules

The following consolidated financial statements and financial statement schedule of Office Properties Income Trust are included on the pages indicated:

Reports of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets as of December 31, 2018 and 2017	F-3
Consolidated Statements of Comprehensive Income (Loss) for each of the three years in the period ended December 31, 2018	F-4
Consolidated Statements of Shareholders’ Equity for each of the three years in the period ended December 31, 2018	F-5
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2018	F-6
Notes to Consolidated Financial Statements	F-8
Schedule III—Real Estate and Accumulated Depreciation	S-1

All other schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions, or are inapplicable, and therefore have been omitted.

(b)    Exhibits

Exhibit Number	Description
2.1	Agreement and Plan of Merger, dated as of September 14, 2018, among the Company, GOV MS REIT and Select Income REIT. (Incorporated by reference to the Company’s Current Report on Form 8-K dated September 14, 2018.)
3.1	Composite Copy of Amended and Restated Declaration of Trust, dated June 8, 2009, as amended to date. (Incorporated by reference to the Company’s Current Report on Form 8-K dated December 31, 2018.)
3.2	Amended and Restated Bylaws of the Company, adopted December 31, 2018. (Incorporated by reference to the Company’s Current Report on Form 8-K dated December 31, 2018.)
4.1	Form of Common Share Certificate. (Filed herewith.)
4.2	Indenture, dated as of August 18, 2014, between the Company and U.S. Bank National Association. (Incorporated by reference to the Company’s Current Report on Form 8-K dated August 18, 2014.)
4.3	Supplemental Indenture No. 1, dated as of August 18, 2014, between the Company and U.S. Bank National Association, relating to the Company’s 3.75% Senior Notes due 2019, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K dated August 18, 2014.)
4.4	Supplemental Indenture No. 2, dated as of May 26, 2016, between the Company and U.S. Bank National Association, relating to the Company’s 5.875% Senior Notes due 2046, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 26, 2016.)
4.5	Authentication Order, dated as of June 22, 2016, from the Company to U.S. Bank National Association, relating to the Company’s 5.875% Senior Notes due 2046. (Incorporated by reference to the Company’s Registration Statement on Form 8-A dated June 30, 2016.)
4.6	Indenture, dated as of July 20, 2017, between the Company and U.S. Bank National Association. (Incorporated by reference to the Company’s Current Report on Form 8-K dated July 20, 2017.)
4.7	First Supplemental Indenture, dated as of July 20, 2017, between the Company and U.S. Bank National Association, relating to the Company’s 4.000% Senior Notes due 2022, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K dated July 20, 2017.)
4.8	Indenture, dated as of February 3, 2015, between the Company (as successor to Select Income REIT) and U.S. Bank National Association. (Incorporated by reference to Select Income REIT’s Current Report on Form 8-K dated January 29, 2015.)

77

4.9	First Supplemental Indenture, dated as of February 3, 2015, between the Company (as successor to Select Income REIT) and U.S. Bank National Association, including the forms of 3.60% Senior Notes due 2020, 4.15% Senior Notes due 2022 and 4.50% Senior Notes due 2025. (Incorporated by reference to Select Income REIT’s Current Report on Form 8-K dated January 29, 2015.)
4.10	Second Supplemental Indenture, dated as of May 15, 2017, between the Company (as successor to Select Income REIT) and U.S. Bank National Association, including the form of 4.250% Senior Notes due 2024. (Incorporated by reference to Select Income REIT’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, filed by Select Income REIT on July 25, 2017.)
4.11	Third Supplemental Indenture, dated as of December 31, 2018, among Select Income REIT, the Company and U.S. Bank National Association. (Incorporated by reference to the Company’s Current Report on Form 8-K dated December 31, 2018.)
4.12	Registration Rights and Lock-Up Agreement, dated as of June 5, 2015, among the Company, ABP Trust (f/k/a Reit Management & Research Trust), Barry M. Portnoy and Adam D. Portnoy. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 5, 2015.)
8.1	Opinion of Sullivan & Worcester LLP as to certain tax matters. (Filed herewith.)
10.1	Second Amended and Restated Business Management Agreement, dated as of June 5, 2015, between the Company and The RMR Group LLC (f/k/a Reit Management & Research LLC).(+) (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 5, 2015.)
10.2	Amendment to Second Amended and Restated Business Management Agreement, dated as of December 31, 2018, between the Company and The RMR Group LLC.(+) (Incorporated by reference to the Company’s Current Report on Form 8-K dated December 31, 2018.)
10.3	Second Amended and Restated Property Management Agreement, dated as of June 5, 2015, between the Company and The RMR Group LLC.(+) (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 5, 2015.)
10.4	2009 Incentive Share Award Plan.(+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, File No. 001-34364.)
10.5	First Amendment to 2009 Incentive Share Award Plan.(+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015.)
10.6	Form of Share Award Agreement.(+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016.)
10.7	Form of Restricted Share Agreement.(+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015.)
10.8	Form of Restricted Share Agreement.(+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, File No. 001-34364.)
10.9	Form of Indemnification Agreement.(+) (Filed herewith.)
10.10	Summary of Trustee Compensation.(+) (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 24, 2018.)
10.11	Amended and Restated Credit Agreement, dated as of December 13, 2018, among the Company, Wells Fargo Bank, National Association, as Administrative Agent, and each of the other financial institutions initially a signatory thereto. (Incorporated by reference to the Company’s Current Report on Form 8-K dated December 13, 2018.)
21.1	Subsidiaries of the Company. (Filed herewith.)
23.1	Consent of Ernst & Young LLP. (Filed herewith.)
23.2	Consent of Sullivan & Worcester LLP. (Contained in Exhibit 8.1.)
31.1	Rule 13a-14(a) Certification. (Filed herewith.)
31.2	Rule 13a-14(a) Certification. (Filed herewith.)
32.1	Section 1350 Certification. (Furnished herewith.)
99.1	Amended and Restated Shareholders Agreement, dated May 21, 2012, by and among Affiliates Insurance Company, Five Star Senior Living Inc. (f/k/a Five Star Quality Care, Inc.), Hospitality Properties Trust, ABP Trust (as successor to The RMR Group LLC), Senior Housing Properties Trust, TravelCenters of America LLC, the Company and Industrial Logistics Properties Trust (as successor to Select Income REIT). (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, File No. 001-34364.)
99.2	Registration Rights Agreement, dated as of June 5, 2015, between the Company and The RMR Group Inc. (f/k/a Reit Management & Research Inc.). (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 5, 2015.)
99.3	Registration Rights Agreement, dated as of June 5, 2015, between the Company (as successor to Select Income REIT) and The RMR Group Inc. (Incorporated by reference to Select Income REIT’s Current Report on Form 8-K dated June 5, 2015.)

78

99.4	Audited Financial Statements as of September 30, 2018 for Select Income REIT. (Filed herewith.)
99.5	Letter dated as of October 2, 2017, between the Company and The RMR Group LLC, regarding Second Amended and Restated Business Management Agreement. (+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017.)
101.1	The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Comprehensive Income (Loss), (iii) the Consolidated Statements of Shareholders’ Equity, (iv) the Consolidated Statements of Cash Flows, and (v) related notes to these financial statements, tagged as blocks of text and in detail. (Filed herewith.)

(+) Management contract or compensatory plan or arrangement.

Item 16.  Form 10-K Summary

None.

79

Report of Independent Registered Public Accounting Firm

To the Trustees and Shareholders of Office Properties Income Trust

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Office Properties Income Trust (the Company) as of December 31, 2018 and 2017, the related consolidated statements of comprehensive income (loss), shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2018, and the related notes and the financial statement schedule listed in the Index at item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 28, 2019 expressed an unqualified opinion thereon.

Adoption of New Accounting Standard

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for investments in equity securities in the year ended December 31, 2018 due to the adoption of ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company's auditor since 2008.

Boston, Massachusetts

February 28, 2019

F-1

Report of Independent Registered Public Accounting Firm

To the Trustees and Shareholders of Office Properties Income Trust

Opinion on Internal Control over Financial Reporting

We have audited Office Properties Income Trust’s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Office Properties Income Trust’s (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2018 and 2017, the related consolidated statements of comprehensive income (loss), shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2018, and the related notes and financial statement schedule listed in the Index at item 15(a), and our report dated February 28, 2019 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management Report on Assessment of Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Boston, Massachusetts

February 28, 2019

F-2

OFFICE PROPERTIES INCOME TRUST

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)

	December 31,
	2018			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
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

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

F-3

OFFICE PROPERTIES INCOME TRUST

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(amounts in thousands, except per share data)

	Year Ended December 31,
	2018			2017			2016
Rental income	$	426,560		$	316,532		$	258,180
EXPENSES:
Real estate taxes	49,708			37,942			30,703
Utility expenses	26,425			20,998			17,269
Other operating expenses	89,610			65,349			54,290
Depreciation and amortization	162,488			109,588			73,153
Loss on impairment of real estate	8,630			9,490			—
Acquisition and transaction related costs	14,508			—			1,191
General and administrative	24,922			18,847			14,897
Total expenses	376,291			262,214			191,503
Gain on sale of real estate	20,661			—			79
Dividend income	1,337			1,216			971
Unrealized loss on equity securities	(7,552		)	—			—
Interest income	639			1,962			158
Interest expense (including net amortization of debt premiums, discounts
and issuance costs of $3,626, $3,420 and $2,832, respectively)	(89,865		)	(65,406		)	(45,060		)
Gain (loss) on early extinguishment of debt	(709		)	(1,715		)	104
Income (loss) from continuing operations before income taxes and
equity in net earnings (losses) of investees	(25,220		)	(9,625		)	22,929
Income tax expense	(117		)	(101		)	(101		)
Equity in net earnings (losses) of investees	(2,269		)	(13		)	137
Income (loss) from continuing operations	(27,606		)	(9,739		)	22,965
Income from discontinued operations	5,722			21,829			34,878
Net income (loss)	(21,884		)	12,090			57,843
Other comprehensive income (loss):
Unrealized gain on equity securities	—			24,042			30,465
Equity in unrealized gain (loss) of investees	(40		)	9,428			11,359
Other comprehensive income (loss)	(40		)	33,470			41,824
Comprehensive income (loss)	$	(21,924	)	$	45,560		$	99,667
Net income (loss)	$	(21,884	)	$	12,090		$	57,843
Preferred units of limited partnership distributions	(371		)	(275		)	—
Net income (loss) available for common shareholders	$	(22,255	)	$	11,815		$	57,843
Weighted average common shares outstanding (basic)	24,830			21,158			17,763
Weighted average common shares outstanding (diluted)	24,830			21,158			17,768
Per common share amounts (basic and diluted):
Income (loss) from continuing operations	$	(1.13	)	$	(0.47	)	$	1.29
Income from discontinued operations	$	0.23		$	1.03		$	1.96
Net income (loss) available for common shareholders	$	(0.90	)	$	0.56		$	3.26

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

F-4

OFFICE PROPERTIES INCOME TRUST

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(dollars in thousands)

	Number of Shares		Common Shares		Additional Paid In Capital			Cumulative Net Income			Cumulative Other Comprehensive Income (Loss)			Cumulative Common Distributions			Total
Balance at December 31, 2015	17,781,577		$	178	$	1,473,015		$	38,486		$	(14,867	)	$	(540,161	)	$	956,651
Share grants	16,475		—		1,389			—			—			—			1,389
Share repurchases	(3,575	)	—		(337		)	—			—			—			(337		)
Equity in unrealized gain of investees	—		—		—			—			11,359			—			11,359
Unrealized gain on equity securities	—		—		—			—			30,465			—			30,465
Net income available for common shareholders	—		—		—			57,843			—			—			57,843
Distributions to common shareholders	—		—		—			—			—			(122,366		)	(122,366		)
Balance at December 31, 2016	17,794,477		178		1,474,067			96,329			26,957			(662,527		)	935,004
Issuance of shares, net	6,976,757		70		493,796			—			—			—			493,866
Share grants	18,836		—		1,361			—			—			—			1,361
Share repurchases	(3,591	)	—		(264		)	—			—			—			(264		)
Equity in unrealized gain of investees	—		—		—			—			9,428			—			9,428
Unrealized gain on equity securities	—		—		—			—			24,042			—			24,042
Net income available for common shareholders	—		—		—			11,815			—			—			11,815
Distributions to common shareholders	—		—		—			—			—			(145,209		)	(145,209		)
Balance at December 31, 2017	24,786,479		248		1,968,960			108,144			60,427			(807,736		)	1,330,043
Cumulative adjustment upon adoption of ASU No. 2016-01	—		—		—			60,281			(60,281		)	—			—
Adjustment upon adoption of ASU No. 2014-09	—		—		—			712			—			—			712
Balance at January 1, 2018	24,786,479		248		1,968,960			169,137			146			(807,736		)	1,330,755
Issuance of shares, net	23,281,738		233		639,550			—			—			—			639,783
Share grants	19,925		—		1,523			—			—			—			1,523
Shares forfeitures or repurchases	(5,239	)	—		(232		)	—			—			—			(232		)
Equity in unrealized gain of investees	—		—		—			—			(40		)	—			(40		)
Net loss available for common shareholders	—		—		—			(22,255		)	—			—			(22,255		)
Distributions to common shareholders	—		—		—			—			—			(170,566		)	(170,566		)
Balance at December 31, 2018	48,082,903		$	481	$	2,609,801		$	146,882		$	106		$	(978,302	)	$	1,778,968

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

F-5

OFFICE PROPERTIES INCOME TRUST

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

	Year Ended December 31,
	2018			2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(21,884	)	$	12,090		$	57,843
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	66,685			52,427			42,489
Net amortization of debt premiums, discounts and issuance costs	3,626			3,420			2,832
Gain on sale of real estate	(20,661		)	—			(79		)
(Gain) loss on early extinguishment of debt	709			1,715			(104		)
Straight line rental income	(10,164		)	(5,582		)	(2,691		)
Amortization of acquired real estate leases	94,375			56,174			29,003
Amortization of deferred leasing costs	4,833			3,802			3,265
Other non-cash expenses, net	250			300			284
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 (earnings) losses of investees	2,269			13			(137		)
Equity in earnings of Select Income REIT included in discontinued operations	(20,873		)	(21,584		)	(35,381		)
Net gain on issuance of shares by Select Income REIT included in discontinued operations	(29		)	(72		)	(86		)
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			35,381
Change in assets and liabilities:
Deferred leasing costs	(9,203		)	(5,017		)	(10,196		)
Rents receivable	5,021			(4,990		)	1,670
Other assets	1,127			1,368			25
Accounts payable and other liabilities	(3,303		)	11,696			1,970
Due to related persons	(97		)	1,339			634
Net cash provided by operating activities	144,916			137,554			126,722
CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate acquisitions and deposits	25,221			(1,187,012		)	(200,331		)
Real estate improvements	(47,500		)	(45,940		)	(32,999		)
Distributions in excess of earnings from Select Income REIT	17,251			29,248			14,954
Distributions in excess of earnings from unconsolidated joint ventures	3,751			482			—
Proceeds from sale of properties, net	304,808			15,083			263
Proceeds from sale of Select Income REIT shares	435,125			—			—
Net cash provided by (used in) investing activities	738,656			(1,188,139		)	(218,113		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of mortgage notes payable	(3,708		)	(11,909		)	(107,933		)
Repayment of unsecured term loan	(162,000		)	—			—
Proceeds from issuance of senior notes, after discounts	—			297,954			300,235
Proceeds from issuance of common shares, net	—			493,866			—
Borrowings on unsecured revolving credit facility	238,000			645,000			399,000
Repayments on unsecured revolving credit facility	(741,000		)	(235,000		)	(356,000		)
Payment of debt issuance costs	(3,936		)	(4,644		)	(544		)
Repurchase of common shares	(232		)	(264		)	(337		)
Redemption of preferred units of limited partnership	(20,221		)	—			—
Preferred units of limited partnership distributions	(646		)	—			—
Distributions to common shareholders	(170,566		)	(145,209		)	(122,366		)
Net cash (used in) provided by financing activities	(864,309		)	1,039,794			112,055
Increase (decrease) in cash, cash equivalents and restricted cash	19,263			(10,791		)	20,664
Cash, cash equivalents and restricted cash at beginning of period	19,680			30,471			9,807
Cash, cash equivalents and restricted cash at end of period	$	38,943		$	19,680		$	30,471

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

F-6

OFFICE PROPERTIES INCOME TRUST

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(dollars in thousands)

	Year Ended December 31,
	2018			2017			2016
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid	$	65,188		$	55,048		$	41,139
Income taxes paid	$	68		$	117		$	111
NON-CASH INVESTING ACTIVITIES:
Sale of real estate	$	—		$	—		$	3,600
Mortgage note receivable related to sale of real estate	$	—		$	—		$	(3,600	)
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,
	2018		2017		2016
Cash and cash equivalents	$	35,349	$	16,569	$	29,941
Restricted cash	3,594		3,111		530
Total cash, cash equivalents and restricted cash shown in the statements of cash flows	$	38,943	$	19,680	$	30,471

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

F-7

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share amounts) 

Note 1. Organization

Office Properties Income Trust (formerly Government Properties Income Trust, or GOV), or OPI, we, us or our, is a real estate investment trust, or REIT, formed in 2009 under Maryland law.

As of December 31, 2018, our wholly owned properties were comprised of 247 buildings, or our consolidated properties, located in 38 states and the District of Columbia containing approximately 31.9 million rentable square feet and we had a noncontrolling ownership interest in two unconsolidated joint ventures that own three buildings totaling an additional approximately 0.4 million rentable square feet.

Merger with Select Income REIT

On September 14, 2018, we and our wholly owned subsidiary, GOV MS REIT, a Maryland real estate investment trust, or Merger Sub, and Select Income REIT, or SIR, a REIT that owned properties that are primarily net leased to single tenants, entered into an Agreement and Plan of Merger, or the SIR Merger Agreement, pursuant to which SIR merged with and into Merger Sub, with Merger Sub continuing as the surviving entity in the merger, or the SIR Merger.

The SIR Merger was consummated and became effective at 4:01 p.m., Eastern Time, on December 31, 2018. Pursuant to the terms set forth in the SIR Merger Agreement, at the effective time of the SIR Merger, we issued to SIR’s shareholders 1.04 of our common shares of beneficial interest, $.01 par value per share, or our common shares, for each common share of SIR issued and outstanding immediately prior to the effective time of the SIR Merger (other than SIR common shares held by us or any of our or SIR’s wholly owned subsidiaries), with cash paid in lieu of fractional shares and any outstanding unvested SIR common share awards under SIR’s equity compensation plan were converted into awards under our 2009 Incentive Share Award Plan, or the 2009 Plan, subject to substantially similar vesting requirements and other terms and conditions, of a number of our common shares determined by multiplying the number of unvested SIR common shares subject to such award by 1.04 (rounded down to the nearest whole number), or the Exchange Ratio. Later on December 31, 2018, Merger Sub merged with and into us, with us as the surviving entity and we changed our name to “Office Properties Income Trust.” Effective January 1, 2019, the ticker symbol for our common shares, which continue to be traded on The Nasdaq Stock Market LLC, or Nasdaq, was changed to “OPI.”

As a condition of the SIR Merger, on October 9, 2018, we sold all of the 24,918,421 common shares of SIR we then owned, or the Secondary Sale, in an underwritten public offering at a price of $18.25 per share, raising net proceeds of $435,125 after deducting underwriting discounts and offering expenses. We used the net proceeds from the Secondary Sale to repay amounts outstanding under our revolving credit facility.

In addition, as a condition of the SIR Merger, on December 27, 2018, SIR paid a pro rata distribution to SIR's shareholders as of the close of business on December 20, 2018 of all 45,000,000 common shares of beneficial interest of Industrial Logistics Properties Trust, or ILPT, that SIR owned, or the ILPT Distribution.

Upon consummation of the SIR Merger, SIR’s separate business and property management agreements with RMR LLC were terminated for convenience and RMR LLC waived its right to receive payment of the termination fees due on account thereof, pursuant to the terms of the letter agreement entered into between SIR and RMR LLC on September 14, 2018.

Also upon consummation of the SIR Merger, we assumed all of the principal and interest on all of SIR’s outstanding $400,000 aggregate principal amount of 3.60% Senior Notes due 2020, $300,000 aggregate principal amount of 4.15% Senior Notes due 2022, $350,000 aggregate principal amount of 4.250% Senior Notes due 2024 and $400,000 aggregate principal amount of 4.50% Senior Notes due 2025.

The aggregate transaction value, based on the closing price of our common shares on December 31, 2018 of $6.87 per share (prior to the Reverse Share Split, as defined below), was approximately $2,415,053, excluding closing costs of approximately $27,497 ($14,508 of which was paid by us and $12,989 of which was paid by SIR) and including the repayment or assumption of $1,719,772 of SIR debt. Following the SIR Merger and the other transactions contemplated by the SIR Merger Agreement, including the Secondary Sale and the ILPT Distribution, or, collectively, the SIR Transactions, we acquired SIR's property portfolio of 99 buildings with approximately 16.5 million rentable square feet.

F-8

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

Reverse Share Split

After the SIR Merger and the other SIR Transactions, on December 31, 2018, we effected a reverse share split of our common shares, or the Reverse Share Split, pursuant to which every four of our common shares issued and outstanding as of the effective time of the Reverse Share Split were converted and reclassified into one of our common shares of beneficial interest, par value $.04 per share, subject to the receipt of cash in lieu of fractional shares. Following the effective time of the Reverse Share Split on December 31, 2018, we changed the par value of our common shares from $.04 per share back to $.01 per share. The Reverse Share Split affected all record holders of our common shares uniformly and did not affect any record shareholder’s percentage ownership interest in us. The Reverse Share Split reduced the number of our issued and outstanding common shares from 192,331,612 to 48,082,903. All impacted amounts and share information included in the consolidated financial statements and notes hereto 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 in the notes to these consolidated financial statements may not agree with previously reported amounts due to rounding of fractional shares.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation.  These consolidated financial statements include the accounts of us and our subsidiaries, all of which are wholly owned directly or indirectly by us. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated.

Real Estate Properties.  We record our properties at cost and provide depreciation on real estate investments on a straight line basis over estimated useful lives generally ranging from 7 to 40 years.  In some circumstances, we engage independent real estate appraisal firms to provide market information and evaluations which are relevant to our purchase price allocations and determinations of useful lives; however, we are ultimately responsible for the purchase price allocations and determinations of useful lives.

We allocate the purchase prices of our properties to land, building and improvements based on determinations of the relative fair values of these assets assuming the properties are vacant. We determine the fair value of each property using methods similar to those used by independent appraisers. We allocate a portion of the purchase price of our properties to above market and below market leases based on the present value (using an interest rate which reflects the risks associated with acquired in place leases at the time each property was acquired by us) of the difference, if any, between (i) the contractual amounts to be paid pursuant to the acquired in place leases and (ii) our estimates of fair market lease rates for the corresponding leases, measured over a period equal to the terms of the respective leases. We allocate a portion of the purchase price to acquired in place leases and tenant relationships based upon market estimates to lease up the property based on the leases in place at the time of purchase.  We allocate this aggregate value between acquired in place lease values and tenant relationships based on our evaluation of the specific characteristics of each tenant’s lease. However, we have not separated the value of tenant relationships from the value of acquired in place leases because such value and related amortization expense is immaterial to the accompanying consolidated financial statements. In making these allocations, we consider factors such as estimated carrying costs during the expected lease up periods, including real estate taxes, insurance and other operating income and expenses and costs, such as leasing commissions, legal and other related expenses, to execute similar leases in current market conditions at the time a property was acquired by us. If the value of tenant relationships becomes material in the future, we may separately allocate those amounts and amortize the allocated amounts over the estimated life of the relationships. For transactions that qualify as business combinations, we allocate the excess, if any, of the consideration over the fair value of the assets acquired to goodwill.

We amortize capitalized above market lease values (included in acquired in place real estate leases, net in our consolidated balance sheets) and below market lease values (presented as assumed real estate lease obligations, net in our consolidated balance sheets) as a reduction or increase, respectively, to rental income over the terms of the associated leases. Such amortization resulted in net decreases to rental income of $2,903, $2,764 and $1,457 during the years ended December 31, 2018, 2017 and 2016, respectively. We amortize the value of acquired in place leases (included in acquired real estate leases, net in our consolidated balance sheets), exclusive of the value of above market and below market acquired in place leases, over the terms of the associated leases. Such amortization, which is included in depreciation and amortization expense, amounted to $91,472, $53,410, and $27,546 during the years ended December 31, 2018, 2017 and 2016, respectively. If a lease is terminated prior to its stated expiration, we write off the unamortized amounts relating to that lease.

F-9

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

As of December 31, 2018 and 2017, our acquired real estate leases and assumed real estate obligations, excluding properties classified as held for sale, were as follows:

	December 31,
	2018			2017
Acquired real estate leases:
Capitalized above market lease values	$	62,260		$	46,096
Less: accumulated amortization	(20,956		)	(27,259		)
Capitalized above market lease values, net	41,304			18,837
Lease origination value	1,168,979			472,928
Less: accumulated amortization	(153,725		)	(139,893		)
Lease origination value, net	1,015,254			333,035
Acquired real estate leases, net	$	1,056,558		$	351,872
Assumed real estate lease obligations:
Capitalized below market lease values	$	31,091		$	25,973
Less: accumulated amortization	(11,060		)	(12,338		)
Assumed real estate lease obligations, net	$	20,031		$	13,635

As of December 31, 2018, the weighted average amortization periods for capitalized above market leases, lease origination value and capitalized below market lease values were 5.4 years, 6.9 years and 5.8 years, respectively.  Future amortization of net intangible lease assets and liabilities, to be recognized over the current terms of the associated leases as of December 31, 2018 are estimated to be $203,554 in 2019, $180,025 in 2020, $153,089in 2021, $136,515 in 2022, $112,524 in 2023 and $250,820 thereafter.

We regularly evaluate whether events or changes in circumstances have occurred that could indicate an impairment in the value of long lived assets. If there is an indication that the carrying value of an asset is not recoverable, we estimate the projected undiscounted cash flows to determine if an impairment loss should be recognized. We determine the amount of any impairment loss by comparing the historical carrying value to estimated fair value. We estimate fair value through an evaluation of recent financial performance and projected discounted cash flows using standard industry valuation techniques. In addition to consideration of impairment upon the events or changes in circumstances described above, we regularly evaluate the remaining lives of our long lived assets. If we change our estimate of the remaining lives, we allocate the carrying value of the affected assets over their revised remaining lives.

Cash and Cash Equivalents. We consider highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.

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

Deferred Leasing Costs. Deferred leasing costs include brokerage, legal and other fees associated with our entering leases and we amortize those costs, which are included in depreciation and amortization expense, on a straight line basis over the terms of the respective leases. Deferred leasing costs, excluding properties classified as held for sale, totaled $38,840 and $32,990 at December 31, 2018 and 2017, respectively, and accumulated amortization of deferred leasing costs totaled $13,168 and $10,013 at December 31, 2018 and 2017, respectively. Future amortization of deferred leasing costs to be recognized during the current terms of our existing leases as of December 31, 2018 are estimated to be $4,925 in 2019, $4,215 in 2020, $3,599 in 2021, $2,902 in 2022, $2,363 in 2023 and $7,668 thereafter.

Debt Issuance Costs. Debt issuance costs include capitalized issuance or assumption costs related to borrowings, which are amortized to interest expense over the terms of the respective loans. Debt issuance costs, net of accumulated amortization, for our revolving credit facility are included in other assets in our consolidated balance sheets. As of December 31, 2018 and 2017, debt issuance costs for our revolving credit facility were $4,125 and $5,234 and accumulated

F-10

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

amortization of debt issuance costs for our revolving credit facility were $49 and $3,849, respectively. Debt issuance costs, net of accumulated amortization, for our unsecured term loans, senior unsecured notes and mortgage notes payable are presented as a direct deduction from the associated debt liability in our consolidated balance sheets. As of December 31, 2018 and 2017, debt issuance costs, net of accumulated amortization, for our unsecured term loans, senior unsecured notes, and mortgage notes payable totaled $12,888 and $15,750, respectively. Future amortization of debt issuance costs to be recognized with respect to our revolving credit facility, unsecured term loans, senior unsecured notes and mortgage notes as of December 31, 2018 are estimated to be $2,890 in 2019, $2,189 in 2020, $2,049 in 2021, $1,725 in 2022, $406 in 2023 and $7,705 thereafter.

Equity Securities. As of December 31, 2018, we owned 2,801,061 common shares of class A common stock of RMR Inc., including 1,586,836 common shares acquired from SIR on December 31, 2018 in connection with the SIR Merger. Our equity securities are recorded at fair value based on their quoted market price at the end of each reporting period. Effective January 1, 2018, changes in the fair value of our equity securities are recorded through earnings in accordance with the Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. Prior to January 1, 2018, unrealized gains and losses on equity securities were recorded as a component of cumulative comprehensive income (loss) in shareholders' equity. As further described in Note 7, we initially acquired 1,541,201 shares of class A common stock of RMR Inc. on June 5, 2015 for cash and share consideration of $17,462. We concluded, for accounting purposes, that the cash and share consideration we paid for our investment in these shares represented a discount to the fair value of these shares. We initially accounted for this investment under the cost method of accounting and recorded this investment at its estimated fair value of $39,833 as of June 5, 2015 using Level 3 inputs, as defined in the fair value hierarchy under U.S. generally accepted accounting principles, or GAAP.  As a result, we recorded a liability for the amount by which the estimated fair value of these shares exceeded the price we paid for these shares. This liability is included in accounts payable and other liabilities in our consolidated balance sheets. This liability is being amortized on a straight line basis through December 31, 2035 as an allocated reduction to our business management and property management fee expense. We amortized $1,087 of this liability during each of the years ended December 31, 2018, 2017 and 2016. These amounts are included in the net business management and property management fee amounts for such periods. As of December 31, 2018, the remaining unamortized amount of this liability was $18,493. Future amortization of this liability as of December 31, 2018 is estimated to be $1,087 in 2019 through 2023 and $13,058 thereafter.

Equity Method Investments.  We account for our investments in Affiliates Insurance Company, or AIC, and SIR, until we sold the SIR common shares we owned as described in Note 1, using the equity method of accounting. Significant influence is present through common representation on the boards of trustees or directors of us, AIC and, until December 31, 2018, SIR. One of our Managing Trustees, Adam D. Portnoy, as the sole trustee of ABP Trust, is the controlling shareholder of The RMR Group Inc., or RMR Inc. He is also a director and officer of RMR Inc. Substantially all of the business of RMR Inc. is conducted by its majority owned subsidiary, RMR LLC, which is our manager, the manager of AIC and, until December 31, 2018, SIR. Most of our Trustees are directors of AIC. See Notes 7, 12 and 13 for further information of our investments in AIC and SIR.

In connection with our acquisition of First Potomac Realty Trust, or FPO, in 2017, we acquired 50% and 51% interests in two unconsolidated joint ventures which own three buildings. The buildings owned by these joint ventures are encumbered by an aggregate $82,000 of mortgage indebtedness. We do not control the activities that are most significant to these joint ventures and, as a result, we account for our investment in these joint ventures under the equity method of accounting. See Note 5 for further information regarding our unconsolidated joint ventures.

We periodically evaluate our equity method investments for possible indicators of other than temporary impairment whenever events or changes in circumstances indicate the carrying amount of the investment might not be recoverable. These indicators may include the length of time and the extent to which the market value of our investment is below our carrying value, the financial condition of our investees, our intent and ability to be a long term holder of the investment and other considerations. If the decline in fair value is judged to be other than temporary, we record an impairment charge to adjust the basis of the investment to its estimated fair value.  

Revenue Recognition. We recognize rental income from operating leases that contain fixed contractual rent changes on a straight line basis over the term of the lease agreements. We increased rental income by $10,164, $5,582 and $2,691 to record revenue on a straight line basis during the years ended December 31, 2018, 2017 and 2016, respectively. Rents receivable, excluding properties classified as held for sale, include $34,006 and $27,267 of straight line rent receivables at December 31, 2018 and 2017, respectively.

F-11

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

Certain of our leases with government tenants provide the tenant the right to terminate its lease if its respective legislature or other funding authority does not appropriate the funding necessary for the government tenant to meet its lease obligations; we have determined the fixed non-cancelable lease term of these leases to be the fully executed term of the lease because we believe the occurrence of termination to be a remote contingency based on both our historical experience and our assessment of the likelihood of lease cancellation on a separate lease basis. 

Income Taxes. We have elected to be taxed as a REIT under the United States Internal Revenue Code of 1986, as amended, or the IRC, and, accordingly, we generally will not be subject to federal income taxes provided we distribute our taxable income and meet certain other requirements to qualify as a REIT. We are, however, subject to certain state and local taxes.

Cumulative Other Comprehensive Income.Cumulative other comprehensive income represents our share of the cumulative comprehensive income of our equity method investees and, prior to the adoption of FASB ASU No. 2016-01 on January 1, 2018, unrealized gains and losses related to our investment in RMR Inc. See Notes 5 and 7 for further information regarding these investments.

Per Common Share Amounts. We calculate basic earnings per common share by dividing net income (loss) available for common shareholders by the weighted average number of our common shares of beneficial ownership, $.01 par value, or our common shares, outstanding during the period. We calculate diluted earnings per share using the more dilutive of the two class method or the treasury stock method.  Unvested share awards and other potentially dilutive common shares and the related impact on earnings, are considered when calculating diluted earnings per share.

Use of Estimates. Preparation of these financial statements in conformity with GAAP requires us to make estimates and assumptions that may affect the amounts reported in these consolidated financial statements and related notes. The actual results could differ from these estimates.

Reclassifications. Reclassifications have been made to the prior years’ consolidated financial statements to conform to the current year’s presentation.

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

Note 3.    Weighted Average Common Shares

The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted earnings per share (in thousands):

	For the Year Ended December 31,
	2018	2017	2016
Weighted average common shares for basic earnings per share	24,830	21,158	17,763
Effect of dilutive securities: unvested share awards	—	—	5
Weighted average common shares for diluted earnings per share (1)	24,830	21,158	17,768

(1) For the years ended December 31, 2018 and 2017, four and five unvested common shares, respectively, were not included in the calculation of diluted earnings per share because to do so would have been antidilutive.

F-12

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

Note 4.    New Accounting Pronouncements

On January 1, 2018, we adopted FASB ASU No. 2014-09 (and related clarifying guidance issued by the FASB), Revenue From Contracts With Customers, which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU No. 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU No. 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. A substantial portion of our revenue consists of rental income from leasing arrangements, which is specifically excluded from ASU No. 2014-09. We have adopted ASU No. 2014-09 using the modified retrospective approach, which resulted in an adjustment to reclassify a previous deferred gain on sale of real estate of $712 from accounts payable and other liabilities to cumulative net income. The adoption of ASU No. 2014-09 did not have a material impact on the amount or timing of our revenue recognition in our consolidated financial statements except for profit recognition on real estate sales.

On January 1, 2018, we adopted FASB ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which changes how entities measure certain equity investments and present changes in the fair value of financial liabilities measured under the fair value option that are attributable to their own credit. The implementation of ASU No. 2016-01 resulted in the reclassification of historical changes in the fair value of our equity securities of $45,116 from cumulative other comprehensive income to cumulative net income. We also reclassified $15,165 from cumulative other comprehensive income to cumulative net income for our share of cumulative other comprehensive income of certain of our equity method investees. Effective January 1, 2018, changes in the fair value of our equity securities are recorded through earnings in accordance with ASU No. 2016-01.

On January 1, 2018, we adopted FASB ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies how companies present and classify certain cash receipts and cash payments in the statements of cash flows. The implementation of this update resulted in the reclassification of $2,944 and $2,956 of accretion recorded in our equity in the earnings of SIR from cash flow from investing activities to cash flow from operating activities for the year ended December 31, 2017 and 2016, respectively. See Note 12 for further information regarding our investment in SIR.

On January 1, 2018, we adopted FASB ASU No. 2016-18, Restricted Cash, which requires companies to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The implementation of ASU No. 2016-18 resulted in a decrease of $1,563 and an increase of $492 of net cash provided by operating activities for the years ended December 31, 2017 and 2016, respectively. This update also requires a reconciliation of the totals in the statements of cash flows to the related captions in the balance sheets. As a result, amounts included in restricted cash on our consolidated balance sheets are included with cash and cash equivalents on the consolidated statements of cash flows. The adoption of this update did not change our balance sheet presentation.

On October 1, 2018, we adopted FASB ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which aligns the measurement and classification guidance for share based payments to nonemployees with the guidance for share based payments to employees, with certain exceptions. The adoption of this standard did not have a material impact in our consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements. In December 2018, the FASB issued ASU No. 2018-20 Leases (Topic 842), Narrow-Scope Improvements for Lessors. Collectively, these standards set out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. These standards are effective as of January 1, 2019. Upon adoption, we applied the package of practical expedients that allows an entity to not reassess (i) whether any expired or existing contracts are or contain leases, (ii) lease classification for any expired or existing leases and (iii) initial direct costs for any expired or existing leases. Furthermore, we applied the optional transition method in ASU No. 2018-11 which allows entities to initially apply the new leases standard at the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of

F-13

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

adoption, if any. Additionally, our leases met the criteria in ASU No. 2018-11 to not separate non-lease components from the related lease component; therefore, the accounting for these leases remained largely unchanged from the previous standard. The adoption of ASU No. 2016-02 and the related improvements did not have a material impact in our consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires that entities use a new forward looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are currently assessing the potential impact the adoption of ASU No. 2016-13 will have in our consolidated financial statements. We currently expect to adopt the standard using the modified retrospective approach.

Note 5. Real Estate Properties

As of December 31, 2018, our wholly owned properties were comprised of 247 buildings, with an undepreciated carrying value of $4,161,591 and had a noncontrolling ownership interest in two unconsolidated joint ventures that own three buildings. We generally lease space at our properties on a gross lease, modified gross lease or net lease basis pursuant to fixed term contracts expiring between 2019 and 2039. Our leases generally require us to pay all or some property operating expenses and to provide all or most property management services. During the year endedDecember 31, 2018, we entered into 128 leases for 1,382,821 rentable square feet for a weighted (by rentable square feet) average lease term of 6.8 years and we made commitments for approximately $37,135 of leasing related costs. As of December 31, 2018, we have estimated unspent leasing related obligations of $58,380.

Merger with Select Income REIT

As described in Note 1, on December 31, 2018, we completed the SIR Merger, pursuant to which we acquired SIR's property portfolio of 99 buildings with approximately 16.5 million rentable square feet. The total consideration transferred and assumed debt for the SIR Merger is $2,415,053, including the assumption of $1,719,772 of debt and excluding acquisition related costs.

The following table summarizes the estimated consideration transferred and liabilities assumed:

Total Purchase Price (excluding acquisition costs):
	OPI common shares issued	23,282,704
	Closing price of OPI common shares on December 31, 2018	$	27.48
	Value of consideration transferred	$	639,809
	Cash consideration for fractional shares	8
	Equity issuance costs	(239		)
	Value of consideration transferred	$	639,578
	Assumed working capital	55,703
	Assumed senior unsecured notes, principal balance	1,450,000
	Assumed mortgage notes payable, principal balance	161,772
	SIR unsecured revolving credit facility repaid at closing	108,000
	Non-cash portion of purchase price	1,775,475
	Total consideration transferred and liabilities assumed	$	2,415,053

F-14

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

The following table summarizes the preliminary purchase price allocation for SIR based on estimated fair values as of the December 31, 2018:

Preliminary Purchase Price Allocation:
	Land	$	475,893
	Buildings and improvements	960,286
	Assets of properties held for sale	7,022
	Acquired real estate leases	858,121
	Cash	24,744
	Restricted cash	476
	Rents receivable, net	11,389
	Other assets (1)	89,188
	Total assets	2,427,119
	Unsecured revolving credit facility (2)	(108,000		)
	Senior unsecured notes (3)	(1,410,947		)
	Mortgage notes payable (4)	(159,490		)
	Accounts payable and other liabilities	(67,151		)
	Assumed real estate lease obligations	(11,833		)
	Due to related persons	(30,120		)
	Net assets acquired	639,578
	Assumed working capital	55,703
	SIR unsecured revolving credit facility repaid at closing (2)	108,000
	Assumed senior unsecured notes, principal balance	1,450,000
	Assumed mortgage notes payable, principal balance	161,772
	Consideration transferred and liabilities assumed (5)	$	2,415,053

(1) Other assets includes $84,229 for SIR's investment in shares of class A common stock of RMR Inc. which was recorded at fair value as of December 31, 2018.

(2) We repaid the outstanding balance under SIR's revolving credit facility at the closing of the SIR Merger with borrowings under our revolving credit facility.

(3) The aggregate principal balance of the senior unsecured notes was $1,450,000 as of December 31, 2018.

(4) The aggregate principal balance of the mortgage notes payable was $161,772 as of December 31, 2018.

(5) The allocation of purchase price is based on preliminary estimates and may change significantly following the completion of (i) third party appraisals and (ii) our analysis of intangibles and building valuations. Purchase price excludes acquisition related costs.

We were the accounting acquirer of SIR and accounted for the SIR Merger as a business combination because substantially all of the fair value of the gross assets acquired was not concentrated in a single identifiable asset or a group of similar identifiable assets and we acquired inputs and a substantive process that together significantly contributed to the ability to create outputs. Although we and SIR have no employees, the personnel and various services required to operate our businesses are provided pursuant to business and property management agreements with RMR LLC. These agreements were in effect before, and, in the case of us, remain in effect after, the SIR Merger. As a result, our acquisition of SIR included a substantive process for accounting purposes.

The assets acquired and liabilities assumed were recorded at their respective fair values and added to our consolidated balance sheet as of December 31, 2018. We allocated the purchase price based on the estimated fair values of the acquired assets and liabilities assumed in a manner consistent with our purchase price allocation accounting policy described in Note 2. We engaged an independent real estate consulting firm to assist us with determining the purchase price allocations and to provide market information and evaluations which are relevant to purchase price allocations and determinations of useful lives. As of the date acquired, the weighted average amortization periods for capitalized above market lease values, lease origination value and capitalized below market lease values were 5.8 years, 7.2 years and 5.7 years, respectively.

F-15

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

FPO Transaction

On October 2, 2017, we completed our acquisition of FPO pursuant to merger transactions, as a result of which we acquired 72 buildings with 6.0 million rentable square feet, and FPO's 50% and 51% interests in two joint ventures that own three buildings with 0.4 million rentable square feet, or collectively, the FPO Transaction. The aggregate value we paid for FPO was $1,370,888, including $651,696 in cash to FPO's shareholders, the repayment of $483,000 of FPO corporate debt, the assumption of $167,548 of mortgage debt; this amount excludes the $82,000 of mortgage debt that encumber the two properties owned by the two joint ventures and the payment of certain transaction fees and expenses, net of FPO cash on hand. We financed the cash payments for the FPO Transaction with borrowings under our revolving credit facility and with cash on hand, including net proceeds from our public offerings of common shares and senior unsecured notes, as described further in Notes 9 and 11. We accounted for the FPO Transaction as an asset acquisition. Our allocation of the purchase price was based on estimates of the relative fair value of the acquired assets and assumed liabilities.

The following table summarizes the total consideration paid and the estimated fair values of the assets acquired and liabilities assumed in the FPO Transaction:

Total Purchase Price:
	Cash consideration	$	1,175,140
	Acquisition related costs	9,575
	Total cash consideration	1,184,715
	Preferred units of limited partnership issued (1)	20,221
	Acquired net working capital	(1,596		)
	Assumed mortgage notes	167,548
	Non-cash portion of purchase price	186,173
	Gross purchase price	$	1,370,888
Purchase Price Allocation:
	Land	$	360,909
	Buildings and improvements	681,340
	Acquired real estate leases (2)	283,498
	Investment in unconsolidated joint ventures	51,305
	Cash	11,191
	Restricted cash	1,018
	Rents receivable	2,672
	Other assets	3,640
	Total assets	1,395,573
	Mortgage notes payable (3)	(167,936		)
	Assumed real estate lease obligations (2)	(5,776		)
	Accounts payable and accrued expenses	(10,640		)
	Rents collected in advance	(1,436		)
	Security deposits	(4,849		)
	Net assets acquired	1,204,936
	Assumed working capital	(1,596		)
	Assumed principal balance of debt	167,548
	Gross purchase price	$	1,370,888

F-16

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

(1) Pursuant to the terms of the FPO Transaction, each unit of limited partnership interest in FPO's operating partnership that was not liquidated on the closing date was exchanged on a one-for-one basis for 5.5% Series A Cumulative Preferred Units of the surviving subsidiary. As of December 31, 2017, the carrying value of these Series A Cumulative Preferred Units was $20,496 and was recorded as temporary equity on our consolidated balance sheet. On May 1, 2018, we redeemed all 1,813,504 of the outstanding 5.5% Series A Cumulative Preferred Units for $11.15 per unit (plus accrued and unpaid distributions) for an aggregate of $20,310.

(2) As of the date acquired, the weighted average amortization periods for capitalized above market lease values, lease origination value and capitalized below market lease values were 3.2 years, 3.1 years and 3.8 years, respectively.

(3) Includes fair value adjustments totaling $388 on $167,936 principal amount of mortgage notes we assumed in connection with the FPO Transaction.

Pro Forma Information (Unaudited):

The following table presents our pro forma results of operations for the years ended December 31, 2018 and 2017 as if the SIR Transactions and the FPO Transaction and related financing activities, had occurred on January 1, 2017. The SIR results of operations included in this pro forma financial information have been adjusted to remove ILPT's results of operations for the years ended December 31, 2018 and 2017. The effect of these adjustments was to decrease pro forma rental income $152,735 and $156,506 for the years ended December 31, 2018 and 2017, respectively, and to decrease net income $46,237 and $64,661 for the years ended December 31, 2018 and 2017, respectively. The FPO results of operations included in this pro forma financial information have been adjusted to remove the results of operations of properties and joint venture interests FPO sold from January 1, 2017 to October 2, 2017, the closing date of the FPO Transaction. The effect of these adjustments was to decrease pro forma rental income $804 for the year ended December 31, 2017 and to decrease net loss $47,019 for the year ended December 31, 2017.

This pro forma financial information is not necessarily indicative of what our actual financial position or results of operations would have been for the periods presented or for any future period. Differences could result from numerous factors, including future changes in our portfolio of investments, capital structure, property level operating expenses and revenues, including rents expected to be received on our existing leases or leases we may enter during and after 2019, changes in interest rates and other reasons. Actual future results are likely to be different from amounts presented in this pro forma financial information and such differences could be significant.

	Year Ended December 31,
	2018			2017
Rental income	$	758,596		$	746,801
Net loss	$	(87,240	)	$	(74,556	)
Net loss per common share	$	(1.82	)	$	(1.55	)

During the year ended December 31, 2018, we did not recognize any revenue or operating income from the assets acquired and liabilities assumed in the SIR Merger. During the year ended December 31, 2017, we recognized revenues of $36,722 and operating income of $3,230 from the consolidated properties acquired in the FPO Transaction and ($621) in equity in losses from our unconsolidated joint ventures acquired in the FPO Transaction.

Unconsolidated Joint Ventures

    We own interests in two joint ventures that own three buildings. We account for these investments under the equity method of accounting. As of December 31, 2018 and 2017, our investment in unconsolidated joint ventures consisted of the following:

	OPI Ownership	OPI Carrying Value of Investment at December 31,				Number of Office Buildings	Location	Square Feet
Joint Venture		2018		2017
Prosperity Metro Plaza	51%	$	23,969	$	27,888	2	Fairfax, VA	328,456
1750 H Street, NW	50%	19,696		22,314		1	Washington, D.C.	115,411
Total		$	43,665	$	50,202	3		443,867

F-17

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

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

Joint Venture	Interest Rate (1)	Maturity Date	Principal Balance at December 31, 2018 and 2017
Prosperity Metro Plaza	4.09%	12/1/2029	$	50,000
1750 H Street, NW	3.69%	8/1/2024	32,000
Weighted Average/Total	3.93%		$	82,000

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

At December 31, 2018, the aggregate unamortized basis difference of our unconsolidated joint ventures of $8,442 is primarily attributable to the difference between the amount for which we purchased our interest in the joint ventures, including transaction costs, and the historical carrying value of the net assets of the joint ventures. This difference will be amortized over the remaining useful life of the related properties and included in the reported amount of equity in net earnings (losses) of investees.

Other 2017 Acquisition Activities

During the year endedDecember 31, 2017, we acquired one building located in Manassas, VA with 69,374 rentable square feet. This building was 100% leased to Prince William County on the date of acquisition. This transaction was accounted for as an asset acquisition. The purchase price was $12,657, including capitalized acquisition costs of $37. Our allocation of the purchase price of this acquisition is based on the relative estimated fair value of the acquired assets and assumed liabilities is presented in the table below.  

Acquisition Date	Location	Number of Office Buildings	Square Feet	Purchase Price		Land		Building and Improvements		Other Assumed Assets
Jan 2017	Manassas, VA	1	69,374	$	12,657	$	1,562	$	8,253	$	2,842

In September 2017, we acquired transferable development rights that allow us to expand a property we own in Washington, D.C. for a purchase price of $2,030, excluding acquisition costs.

2016 Acquisition Activities

During the year ended December 31, 2016, we acquired five buildings with a combined 830,185 rentable square feet and a land parcel adjacent to one of our existing properties for an aggregate purchase price of $199,304, excluding acquisition costs. Our allocation of the purchase price of these acquisitions based on the estimated fair value of the acquired assets and assumed liabilities is presented in the table below.

Acquisition Date	Location	Number of Office Buildings	Square Feet	Purchase Price (1)		Land		Buildings and Improvements		Other Assumed Assets		Acquired Leases		Acquired Lease Obligations
Jan 2016	Sacramento, CA (2)	1	337,811	$	79,508	$	4,688	$	61,995	$	2,167	$	11,245	$	(587	)
Jul 2016	Atlanta, GA (3)	—	—	1,670		1,670		—		—		—		—
Dec 2016	Rancho Cordova, CA (2)	1	82,896	13,943		1,466		8,797		—		3,680		—
Dec 2016	Chantilly, VA (2)	3	409,478	104,183		6,966		74,214		—		23,003		—
		5	830,185	$	199,304	$	14,790	$	145,006	$	2,167	$	37,928	$	(587	)

(1) Excludes acquisition related costs.

(2) Accounted for as a business combination. 

(3) On July 6, 2016, we acquired a land parcel adjacent to one of our existing properties for $1,623. We accounted for this transaction as an asset acquisition and capitalized acquisition related costs of $47.

F-18

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

2018 Disposition Activities

During the year ended December 31, 2018, we sold 19 buildings with a combined 2,174,637 rentable square feet for an aggregate purchase price of $320,255, excluding closing costs, in five separate transactions. The sales of these properties, as presented in the table below, do not represent significant dispositions individually or in the aggregate nor do they represent a strategic shift. As a result, the results of operations of these properties are included in continuing operations through the date of sale in our consolidated statements of income (loss).

Date of Sale	Number of Office Buildings	Location	Square Feet	Gross  Sale Price (1)
Mar 2018 (2)	1	Minneapolis, MN	193,594	$	20,000
May 2018 (3)	1	New York, NY	187,060	118,500
May 2018 (4)	1	Sacramento, CA	110,500	10,755
Nov 2018 (5)	1	Golden, CO	43,231	4,000
Dec 2018 (6)	15	Southern Virginia	1,640,252	167,000
	19		2,174,637	$	320,255

(1) Gross sale price includes purchase price adjustments, if any, excludes closing costs.

(2) We recorded a $640 loss on impairment of real estate to reduce the carrying value of this property to its estimated fair value less costs to sell during the year ended December 31, 2018.

(3) We recorded a $17,249 gain on sale of real estate during the year ended December 31, 2018 as a result of this sale.

(4) We recorded a loss on impairment of real estate of $3,029 to reduce the carrying value of this property to its estimated fair value less costs to sell during the year ended December 31, 2018.

(5) We recorded a $54 gain on sale of real estate during the year ended December 31, 2018 as a result of this sale.

(6) We recorded a $3,358 gain on sale of real estate during the year ended December 31, 2018 as a result of this sale.

In February 2018, we entered an agreement to sell an office building located in Safford, AZ with 36,139 rentable square feet for $8,250. We recorded a $2,453 loss on impairment of real estate to reduce the carrying value of the property to its estimated fair value less costs to sell in the three months ended March 31, 2018. In April 2018, the buyer terminated the sale agreement and we removed this property from held for sale status. We recorded a $322 adjustment to impairment of real estate to increase the carrying value of the property to its estimated fair value during the year ended December 31, 2018.

As of December 31, 2018, we had 36 buildings with an aggregate undepreciated carrying value of $216,955 under agreement to sell in three separate transactions, as presented in the table below. We have classified these properties as held for sale in our consolidated balance sheet at December 31, 2018.     

Date of Sale Agreement	Number of Office Buildings	Location	Square  Feet	Gross Sale Price (1)
Aug 2018 (2)	1	Washington, D.C.	129,035	$	70,000
Sep 2018 (3)	34	Northern Virginia and Maryland	1,635,868	198,500
Nov 2018 (2)(4)	1	Kapolei, HI	416,956	7,100
	36		2,181,859	$	275,600

(1) Gross sale price includes purchase price adjustments, if any, excludes closing costs.

(2) These pending sales are subject to conditions; accordingly, we cannot be sure that we will complete these sales or that these sales will not be delayed or their terms will not change.

(3) We recorded a $2,830 loss on impairment of real estate to reduce the carrying value of these buildings to their estimated fair value less costs to sell during the year ended December 31, 2018. On February 8, 2019, we completed the sale of these buildings.

(4) Represents a land parcel acquired from SIR in the SIR Merger.

In addition to the properties in the table above, we are currently marketing for sale 34 buildings, including properties acquired in the SIR Merger containing approximately 5.3 million square feet as of December 31, 2018. We have determined that these properties did not meet the held for sale criteria as of December 31, 2018. We cannot be sure we will sell any of our properties that we are currently marketing or plan to market for sale or sell them for prices in excess of our carrying values or that we will not recognize impairment losses with respect to these properties.

F-19

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

2017 Disposition Activities - Continuing Operations

In October 2017, we sold one vacant office building located in Albuquerque, NM with 29,045 rentable square feet and a net book value of $1,885 as of the date of sale, for $2,000, excluding closing costs. During the year endedDecember 31, 2017, we recorded a $230 loss on impairment of real estate to reduce the carrying value of this property to its estimated fair value.

2017 Disposition Activities – Discontinued Operations

In August 2017, we sold one vacant office building in Falls Church, VA with 164,746 rentable square feet and a net book value of $12,901 as of the date of sale for $13,523, excluding closing costs. Results of operations for this property, which qualified as held for sale prior to our adoption in 2014 of ASU No. 2014-8,Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, are classified as discontinued operations in our consolidated financial statements. During theyear endedDecember 31, 2017, we recorded an adjustment of $619 to increase the carrying value of this property to its estimated fair value less costs to sell.

Summarized income statement information for this property is as follows:

Statements of Income (Loss)

	Year Ended December 31,
	2017			2016
Rental income	$	17		$	68
Real estate taxes	(88		)	(97		)
Utility expenses	(97		)	(146		)
Other operating expenses	(202		)	(300		)
General and administrative	(76		)	(114		)
Increase in carrying value of property included in discontinued operations	619			—
Income (loss) from discontinued operations	$	173		$	(589	)

2016 Disposition Activities

In July 2016, we sold an office building in Savannah, GA with 35,228 rentable square feet that had a net book value of $2,986 for $4,000, excluding closing costs. In connection with this sale, we provided $3,600 of mortgage financing to the buyer. The mortgage note requires interest to be paid at an annual rate of LIBOR plus 4.0%, subject to a minimum annual interest rate of 5.0%, and requires monthly payments of interest only until maturity on June 30, 2021. When this sale was completed, this transaction did not qualify for full gain recognition under GAAP and was accounted for under the installment method. Accordingly, we recognized a gain on sale of real estate of $79 during the year ended December 31, 2016 and recorded a deferred gain of $712. As disclosed in Note 4, on January 1, 2018, we adopted ASU No. 2014-09, which resulted in an adjustment to reclassify the deferred gain on sale of real estate of $712 from accounts payable and other liabilities to cumulative net income. The mortgage note receivable of $3,600 is included in other assets in our consolidated balance sheets at December 31, 2018 and 2017.

Operating leases

Our future minimum lease payments related to our consolidated properties and estimated real estate tax and other expense reimbursements scheduled to be received during the current terms of the existing leases as of December 31, 2018, including the properties acquired in the SIR Merger, are as follows:

F-20

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

Year	Minimum Lease Payments
2019	$	569,874
2020	514,551
2021	479,401
2022	434,135
2023	383,695
Thereafter	1,236,540
	$	3,618,196

Certain of our tenants have the right to terminate their leases before the lease term expires. As of December 31, 2018, tenants who currently represent approximately 5.6% of our total future minimum lease payments have currently exercisable rights to terminate their leases before the stated terms of their leases expire. In 2019, 2020, 2021, 2022, 2023, 2024, 2025, 2026 and 2028, early termination rights become exercisable by other government tenants who currently represent an additional approximately 2.1%, 6.4%, 1.9%, 2.7%, 0.6%, 1.4%, 4.7%, 2.0% and 1.9% of our total future minimum lease payments, respectively. In addition, as of December 31, 2018, 22 of our tenants have the currently exercisable right to terminate their leases if the respective legislature or other funding authority does not appropriate the funding necessary for the tenant to meet its obligation. These 22 tenants represent approximately 5.8% of our total future minimum lease payments as of December 31, 2018.

As part of the FPO Transaction, we assumed the lease for FPO's former corporate headquarters, which expires on January 31, 2021. We sublease a portion of the space, which sublease expires on January 31, 2021. Rent expense incurred under the lease, net of sublease revenue, was $1,707 and $374 for the years ended December 31, 2018 and 2017, respectively.

Future minimum rental payments due under the lease, net of subleased revenue, as of December 31, 2018 are summarized as follows:

Year	Minimum Rental Payments
2019	$	1,584
2020	1,627
2021	139
	$	3,350

F-21

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

Note 6. Business and Property Management Agreements with RMR LLC

We have no employees. The personnel and various services we require to operate our business are provided to us by RMR LLC. We have two agreements with RMR LLC to provide management services to us: (1) a business management agreement, which relates to our business generally, and (2) a property management agreement, which relates to our property level operations. Prior to the consummation of the SIR Merger, SIR had similar business and property management agreements with RMR LLC on substantially similar terms, which agreements were terminated in connection with the SIR Merger. See Notes 1 and 7 for further information regarding our relationship, agreements and transactions with SIR and RMR LLC.

Management Agreements with RMR LLC. Our management agreements with RMR LLC provide for an annual base management fee, an annual incentive management fee and property management and construction supervision fees, payable in cash, among other terms:

• Base Management Fee. The annual base management fee payable to RMR LLC by us for each applicable period is equal to the lesser of:

• the sum of (a) 0.5% of the average aggregate historical cost of the real estate assets acquired from a REIT to which RMR LLC provided business management or property management services, or the Transferred Assets, plus (b) 0.7% of the average aggregate historical cost of our real estate investments excluding the Transferred Assets up to $250,000, plus (c) 0.5% of the average aggregate historical cost of our real estate investments excluding the Transferred Assets exceeding $250,000; and

• the sum of (a) 0.7% of the average closing price per share of our common shares on the stock exchange on which such shares are principally traded during such period, multiplied by the average number of our common shares outstanding during such period, plus the daily weighted average of the aggregate liquidation preference of each class of our preferred shares outstanding during such period, plus the daily weighted average of the aggregate principal amount of our consolidated indebtedness during such period, or, together, our Average Market Capitalization, up to $250,000, plus (b) 0.5% of our Average Market Capitalization exceeding $250,000.

The average aggregate historical cost of our real estate investments includes our consolidated assets invested, directly or indirectly, in equity interests in or loans secured by real estate and personal property owned in connection with such real estate (including acquisition related costs and costs which may be allocated to intangibles or are unallocated), all before reserves for depreciation, amortization, impairment charges or bad debts or other similar non-cash reserves; provided, however, our ownership of SIR common shares was not included as part of our real estate investments for purposes of calculating our base management fee due to RMR LLC since SIR paid separate business management fees to RMR LLC.

• Incentive Management Fee. The incentive management fee which may be earned by RMR LLC for an annual period is calculated as follows:

• An amount, subject to a cap based on the value of our common shares outstanding, equal to 12% of the product of:

• our equity market capitalization on the last trading day of the year immediately prior to the relevant three year measurement period, and

• the amount (expressed as a percentage) by which the total return per share, as defined in the business management agreement and further described below, of our common shareholders (i.e., share price appreciation plus dividends) exceeds the total shareholder return of the applicable index, or the benchmark return per share, for the relevant measurement period. Effective as of January 1, 2019, we amended our business management agreement with RMR LLC so that the SNL U.S. Office REIT Index will be used for periods beginning on and after January 1, 2019, with the SNL U.S. REIT Equity Index for periods ending on or prior to December 31, 2018.

F-22

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

For purposes of the total return per share of our common shareholders, share price appreciation for a measurement period is determined by subtracting (1) the closing price of our common shares on the Nasdaq on the last trading day of the year immediately before the first year of the applicable measurement period, or the initial share price, from (2) the average closing price of our common shares on the 10 consecutive trading days having the highest average closing prices during the final 30 trading days in the last year of the measurement period.

• The calculation of the incentive management fee (including the determinations of our equity market capitalization, initial share price and the total return per share of our common shareholders) is subject to adjustments if additional common shares are issued during the measurement period.

• No incentive management fee is payable by us unless our total return per share during the measurement period is positive.

• The measurement periods are three year periods ending with the year for which the incentive management fee is being calculated.

• If our total return per share exceeds 12% per year in any measurement period, the benchmark return per share is adjusted to be the lesser of the total shareholder return of the applicable index for such measurement period and 12% per year, or the adjusted benchmark return per share. In instances where the adjusted benchmark return per share applies, the incentive management fee will be reduced if our total return per share is between 200 basis points and 500 basis points below the applicable index by a low return factor, as defined in the business management agreement, and there will be no incentive management fee paid if, in these instances, our total return per share is more than 500 basis points below the applicable index.

• The incentive management fee is subject to a cap. The cap is equal to the value of the number of our common shares which would, after issuance, represent 1.5% of the number of our common shares then outstanding multiplied by the average closing price of our common shares during the 10 consecutive trading days having the highest average closing prices during the final 30 trading days of the relevant measurement period.

• Incentive management fees we paid to RMR LLC for any period may be subject to “clawback” if our financial statements for that period are restated due to material non-compliance with any financial reporting requirements under the securities laws as a result of the bad faith, fraud, willful misconduct or gross negligence of RMR LLC and the amount of the incentive management fee we paid was greater than the amount we would have paid based on the restated financial statements.

Pursuant to our business management agreement with RMR LLC, we recognized net business management fees of $16,381, $12,464 and $10,222 for the years ended December 31, 2018, 2017 and 2016, respectively. The net business management fees we recognized are included in general and administrative expenses in our consolidated statements of comprehensive income (loss) for these periods. The net business management fees we recognized for each of the years ended December 31, 2018, 2017 and 2016 reflect a reduction of $603, for the amortization of the liability we recorded in connection with our investment in RMR Inc., as further described in Note 2. No incentive management fee was payable to RMR LLC under our business management agreement for the years ended December 31, 2018, 2017 or 2016.

• Property Management and Construction Supervision Fees. The property management fees payable to RMR LLC by us for each applicable period are equal to 3.0% of gross collected rents and the construction supervision fees payable to RMR LLC by us for each applicable period are equal to 5.0% of construction costs.

Pursuant to our property management agreement with RMR LLC, we recognized aggregate net property management and construction supervision fees of $13,989, $11,566 and $8,949 for each of the years ended December 31, 2018, 2017 and 2016, respectively. The net property management and construction supervision fees we recognized for the years ended December 31, 2018, 2017 and 2016 reflect a reduction of $484, for the amortization of the liability we recorded in connection with our investment in RMR Inc., as further described in

F-23

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

Note 2. These amounts are included in other operating expenses or have been capitalized, as appropriate, in our consolidated financial statements.

Prior to the SIR Merger, SIR was party to business and property management agreements with RMR LLC. The terms of those agreements were substantially similar to the terms of our business and property management agreements with RMR LLC, including the determination of the fees payable to RMR LLC. Pursuant to its business management agreement with RMR LLC, SIR incurred an incentive management fee of $25,817 for the year ended December 31, 2018, payable in January 2019. In addition, SIR had incurred, in the ordinary course, but not paid, aggregate business management, property management and construction supervision fees of $2,185 at December 31, 2018. As successor to SIR as a result of the SIR Merger, we assumed the obligations to pay SIR’s 2018 incentive management fee and the business management, property management and construction supervision fees it had accrued, but not paid, as of December 31, 2018. We paid these fees to RMR LLC in January 2019. In calculating the incentive management fee payable by SIR for the year ended December 31, 2018, SIR’s total shareholder return per share was adjusted in accordance with its business management agreement to reflect aggregate net increases in the number of SIR common shares outstanding as a result of certain share issuances and repurchases by SIR during the three year measurement period, and compared to the SNL U.S. REIT Equity Index. In addition, the calculation of SIR’s benchmark return per share was also adjusted for these issuances and repurchases in accordance with its business management agreement. Upon consummation of the SIR Merger, SIR’s separate business and property management agreements with RMR LLC were terminated for convenience and RMR LLC waived its right to receive payment of the termination fees due on account of that termination.

Expense Reimbursement. We are generally responsible for all of our operating expenses, including certain expenses incurred or arranged by RMR LLC on our behalf. We are generally not responsible for payment of RMR LLC’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR LLC’s employees assigned to work exclusively or partly at our properties, our share of the wages, benefits and other related costs of RMR LLC’s centralized accounting personnel, our share of RMR LLC’s costs for providing our internal audit function and as otherwise agreed. Our property level operating expenses are generally incorporated into rents charged to our tenants, including certain payroll and related costs incurred by RMR LLC. We reimbursed RMR LLC $21,042, $15,045 and $12,276 for property management related expenses for each of the years ended December 31, 2018, 2017 and 2016, respectively. These amounts are included in other operating expenses in our consolidated statements of comprehensive income (loss) for these periods. We assumed the obligation to reimburse RMR LLC for similar expenses that RMR LLC had incurred on behalf of SIR in the ordinary course but which SIR had not paid as of December 31, 2018. We reimbursed RMR LLC $462 in January 2019 for these expenses. Our Audit Committee appoints our Director of Internal Audit and our Compensation Committee approves the costs of our internal audit function. The amounts we recognized as expense for internal audit costs were $237, $276 and $235 for the years ended December 31, 2018, 2017 and 2016, respectively. These amounts are included in general and administrative expenses in our consolidated statements of comprehensive income (loss) for these periods.

• Term. Our management agreements with RMR LLC have terms that end on December 31, 2038, and automatically extend on December 31st of each year for an additional year, so that the terms of our management agreements thereafter end on the 20th anniversary of the date of the extension.

• Termination Rights. We have the right to terminate one or both of our management agreements with RMR LLC: (i) at any time on 60 days’ written notice for convenience, (ii) immediately on written notice for cause, as defined therein, (iii) on written notice given within 60 days after the end of an applicable calendar year for a performance reason, as defined therein, and (iv) by written notice during the 12 months following a change of control of RMR LLC, as defined therein. RMR LLC has the right to terminate the management agreements for good reason, as defined therein.

• Termination Fee. If we terminate one or both of our management agreements with RMR LLC for convenience, or if RMR LLC terminates one or both of our management agreements for good reason, we have agreed to pay RMR LLC a termination fee in an amount equal to the sum of the present values of the monthly future fees, as defined therein, for the terminated management agreement(s) for the term that was remaining prior to such termination, which, depending on the time of termination, would be between 19 and 20 years. If we terminate one or both of

F-24

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

our management agreements with RMR LLC for a performance reason, we have agreed to pay RMR LLC the termination fee calculated as described above, but assuming a 10 year term was remaining prior to the termination. We are not required to pay any termination fee if we terminate our management agreements with RMR LLC for cause or as a result of a change of control of RMR LLC.

• Transition Services. RMR LLC has agreed to provide certain transition services to us for 120 days following an applicable termination by us or notice of termination by RMR LLC, including cooperating with us and using commercially reasonable efforts to facilitate the orderly transfer of the management and real estate investment services provided under our business management agreement and to facilitate the orderly transfer of the management of the managed properties under our property management agreement, as applicable.

• Vendors. Pursuant to our management agreements with RMR LLC, RMR LLC may from time to time negotiate on our behalf with certain third party vendors and suppliers for the procurement of goods and services to us. As part of this arrangement, we may enter agreements with RMR LLC and other companies to which RMR LLC or its subsidiaries provide management services for the purpose of obtaining more favorable terms from such vendors and suppliers.

• Investment Opportunities. Under our business management agreement with RMR LLC, we acknowledge that RMR LLC may engage in other activities or businesses and act as the manager to any other person or entity (including other REITs) even though such person or entity has investment policies and objectives similar to ours and we are not entitled to preferential treatment in receiving information, recommendations and other services from RMR LLC.

Note 7. Related Person Transactions

We have relationships and historical and continuing transactions with SIR (prior to the SIR Merger), RMR LLC, RMR Inc., AIC and others related to them, including other companies to which RMR LLC or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. One of our Managing Trustees, Adam D. Portnoy, as the sole trustee of ABP Trust, is the controlling shareholder of RMR Inc. and is a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR LLC. Barry M. Portnoy was our other Managing Trustee and a managing director and an officer of RMR Inc. and an officer and employee of RMR LLC until his death on February 25, 2018. Mr. Mark L. Kleifges, was our other Managing Trustee and our Chief Financial Officer and Treasurer until he resigned from his positions with us effective December 31, 2018 and was an officer of, and will remain an employee of, RMR LLC until June 30, 2019. David M. Blackman, our other Managing Trustee and our President and Chief Executive Officer, and each of our other officers is also an officer and employee of RMR LLC. RMR LLC provides management services to us and provided management services to SIR until it ceased to exist.

Our Managing Trustees also served as the managing trustees of SIR until it ceased to exist. David M. Blackman, our President and Chief Executive Officer, and Jeffrey C. Leer, our Chief Financial Officer and Treasurer, also served as president and chief executive officer and chief financial officer and treasurer, respectively, of SIR until it ceased to exist. Each of SIR’s officers was also an officer and employee of RMR LLC. Our Independent Trustees also serve as independent directors or independent trustees of other public companies to which RMR LLC or its subsidiaries provide management services, including SIR (until it ceased to exist). Adam Portnoy serves, and, until his death, Barry Portnoy served, as a managing director or managing trustee of these companies and other officers of RMR LLC serve as managing trustees or managing directors of certain of these companies. In addition, officers of RMR LLC and RMR Inc. serve as our officers and officers of other companies to which RMR LLC or its subsidiaries provide management services.

Our Manager, RMR LLC. We have two agreements with RMR LLC to provide management services to us: (1) a business management agreement, which relates to our business generally, and (2) a property management agreement, which relates to our property level operations. SIR had similar agreements with RMR LLC until it ceased to exist. See Note 6 for further information regarding these management agreements with RMR LLC.

Leases with RMR LLC. We lease office space to RMR LLC in certain of our properties for RMR LLC’s property management offices. Pursuant to our lease agreements with RMR LLC, we recognized rental income from RMR LLC for leased office space of $1,026, $303 and $366 for the years ended December 31, 2018, 2017 and 2016, respectively. Our office space leases with RMR LLC are terminable by RMR LLC if our management agreements with RMR LLC are terminated.

F-25

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

Share Awards to RMR LLC Employees. As described further in Note 11, we award shares to our officers and other employees of RMR LLC annually. Generally, one fifth of these awards vest on the grant date and one fifth vests on each of the next four anniversaries of the grant dates. In certain instances, we may accelerate the vesting of an award, such as in connection with the award holder’s retirement as an officer of us or an officer or employee of RMR LLC. These awards to RMR LLC employees are in addition to the share awards granted to our current and former Managing Trustees, as Trustee compensation, and the fees we paid to RMR LLC. See Note 11 for information regarding our share awards and activity as well as certain share purchases we made in connection with share award recipients satisfying tax withholding obligations on vesting share awards.

Prior to the SIR Merger, SIR historically made share awards to certain RMR LLC employees under its equity compensation plan and during the years ended December 31, 2018, 2017 and 2016, SIR awarded to its officers and other employees of RMR LLC annual share awards of 58,700, 57,850 and 53,400 of its common shares, respectively, valued at $1,183, $1,337 and $1,397, in aggregate, respectively. During these periods, SIR repurchased some common shares awarded to certain of its trustees and officers and employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares. During the years ended December 31, 2018, 2017 and 2016 SIR accelerated the vesting of its common shares previously awarded to certain of its officers and employees of RMR LLC in connection with their termination of employment from RMR LLC.

Ownership Interest in RMR Inc. and Registration and Lock-up Agreements. We currently hold 2,801,061 shares of class A common stock of RMR Inc. which we and SIR acquired in June 2015 in a transaction pursuant to which, among other things, we, SIR and two other REITs managed by RMR LLC acquired class A common stock of RMR Inc. and entered into amended and restated business and property management agreements with RMR LLC. We are party to a registration rights agreement with RMR Inc. covering the shares of class A common stock of RMR Inc. issued to us in this transaction, pursuant to which we have demand and piggyback registration rights, subject to certain limitations. We are also party to a lock up and registration rights agreement with ABP Trust, Adam Portnoy and Barry Portnoy pursuant to which they (on behalf of themselves and their permitted transferees) agreed not to transfer the 175,000 of our common shares (after giving effect to the Reverse Share Split) ABP Trust received in this transaction for a 10 year period ending on June 5, 2025 and they have certain registration rights, subject, in each case, to certain exceptions. Prior to the SIR Merger, SIR was party to similar agreements which we assumed in the SIR Merger.

SIR. Until October 9, 2018, we owned 24,918,421 SIR common shares, or approximately 27.8% of its then outstanding common shares. As described further in Note 1, we completed the SIR Merger effective December 31, 2018 pursuant to the SIR Merger Agreement we and SIR entered into on September 14, 2018. On October 9, 2018, we sold all of these shares in the Secondary Sale. During 2018, our Managing Trustees also served as managing trustees of SIR, our President and Chief Executive Officer also served as SIR’s president and chief executive officer and Jeffrey C. Leer, our Chief Financial Officer and Treasurer, served as SIR’s chief financial officer and treasurer. During 2018, each of SIR’s officers was also an officer and employee of RMR LLC. RMR LLC provides management services to us and provided management services to SIR until it ceased to exist. See Note 1 for further information regarding the SIR Merger Agreement and the Secondary Sale and Notes 12 and 13 for further information regarding our investment in SIR.

AIC. We, ABP Trust, ILPT and four other companies to which RMR LLC provides management services currently own AIC, an Indiana insurance company, in equal amounts and are parties to a shareholders agreement regarding AIC. All our Trustees (other than David M. Blackman) and all the independent trustees and independent directors of the other AIC shareholders currently serve on the board of directors of AIC. On December 28, 2018, SIR and ILPT entered a stock purchase agreement, or the AIC Stock Purchase Agreement, pursuant to which ILPT purchased all of SIR’s shares of common stock of AIC, effective December 31, 2018 for a purchase price of $8,632. RMR LLC provides management and administrative services to AIC pursuant to a management and administrative services agreement with AIC. Pursuant to this agreement, AIC pays to RMR LLC a service fee equal to 3.0% of the total annual net earned premiums payable under then active policies issued or underwritten by AIC or by a vendor or an agent of AIC on its behalf or in furtherance of AIC’s business.

We and the other AIC shareholders participate in a combined property insurance program arranged and insured or reinsured in part by AIC. We paid aggregate annual premiums, including taxes and fees, of $1,211, $757 and $1,032 in connection with this insurance program for the policy years ending June 30, 2019, 2018 and 2017, respectively, which amount for the current policy year ending June 30, 2019 may be adjusted from time to time as we acquire or dispose of properties that are included in this insurance program. Properties we acquired as a result of the SIR Merger were already previously included in this insurance program because SIR was a participant in the program. SIR paid an annual premium, including taxes and fees, of $1,666 in connection with this insurance program for the policy year ending June 30, 2019.

F-26

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

As of December 31, 2018, 2017 and 2016, our investment in AIC had a carrying value of $8,751, $8,304 and $7,235, respectively. These amounts are included in other assets in our consolidated balance sheets. We recognized income of $516, $608 and $137 related to our investment in AIC for the years ended December 31, 2018, 2017 and 2016, respectively. These amounts are presented as equity in net earnings (losses) of investees in our consolidated statements of comprehensive income (loss). Our other comprehensive income (loss) includes our proportionate part of unrealized gains on securities which are owned and held for sale by AIC of ($69), $461 and $152 related to our investment in AIC for the years ended December 31, 2018, 2017 and 2016, respectively.

Directors’ and Officers’ Liability Insurance. We, RMR Inc., RMR LLC and certain other companies to which RMR LLC or its subsidiaries provide management services, including SIR (until it ceased to exist), participate in a combined directors’ and officers’ liability insurance policy. The current combined policy expires in September 2020. We paid aggregate premiums of $198, $91 and $106 in 2018, 2017 and 2016, respectively, for these policies.

Note 8. Concentration

Tenant and Credit Concentration

We define annualized rental income as the annualized contractual base rents from our tenants pursuant to our lease agreements as of the measurement date, plus straight line rent adjustments and estimated recurring expense reimbursements to be paid to us, and excluding lease value amortization. The U.S. Government, 13 state governments, and three other government tenants combined were responsible for approximately 35.4%, 62.6% and 87.9% of our annualized rental income as of December 31, 2018, 2017 and 2016, respectively. The U.S. Government is our largest tenant by annualized rental income and represents approximately 25.6%, 43.5% and 60.6% of our annualized rental income as of December 31, 2018, 2017 and 2016, respectively.

Geographic Concentration

At December 31, 2018, our 247 wholly owned buildings were located in 38 states and the District of Columbia. Consolidated properties located in Virginia, California, Texas, the District of Columbia and Maryland were responsible for approximately 15.4%, 11.3%, 10.9%, 9.8%, 9.4% of our annualized rental income as of December 31, 2018, respectively. Consolidated properties located in the metropolitan Washington, D.C. market area were responsible for approximately 26.5% of our annualized rental income as of December 31, 2018.

F-27

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

Note 9.  Indebtedness

At December 31, 2018 and 2017, our outstanding indebtedness consisted of the following:

	December 31,
	2018			2017
Revolving credit facility, due in 2023	$	175,000		$	570,000
Unsecured term loan, due in 2020	300,000			300,000
Unsecured term loan, due in 2022 (1)	88,000			250,000
Senior unsecured notes, 3.750% interest rate, due in 2019	350,000			350,000
Senior unsecured notes, 3.600% interest rate, due in 2020 (2)	400,000			—
Senior unsecured notes, 4.000% interest rate, due in 2022	300,000			300,000
Senior unsecured notes, 4.150% interest rate, due in 2022 (2)	300,000			—
Senior unsecured notes, 4.250% interest rate, due in 2024 (2)	350,000			—
Senior unsecured notes, 4.500% interest rate, due in 2025 (2)	400,000			—
Senior unsecured notes, 5.875% interest rate, due in 2046	310,000			310,000
Mortgage note payable, 7.000% interest rate, due in 2019 (3)	7,939			8,221
Mortgage note payable, 5.720% interest rate, due in 2020 (3)	33,703			34,474
Mortgage note payable, 4.260% interest rate, due in 2020 (3)(4)	—			3,173
Mortgage note payable, 4.160% interest rate, due in 2020 (2)(3)	40,772			—
Mortgage note payable, 8.150% interest rate, due in 2021 (3)	2,912			4,045
Mortgage note payable, 5.877% interest rate, due in 2021 (3)	13,437			13,693
Mortgage note payable, 4.220% interest rate, due in 2022 (3)	27,210			27,870
Mortgage note payable, 3.550% interest rate, due in 2023 (2)(3)	71,000			—
Mortgage note payable, 3.700% interest rate, due in 2023 (2)(3)	50,000			—
Mortgage note payable, 4.800% interest rate, due in 2023 (3)	24,509			24,891
Mortgage note payable, 4.050% interest rate, due in 2030 (3)	66,780			66,780
	3,311,262			2,263,147
Unamortized debt premiums, discounts and issuance costs	(56,372		)	(18,055		)
	$	3,254,890		$	2,245,092

(1) On December 18, 2018, we made a partial principal payment of $162,000 without penalty using proceeds from the sale of a property portfolio of 15 office buildings located in southern Virginia. As a result of this repayment, we recognized a loss on early extinguishment of debt of $625 for the year ended December 31, 2018 to write off a proportionate amount of unamortized debt issuance costs. On February 11, 2019, we repaid the remaining outstanding principal balance of $88,000 without penalty using proceeds from the sale of a property portfolio located in Northern Virginia and Maryland.

(2) As described in Notes 1 and 5, in connection with the SIR Merger, we assumed all of SIR's outstanding senior unsecured notes and mortgage notes on December 31, 2018.

(3) We assumed these mortgage notes in connection with our acquisitions of the encumbered properties. The stated interest rates for these mortgage debts are the contractually stated rates; we recorded the assumed mortgages at estimated fair value on the dates of acquisition, and we amortize the fair value premiums to interest expense over the respective terms of the mortgage notes to reduce interest expense to the estimated market interest rates as of the dates of acquisition.

(4) This mortgage note was secured by a property in southern Virginia that was sold on December 14, 2018. The mortgage note was repaid at closing and we recognized a loss on early extinguishment of debt of $60 for the year ended December 31, 2018.

Our $750,000 revolving credit facility and our term loans are governed by a credit agreement, or our credit agreement, with a syndicate of institutional lenders that includes a number of features common to all of these credit arrangements. Our credit agreement also includes a feature under which the maximum aggregate borrowing availability may be increased to up to $2,500,000 on a combined basis in certain circumstances.

F-28

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

Our $750,000 revolving credit facility is available for general business purposes, including acquisitions. We can borrow, repay and reborrow funds available under our revolving credit facility until maturity and no principal repayment is due until maturity. On December 13, 2018, we amended and restated the credit agreement governing our $750,000 revolving credit facility and $300,000 and $250,000 term loans. 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 LIBOR plus a premium of 125 basis points per annum to 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 facility fee are subject to adjustment based upon changes to our credit ratings. As a result of these amendments, we recognized a loss on early extinguishment of debt related to the revolving credit facility of $24during the year endedDecember 31, 2018 to write off unamortized debt issuance costs.

As of December 31, 2018 and 2017, the annual interest rate payable on borrowings under our revolving credit facility was 3.6% and 2.7%, respectively. The weighted average annual interest rate for borrowings under our revolving credit facility was 3.0%, 2.4% and 1.7%, for the years ended December 31, 2018, 2017 and 2016, respectively.  As of December 31, 2018 and February 25, 2019, we had $175,000 and $110,000 outstanding under our revolving credit facility, and $575,000 and $640,000, respectively, available for borrowing under our revolving credit facility.

One of our term loans, which matures on March 31, 2020, is prepayable without penalty at any time. We are required to pay interest at a rate of LIBOR plus a premium, which was 140 basis points per annum at December 31, 2018, on the amount outstanding under this term loan.  The interest rate premium is subject to adjustment based upon changes to our credit ratings. As of December 31, 2018 and 2017, the annual interest rate for the amount outstanding under this term loan was 3.9% and 3.0%, respectively.  The weighted average annual interest rate under this term loan was 3.4%, 2.5% and 1.9%, for the years ended December 31, 2018, 2017 and 2016, respectively.

Our other term loan, which matures on March 31, 2022, is prepayable without penalty at any time. We are required to pay interest at a rate of LIBOR plus a premium, which was 180 basis points per annum as of December 31, 2018, on the amount outstanding under this term loan. The interest rate premium is subject to adjustment based upon changes to our credit ratings. As of December 31, 2018 and 2017, the annual interest rate for the amount outstanding under this term loan was 4.3% and 3.4%, respectively. The weighted average annual interest rate under this term loan was 3.8%, 2.9% and 2.3%, for the years ended December 31, 2018, 2017 and 2016, respectively.    

Our credit agreement and senior unsecured notes indentures and their supplements provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default, such as, in the case of our credit agreement, a change of control of us, which includes RMR LLC ceasing to act as our business and property manager.  Our credit agreement and our senior unsecured notes indentures and their supplements also contain a number of covenants, including covenants that restrict our ability to incur debts, require us to maintain certain financial ratios and, in the case of our credit agreement, restrict our ability to make distributions under certain circumstances. We believe we were in compliance with the terms and conditions of the respective covenants under our credit agreement and senior unsecured notes indentures and their supplements at December 31, 2018.

On July 20, 2017, we issued $300,000 of 4.000% senior unsecured notes due 2022 in an underwritten public offering. The net proceeds from this offering of $295,399, after payment of the underwriters' discount and other offering expenses, were used to finance, in part, the FPO Transaction.

As described in Note 5, in connection with the SIR Merger, we assumed three mortgage notes with an aggregate principal balance of $161,772. We recorded these mortgage notes at their estimated fair value aggregating $159,490 on the date of acquisition. These mortgage notes are secured by five buildings.

Also as described in Note 5, in connection with the FPO Transaction we assumed five mortgage notes with an aggregate principal balance of $167,548. We recorded these mortgage notes at their estimated fair value aggregating $167,936 on the date of acquisition. These mortgage notes are secured by five buildings. In November 2017, we repaid $10,000 of principal of one of these mortgage notes as part of our assumption agreement with the lender. In connection with the FPO Transaction, we acquired FPO's 50% and 51% interests in two unconsolidated joint ventures which own three buildings encumbered by two mortgage notes with an aggregate principal balance of $82,000.

F-29

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

Concurrently with our entering into the FPO merger agreement, we entered a commitment letter with a group of institutional lenders for a 364-day senior unsecured bridge loan facility in an initial aggregate principal amount of up to $750,000. In July 2017, we and the lenders terminated this commitment letter and bridge loan facility as a result of our issuance of the senior unsecured notes described above and the proceeds from the sale of our common shares in July 2017 (see Note 11 for more information regarding this sale), and we recognized a loss on extinguishment of debt of $1,715.

At December 31, 2018, 12 of our consolidated buildings with an aggregate net book value of $627,173 are encumbered by mortgage notes with an aggregate principal amount of $338,262. Our mortgage notes are non-recourse, subject to certain limited exceptions and do not contain any material financial covenants.

None of our unsecured debt obligations require sinking fund payments prior to their maturity dates.

The required principal payments due during the next five years and thereafter under all our outstanding consolidated debt as of December 31, 2018 are as follows:

Year	Principal Payment
2019	$	362,054
2020	775,707
2021	14,420
2022	713,518
2023	318,783
Thereafter	1,126,780
	$	3,311,262	(1)

(1) Total consolidated debt outstanding as of December 31, 2018, net of unamortized premiums, discounts and issuance costs totaling $56,372 was $3,254,890.

Note 10. Fair Value of Assets and Liabilities

The table below presents certain of our assets measured at fair value at December 31, 2018, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset:

			Fair Value at Reporting Date Using
			Quoted Prices in  Active Markets for Identical Assets		Significant Other Observable Inputs		Significant  Unobservable Inputs
Description	Total		(Level 1)		(Level 2)		(Level 3)
Recurring Fair Value Measurements Assets:
Investment in RMR Inc. (1)	$	148,680	$	148,680	$	—	$	—
Non-Recurring Fair Value Measurements Assets:
Assets of properties held for sale (2)	$	195,107	$	—	$	195,107	$	—

(1) As of December 31, 2018, we owned 2,801,061 shares of class A common stock of RMR Inc., including 1,214,225 shares acquired in 2015 with a historical cost basis of $26,888, and 1,586,836 shares acquired from SIR in the SIR Merger with a cost basis of $84,229. Our shares of class A common stock of RMR Inc. are included in other assets in our consolidated balance sheets and are reported at fair value based on quoted market prices (Level 1 inputs as defined in the fair value hierarchy under GAAP). During the year ended December 31, 2018, we recorded an unrealized loss of $7,552 for the shares acquired in 2015 to adjust our investment in RMR Inc. to its fair value. As discussed in Note 5, the shares we acquired from SIR in the SIR Merger were recorded at fair value on December 31, 2018.

(2) We estimated the fair value of a property portfolio consisting of 34 buildings we agreed to sell located in Northern Virginia and Maryland at December 31, 2018 based on the selling price agreed to with a third party (Level 2 inputs as defined in the fair value hierarchy under GAAP). See Note 5 for further details.

In addition to the assets described in the table above, our financial instruments include our cash and cash equivalents, restricted cash, rents receivable, mortgage note receivable, accounts payable, a revolving credit facility, unsecured term loans,

F-30

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

senior unsecured notes, mortgage notes payable, amounts due to related persons, other accrued expenses and security deposits.  At December 31, 2018 and 2017, the fair values of our financial instruments approximated their carrying values in our consolidated financial statements, due to their short term nature or floating interest rates, except as follows:

	As of December 31, 2018				As of December 31, 2017
Financial Instrument	Carrying Value (1)		Fair Value		Carrying Value (1)		Fair Value
Senior unsecured notes, 3.750% interest rate, due in 2019	$	349,239	$	348,903	$	348,096	$	354,993
Senior unsecured notes, 3.60% interest rate, due in 2020	399,146		399,146		—		—
Senior unsecured notes, 4.00% interest rate, due in 2022	296,735		295,047		295,812		302,655
Senior unsecured notes, 4.15% interest rate, due in 2022	296,736		296,736		—		—
Senior unsecured notes, 4.25% interest rate, due in 2024	337,736		337,736		—		—
Senior unsecured notes, 4.50% interest rate, due in 2025	377,329		377,329		—		—
Senior unsecured notes, 5.875% interest rate, due in 2046	300,576		274,288		300,232		320,416
Mortgage notes payable	335,241		336,365		183,100		186,542
Total	$	2,692,738	$	2,665,550	$	1,127,240	$	1,164,606

(1) Includes unamortized debt premiums, discounts and issuance costs.

We estimated the fair value of our senior unsecured notes (except for our senior unsecured notes due in 2046) using an average of the bid and ask price of the notes as of the measurement date (Level 2 inputs as defined in the fair value hierarchy under GAAP). We estimated the fair value of our senior unsecured notes due in 2046 based on the closing price on Nasdaq (Level 1 inputs as defined in the fair value hierarchy under GAAP) as of the measurement date. We estimated the fair values of our mortgage notes payable using discounted cash flow analyses and currently prevailing market rates as of the measurement date (Level 3 inputs as defined in the fair value hierarchy under GAAP).  Because Level 3 inputs are unobservable, our estimated fair value may differ materially from the actual fair value.

Note 11. Shareholders’ Equity

Share Awards:

We have common shares available for issuance under the terms of the 2009 Plan. During the years ended December 31, 2018, 2017 and 2016, we granted to our officers and other employees of RMR LLC annual share awards of 14,675, 14,337 and 13,350 of our common shares, respectively, valued at $995, $1,067 and $1,183, in aggregate, respectively. We also granted each of our then six Trustees 750 of our common shares in 2018 with an aggregate value of $254 ($42 per Trustee), each of our then six Trustees 750 common shares in 2017 with an aggregate value of $392 ($65 per Trustee) and each of our then five Trustees 625 common shares in 2016 with an aggregate value of $244 ($49 per Trustee) as part of their annual compensation.  In addition, we granted 750 of our common shares, with a value of $41 in connection with the election of one of our Managing Trustees in 2018. The values of the share grants were based upon the closing price of our common shares trading on Nasdaq or the New York Stock Exchange, as applicable, on the date of grant. The common shares awarded to our Trustees vested immediately. The common shares granted to our officers and certain other employees of RMR LLC vest in five equal annual installments beginning on the date of grant. We include the value of granted shares in general and administrative expenses ratably over the vesting period.

F-31

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

A summary of shares granted, forfeited, vested and unvested under the terms of the 2009 Plan for the years ended December 31, 2018, 2017 and 2016, is as follows:

	2018			2017			2016
	Number of Shares		Weighted Average Grant Date Fair Value	Number of Shares		Weighted Average Grant Date Fair Value	Number of Shares		Weighted Average Grant Date Fair Value
Unvested at beginning of year	26,062		$78.24	24,743		$82.36	24,181		$80.44
Granted	19,925		$64.73	18,837		$77.44	16,475		$86.64
Forfeited	(255	)	$52.96	—		$—	—		$—
Vested	(18,634	)	$63.80	(17,518	)	$83.20	(15,913	)	$83.88
Unvested acquired in the SIR Merger (1)	28,223		$27.48	—		$—	—		$—
Unvested at end of year	55,321		$73.25	26,062		$78.24	24,743		$82.36

(1) Represents unvested shares granted under SIR's equity compensation plan that were converted at the Exchange Ratio into shares under the 2009 Plan, and which will have similar vesting requirements as shares granted under the 2009 Plan, as described in Note 1.

The 55,321 unvested shares as of December 31, 2018 are scheduled to vest as follows:27,998shares in 2019,13,259shares in 2020,9,232shares in 2021 and4,832shares in 2022. As of December 31, 2018, the estimated future compensation expense for the unvested shares was$984. The weighted average period over which the compensation expense will be recorded is approximately22 months. During the years ended December 31, 2018, 2017 and 2016, we recorded$1,337, $1,377and$1,371, respectively, of compensation expense related to the 2009 Plan.  At December 31, 2018,330,372of our common shares remained available for issuance under the 2009 Plan.

2018 Share Purchases

On January 1, 2018, we purchased 154 of our common shares valued at $74.16 per share, the closing price of our common shares on Nasdaq on December 29, 2017, from a former employee of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

On May 24, 2018, we purchased 112 of our common shares valued at $56.40 per share, the closing price of our common shares on Nasdaq on that day, from one of our Trustees in satisfaction of tax withholding and payment obligations in connection with the vesting of an award of our common shares.

On September 24, 2018, we purchased an aggregate of 4,718 of our common shares, valued at $45.40 per share, the closing price of our common shares on Nasdaq on that day, from our officers and certain other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

2017 Share Purchases

On May 17, 2017, we purchased 112 of our common shares, valued at $87.00 per share, the closing price of our common shares on Nasdaq on that day, from one of our Trustees to fund that Trustee's resulting minimum required tax withholding obligation.

During 2017, we purchased 3,478 of our common shares, valued at a weighted average price per share of $73.20, based on the closing price of our common shares on Nasdaq, on the date of purchase, from our officers and certain other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

F-32

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

Distributions

During the years ended December 31, 2018, 2017 and 2016, we paid distributions on our common shares as follows:

	Annual Per Share Distribution	Total Distribution		Characterization of Distribution
Year				Return of Capital	Ordinary Income	Qualified Dividend
2018	$6.88	$	170,566	68.60%	31.40%	—%
2017	$6.88	$	145,209	49.35%	50.65%	—%
2016	$6.88	$	122,366	36.21%	62.74%	1.05%

On January 18, 2019, we declared a dividend payable to common shareholders of record on January 28, 2019 in the amount of $0.55 per share, or $26,446. We paid this distribution on February 21, 2019.

2017 Sale of Shares

On July 5, 2017, we sold 6,250,000 of our common shares at a price of $74.00 per share in an underwritten public offering. On August 3, 2017, we sold 726,757 of our common shares at a price of $74.00 per share pursuant to an overallotment option granted to the underwriters for the July offering. The aggregate net proceeds from these sales of $493,866, after payment of the underwriters' discount and other offering expenses, were used to finance, in part, the FPO Transaction.

Cumulative Other Comprehensive Income (Loss)

Cumulative other comprehensive income (loss) represents our share of the comprehensive income (loss) of our equity method investees, and prior to December 31, 2017, the unrealized gain (loss) on the RMR Inc. shares we own. See Note 4 for further information on ASU No. 2016-01.

The following table presents changes in the amounts we recognized in cumulative other comprehensive income (loss) by component for the years ended December 31, 2018, 2017 and 2016:

	Unrealized Gain (Loss) on  Investment in Equity Securities			Equity in Unrealized Gains (Losses) of Investees (1)			Total
Balance at December 31, 2015	$	(9,391	)	$	(5,476	)	$	(14,867	)
Other comprehensive income before reclassifications	30,465			11,254			41,719
Amounts reclassified from cumulative other
comprehensive income to net income	—			105			105
Net current period other comprehensive income	30,465			11,359			41,824
Balance at December 31, 2016	21,074			5,883			26,957
Other comprehensive income before reclassifications	24,042			9,462			33,504
Amounts reclassified from cumulative other
comprehensive income to net income	—			(34		)	(34		)
Net current period other comprehensive income	24,042			9,428			33,470
Balance at December 31, 2017	45,116			15,311			60,427
Amounts reclassified from cumulative
other comprehensive income to cumulative net income	(45,116		)	(15,165		)	(60,281		)
Balance at January 1, 2018	—			146			146
Other comprehensive income before reclassifications	—			(3		)	(3		)
Amounts reclassified from cumulative other
comprehensive income to net income	—			(37		)	(37		)
Net current period other comprehensive income	—			(40		)	(40		)
Balance at December 31, 2018	$	—		$	106		$	106

F-33

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

(1) Amounts reclassified from cumulative other comprehensive income (loss) to net income (loss) is included in equity in net earnings (losses) of investees in our consolidated statements of comprehensive income (loss).

Preferred Units of Limited Partnership

On May 1, 2018, one of our subsidiaries redeemed all 1,813,504 of its outstanding 5.5% Series A Cumulative Preferred Units for $11.15 per unit plus accrued and unpaid distributions (an aggregate of $20,310).

Note 12. Equity Investment in Select Income REIT

Until October 9, 2018, we owned 24,918,421, or approximately 27.8%, of the then outstanding SIR common shares. As described in Note 1, we completed the Secondary Sale. As a result of the Secondary Sale, we recorded a loss of $18,665 during the year ended December 31, 2018.

We accounted for our investment in SIR under the equity method and had previously reported our investment in SIR as a reportable segment. As a result of the Secondary Sale and the elimination of a reportable segment, our equity method investment in SIR is classified as discontinued operations in our consolidated financial statements. See Note 13 for further information regarding discontinued operations.

Under the equity method, we recorded our proportionate share of SIR’s net income as equity in earnings of SIR in our consolidated statements of comprehensive income (loss). During the period from January 1, 2018 to October 9, 2018 and the years ended December 31, 2017 and 2016, we recorded $24,358, $21,584 and $35,381 of equity in earnings of SIR, respectively. Our other comprehensive income (loss) includes our proportionate share of SIR’s unrealized gains of $28, $8,967 and $11,207 for the period from January 1, 2018 to October 9, 2018 and the years ended December 31, 2017 and 2016, respectively.

The adjusted GAAP cost basis of our investment in SIR was less than our proportionate share of SIR’s total shareholders’ equity book value on the dates we acquired the shares. Prior to the Secondary Sale, we were accreting a basis difference to earnings over the estimated remaining useful lives of certain real estate assets and intangible assets and liabilities owned by SIR. This accretion increased our equity in the earnings of SIR by $3,233, $2,944 and $2,956 for the period from January 1, 2018 to October 9, 2018 and the years ended December 31, 2017 and 2016, respectively.

During the period from January 1, 2018 to October 9, 2018 and the years ended December 31, 2017 and 2016, we received cash distributions from SIR totaling $38,124, $50,832 and $50,335, respectively.

During the period from January 1, 2018 to October 9, 2018 and the years ended December 31, 2017 and 2016, SIR issued 63,157, 59,502 and 65,900 common shares, respectively. We recognized a gain on issuance of shares by SIR of $29, $72 and $86 during the period from January 1, 2018 to October 9, 2018, and the years ended December 31, 2017 and 2016, respectively, as a result of the per share issuance price of these SIR common shares being above the then average per share carrying value of our SIR common shares.

F-34

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

The following tables present summarized financial data of SIR:

Condensed Consolidated Balance Sheet

	December 31,
		2017
Real estate properties, net		$	3,905,616
Properties held for sale		5,829
Acquired real estate leases, net		477,577
Cash and cash equivalents		658,719
Rents receivable, net		127,672
Other assets, net		127,617
Total assets		$	5,303,030
ILPT revolving credit facility		$	750,000
Unsecured term loan, net		348,870
Senior unsecured notes, net		1,777,425
Mortgage notes payable, net		210,785
Assumed real estate lease obligations, net		68,783
Other liabilities		155,348
Total shareholders' equity		1,991,819
Total liabilities and shareholders' equity		$	5,303,030

F-35

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

Consolidated Statements of Income

	Nine Months Ended September 30,			Year Ended December 31,
REVENUES:	2018			2017			2016
Rental income	$	298,003		$	392,285		$	387,015
Tenant reimbursements and other income	60,514			75,818			74,992
Total revenues	358,517			468,103			462,007
EXPENSES:
Real estate taxes	36,748			44,131			42,879
Other operating expenses	43,714			55,567			52,957
Depreciation and amortization	105,326			137,672			133,762
Acquisition and transaction related costs	3,796			1,075			306
General and administrative	47,353			54,909			28,632
Write-off of straight line rents, net	10,626			12,517			—
Loss on asset impairment	—			4,047			—
Loss on impairment of real estate assets	9,706			229			5,484
Total expenses	257,269			310,147			264,020
Gain on sale of real estate	4,075			—			—
Dividend income	1,190			1,587			1,268
Unrealized gain on equity securities	53,159			—			—
Interest income	753			91			30
Interest expense	(69,446		)	(92,870		)	(82,620		)
Loss on early extinguishment of debt	(1,192		)	—			—
Income before income tax expense and equity in earnings of an investee	89,787			66,764			116,665
Income tax expense	(446		)	(466		)	(448		)
Equity in earnings of an investee	882			608			137
Net income	90,223			66,906			116,354
Net income allocated to noncontrolling interest	(15,841		)	—			(33		)
Net income attributed to SIR	$	74,382		$	66,906		$	116,321
Weighted average common shares outstanding (basic)	89,395			89,351			89,304
Weighted average common shares outstanding (diluted)	89,411			89,370			$	89,324
Net income attributed to SIR per common share (basic and diluted)	$	0.83		$	0.75		$	1.30

F-36

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts) 

Note 13. Discontinued Operations

As described in Notes 1 and 7, on October 9, 2018, we sold all 24,918,421 SIR common shares that we then owned in the Secondary Sale. We recorded a loss of $18,665 during the year ended December 31, 2018 related to this sale. The sale of the SIR common shares qualifies as discontinued operations; accordingly, our equity method investment in SIR is classified as discontinued operations in our consolidated financial statements.

As described in Note 5, in August 2017, we sold one vacant office property in Falls Church, VA with 164,746 rentable square feet and a net book value of $12,901 as of the date of sale for $13,523, excluding closing costs. Results of operations for this property, which qualified as held for sale prior to our adoption in 2014 of ASU No. 2014-8, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, are classified as discontinued operations in our consolidated financial statements.

The table below presents the components of income from discontinued operations for the years ended December 31, 2018, 2017 and 2016:

	Year Ended December 31,
	2018			2017		2016
Equity in earnings of Select Income REIT	$	24,358		$	21,584	$	35,381
Net gain on issuance of shares by Select Income REIT	29			72		86
Loss on sale of Select Income REIT shares	(18,665		)	—		—
Income (loss) from property discontinued operations	—			173		(589		)
Income from discontinued operations	$	5,722		$	21,829	$	34,878

Note 14. Selected Quarterly Financial Data (Unaudited)

The following is a summary of our unaudited quarterly results of operations for 2018 and 2017.

	2018
	First Quarter		Second Quarter		Third Quarter			Fourth Quarter
Rental income	$	108,717	$	108,085	$	106,102		$	103,656
Net income (loss) available for common shareholders	$	6,287	$	29,602	$	(449	)	$	(57,695	)
Net income (loss) available for common shareholders per common share (basic and diluted)	$	0.25	$	1.20	$	(0.02	)	$	(2.31	)
Common distributions declared	$	1.72	$	1.72	$	1.72		$	1.72

	2017
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Rental income	$	69,296	$	69,887	$	70,179	$	107,170
Net income (loss) available for common shareholders	$	7,415	$	11,677	$	10,989	$	(18,266	)
Net income (loss) available for common shareholders per common share (basic and diluted)	$	0.42	$	0.66	$	0.45	$	(0.74	)
Common distributions declared	$	1.72	$	1.72	$	1.72	$	1.72

F-37

OFFICE PROPERTIES INCOME TRUST

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2018

(dollars in thousands)

					Initial Cost to Company				Costs Capitalized Subsequent to Acquisition					Cost amount carried at Close of Period
Property	Location	Number of Buildings	Encumbrances (1)		Land		Buildings and Equipment				Impairments/ Writedowns			Land		Buildings and Equipment		Total (2)		Accumulated Depreciation (3)			Date(s) Acquired	Original Construction Date(s)
Inverness Center	Birmingham, AL	3	$	—	$	5,954	$	11,664	$	—	$	—		$	5,954	$	11,664	$	17,618	$	—		12/31/2018	1984; 1985
445 Jan Davis Drive	Huntsville, AL	1	—		1,513		1,503		—		—			1,513		1,503		3,016		—			12/31/2018	2007
4905 Moores Mill Road	Huntsville, AL	1	—		4,628		36,612		—		—			4,628		36,612		41,240		—			12/31/2018	1979
131 Clayton Street	Montgomery, AL	1	—		920		9,084		48		—			920		9,132		10,052		(1,708		)	6/22/2011	2007
4344 Carmichael Road	Montgomery, AL	1	—		1,374		11,658		10		—			1,374		11,668		13,042		(1,458		)	12/17/2013	2009
15451 North 28th Avenue	Phoenix, AZ	1	—		1,917		7,416		499		—			1,917		7,915		9,832		(836		)	9/10/2014	1996
16001 North 28th Avenue	Phoenix, AZ	1	—		3,382		416		—		—			3,382		416		3,798		—			12/31/2018	1998
2149 West Dunlap Avenue	Phoenix, AZ	1	—		6,606		218		—		—			6,606		218		6,824		—			12/31/2018	1983
711 S 14th Avenue	Safford, AZ	1	—		460		11,708		484		(4,440		)	364		7,848		8,212		(190		)	6/16/2010	1992
Regents Center	Tempe, AZ	2	—		4,154		3,066		—		—			4,154		3,066		7,220		—			12/31/2018	1988
Campbell Place	Carlsbad, CA	2	—		5,815		3,902		—		—			5,815		3,902		9,717		—			12/31/2018	2007
Folsom Corporate Center	Folsom, CA	1	—		2,927		5,628		—		—			2,927		5,628		8,555		—			12/31/2018	2008
Bayside Technology Park	Fremont, CA	1	—		10,869		653		—		—			10,869		653		11,522		—			12/31/2018	1990
5045 East Butler Street	Fresno, CA	1	—		7,276		61,118		139		—			7,276		61,257		68,533		(25,031		)	8/29/2002	1971
10949 N. Mather Boulevard	Rancho Cordova, CA	1	—		562		16,923		359		—			562		17,282		17,844		(2,201		)	10/30/2013	2012
11020 Sun Center Drive	Rancho Cordova, CA	1	64,490		1,466		8,797		671		—			1,466		9,468		10,934		(513		)	12/20/2016	1983
100 Redwood Shores Parkway	Redwood City, CA	1	—		14,568		7,783		—		—			14,568		7,783		22,351		—			12/31/2018	1993
3875 Atherton Road	Rocklin, CA	1	—		178		860		—		—			178		860		1,038		—			12/31/2018	1991
801 K Street	Sacramento, CA	1	—		4,688		61,995		6,275		—			4,688		68,270		72,958		(5,922		)	1/29/2016	1989
9815 Goethe Road	Sacramento, CA	1	—		1,450		9,465		1,523		—			1,450		10,988		12,438		(2,019		)	9/14/2011	1992
Capitol Place	Sacramento, CA	1	—		2,290		35,891		7,885		—			2,290		43,776		46,066		(10,059		)	12/17/2009	1988
4181 Ruffin Road	San Diego, CA	1	—		5,250		10,549		5,076		—			5,250		15,625		20,875		(3,914		)	7/16/2010	1981
4560 Viewridge Road	San Diego, CA	1	—		4,269		18,316		4,319		—			4,347		22,557		26,904		(10,672		)	3/31/1997	1996
9174 Sky Park Centre	San Diego, CA	1	7,983		685		5,530		2,708		—			685		8,238		8,923		(3,246		)	6/24/2002	1986
2090 Fortune Drive	San Jose, CA	1	—		9,074		—		—		—			9,074		—		9,074		—			12/31/2018	1996
2115 O’Nel Drive	San Jose, CA	1	—		12,402		5,103		—		—			12,402		5,103		17,505		—			12/31/2018	1984
6448-6450 Via Del Oro	San Jose, CA	1	—		4,747		2,027		—		—			4,747		2,027		6,774		—			12/31/2018	1983
North First Street	San Jose, CA	1	—		8,377		4,035		—		—			8,377		4,035		12,412		—			12/31/2018	1984
Rio Robles Drive	San Jose, CA	3	—		23,874		13,806		—		—			23,874		13,806		37,680		—			12/31/2018	1984
2450 and 2500 Walsh Avenue	Santa Clara, CA	2	—		13,480		16,783		—		—			13,480		16,783		30,263		—			12/31/2018	1982

S-1

OFFICE PROPERTIES INCOME TRUST

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2018

(dollars in thousands)

				Initial Cost to Company		Costs Capitalized Subsequent to Acquisition		Cost amount carried at Close of Period
Property	Location	Number of Buildings	Encumbrances (1)	Land	Buildings and Equipment		Impairments/ Writedowns	Land	Buildings and Equipment	Total (2)	Accumulated Depreciation (3)		Date(s) Acquired	Original Construction Date(s)
3250 and 3260 Jay Street	Santa Clara, CA	2	—	20,056	14,163	—	—	20,056	14,163	34,219	—		12/31/2018	1982
603 San Juan Avenue	Stockton, CA	1	—	563	5,470	—	—	563	5,470	6,033	(878	)	7/20/2012	2012
350 West Java Drive	Sunnyvale, CA	1	—	24,804	464	—	—	24,804	464	25,268	—		12/31/2018	1984
7958 South Chester Street	Centennial, CO	1	—	6,735	7,210	—	—	6,735	7,210	13,945	—		12/31/2018	2000
350 Spectrum Loop	Colorado Springs, CO	1	—	3,679	7,793	—	—	3,679	7,793	11,472	—		12/31/2018	2000
333 Inverness Drive South	Englewood, CO	1	—	5,756	4,579	—	—	5,756	4,579	10,335	—		12/31/2018	1998
12795 West Alameda Parkway	Lakewood, CO	1	—	2,640	23,777	1,094	—	2,640	24,871	27,511	(5,559	)	1/15/2010	1988
Corporate Center	Lakewood, CO	3	—	2,887	27,537	3,889	—	2,887	31,426	34,313	(12,495	)	10/11/2002	1980
1 Targeting Center	Windsor, CT	1	—	1,404	574	—	—	1,404	574	1,978	—		12/31/2018	1980
11 Dupont Circle, NW	Washington, DC	1	—	28,255	44,743	1,994	—	28,255	46,737	74,992	(1,672	)	10/2/2017	1974
1211 Connecticut Avenue, NW	Washington, DC	1	—	30,388	24,667	1,391	—	30,388	26,058	56,446	(892	)	10/2/2017	1967
1401 K Street, NW	Washington, DC	1	—	29,215	34,656	3,210	—	29,215	37,866	67,081	(1,497	)	10/2/2017	1929
20 Massachusetts Avenue	Washington, DC	1	—	12,009	51,528	21,395	—	12,228	72,704	84,932	(35,137	)	3/31/1997	1996
440 First Street, NW	Washington, DC	1	—	27,903	38,624	1,293	—	27,903	39,917	67,820	(1,264	)	10/2/2017	1982
625 Indiana Avenue	Washington, DC	1	—	26,000	25,955	7,293	—	26,000	33,248	59,248	(7,555	)	8/17/2010	1989
840 First Street, NE	Washington, DC	1	—	42,727	73,249	472	—	42,727	73,721	116,448	(2,290	)	10/2/2017	2003
10350 NW 112th Avenue	Miami, FL	1	—	4,836	2,779	—	—	4,836	2,779	7,615	—		12/31/2018	2002
7850 Southwest 6th Court	Plantation, FL	1	—	4,800	30,592	383	—	4,800	30,975	35,775	(6,026	)	5/12/2011	1999
8900 Grand Oak Circle	Tampa, FL	1	—	1,100	11,773	288	—	1,100	12,061	13,161	(2,471	)	10/15/2010	1994
180 Ted Turner Drive SW	Atlanta, GA	1	—	5,717	20,017	186	—	5,717	20,203	25,920	(3,229	)	7/25/2012	2007
Corporate Square	Atlanta, GA	5	—	3,996	29,762	27,816	—	3,996	57,578	61,574	(13,371	)	7/16/2004	1967
Executive Park	Atlanta, GA	1	—	1,521	11,826	3,996	—	1,521	15,822	17,343	(5,781	)	7/16/2004	1972
One Georgia Center	Atlanta, GA	1	—	10,250	27,933	6,034	—	10,250	33,967	44,217	(5,419	)	9/30/2011	1968
One Primerica Parkway	Duluth, GA	1	—	6,982	23,132	—	—	6,982	23,132	30,114	—		12/31/2018	2013
4712 Southpark Boulevard	Ellenwood, GA	1	—	1,390	19,635	88	—	1,390	19,723	21,113	(3,156	)	7/25/2012	2005
91-209 Kuhela Street	Kapolei, HI	1	—	2,008	—	—	—	2,008	—	2,008	—		12/31/2018	—
8305 NW 62nd Avenue	Johnston, IA	1	—	2,670	8,060	—	—	2,670	8,060	10,730	—		12/31/2018	2011
1185, 1249 & 1387 S. Vinnell Way	Boise, ID	3	—	3,390	29,026	822	—	3,390	29,848	33,238	(4,871	)	9/11/2012	1996; 1997; 2002

S-2

OFFICE PROPERTIES INCOME TRUST

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2018

(dollars in thousands)

				Initial Cost to Company		Costs Capitalized Subsequent to Acquisition		Cost amount carried at Close of Period
Property	Location	Number of Buildings	Encumbrances (1)	Land	Buildings and Equipment		Impairments/ Writedowns	Land	Buildings and Equipment	Total (2)	Accumulated Depreciation (3)		Date(s) Acquired	Original Construction Date(s)
2020 S. Arlington Heights	Arlington Heights, IL	1	—	1,450	13,160	872	—	1,450	14,032	15,482	(3,101	)	12/29/2009	1988
400 South Jefferson Street	Chicago, IL	1	13,384	19,532	20,274	—	—	19,532	20,274	39,806	—		12/31/2018	1947
475 Bond Street	Lincolnshire, IL	1	—	4,915	574	—	—	4,915	574	5,489	—		12/31/2018	2000
1415 West Diehl Road	Naperville, IL	1	—	12,431	20,749	—	—	12,431	20,749	33,180	—		12/31/2018	2001
440 North Fairway Drive	Vernon Hills, IL	1	—	4,500	445	—	—	4,500	445	4,945	—		12/31/2018	1992
Intech Park	Indianapolis, IN	3	—	4,170	68,888	4,337	—	4,170	73,225	77,395	(13,425	)	10/14/2011	2000; 2001; 2008
7601 and 7635 Interactive Way	Indianapolis, IN	2	—	3,363	14,636	—	—	3,363	14,636	17,999	—		12/31/2018	2003; 2008
400 State Street	Kansas City, KS	1	49,087	640	9,932	5,265	—	640	15,197	15,837	(3,309	)	6/16/2010	1971
Capitol Tower	Topeka, KS	1	—	1,236	3,115	—	—	1,236	3,115	4,351	—		12/31/2018	1983
The Atrium at Circleport II	Erlanger, KY	1	—	1,810	1,948	—	—	1,810	1,948	3,758	—		12/31/2018	1999
7125 Industrial Road	Florence, KY	1	—	1,698	11,722	151	—	1,698	11,873	13,571	(1,766	)	12/31/2012	1980
251 Causeway Street	Boston, MA	1	—	5,100	17,293	2,555	—	5,100	19,848	24,948	(4,061	)	8/17/2010	1987
300 and 330 Billerica Road	Chelmsford, MA	2	—	4,737	—	—	—	4,737	—	4,737	—		12/31/2018	1984
75 Pleasant Street	Malden, MA	1	—	1,050	31,086	271	—	1,050	31,357	32,407	(6,703	)	5/24/2010	2008
111 Powdermill Road	Maynard, MA	1	—	4,432	—	—	—	4,432	—	4,432	—		12/31/2018	1990
25 Newport Avenue	Quincy, MA	1	—	2,700	9,199	1,791	—	2,700	10,990	13,690	(2,021	)	2/16/2011	1985
One Montvale Avenue	Stoneham, MA	1	—	1,670	11,035	2,234	—	1,670	13,269	14,939	(2,693	)	6/16/2010	1945
314 Littleton Road	Westford, MA	1	—	5,736	8,555	—	—	5,736	8,555	14,291	—		12/31/2018	2007
Annapolis Commerce Center	Annapolis, MD	2	—	4,057	7,665	219	—	4,057	7,884	11,941	(275	)	10/2/2017	1989
4201 Patterson Avenue	Baltimore, MD	1	—	901	8,097	4,085	—	901	12,182	13,083	(4,961	)	10/15/1998	1989
Hillside Center	Columbia, MD	2	—	3,437	4,228	336	—	3,437	4,564	8,001	(131	)	10/2/2017	2001
TenThreeTwenty	Columbia, MD	1	—	3,126	16,361	869	—	3,126	17,230	20,356	(570	)	10/2/2017	1982
7001 Columbia Gateway Drive	Columbia, MD	1	—	5,687	10,433	—	—	5,687	10,433	16,120	—		12/31/2018	2008
3300 75th Avenue	Landover, MD	1	—	4,110	36,371	1,346	—	4,110	37,717	41,827	(8,281	)	2/26/2010	1985
1401 Rockville Pike	Rockville, MD	1	25,019	3,248	29,258	16,481	—	3,248	45,739	48,987	(19,266	)	2/2/1998	1986
2115 East Jefferson Street	Rockville, MD	1	—	3,349	11,152	385	—	3,349	11,537	14,886	(1,521	)	8/27/2013	1981
Redland 520/530	Rockville, MD	3	—	12,714	61,377	1,498	—	12,714	62,875	75,589	(1,945	)	10/2/2017	2008
Redland 540	Rockville, MD	1	—	10,740	17,714	2,896	—	10,740	20,610	31,350	(879	)	10/2/2017	2003

S-3

OFFICE PROPERTIES INCOME TRUST

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2018

(dollars in thousands)

				Initial Cost to Company		Costs Capitalized Subsequent to Acquisition		Cost amount carried at Close of Period
Property	Location	Number of Buildings	Encumbrances (1)	Land	Buildings and Equipment		Impairments/ Writedowns	Land	Buildings and Equipment	Total (2)	Accumulated Depreciation (3)		Date(s) Acquired	Original Construction Date(s)
Rutherford Business Park	Windsor Mill, MD	1	—	1,598	10,219	330	—	1,598	10,549	12,147	(1,557	)	11/16/2012	1972
Meadows Business Park	Woodlawn, MD	2	—	3,735	21,509	2,268	—	3,735	23,777	27,512	(4,701	)	2/15/2011	1973
3550 Green Court	Ann Arbor, MI	1	69,304	3,659	4,896	—	—	3,659	4,896	8,555	—		12/31/2018	1998
11411 E. Jefferson Avenue	Detroit, MI	1	—	630	18,002	438	—	630	18,440	19,070	(3,930	)	4/23/2010	2009
Rosedale Corporate Plaza	Roseville, MN	1	—	672	6,045	1,505	—	672	7,550	8,222	(3,474	)	12/1/1999	1987
1300 Summit Street	Kansas City, MO	1	2,933	2,776	12,070	915	—	2,776	12,985	15,761	(1,939	)	9/27/2012	1998
4241-4300 NE 34th Street	Kansas City, MO	1	—	1,443	6,193	3,992	—	1,780	9,848	11,628	(4,199	)	3/31/1997	1995
2555 Grand Boulevard	Kansas City, MO	1	—	4,243	51,931	—	—	4,243	51,931	56,174	—		12/31/2018	2003
1220 Echelon Parkway	Jackson, MS	1	—	440	25,458	238	—	440	25,696	26,136	(4,100	)	7/25/2012	2009
2300 and 2400 Yorkmont Road	Charlotte, NC	2	—	1,345	19,226	—	—	1,345	19,226	20,571	—		12/31/2018	1995
18010 and 18020 Burt Street	Omaha, NE	2	—	7,032	12,599	—	—	7,032	12,599	19,631	—		12/31/2018	2012
10-12 Celina Avenue	Nashua, NH	1	—	3,000	14,052	1,569	—	3,000	15,621	18,621	(3,379	)	8/31/2009	1979
500 Charles Ewing Boulevard	Ewing, NJ	1	—	4,846	26,208	—	—	4,846	26,208	31,054	—		12/31/2018	2012
299 Jefferson Road	Parsippany, NJ	1	—	4,579	2,937	—	—	4,579	2,937	7,516	—		12/31/2018	2011
One Jefferson Road	Parsippany, NJ	1	—	4,450	5,291	—	—	4,450	5,291	9,741	—		12/31/2018	2009
50 West State Street	Trenton, NJ	1	—	5,000	38,203	3,313	—	5,000	41,516	46,516	(8,009	)	12/30/2010	1989
138 Delaware Avenue	Buffalo, NY	1	—	4,405	18,899	7,551	—	4,485	26,370	30,855	(11,830	)	3/31/1997	1994
Airline Corporate Center	Colonie, NY	1	—	790	6,400	406	—	790	6,806	7,596	(1,053	)	6/22/2012	2004
5000 Corporate Court	Holtsville, NY	1	—	6,530	17,711	2,734	—	6,530	20,445	26,975	(3,811	)	8/31/2011	2000
8687 Carling Road	Liverpool, NY	1	—	571	—	—	—	571	—	571	—		12/31/2018	1997
1212 Pittsford - Victor Road	Pittsford, NY	1	27,238	613	79	—	—	613	79	692	—		12/31/2018	1965
500 Canal View Boulevard	Rochester, NY	1	—	2,077	376	—	—	2,077	376	2,453	—		12/31/2018	1996
2231 Schrock Road	Columbus, OH	1	—	722	218	—	—	722	218	940	—		12/31/2018	1999
4600 25th Avenue	Salem, OR	1	—	6,510	17,973	5,165	—	6,510	23,138	29,648	(4,898	)	12/20/2011	1957
501 Ridge Avenue	Hanover, PA	1	—	3,452	5,152	—	—	3,452	5,152	8,604	—		12/31/2018	1948
8800 Tinicum Boulevard	Philadelphia, PA	1	—	5,617	22,866	—	—	5,617	22,866	28,483	—		12/31/2018	2000
Synergy Business Park	Columbia, SC	3	—	1,439	11,143	5,178	—	1,439	16,321	17,760	(4,335	)	5/10/2006;9/17/2010	1982; 1985
9680 Old Bailes Road	Fort Mill, SC	1	—	841	2,967	—	—	841	2,967	3,808	—		12/31/2018	2007
One Memphis Place	Memphis, TN	1	—	1,630	5,645	3,290	—	1,630	8,935	10,565	(1,742	)	9/17/2010	1985
16001 North Dallas Parkway	Addison, TX	2	—	10,364	63,661	—	—	10,364	63,661	74,025	—		12/31/2018	1987

S-4

OFFICE PROPERTIES INCOME TRUST

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2018

(dollars in thousands)

				Initial Cost to Company		Costs Capitalized Subsequent to Acquisition		Cost amount carried at Close of Period
Property	Location	Number of Buildings	Encumbrances (1)	Land	Buildings and Equipment		Impairments/ Writedowns	Land	Buildings and Equipment	Total (2)	Accumulated Depreciation (3)		Date(s) Acquired	Original Construction Date(s)
2115-2116 East Randol Mill Road	Arlington, TX	1	—	2,146	5,469	—	—	2,146	5,469	7,615	—		12/31/2018	1989
Research Park	Austin, TX	2	—	4,292	13,856	—	—	4,292	13,856	18,148	—		12/31/2018	1999
1001 Noble Energy Way	Houston, TX	1	—	5,222	29,392	—	—	5,222	29,392	34,614	—		12/31/2018	1998
10451 Clay Road	Houston, TX	1	—	5,538	10,335	—	—	5,538	10,335	15,873	—		12/31/2018	2013
202 North Castlegory Road	Houston, TX	1	—	870	5,064	—	—	870	5,064	5,934	—		12/31/2018	2016
6380 Rogerdale Road	Houston, TX	1	—	12,728	6,161	—	—	12,728	6,161	18,889	—		12/31/2018	2006
4221 W. John Carpenter Freeway	Irving, TX	1	—	1,424	2,384	—	—	1,424	2,384	3,808	—		12/31/2018	1995
8675,8701-8711 Freeport Pkwy and 8901 Esters Boulevard	Irving, TX	3	—	10,266	31,815	—	—	10,266	31,815	42,081	—		12/31/2018	1990
1511 East Common Street	New Braunfels, TX	1	—	5,004	1,276	—	—	5,004	1,276	6,280	—		12/31/2018	2005
2900 West Plano Parkway	Plano, TX	1	—	6,873	8,901	—	—	6,873	8,901	15,774	—		12/31/2018	1998
3400 West Plano Parkway	Plano, TX	1	—	4,579	16,091	—	—	4,579	16,091	20,670	—		12/31/2018	1994
19100 Ridgewood Parkway	San Antonio, TX	1	—	4,223	144,519	—	—	4,223	144,519	148,742	—		12/31/2018	2008
3600 Wiseman Boulevard	San Antonio, TX	1	—	3,521	6,715	—	—	3,521	6,715	10,236	—		12/31/2018	2004
701 Clay Road	Waco, TX	1	—	2,030	8,708	3,584	—	2,060	12,262	14,322	(5,020	)	12/23/1997	1997
1800 Novell Place	Provo, UT	1	—	7,546	43,831	—	—	7,546	43,831	51,377	—		12/31/2018	2000
4885-4931 North 300 West	Provo, UT	2	—	3,946	9,504	—	—	3,946	9,504	13,450	—		12/31/2018	2009
14660, 14672 & 14668 Lee Road	Chantilly, VA	3	—	6,966	74,214	2,038	—	6,966	76,252	83,218	(3,757	)	12/22/2016	1998; 2002; 2006
1434 Crossways	Chesapeake, VA	2	—	3,617	19,527	1,817	—	3,617	21,344	24,961	(840	)	10/2/2017	1998
Greenbrier Towers	Chesapeake, VA	2	—	3,437	11,241	700	—	3,437	11,941	15,378	(507	)	10/2/2017	1985
Enterchange at Meadowville	Chester, VA	1	—	1,478	9,594	283	—	1,478	9,877	11,355	(1,309	)	8/28/2013	1999
Three Flint Hill	Fairfax, VA	1	—	5,991	25,619	1,515	—	5,991	27,134	33,125	(1,075	)	10/2/2017	1984
3920 Pender Drive	Fairfax, VA	1	—	2,963	12,840	231	—	2,963	13,071	16,034	(1,529	)	3/21/2014	1981
Pender Business Park	Fairfax, VA	4	—	2,529	21,386	636	—	2,529	22,022	24,551	(2,873	)	11/4/2013	2000
7987 Ashton Avenue	Manassas, VA	1	—	1,562	8,253	623	—	1,562	8,876	10,438	(439	)	1/3/2017	1989
Two Commercial Place	Norfolk, VA	1	—	4,530	21,678	—	—	4,530	21,678	26,208	—		12/31/2018	1974
1759 & 1760 Business Center Drive	Reston, VA	2	—	9,066	78,658	2,723	—	9,066	81,381	90,447	(9,273	)	5/28/2014	1987
1775 Wiehle Avenue	Reston, VA	1	—	4,138	26,120	756	—	4,138	26,876	31,014	(828	)	10/2/2017	2001
9960 Mayland Drive	Richmond, VA	1	—	2,614	15,930	1,891	—	2,614	17,821	20,435	(2,055	)	5/20/2014	1994
501 South 5th Street	Richmond, VA	1	—	14,884	39,411	—	—	14,884	39,411	54,295	—		12/31/2018	2009
9201 Forest Hill Avenue	Richmond, VA	1	—	1,355	376	—	—	1,355	376	1,731	—		12/31/2018	1985

S-5

OFFICE PROPERTIES INCOME TRUST

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2018

(dollars in thousands)

					Initial Cost to Company				Costs Capitalized Subsequent to Acquisition					Cost amount carried at Close of Period
Property	Location	Number of Buildings	Encumbrances (1)		Land		Buildings and Equipment				Impairments/ Writedowns			Land		Buildings and Equipment		Total (2)		Accumulated Depreciation (3)			Date(s) Acquired	Original Construction Date(s)
Parham Place	Richmond, VA	3	—		920		1,107		—		—			920		1,107		2,027		—			12/31/2018	1989; 2012
1751 Blue Hills Drive	Roanoke, VA	1	—		2,710		7,823		—		—			2,710		7,823		10,533		—			12/31/2018	2003
Aquia Commerce Center	Stafford, VA	2	—		2,090		7,465		768		—			2,090		8,233		10,323		(1,549		)	6/22/2011	1988; 1999
Atlantic Corporate Park	Sterling, VA	2	—		5,752		29,323		178		—			5,752		29,501		35,253		(931		)	10/2/2017	2008
Sterling Business Park Lots 8 and 9	Sterling, VA	1	—		9,177		44,375		—		—			9,177		44,375		53,552		(1,385		)	10/2/2017	2016
Orbital Sciences Campus	Sterling, VA	3	—		12,372		19,473		—		—			12,372		19,473		31,845		—			12/31/2018	2000; 2001
65 Bowdoin Street	S. Burlington, VT	1	—		700		8,416		140		—			700		8,556		9,256		(1,873		)	4/9/2010	2009
840 North Broadway	Everett, WA	2	34,704		3,360		15,376		2,116		—			3,360		17,492		20,852		(3,099		)	6/28/2012	1985
Stevens Center	Richland, WA	2	—		3,970		17,035		4,137		—			4,045		21,097		25,142		(9,854		)	3/31/1997	1995
351, 401, 501 Elliott Ave West	Seattle, WA	3	—		26,851		53,157		—		—			26,851		53,157		80,008		—			12/31/2018	2000
11050 West Liberty Drive	Milwaukee, WI	1	—		945		4,539		103		—			945		4,642		5,587		(881		)	6/9/2011	2006
882 TJ Jackson Drive	Falling Waters, WV	1	41,099		906		3,886		270		—			922		4,140		5,062		(2,215		)	3/31/1997	1993
5353 Yellowstone Road	Cheyenne, WY	1	—		1,915		8,217		765		—			1,950		8,947		10,897		(4,658		)	3/31/1997	1995
		211	$	335,241	$	923,390	$	2,804,289	$	221,397	$	(4,440	)	$	924,164	$	3,020,472	$	3,944,636	$	(375,147	)
Properties Held for Sale														—		—		—		—
500 First Street, NW	Washington, DC	1	—		30,478		15,660		44		—			30,478		15,704		46,182		(448		)	10/2/2017	1969
91-008 Hanua Street	Kapolei, HI	1	—		6,846		—		—		—			6,846		—		6,846		—			12/31/2018	—
Ammendale Commerce Center	Beltsville, MD	3	—		4,879		9,498		99		—			4,879		9,597		14,476		(279		)	10/2/2017	1987
Indian Creek Technology Park	Beltsville, MD	4	—		8,796		12,093		394		(2,830		)	8,796		9,657		18,453		(363		)	10/2/2017	1988
Gateway 270 West	Clarksburg, MD	6	—		12,104		9,688		516		—			12,104		10,204		22,308		(257		)	10/2/2017	2002
Snowden Center	Columbia, MD	5	—		7,955		10,128		119		—			7,955		10,247		18,202		(258		)	10/2/2017	1982
20400 Century Boulevard	Germantown, MD	1	—		2,305		9,890		1,304		—			2,347		11,152		13,499		(5,520		)	3/31/1997	1995
Cloverleaf Center	Germantown, MD	4	—		11,890		4,639		481		—			11,890		5,120		17,010		(167		)	10/2/2017	2000
Metro Park North	Rockville, MD	4	—		11,159		7,624		235		—			11,159		7,859		19,018		(236		)	10/2/2017	2001
Sterling Park Business Center	Sterling, VA	7	—		18,935		21,191		835		—			18,935		22,026		40,961		(643		)	10/2/2017	1990
		36	—		115,347		100,411		4,027		(2,830		)	115,389		101,566		216,955		(8,171		)
		247	$	335,241	$	1,038,737	$	2,904,700	$	225,424	$	(7,270	)	$	1,039,553	$	3,122,038	$	4,161,591	$	(383,318	)

____________________

(1) Represents mortgage debt, net of the unamortized balance of the fair value adjustments and debt issuance costs totaling $3,021.

(2) Excludes value of real estate intangibles. Aggregate cost for federal income tax purposes is approximately $7,126,328.

(3) Depreciation on building and improvements is provided for periods ranging up to 40 years and on equipment up to 12 years. 

S-6

OFFICE PROPERTIES INCOME TRUST

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2018

(dollars in thousands)

Analysis of the carrying amount of real estate properties and accumulated depreciation:

	Real Estate Properties			Accumulated Depreciation
Balance at December 31, 2015	$	1,696,132		$	255,879
Additions	194,107			42,404
Disposals	(1,479		)	(1,479		)
Balance at December 31, 2016	1,888,760			296,804
Additions	1,100,138			45,315
Loss on asset impairment	(9,490		)	—
Disposals	(3,687		)	(271		)
Balance at December 31, 2017	2,975,721			341,848
Additions	1,486,342			65,215
Loss on asset impairment	(8,630		)	—
Disposals	(286,837		)	(18,740		)
Cost basis adjustment (1)	(5,005		)	(5,005		)
Reclassification of assets of properties held for sale	(216,955		)	(8,171		)
Balance at December 31, 2018	$	3,944,636		$	375,147

(1) Represents the reclassification between accumulated depreciation and building made to certain properties reclassified as assets of properties held for sale at fair value in accordance with GAAP.

S-7

SIGNATURES

Pursuant to the requirements of Section 13 and 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

OFFICE PROPERTIES INCOME TRUST
By:	/s/ David M. Blackman
	David M. Blackman President and Chief Executive Officer
Dated: February 28, 2019

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ David M. Blackman	Managing Trustee, President and Chief Executive Officer (principal executive officer)	February 28, 2019
David M. Blackman
/s/ Jeffrey C. Leer	Chief Financial Officer and Treasurer (principal financial officer and principal accounting officer)	February 28, 2019
Jeffrey C. Leer
/s/ Adam D. Portnoy	Managing Trustee	February 28, 2019
Adam D. Portnoy
/s/ Donna D. Fraiche	Independent Trustee	February 28, 2019
Donna D. Fraiche
/s/ Barbara D. Gilmore	Independent Trustee	February 28, 2019
Barbara D. Gilmore
/s/ John L. Harrington	Independent Trustee	February 28, 2019
John L. Harrington
/s/ William A. Lamkin	Independent Trustee	February 28, 2019
William A. Lamkin
/s/ Elena Poptodorova	Independent Trustee	February 28, 2019
Elena Poptodorova
/s/ Jeffrey P. Somers	Independent Trustee	February 28, 2019
Jeffrey P. Somers

EX-4.1

Exhibit 4.1 COMMON SHARES COMMON SHARES $.01 PAR VALUE PER SHARE $.01 PAR VALUE PER SHARE SEE REVERSE FOR IMPORTANT NOTICE ON TRANSFER RESTRICTIONS AND A MARYLAND REAL ESTATE INVESTMENT TRUST OTHER INFORMATION CUSIP 67623C 10 9 THIS CERTIFIES THAT BY ONESGE N REGISTERED: AND COUNTERSIGNED QIIITUTCOMPANY TRUST EQUINITI is the registered holder of FULLY PAID AND NON-ASSESSABLE COMMON SHARES OF BENEFICIAL INTEREST IN OFFICE PROPERTIES INCOME TRUST a Maryland real estate investment trust (the “Trust”), transferable on the books of the Trust by the holder hereof in person or by its duly authorized attorney upon surrender of this Certificate properly endorsed. This Certificate and the shares evidenced hereby are issued and shall be held subject to all of the provisions of the DeclarationCOMMON of Trust and Bylaws of the Trust and any amendments thereto. The holder of this Certificate and every transferee or assignee hereof by accepting or holding the same agrees to be bound by all of the provisions of the Declaration of Trust and Bylaws of the Trust, as amended from time to time. This Certificate is not valid unless countersigned and registered by the Transfer SIGNATURE AUTHORIZED Agent and Registrar. RNFRAGENT TRANSFER IN WITNESS WHEREOF, the Trust has caused this Certificate to be executed on its behalf by its duly authorized officers. REGISTRAR AND Dated: PRESIDENT AND CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER AND TREASURER THE DECLARATION OF TRUST PROVIDES THAT THE NAME “OFFICE PROPERTIES INCOME TRUST” REFERS TO THE TRUSTEES UNDER THE DECLARATION OF TRUST, COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND NO TRUSTEE, SHAREHOLDER, EMPLOYEE OR AGENT OF THE TRUST SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, IN CONNECTION WITH THIS INSTRUMENT. ALL PERSONS DEALING WITH THE TRUST IN ANY WAY SHALL LOOK ONLY TO THE ASSETS OF THE TRUST FOR PAYMENT OF ANY SUM OR PERFORMANCE OF ANY OBLIGATION. AMERICAN FINANCIAL PRINTING INCORPORATED – MINNEAPOLIS

OFFICE PROPERTIES INCOME TRUST IMPORTANT NOTICE OFFICE PROPERTIES INCOME TRUST IS A MARYLAND REAL ESTATE INVESTMENT TRUST (THE “COMPANY”). THE SHARES COVERED BY THIS CERTIFICATE ARE ISSUED AND SHALL BE HELD SUBJECT TO ALL OF THE PROVISIONS OF THE AMENDED AND RESTATED DECLARATION OF TRUST OF THE COMPANY, AS AMENDED FROM TIME TO TIME (THE “DECLARATION OF TRUST”) AND THE AMENDED AND RESTATED BYLAWS ADOPTED BY THE COMPANY, AS AMENDED FROM TIME TO TIME (THE “BYLAWS”). THE HOLDER OF THE SHARES COVERED BY THIS CERTIFICATE AND EVERY TRANSFEREE OR ASSIGNEE THEREOF BY ACCEPTING OR HOLDING THE SAME AGREES TO BE BOUND BY ALL OF THE PROVISIONS OF THE DECLARATION OF TRUST AND BYLAWS. PURSUANT AND SUBJECT TO THE TERMS OF THE DECLARATION OF TRUST, THE COMPANY HAS THE AUTHORITY TO CREATE ONE OR MORE ADDITIONAL CLASSES OR SERIES OF SHARES AND ISSUE ADDITIONAL SHARES OF ANY EXISTING CLASS OR SERIES OF SHARES. THE COMPANY WILL FURNISH A FULL STATEMENT OF (i) THE AUTHORITY OF THE COMPANY TO CREATE ADDITIONAL CLASSES OR SERIES OF SHARES AND ISSUE ADDITIONAL SHARES OF ANY EXISTING CLASS OR SERIES OF SHARES, (ii) THE TERMS OF ANY EXISTING CLASS OR SERIES OF SHARES, AND (iii) SUCH OTHER INFORMATION AS IS REQUIRED BY APPLICABLE LAW, WITHOUT CHARGE TO ANY SHAREHOLDER UPON REQUEST TO THE SECRETARY OF THE COMPANY. THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON OWNERSHIP AND TRANSFER WHICH ARE OR MAY HEREAFTER BE CONTAINED IN THE DECLARATION OF TRUST OR IN THE BYLAWS, INCLUDING PROVISIONS OF THE DECLARATION OF TRUST WHICH PROHIBIT THE OWNERSHIP OF MORE THAN 9.8% OF ANY CLASS OR SERIES OF THE COMPANY’S SHARES OF BENEFICIAL INTEREST BY ANY PERSON OR GROUP. THIS DESCRIPTION OF THE RESTRICTIONS UPON OWNERSHIP OR TRANSFER OF THE COMPANY’S SECURITIES IS NOT COMPLETE. A MORE COMPLETE DESCRIPTION OF THESE RESTRICTIONS AND OF VARIOUS RIGHTS AND OBLIGATIONS OF SHAREHOLDERS APPEARS IN THE DECLARATION OF TRUST OR BYLAWS, AS APPLICABLE, AND IN CERTAIN OTHER AGREEMENTS WHICH MAY FROM TIME TO TIME BE ENTERED INTO BY THE COMPANY AFFECTING THE RIGHTS AND OBLIGATIONS OF SHAREHOLDERS. COPIES OF THE DECLARATION OF TRUST, BYLAWS AND AGREEMENTS AFFECTING THE RIGHTS AND OBLIGATIONS OF SHAREHOLDERS AS IN EFFECT FROM TIME TO TIME WILL BE SENT WITHOUT CHARGE TO ANY SHAREHOLDER UPON REQUEST TO THE SECRETARY OF THE COMPANY. The following abbreviations, when used in the inscription on the face of this Certificate, shall be construed as though they were written out in full according to applicable laws or regulations: UTMA – ____________ Custodian ____________ TEN COM – as tenants in common (Cust) (Minor) TEN ENT – as tenants by entireties under Uniform Transfers to Minors JT TEN – as joint tenants with right of survivorship Act ___________________ _____________ and not as tenants in common (State) Additional abbreviations may also be used though not in above list. For value received ________________________________________________ hereby sell, assign, and transfer unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING ZIP CODE OF ASSIGNEE) Shares of beneficial interest represented by the within Certificate, and do hereby irrevocably constitute and appoint Attorney to transfer the said shares on the books of the within-named Trust with full power of substitution in the premises. Dated ________________ X X NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. SIGNATURE GUARANTEED ALL GUARANTEES MUST BE MADE BY A FINANCIAL INSTITUTION (SUCH AS A BANK OR BROKER) WHICH IS A PARTICIPANT IN THE SECURITIES TRANSFER AGENTS MEDALLION PROGRAM (“STAMP”), THE NEW YORK STOCK EXCHANGE, INC. MEDALLION SIGNATURE PROGRAM (“MSP”), OR THE STOCK EXCHANGES MEDALLION PROGRAM (“SEMP”) AND MUST NOT BE DATED. GUARANTEES BY A NOTARY PUBLIC ARE NOT ACCEPTABLE.

EX-8.1

Exhibit 8.1

February 28, 2019

Office Properties Income Trust

Two Newton Place

255 Washington Street, Suite 300

Newton, Massachusetts 02458

Ladies and Gentlemen:

The following opinion is furnished to Office Properties Income Trust, a Maryland real estate investment trust (the “Company”), to be filed with the Securities and Exchange Commission (the “SEC”) as Exhibit 8.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (the “Form 10-K”) under the Securities Exchange Act of 1934, as amended.

We have acted as counsel for the Company in connection with the preparation of the Form 10-K. We have reviewed originals or copies of such corporate records, such certificates and statements of officers of the Company and of public officials, and such other documents as we have considered relevant and necessary in order to furnish the opinion hereinafter set forth. In doing so, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as copies, and the authenticity of the originals of such documents. Specifically, and without limiting the generality of the foregoing, we have reviewed: (i) the Company’s amended and restated declaration of trust, as amended, and its amended and restated bylaws; and (ii) the Form 10-K. For purposes of the opinion set forth below, we have assumed that any documents (other than documents which have been executed, delivered, adopted or filed, as applicable, by the Company prior to the date hereof) that have been provided to us in draft form will be executed, delivered, adopted and filed, as applicable, without material modification.

The opinion set forth below is based upon the Internal Revenue Code of 1986, as amended, the Treasury regulations issued thereunder, published administrative interpretations thereof, and judicial decisions with respect thereto, all as of the date hereof (collectively, “Tax Laws”), and upon the Employee Retirement Income Security Act of 1974, as amended, the Department of Labor regulations issued thereunder, published administrative interpretations thereof, and judicial decisions with respect thereto, all as of the date hereof (collectively, “ERISA Laws”). No assurance can be given that Tax Laws or ERISA Laws will not change. In the discussions with respect to Tax Laws matters and ERISA Laws matters in the sections of Item 1 of the Form 10-K captioned “Material United States Federal Income Tax Considerations” and “ERISA Plans, Keogh Plans and

Office Properties Income Trust

February 28, 2019

Page 2

Individual Retirement Accounts”, certain assumptions have been made therein and certain conditions and qualifications have been expressed therein, all of which assumptions, conditions and qualifications are incorporated herein by reference. With respect to all questions of fact on which our opinion is based, we have assumed the initial and continuing truth, accuracy and completeness of: (i) the information set forth in the Form 10-K and in the exhibits thereto; and (ii) representations made to us by officers of the Company or contained in the Form 10-K and in the exhibits thereto, in each such instance without regard to qualifications such as “to the best knowledge of” or “in the belief of”. We have not independently verified such information.

We have relied upon, but not independently verified, the foregoing assumptions. If any of the foregoing assumptions are inaccurate or incomplete for any reason, or if the transactions described in the Form 10-K or in the exhibits thereto have been or are consummated in a manner that is inconsistent with the manner contemplated therein, our opinion as expressed below may be adversely affected and may not be relied upon.

Based upon and subject to the foregoing: (i) we are of the opinion that the discussions with respect to Tax Laws matters and ERISA Laws matters in the sections of Item 1 of the Form 10-K captioned “Material United States Federal Income Tax Considerations” and “ERISA Plans, Keogh Plans and Individual Retirement Accounts” in all material respects are, subject to the limitations set forth therein, the material Tax Laws considerations and the material ERISA Laws considerations relevant to holders of the securities of the Company discussed therein (the “Securities”); and (ii) we hereby confirm that the opinions of counsel referred to in said sections represent our opinions on the subject matters thereof.

Our opinion above is limited to the matters specifically covered hereby, and we have not been asked to address, nor have we addressed, any other matters or any other transactions. Further, we disclaim any undertaking to advise you of any subsequent changes of the matters stated, represented or assumed herein or any subsequent changes in Tax Laws or ERISA Laws.

This opinion is rendered to you in connection with the filing of the Form 10-K. Purchasers and holders of the Securities are urged to consult their own tax advisors or counsel, particularly with respect to their particular tax consequences of acquiring, holding and disposing of the Securities, which may vary for investors in different tax situations. We hereby consent to the filing of a copy of this opinion as an exhibit to the Form 10-K, which is incorporated by reference in the Company’s Registration Statement on Form S-3, File No. 333-212431 (the “Registration Statement”), under the Securities Act of 1933, as amended (the “Securities Act”), and to the references to our firm in the Form 10-K and the Registration Statement. In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act or under the rules and regulations of the SEC promulgated thereunder.

Very truly yours,

/s/ Sullivan & Worcester LLP

SULLIVAN & WORCESTER LLP

EX-10.9

Exhibit 10.9

OFFICE PROPERTIES INCOME TRUST

FORM OF [AMENDED AND RESTATED]¹ INDEMNIFICATION AGREEMENT

THIS [AMENDED AND RESTATED] INDEMNIFICATION AGREEMENT (this “Agreement”), effective as of [DATE] (the “Effective Date”), by and between Office Properties Income Trust, a Maryland real estate investment trust (the “Company”), and [TRUSTEE/OFFICER] (“Indemnitee”).

WHEREAS, Indemnitee currently serves as a trustee and/or officer of the Company and may, in connection therewith, be subjected to claims, suits or proceedings arising from such service; and

WHEREAS, as an inducement to Indemnitee to continue to serve as such, the Company has agreed to indemnify and to advance expenses and costs incurred by Indemnitee in connection with any such claims, suits or proceedings, to the maximum extent permitted by law as hereinafter provided; and

WHEREAS, the parties [are currently parties to an Indemnification Agreement dated as of [DATE] (the “Prior Indemnification Agreement”) and] desire to [amend and restate the Prior Indemnification Agreement and] set forth their agreement regarding indemnification and advancement of expenses [as reflected herein];

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

Section 1.    Definitions.  For purposes of this Agreement:

(a) “Board” means the board of trustees of the Company.

(b)    “Bylaws” means the bylaws of the Company, as they may be amended from time to time.

(c)    “Change in Control” means a change in control of the Company occurring after the Effective Date of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934, as amended (the “Act”), whether or not the Company is then subject to such reporting requirement; provided, however, that, without limitation, such a Change in Control shall be deemed to have occurred if after the Effective Date:

(i)    any “person” (as such term is used in Sections 13(d) and 14(d) of the Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing 10% or more of the combined voting power of all the Company’s then outstanding securities entitled to vote generally in the election of trustees without the prior approval of at least two-thirds of the members of the Board in office immediately prior to such person attaining such percentage interest;

(ii)    there occurs a proxy contest, or the Company is a party to a merger, consolidation, sale of assets, plan of liquidation or other reorganization not approved by at least two-thirds of the members of the Board then in office, as a consequence of which members of the Board in office immediately prior to such transaction or event constitute less than a majority of the Board thereafter; or

(iii)    during any period of two consecutive years, other than as a result of an event described in clause (a)(ii) of this Section 1, individuals who at the beginning of such period constituted the Board (including for this purpose any new trustee whose election or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds of the trustees then still in office who were trustees at the beginning of such period) cease for any reason to constitute at least a majority of the Board.

¹ Bracketed text to be included for trustees and officers with existing agreements. Bracketed text would not be included for persons who are first elected as a trustee or appointed as an officer after this form is adopted.

(d)    “Company Status” means the status of a Person who is or was a trustee, director, manager, officer, partner, employee, agent or fiduciary of the Company or any predecessor of the Company or any of their majority owned subsidiaries and the status of a Person who, while a trustee, director, manager, officer, partner, employee, agent or fiduciary of the Company or any predecessor of the Company or any of their majority owned subsidiaries, is or was serving at the request of the Company or any predecessor of the Company or any of their majority owned subsidiaries as a trustee, director, manager, officer, partner, employee, agent or fiduciary of another real estate investment trust, corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or any other Enterprise.

(e)    “control” of an entity, shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such entity, whether through ownership of voting securities, by contract or otherwise.

(f)    “Declaration of Trust” means the declaration of trust (as defined in the Maryland REIT Law) of the Company, as it may be in effect from time to time.

(g)    “Disinterested Trustee” means a trustee of the Company who is not and was not a party to the Proceeding in respect of which indemnification or advance of Expenses is sought by Indemnitee.

(h)    “Enterprise” shall mean the Company and any other real estate investment trust, corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that Indemnitee is or was serving at the express written request of the Company as a trustee, director, manager, officer, partner, employee, agent or fiduciary.

(i)    “Expenses”  means all expenses, including, but not limited to, all attorneys’ fees and costs, retainers, court or arbitration costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding, or responding to, or objecting to, a request to provide discovery in any Proceeding.  Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond or other appeal bond or its equivalent.

(j)    “Independent Counsel” means a law firm, or a member of a law firm, selected by the Company and acceptable to Indemnitee, that is experienced in matters of business law.  If, within twenty (20) days after submission by Indemnitee of a written demand for indemnification pursuant to Section 7(a) hereof, no Independent Counsel shall have been selected and agreed to by Indemnitee, either the Company or Indemnitee may petition a Chosen Court (as defined in Section 18) for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person so appointed shall act as Independent Counsel hereunder.

(k)    “MGCL” means the Maryland General Corporation Law.

(l)    “Maryland REIT Law” means Title 8 of the Corporations and Associations Article of the Annotated Code of Maryland.

(m)    “Person” means an individual, a corporation, a general or limited partnership, an association, a limited liability company, a governmental entity, a trust, a joint venture, a joint stock company or another entity or organization.

(n)    “Proceeding” means any threatened, pending or completed claim, demand, action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other proceeding, whether civil, criminal, administrative or investigative (including on appeal), whether or not by or in the right of the Company, except one initiated by an Indemnitee pursuant to Section 9.

Section 2.    Indemnification - General.  The Company shall indemnify, and advance Expenses to, Indemnitee (a) as provided in this Agreement and (b) otherwise to the maximum extent permitted by Maryland law in effect on the Effective Date and as amended from time to time; provided, however, that no change in Maryland law shall have the effect of reducing the benefits available to Indemnitee hereunder based on Maryland law as in effect on the Effective Date.  The rights of Indemnitee provided in this Section 2 shall include, without limitation, the rights set forth in the other sections of this

Agreement, including any additional indemnification permitted by Section 2-418(g) of the MGCL, as applicable to a Maryland real estate investment trust by virtue of Section 8-301(15) of the Maryland REIT Law, the Declaration of Trust or the Bylaws.

Section 3.    Proceedings Other Than Derivative Proceedings by or in the Right of the Company.  Indemnitee shall be entitled to the rights of indemnification provided in this Section 3 if, by reason of Indemnitee’s Company Status, Indemnitee is, or is threatened to be, made a party to any Proceeding, other than a derivative Proceeding by or in the right of the Company (or, if applicable, such other Enterprise at which Indemnitee is or was serving at the request of the Company or a predecessor of the Company or any of their majority owned subsidiaries).  Pursuant to this Section 3, Indemnitee shall be indemnified against all judgments, penalties, fines and amounts paid in settlement and all Expenses incurred by Indemnitee or on Indemnitee’s behalf in connection with a Proceeding by reason of Indemnitee’s Company Status unless it is finally determined that such indemnification is not permitted by the MGCL, the Declaration of Trust or the Bylaws.

Section 4.    Derivative Proceedings by or in the Right of the Company.  Indemnitee shall be entitled to the rights of indemnification provided in this Section 4 if, by reason of Indemnitee’s Company Status, Indemnitee is, or is threatened to be, made a party to any derivative Proceeding brought by or in the right of the Company (or, if applicable, such other Enterprise at which Indemnitee is or was serving at the request of the Company or a predecessor of the Company or any of their majority owned subsidiaries).  Pursuant to this Section 4, Indemnitee shall be indemnified against all judgments, penalties, fines and amounts paid in settlement and all Expenses incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding unless it is finally determined that such indemnification is not permitted by the MGCL, the Declaration of Trust or the Bylaws.

Section 5.    Indemnification for Expenses of a Party Who is Partly Successful.  Without limitation on Section 3 or Section 4, if Indemnitee is not wholly successful in any Proceeding covered by this Agreement, but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee under this Section 5 for all Expenses incurred by Indemnitee or on Indemnitee’s behalf in connection with each successfully resolved claim, issue or matter, allocated on a reasonable and proportionate basis.  For purposes of this Section 5 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

Section 6.    Advancement of Expenses.  The Company, without requiring a preliminary determination of Indemnitee’s ultimate entitlement to indemnification hereunder, shall advance all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding in which Indemnitee may be involved, or is threatened to be involved, including as a party, a witness or otherwise, by reason of Indemnitee’s Company Status, within ten (10) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding.  Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall be preceded or accompanied by a written affirmation by Indemnitee of Indemnitee’s good faith belief that the standard of conduct necessary for indemnification by the Company as authorized by the MGCL, the Declaration of Trust and the Bylaws has been met and a written undertaking by or on behalf of Indemnitee, in substantially the form of Exhibit A hereto or in such other form as may be required under applicable law as in effect at the time of the execution thereof, to reimburse the portion of any Expenses advanced to Indemnitee relating to any claims, issues or matters in the Proceeding as to which it shall be finally determined that the standard of conduct has not been met and which have not been successfully resolved as described in Section 5.  For the avoidance of doubt, the Company shall advance Expenses incurred by Indemnitee or on Indemnitee’s behalf in connection with such a Proceeding pursuant to this Section 6 until it is finally determined that Indemnitee is not entitled to indemnification under the MGCL, the Declaration of Trust or the Bylaws in respect of such Proceeding.  To the extent that Expenses advanced to Indemnitee do not relate to a specific claim, issue or matter in the Proceeding, such Expenses shall be allocated on a reasonable and proportionate basis.  The undertaking required by this Section 6 shall be an unlimited general obligation by or on behalf of Indemnitee and shall be accepted without reference to Indemnitee’s financial ability to repay such advanced Expenses and without any requirement to post security therefor.  At Indemnitee’s request, advancement of any such Expense shall be made by the Company’s direct payment of such Expense instead of reimbursement of Indemnitee’s payment of such Expense.

Section 7.    Procedure for Determination of Entitlement to Indemnification.

(a)    To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written demand therefor.  The Secretary of the Company shall, promptly upon receipt of such a demand for indemnification, provide copies of the demand to the Board.

(b)    Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 7(a), a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall promptly be

made in the specific case: (i) if a Change in Control shall have occurred, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee; or (ii) if a Change in Control shall not have occurred or if, after a Change in Control, Indemnitee shall so request, (A) by the Board (or a duly authorized committee thereof) by a majority vote of a quorum consisting of Disinterested Trustees, or (B) if a quorum of the Board consisting of Disinterested Trustees is not obtainable or, even if obtainable, such quorum of Disinterested Trustees so directs, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee, or (C) if so directed by a majority of the members of the Board, by the shareholders of the Company; and, if it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination.  Any Independent Counsel, member of the Board or shareholder of the Company shall act reasonably and in good faith in making a determination regarding Indemnitee’s entitlement to indemnification under this Agreement.

(c)    The Company shall pay the fees and expenses of Independent Counsel, if one is appointed, and shall agree to fully indemnify such Independent Counsel against any and all expenses, claims, liabilities and damages arising out of or relating to this Agreement or the Independent Counsel’s engagement as such pursuant hereto.

Section 8.    Presumptions and Effect of Certain Proceedings.

(a)    In making a determination with respect to entitlement to indemnification hereunder, the Person or Persons making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

(b)    It shall be presumed that Indemnitee has at all times acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.  Without limitation of the foregoing, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise.  In addition, the knowledge or actions, or failure to act, of any trustee, director, manager, officer, partner, employee, agent or fiduciary of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

(c)    Neither the failure to make a determination pursuant to Section 7(b) as to whether indemnification is proper in the circumstances because Indemnitee has met any particular standard of conduct, nor an actual determination by the Company (including by the Board or Independent Counsel) pursuant to Section 7(b) that Indemnitee has not met such standard of conduct, shall be a defense to Indemnitee’s claim that indemnification is proper in the circumstances or create a presumption that Indemnitee has not met any particular standard of conduct. 

(d)    The termination of any Proceeding by judgment, order, settlement, conviction, a plea of nolo contendere or its equivalent, or an entry of an order of probation prior to judgment, shall not in and of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not meet the standard of conduct required for indemnification.  The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty.  In the event that any Proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such action, claim or proceeding with or without payment of money or other consideration), it shall be presumed that Indemnitee has been successful on the merits or otherwise in such Proceeding.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

Section 9.    Remedies of Indemnitee.

(a)    If (i) a determination is made pursuant to Section 7(b) that Indemnitee is not entitled to indemnification under this Agreement, (ii) advance of Expenses is not timely made pursuant to Section 6, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 7(b) within thirty (30) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 5 within ten (10) days after receipt by the Company of a written request therefor, or (v) payment of indemnification is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall (A) unless the Company demands arbitration as provided by Section 17, be entitled to an adjudication in a Chosen Court or (B) be entitled to

seek an award in arbitration as provided by Section 17, in each case of Indemnitee’s entitlement to such indemnification or advance of Expenses.

(b)    In any judicial proceeding or arbitration commenced pursuant to this Section 9, the Company shall have the burden of proving that Indemnitee is not entitled to indemnification or advance of Expenses, as the case may be.  In the event that a determination shall have been made pursuant to Section 7(b) that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 9 shall be conducted in all respects as a de novo trial on the merits, and Indemnitee shall not be prejudiced by reason of the adverse determination under Section 7(b).

(c)    If a determination shall have been made pursuant to Section 7(b) that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 9, absent a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the demand for indemnification.

(d)    In the event that Indemnitee, pursuant to this Section 9, seeks a judicial adjudication of or an award in arbitration as provided by Section 17 to enforce Indemnitee’s rights under, or to recover damages for breach of, this Agreement by the Company, or to recover under any directors’ and officers’ liability insurance policies maintained by the Company, the Company shall indemnify Indemnitee against any and all Expenses incurred by Indemnitee in such judicial adjudication or arbitration and, if requested by Indemnitee, the Company shall (within ten (10) days after receipt by the Company of a written demand therefor) advance, to the extent not prohibited by law, the Declaration of Trust or the Bylaws, any and all such Expenses.

(e)    The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 9 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such judicial proceeding or arbitration that the Company is bound by all the provisions of this Agreement.

(f)    To the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to time provide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral.  Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of Indemnitee.

(g)    Interest shall be paid by the Company to Indemnitee at the maximum rate allowed to be charged for judgments under the Courts and Judicial Proceedings Article of the Annotated Code of Maryland for amounts which the Company pays or is obligated to pay for the period (i) commencing with either the tenth (10th) day after the date on which the Company was requested to advance Expenses in accordance with Section 6 of this Agreement or the thirtieth (30th) day after the date on which the Company was requested to make the determination of entitlement to indemnification under Section 7(b) of this Agreement, as applicable, and (ii) ending on the date such payment is made to Indemnitee by the Company.

Section 10.    Defense of the Underlying Proceeding.

(a)    Indemnitee shall notify the Company promptly upon being served with or receiving any summons, citation, subpoena, complaint, indictment, information, notice, request or other document relating to any Proceeding which may result in the right to indemnification or the advance of Expenses hereunder; provided, however, that the failure to give any such notice shall not disqualify Indemnitee from the right, or otherwise affect in any manner any right of Indemnitee, to indemnification or the advance of Expenses under this Agreement unless the Company’s ability to defend in such Proceeding or to obtain proceeds under any insurance policy is materially and adversely prejudiced thereby, and then only to the extent the Company is thereby actually so prejudiced.

(b)    Subject to the provisions of the last sentence of this Section 10(b) and of Section 10(c) below, the Company shall have the right to defend Indemnitee in any Proceeding which may give rise to indemnification hereunder; provided, however, that the Company shall notify Indemnitee of any such decision to defend within fifteen (15) days following receipt of notice of any such Proceeding under Section 10(a) above, and the counsel selected by the Company shall be reasonably satisfactory to Indemnitee.  The Company shall not, without the prior written consent of Indemnitee, consent to the entry of any judgment against Indemnitee or enter into any settlement or compromise which (i) includes an admission of fault of Indemnitee, (ii) does not include, as an unconditional term thereof, the full release of Indemnitee from all liability in respect of such Proceeding, which release shall be in form and substance reasonably satisfactory to Indemnitee or (iii) has the

actual or purported effect of extinguishing, limiting or impairing Indemnitee’s rights hereunder.  This Section 10(b) shall not apply to a Proceeding brought by Indemnitee under Section 9 above or Section 15.

(c)    Notwithstanding the provisions of Section 10(b), if in a Proceeding to which Indemnitee is a party by reason of Indemnitee’s Company Status, (i) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld, that Indemnitee may have separate defenses or counterclaims to assert with respect to any issue which may not be consistent with other defendants in such Proceeding, (ii) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld, that an actual or apparent conflict of interest or potential conflict of interest exists between Indemnitee and the Company, or (iii) the Company fails to assume the defense of such Proceeding in a timely manner, Indemnitee shall be entitled to be represented by separate legal counsel of Indemnitee’s choice, subject to the prior approval of the Company, which shall not be unreasonably withheld, at the expense of the Company.  In addition, if the Company fails to comply with any of its obligations under this Agreement or in the event that the Company or any other Person takes any action to declare this Agreement void or unenforceable, or institutes any Proceeding to deny or to recover from Indemnitee the benefits intended to be provided to Indemnitee hereunder, Indemnitee shall have the right to retain counsel of Indemnitee’s choice, at the expense of the Company (subject to Section 9(d)), to represent Indemnitee in connection with any such matter.

Section 11.    Liability Insurance.

(a)    To the extent the Company maintains an insurance policy or policies providing liability insurance for any of its trustees or officers, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any Company trustee or officer during Indemnitee’s tenure as a trustee or officer and, following a termination of Indemnitee’s service in connection with a Change in Control, for a period of six (6) years thereafter.

(b)    If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has directors’ and officers’ liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.

(c)    In the event of any payment by the Company under this Agreement the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee with respect to any insurance policy.  Indemnitee shall take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights in accordance with the terms of such insurance policy. The Company shall pay or reimburse all expenses actually and reasonably incurred by Indemnitee in connection with such subrogation.

Section 12.    Non-Exclusivity; Survival of Rights.

(a)    The rights of indemnification and advance of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Declaration of Trust or the Bylaws, any agreement or a resolution of the shareholders entitled to vote generally in the election of trustees or of the Board, or otherwise.  No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by Indemnitee in Indemnitee’s Company Status prior to such amendment, alteration or repeal.  To the extent that a change in the Maryland REIT Law or the MGCL permits greater indemnification to Indemnitee than would be afforded currently under the Maryland REIT Law or the MGCL, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change if permitted by the Maryland REIT Law or the MGCL.  No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

(b)    The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable or payable or reimbursable as Expenses hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

Section 13.    Binding Effect.

(a)    The indemnification and advance of Expenses provided by, or granted pursuant to, this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall continue as to an Indemnitee who has ceased to be a trustee, director, manager, officer, partner, employee, agent or fiduciary of the Company or a trustee, director, manager, officer, partner, employee, agent or fiduciary of another Enterprise which such Person is or was serving at the request of the Company or a predecessor of the Company or any of their majority owned subsidiaries, and shall inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.

(b)    Any successor of the Company (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all, or a substantial part of, the business or assets of the Company shall be automatically deemed to have assumed and agreed to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place, provided that no such assumption shall relieve the Company of its obligations hereunder.  To the extent required by applicable law to give effect to the foregoing sentence and to the extent requested by Indemnitee, the Company shall require and cause any such successor to expressly assume and agree to perform this Agreement by written agreement in form and substance satisfactory to Indemnitee.

Section 14.    Severability.  If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

Section 15.    Limitation and Exception to Right of Indemnification or Advance of Expenses.  Notwithstanding any other provision of this Agreement, (a) any indemnification or advance of Expenses to which Indemnitee is otherwise entitled under the terms of this Agreement shall be made only to the extent such indemnification or advance of Expenses does not conflict with applicable Maryland law and (b) Indemnitee shall not be entitled to indemnification or advance of Expenses under this Agreement with respect to any Proceeding brought by Indemnitee, unless (i) the Proceeding is brought to enforce rights under this Agreement, the Declaration of Trust, the Bylaws, liability insurance policy or policies, if any, or otherwise or (ii) the Declaration of Trust, the Bylaws, a resolution of the shareholders entitled to vote generally in the election of trustees or of the Board or an agreement approved by the Board to which the Company is a party expressly provides otherwise.  Notwithstanding any other provision of this Agreement, a court of appropriate jurisdiction, upon application of Indemnitee and such notice as the court shall require, may order indemnification of Indemnitee by the Company in the following circumstances:  (a) if such court determines that Indemnitee is entitled to reimbursement under Section 2-418(d)(1) of the MGCL, the court shall order indemnification, in which case Indemnitee shall be entitled to recover the Expenses of securing such reimbursement; or (b) if such court determines that Indemnitee is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not Indemnitee (i) has met the standard of conduct set forth in Section 2-418(b) of the MGCL or (ii) has been adjudged liable for receipt of an improper personal benefit under Section 2-418(c) of the MGCL, the court may order such indemnification as the court shall deem proper without regard to any limitation on such court-ordered indemnification contemplated by Section 2-418(d)(2)(ii) of the MGCL.

Section 16.    Specific Performance, Etc.  The parties hereto recognize that if any provision of this Agreement is violated by the Company, Indemnitee may be without an adequate remedy at law.  Accordingly, in the event of any such violation, Indemnitee shall be entitled, if Indemnitee so elects, to institute proceedings, either in law or at equity, to obtain damages, to enforce specific performance, to enjoin such violation, or to obtain any relief or any combination of the foregoing as Indemnitee may elect to pursue.

Section 17.    Arbitration.

(a)    Any disputes, claims or controversies regarding Indemnitee’s entitlement to indemnification or advancement of Expenses hereunder or otherwise arising out of or relating to this Agreement, including any disputes, claims or controversies brought by or on behalf of a party hereto or any holder of equity interests (which, for purposes of this Section 17, shall mean any holder of record or any beneficial owner of equity interests or any former holder of record or beneficial owner of equity interests) of a party, either on his, her or its own behalf, on behalf of a party or on behalf of any series or class of equity interests of a party or holders of equity interests of a party against a party or any of their respective trustees, directors, members, officers, managers, agents or employees, including any disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of this Agreement, including this Section 17 or the

governing documents of a party (all of which are referred to as “Disputes”), or relating in any way to such a Dispute or Disputes, shall, on the demand of any party to such Dispute or Disputes, be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”) then in effect, except as those Rules may be modified in this Section 17.  For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against the trustees, directors, officers or managers of a party and class actions by a holder of equity interests against those individuals or entities and a party.  For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party.  For purposes of this Section 17, the term “equity interest” shall mean (i) in respect of the Company, shares of beneficial interest of the Company, (ii) shares of “membership interests” in an entity that is a limited liability company, (iii) general partnership interests in an entity that is a partnership, (iv) shares of capital stock of an entity that is a corporation and (v) similar equity ownership interests in other entities.

(b)    There shall be three (3) arbitrators.  If there are only two (2) parties to the Dispute, each party shall select one (1) arbitrator within fifteen (15) days after receipt by respondent of a copy of the demand for arbitration.  The arbitrators may be affiliated or interested persons of the parties.  If there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall select, by the vote of a majority of the claimants or the respondents, as the case may be, one (1) arbitrator within fifteen (15) days after receipt of the demand for arbitration. The arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be.  If either a claimant (or all claimants) or a respondent (or all respondents) fail(s) to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request AAA to provide a list of three (3) proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten (10) days from the date AAA provides the list to select one (1) of the three (3) arbitrators proposed by AAA.  If the party (or parties) fail(s) to select the second (2nd) arbitrator by that time, the party (or parties) who have appointed the first (1st) arbitrator shall then have ten (10) days to select one (1) of the three (3) arbitrators proposed by AAA to be the second (2nd) arbitrator; and, if he/they should fail to select the second (2nd) arbitrator by such time, AAA shall select, within fifteen (15) days thereafter, one (1) of the three (3) arbitrators it had proposed as the second (2nd) arbitrator.  The two (2) arbitrators so appointed shall jointly appoint the third (3rd) and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second (2nd) arbitrator.  If the third (3rd) arbitrator has not been appointed within the time limit specified herein, then AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by AAA in accordance with a listing, striking and ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

(c)    The place of arbitration shall be Boston, Massachusetts unless otherwise agreed by the parties.

(d)    There shall be only limited documentary discovery of documents directly related to the issues in dispute, as may be ordered by the arbitrators.  For the avoidance of doubt, it is intended that there shall be no depositions and no other discovery other than limited documentary discovery as described in the preceding sentence.

(e)    In rendering an award or decision (an “Award”), the arbitrators shall be required to follow the laws of the State of Maryland without regard to principles of conflicts of law.  Any arbitration proceedings or award rendered hereunder and the validity, effect and interpretation of this arbitration agreement shall be governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq.  An Award shall be in writing and shall state the findings of fact and conclusions of law on which it is based.  Any monetary Award shall be made and payable in U.S. dollars free of any tax, deduction or offset.  Subject to Section 17(g), each party against which an Award assesses a monetary obligation shall pay that obligation on or before the thirtieth (30th) day following the date of such Award or such other date as the Award may provide.

(f)    Except to the extent expressly provided by this Agreement or as otherwise agreed by the parties hereto, each party and each Person acting or seeking to act in a representative capacity (such Person, a “Named Representative”) involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an Award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of a party’s award to its attorneys, a Named Representative or any attorney of a Named Representative.  Each party (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third (3rd) appointed arbitrator.

(g)    Notwithstanding any language to the contrary in this Agreement, an Award, including but not limited to any interim Award, may be appealed pursuant to the AAA’s Optional Appellate Arbitration Rules (the “Appellate Rules”).  An Award shall not be considered final until after the time for filing the notice of appeal pursuant to the Appellate

Rules has expired.  Appeals must be initiated within thirty (30) days of receipt of an Award by filing a notice of appeal with any AAA office. Following the appeal process, the decision rendered by the appeal tribunal may be entered in any court having jurisdiction thereof.  For the avoidance of doubt, and despite any contrary provision of the Appellate Rules, Section 17(f) shall apply to any appeal pursuant to this Section 17 and the appeal tribunal shall not render an Award that would include shifting of any costs or expenses (including attorneys’ fees) of any party or Named Representative or the payment of such costs and expenses, and all costs and expenses of a party or Named Representative shall be its sole responsibility.

(h)    Following the expiration of the time for filing the notice of appeal, or the conclusion of the appeal process set forth in Section 17(g), an Award shall be final and binding upon the parties thereto and shall be the sole and exclusive remedy between those parties relating to the Dispute, including any claims, counterclaims, issues or accounting presented to the arbitrators.  Judgment upon an Award may be entered in any court having jurisdiction.  To the fullest extent permitted by law, no application or appeal to any court of competent jurisdiction may be made in connection with any question of law arising in the course of arbitration or with respect to any award made except for actions relating to enforcement of this agreement to arbitrate or any arbitral award issued hereunder and except for actions seeking interim or other provisional relief in aid of arbitration proceedings in any court of competent jurisdiction.

(i)    This Section 17 is intended to benefit and be enforceable by the parties hereto and their respective holders of equity interests, trustees, directors, officers, managers, agents or employees, and their respective successors and assigns, and shall be binding upon all such parties and their respective holders of equity interests, and be in addition to, and not in substitution for, any other rights to indemnification or contribution that such individuals or entities may have by contract or otherwise.

Section 18.    Venue.  Each party hereto agrees that it shall bring any Proceeding in respect of any claim arising out of or related to this Agreement exclusively in the courts of the State of Maryland and the Federal courts of the United States, in each case, located in the City of Baltimore (the “Chosen Courts”).  Solely in connection with claims arising under this Agreement, each party irrevocably and unconditionally (i) submits to the exclusive jurisdiction of the Chosen Courts, (ii) agrees not to commence any such Proceeding except in such courts, (iii) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any such Proceeding in the Chosen Courts, (iv) waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such Proceeding, (v) agrees that service of process upon such party in any such Proceeding shall be effective if notice is given in accordance with Section 24and (vi) agrees to request and/or consent to the assignment of any dispute arising out of this Agreement or the transactions contemplated by this Agreement to the Chosen Courts’ Business and Technology Case Management Program, or similar program.  Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by law.  A final judgment in any such Proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS.  Notwithstanding anything herein to the contrary, if a demand for arbitration of a Dispute is made pursuant to Section 17, this Section 18 shall not preempt resolution of the Dispute pursuant to Section 17.

Section 19.    Adverse Settlement.  The Company shall not seek, nor shall it agree to or support, or agree not to contest any settlement or other resolution of any matter that has the actual or purported effect of extinguishing, limiting or impairing Indemnitee’s rights hereunder, including without limitation the entry of any bar order or other order, decree or stipulation, pursuant to 15 U.S.C. § 78u-4 (the Private Securities Litigation Reform Act), or any similar foreign, federal or state statute, regulation, rule or law.

Section 20.Period of Limitations.  To the fullest extent permitted by law, no legal action shall be brought, and no cause of action shall be asserted, by or on behalf of the Company or any controlled affiliate of the Company against Indemnitee, Indemnitee’s spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company or its controlled affiliate shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern.

Section 21.    Counterparts.  This Agreement may be executed in any number of counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties hereto and delivered to the other party (including via facsimile or other electronic transmission), it being understood that each party hereto need not sign the same counterpart.

Section 22.    Delivery by Electronic Transmission.  This Agreement and any signed agreement or instrument entered into in connection with this Agreement or contemplated hereby, and any amendments hereto or thereto, to the extent signed and delivered by means of an electronic transmission, including by a facsimile machine or via email, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.  At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall re-execute original forms thereof and deliver them to the other parties.  No party hereto or to any such agreement or instrument shall raise the use of electronic transmission by a facsimile machine or via email to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through electronic transmission as a defense to the formation of a contract and each such party forever waives any such defense.

Section 23.    Modification and Waiver.  No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto.  No waiver of any of the provisions of this Agreement shall be deemed to, or shall, constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

Section 24.    Notices.  Any notice, report or other communication required or permitted to be given hereunder shall be in writing unless some other method of giving such notice, report or other communication is accepted by the party to whom it is given, and shall be given by being delivered at the following addresses to the parties hereto:

(a) If to Indemnitee, to:  The address set forth on the signature page hereto.

(b) If to the Company to:

Office Properties Income Trust

Two Newton Place

255 Washington Street, Suite 300

Newton, Massachusetts 02458-1634

Attn: Secretary

or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

Section 25.    Governing Law.  The provisions of this Agreement and any Dispute, whether in contract, tort or otherwise, shall be governed by and construed in accordance with the laws of the State of Maryland without regard to its conflicts of laws rules.

Section 26.    Interpretation.

(a)    Generally.  Unless the context otherwise requires, as used in this Agreement: (a) words defined in the singular have the parallel meaning in the plural and vice versa; (b) “Articles,” “Sections,” and “Exhibits” refer to Articles, Sections and Exhibits of this Agreement unless otherwise specified; and (c) “hereto” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

(b)    Additional Interpretive Provisions.  The headings in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.  Any capitalized term used in any Exhibit to this Agreement, but not otherwise defined therein, shall have the meaning as defined in this Agreement.  References to any statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated thereunder and any successor statute or statutory provision.  References to any agreement are to that agreement as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof.  References to any Person include the successors and permitted assigns of that Person.  Reference to any agreement, document or instrument means the agreement, document or instrument as amended or otherwise modified from time to time in accordance with the terms thereof, and if applicable hereof.

(c)[Expansion of Indemnification. This amendment and restatement of the Prior Indemnification Agreement is intended to expand, and not to limit, the scope of indemnification provided to Indemnitee under the Prior Indemnification Agreement, and this Agreement shall be interpreted consistent with such intent.]

[Signature Page Follows]

IN WITNESS WHEREOF, the undersigned have executed or caused to be executed on their behalf this Agreement as of the date first written above.

Inf	OFFICE PROPERTIES INCOME TRUST
	By:
	Name:
	Title:
	[INDEMNITEE]
	Indemnitee’s Address:
	[ ]

[Signature Page to [Amended and Restated] Indemnification Agreement]

EXHIBIT A

FORM OF AFFIRMATION AND

UNDERTAKING TO REPAY EXPENSES ADVANCED

To the Board of Trustees of Office Properties Income Trust:

This affirmation and undertaking is being provided pursuant to that certain [Amended and Restated] Indemnification Agreement dated                                 , 20   (the “Indemnification Agreement”), by and between Office Properties Income Trust, a Maryland real estate investment trust (the “Company”), and the undersigned Indemnitee, pursuant to which Indemnitee is entitled to advancement of expenses in connection with [Description of Claims/Proceeding] (together, the “Claims”).  Terms used, and not otherwise defined, herein shall have the meanings specified in the Indemnification Agreement.

Indemnitee is subject to the Claims by reason of Indemnitee’s Company Status or by reason of alleged actions or omissions by Indemnitee in such capacity.

Indemnitee hereby affirms Indemnitee’s good faith belief that the standard of conduct necessary for Indemnitee’s indemnification has been met.

In consideration of the advancement of Expenses by the Company for attorneys’ fees and related expenses incurred by Indemnitee in connection with the Claims (the “Advanced Expenses”), Indemnitee hereby agrees that if, in connection with a proceeding regarding the Claim, it is ultimately determined that Indemnitee is not entitled to indemnification under law, the Declaration of Trust, the Bylaws or the Indemnification Agreement with respect to an act or omission by Indemnitee, then Indemnitee shall promptly reimburse the portion of the Advanced Expenses relating to the Claim(s) as to which the foregoing findings have been established and which have not been successfully resolved as described in Section 5 of the Indemnification Agreement.  To the extent that Advanced Expenses do not relate to specific Claims, Indemnitee agrees that such Advanced Expenses may be allocated on a reasonable and proportionate basis.

IN WITNESS WHEREOF, the undersigned Indemnitee has executed this Affirmation and Undertaking to Repay Expenses Advanced on                      ,      .

WITNESS:

Print name of witness

Schedule to Exhibit 10.2

The following trustees and executive officers of Office Properties Income Trust, or OPI, are parties to Indemnification Agreements with OPI which are substantially identical in all material respects to the representative Indemnification Agreement filed herewith and are dated as of the respective dates listed below. The other Indemnification Agreements are omitted pursuant to Instruction 2 to Item 601 of Regulation S-K.

Name of Signatory	Date
Donna D. Fraiche	January 15, 2019
William A. Lamkin	January 15, 2019
Jeffrey C. Leer	January 1, 2019
David M. Blackman	May 24, 2018
Barbara D. Gilmore	May 24, 2018
John L. Harrington	May 24, 2018
Mark L. Kleifges	May 24, 2018
Elena Poptodorova	May 24, 2018
Adam D. Portnoy	May 24, 2018
Jeffrey P. Somers	May 24, 2018

EX-21.1

Exhibit21.1

OFFICE PROPERTIES INCOME TRUST

SUBSIDIARIES OF THE REGISTRANT

Name	State of Formation, Organization or Incorporation
1434 Crossways Boulevard I, LLC	Delaware
1434 Crossways Boulevard II, LLC	Delaware
1441 Crossways Blvd., LLC	Virginia
3300 75th Avenue LLC	Delaware
403 & 405 Glenn Drive Manager, LLC	Virginia
403 & 405 Glenn Drive, LLC	Virginia
ACP East LLC	Maryland
AP Indian Creek, LLC	Delaware
Columbia Holding Associates LLC	Delaware
CRI SIR LLC	Delaware
Crossways Associates LLC	Delaware
Crossways II LLC	Delaware
Crossways Land, LLC	Virginia
First Potomac DC Holdings, LLC	Delaware
First Potomac DC Management LLC	Delaware
First Potomac Management LLC	Delaware
First Potomac TRS Holdings, Inc.	Virginia
First Snowden LLC	Delaware
FP 11 Dupont Circle Managing Member, LLC	Delaware
FP 11 Dupont Circle, LLC	Delaware
FP 1211 Connecticut Avenue, LLC	Delaware
FP 1401 K, LLC	Delaware
FP 1408 Stephanie Way, LLC	Virginia
FP 1775 Wiehle Avenue, LLC	Virginia
FP 2550 Ellsmere Avenue, LLC	Virginia
FP 3 Flint Hill, LLC	Virginia
FP 440 1st Street, LLC	Delaware
FP 500 First Street REIT GP, LLC	Delaware
FP 500 First Street, LLC	Delaware
FP 535 Independence Parkway, LLC	Virginia
FP 540 Gaither, LLC	Maryland
FP 6310 Hillside Center, LLC	Delaware
FP 6315 Hillside Center, LLC	Delaware
FP 840 First Street, LLC	Delaware
FP Ammendale Commerce Center, LLC	Maryland
FP Atlantic Corporate Park, LLC	Virginia
FP Cloverleaf Investor, LLC	Delaware
FP Cloverleaf, LLC	Maryland
FP CPT 1750 H Street, LLC	Delaware
FP CPT 1750 Holdings, LLC	Delaware
FP Davis Drive Lot 5, LLC	Virginia
FP Gateway 270, LLC	New Jersey
FP Greenbrier Circle, LLC	Virginia
FP Greenbrier Towers, LLC	Virginia

FP Gude Manager, LLC	Delaware
FP Gude, LLC	Maryland
FP Indian Creek, LLC	Delaware
FP Metro Place, LLC	Delaware
FP Patuxent Parkway, LLC	Delaware
FP Redland GP, LLC	Delaware
FP Redland Technology Center LP	Delaware
FP Redland, LLC	Delaware
FP Sterling Park 6, LLC	Virginia
FP Sterling Park 7, LLC	Virginia
FP Sterling Park 8 & 9, LLC	Virginia
FP Sterling Park I, LLC	Virginia
FP Sterling Park Land, LLC	Virginia
GOV Grand Oak Properties Trust	Maryland
GOV Intech LLC	Delaware
GOV Lake Fairfax Inc.	Maryland
GOV Lakewood Properties Trust	Maryland
GOV NEW OPPTY LP	Delaware
GOV NEW OPPTY LP REIT	Maryland
GOV NEW OPPTY REIT	Maryland
GOV NEW OPPTY TRS Inc.	Maryland
GOV Pender Drive Inc.	Maryland
GOV TRS, Inc.	Maryland
Government Properties Income Trust LLC	Delaware
GPT Properties LLC	Delaware
GPT Properties Trust	Maryland
GPT Realty Trust (Nominee Trust)	Massachusetts
Greenbrier Holding Associates LLC	Delaware
Greenbrier Land, LLC	Virginia
Greenbrier/Norfolk Holding LLC	Delaware
Greenbrier/Norfolk Investment LLC	Delaware
GTC I Second LLC	Virginia
GTC II First LLC	Delaware
Hanua Street LLC	Delaware
Hawaii Metamorphosis LLC	Maryland
Indian Creek Investors, LLC	Maryland
Kristina Way Investments LLC	Delaware
Kuhela Street LLC	Delaware
Norfolk Commerce Park LLC	Delaware
Norfolk First LLC	Delaware
Norfolk Land, LLC	Virginia
One State Street Square Urban Renewal L.L.C.	New Jersey
Prosperity Metro Plaza of Virginia, LLC	Delaware
Rumsey/Snowden Holding LLC	Delaware
Rumsey/Snowden Investment LLC	Delaware
SC Merger Sub LLC	Maryland
SIR 300 Billerica Inc.	Maryland
SIR Campbell Place Inc.	Maryland
SIR Centennial LLC	Delaware
SIR Charlotte LLC	Delaware

SIR Chicago LLC	Delaware
SIR Colorado Springs LLC	Delaware
SIR Columbus LLC	Delaware
SIR Duluth (Primerica Parkway) LLC	Delaware
SIR Duluth LLC	Delaware
SIR Ewing LLC	Delaware
SIR Fort Mill LLC	Delaware
SIR GP Redwood City LLC	Delaware
SIR GP San Jose (Fortune) LLC	Delaware
SIR GP San Jose (Via Del Oro) LLC	Delaware
SIR GP San Jose LLC	Delaware
SIR GP Santa Clara (Walsh) LLC	Delaware
SIR GP Santa Clara LLC	Delaware
SIR Highway 249 REIT LLC	Delaware
SIR Holdings Corporation	Maryland
SIR Houston (Clay) LLC	Delaware
SIR Irving (Freeport) LLC	Delaware
SIR Johnston LLC	Delaware
SIR Lincolnshire LLC	Delaware
SIR MA Realty Trust (Nominee Trust)	Massachusetts
SIR Mezz Philadelphia LLC	Delaware
SIR Miami LLC	Delaware
SIR NE Houston LLC	Delaware
SIR OFC Houston LLC	Delaware
SIR Omaha LLC	Delaware
SIR Operating Partnership LP	Delaware
SIR Parsippany (Jefferson) LLC	Delaware
SIR Philadelphia LLC	Delaware
SIR Phoenix (Dunlap) LLC	Delaware
SIR Plano (3400) LLC	Delaware
SIR Properties REIT LLC	Maryland
SIR Properties Trust	Maryland
SIR Redwood City LP	Delaware
SIR REIT Arlington LLC	Delaware
SIR REIT Houston LLC	Delaware
SIR REIT New Braunfels LLC	Delaware
SIR REIT Plano LLC	Delaware
SIR Roanoke LLC	Delaware
SIR Rocklin (Office) LLC	Delaware
SIR San Antonio (Ridgewood Parkway) LLC	Delaware
SIR San Jose (Fortune) LP	Delaware
SIR San Jose (Via Del Oro) LP	Delaware
SIR San Jose LP	Delaware
SIR Santa Clara (Walsh) LP	Delaware
SIR Santa Clara LP	Delaware
SIR Seattle LLC	Delaware
SIR TIF Philadelphia LLC	Delaware
SIR TRS, Inc.	Maryland
SIR Westford LLC	Delaware
SIR/Duke JV Duluth LLC	Delaware

Snowden First LLC	Delaware
VEF 500 First REIT L.P.	Delaware

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement (Form S-3 No. 333-212431) of Office Properties Income Trust and the Registration Statement (Form S-8 No. 333-191094) pertaining to the 2009 Incentive Share Award Plan of Office Properties Income Trust of our reports dated February 28, 2019, with respect to the consolidated financial statements and schedule of Office Properties Income Trust and the effectiveness of internal control over financial reporting of Office Properties Income Trust and of our report dated February 28, 2019, with respect to the consolidated financial statements and schedules of Select Income REIT, included in this Annual Report (Form 10-K) of Office Properties Income Trust for the year ended December 31, 2018.

/s/ Ernst & Young LLP

Boston, Massachusetts

February 28, 2019

EX-31.1

Exhibit 31.1

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

I, David M. Blackman, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: February 28, 2019	/s/ David M. Blackman
	David M. Blackman President and Chief Executive Officer

EX-31.2

Exhibit 31.2

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

I, Jeffrey C. Leer, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: February 28, 2019	/s/ Jeffrey C. Leer
	Jeffrey C. Leer Chief Financial Officer and Treasurer

EX-32.1

Exhibit 32.1

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

In connection with the filing by Office Properties Income Trust (the “Company”) of the Annual Report on Form 10-K for the period ended December 31, 2018 (the “Report”), each of the undersigned hereby certifies, to the best of his knowledge:

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

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

/s/ David M. Blackman

David M. Blackman 

President and Chief Executive Officer

/s/ Jeffrey C. Leer

Jeffrey C. Leer
Chief Financial Officer and Treasurer

Date:    February 28, 2019

EX-99.4

Exhibit 99.4

SELECT INCOME REIT

Index to Financial Statements

	Page
The following consolidated financial statements of Select Income REIT are included on the pages indicated:
Report of Independent Auditors	F- 1
Consolidated Balance Sheets as of September 30, 2018 and December 31, 2017	F- 2
Consolidated Statements of Comprehensive Income for the nine months ended September 30, 2018 and for each of the two years in the period ended December 31, 2017	F- 3
Consolidated Statements of Shareholders' Equity for the nine months ended September 30, 2018 and for each of the two years in the period ended December 31, 2017	F- 4
Consolidated Statements of Cash Flows for the nine months ended September 30, 2018 and for each of the two years in the period ended December 31, 2017	F- 5
Notes to Consolidated Financial Statements	F- 7
Schedule II - Valuation and Qualifying Accounts	S- 1
Schedule III - Real Estate and Accumulated Depreciation	S- 2

Report of Independent Auditors

To the Trustees and Shareholders of Office Properties Income Trust

We have audited the accompanying consolidated financial statements of Select Income REIT (the Company), which comprise the consolidated balance sheets as of September 30, 2018 and December 31, 2017, and the related consolidated statements of comprehensive income, shareholders’ equity and cash flows for the nine months ended September 30, 2018 and for each of the two years in the period ended December 31, 2017, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in conformity with U.S. generally accepted accounting principles; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion.

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Select Income REIT at September 30, 2018 and December 31, 2017, and the consolidated results of its operations and its cash flows for the nine months ended September 30, 2018 and for each of the two years in the period ended December 31, 2017 in conformity with U.S. generally accepted accounting principles.

Adoption of ASU No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities”

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for investments in equity securities in the period ended September 30, 2018 as a result of the adoption of the amendments to the FASB Accounting Standards Codification resulting from Accounting Standards Update No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities,” effective January 1, 2018. Our opinion is not modified with respect to this matter.

/s/ Ernst & Young LLP

Boston, Massachusetts

February 28, 2019

F- 1

SELECT INCOME REIT

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, exceptper sharedata)

	September 30,			December 31,
	2018			2017
ASSETS
Real estate properties:
Land	$	1,057,197		$	1,041,767
Buildings and improvements	3,238,661			3,178,098
	4,295,858			4,219,865
Accumulated depreciation	(369,252		)	(314,249		)
	3,926,606			3,905,616
Properties held for sale	15,289			5,829
Acquired real estate leases, net	433,947			477,577
Cash and cash equivalents	25,982			658,719
Restricted cash	403			178
Rents receivable, including straight line rents of $121,770 and $122,010, respectively, net of allowance for doubtful accounts of $2,227 and $1,396, respectively	131,642			127,672
Deferred leasing costs, net	14,568			14,295
Other assets, net	173,062			113,144
Total assets	$	4,721,499		$	5,303,030
LIABILITIES AND SHAREHOLDERS' EQUITY
Unsecured revolving credit facility	$	108,000		$	—
ILPT revolving credit facility	380,000			750,000
Unsecured term loan, net	—			348,870
Senior unsecured notes, net	1,430,688			1,777,425
Mortgage notes payable, net	210,624			210,785
Accounts payable and other liabilities	92,626			101,352
Assumed real estate lease obligations, net	62,176			68,783
Rents collected in advance	21,626			15,644
Security deposits	9,370			8,346
Due to related persons	26,749			30,006
Total liabilities	2,341,859			3,311,211
Commitments and contingencies
Shareholders' equity:
Shareholders' equity attributable to SIR:
Common shares of beneficial interest, $.01 par value: 125,000,000 shares authorized; 89,550,528 and 89,487,371 shares issued and outstanding, respectively	896			895
Additional paid in capital	2,312,724			2,180,896
Cumulative net income	634,849			508,213
Cumulative other comprehensive income	863			52,665
Cumulative common distributions	(887,776		)	(750,850		)
Total shareholders' equity attributable to SIR	2,061,556			1,991,819
Noncontrolling interest in consolidated subsidiary	318,084			—
Total shareholders' equity	2,379,640			1,991,819
Total liabilities and shareholders' equity	$	4,721,499		$	5,303,030

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

F- 2

SELECT INCOME REIT

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(amounts in thousands, except per share data)

	Nine Months Ended
	September 30,			Year Ended December 31,
	2018			2017			2016
REVENUES:
Rental income	$	298,003		$	392,285		$	387,015
Tenant reimbursements and other income	60,514			75,818			74,992
Total revenues	358,517			468,103			462,007
EXPENSES:
Real estate taxes	36,748			44,131			42,879
Other operating expenses	43,714			55,567			52,957
Depreciation and amortization	105,326			137,672			133,762
Acquisition and transaction related costs	3,796			1,075			306
General and administrative	47,353			54,909			28,632
Write-off of straight line rents receivable, net	10,626			12,517			—
Loss on asset impairment	—			4,047			—
Loss on impairment of real estate assets	9,706			229			5,484
Total expenses	257,269			310,147			264,020
Gain on sale of real estate	4,075			—			—
Dividend income	1,190			1,587			1,268
Unrealized gain on equity securities	53,159			—			—
Interest income	753			91			30
Interest expense (including net amortization of debt issuance costs, premiums and discounts of $5,245, $6,182 and $5,508, respectively)	(69,446		)	(92,870		)	(82,620		)
Loss on early extinguishment of debt	(1,192		)	—			—
Income before income tax expense and equity in earnings of an investee	89,787			66,764			116,665
Income tax expense	(446		)	(466		)	(448		)
Equity in earnings of an investee	882			608			137
Net income	90,223			66,906			116,354
Net income allocated to noncontrolling interest	(15,841		)	—			(33		)
Net income attributed to SIR	$	74,382		$	66,906		$	116,321
Net income	$	90,223		$	66,906		$	116,354
Other comprehensive income:
Unrealized gain on equity securities	—			31,419			39,814
Unrealized gain on interest rate swap	362			313			93
Equity in unrealized gain of an investee	90			461			152
Other comprehensive income	452			32,193			40,059
Comprehensive income	90,675			99,099			156,413
Comprehensive income allocated to noncontrolling interest	(15,841		)	—			(33		)
Comprehensive income attributed to SIR	$	74,834		$	99,099		$	156,380
Weighted average common shares outstanding - basic	89,395			89,351			89,304
Weighted average common shares outstanding - diluted	89,411			89,370			89,324
Net income attributed to SIR per common share - basic and diluted	$	0.83		$	0.75		$	1.30

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

F- 3

SELECT INCOME REIT

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’EQUITY

(dollars in thousands)

																Total
										Cumulative						Shareholders'			Noncontrolling
	Number of				Additional			Cumulative		Other			Cumulative			Equity			Interest in			Total
	Common		Common		Paid In			Net		Comprehensive			Common			Attributable			Consolidated			Shareholders'
	Shares		Shares		Capital			Income		Income (Loss)			Distributions			to SIR			Subsidiary			Equity
Balance at December 31, 2015	89,374,029		$	894	$	2,178,477		$	324,986	$	(19,587	)	$	(387,810	)	$	2,096,960		$	—		$	2,096,960
Net income	—		—		—			116,321		—			—			116,321			—			116,321
Share grants	65,900		—		1,523			—		—			—			1,523			—			1,523
Share repurchases	(12,060	)	—		(331		)	—		—			—			(331		)	—			(331		)
Other comprehensive income	—		—		—			—		40,059			—			40,059			—			40,059
Distributions to common shareholders	—		—		—			—		—			(180,570		)	(180,570		)	—			(180,570		)
Balance at December 31, 2016	89,427,869		894		2,179,669			441,307		20,472			(568,380		)	2,073,962			—			2,073,962
Net income	—		—		—			66,906		—			—			66,906			—			66,906
Share grants	72,850		1		1,536			—		—			—			1,537			—			1,537
Share repurchases	(13,348	)	—		(309		)	—		—			—			(309		)	—			(309		)
Other comprehensive income	—		—		—			—		32,193			—			32,193			—			32,193
Distributions to common shareholders	—		—		—			—		—			(182,470		)	(182,470		)	—			(182,470		)
Balance at December 31, 2017	89,487,371		895		2,180,896			508,213		52,665			(750,850		)	1,991,819			—			1,991,819
Cumulative adjustment upon adoption of ASU No. 2016-01	—		—		—			52,254		(52,254		)	—			—			—			—
Balance at January 1, 2018	89,487,371		895		2,180,896			560,467		411			(750,850		)	1,991,819			—			1,991,819
Net income	—		—		—			74,382		—			—			74,382			15,841			90,223
Share grants	76,700		1		1,086			—		—			—			1,087			967			2,054
Share repurchases	(13,063	)	—		(283		)	—		—			—			(283		)	—			(283		)
Forfeited share grants	(480	)	—		—			—		—			—			—			—			—
Issuance of shares of subsidiary, net	—		—		131,025			—		—			—			131,025			313,284			444,309
Other comprehensive income	—		—		—			—		452			—			452			—			452
Distributions to common shareholders	—		—		—			—		—			(136,926		)	(136,926		)	—			(136,926		)
Distributions to noncontrolling interest	—		—		—			—		—			—			—			(12,008		)	(12,008		)
Balance at September 30, 2018	89,550,528		$	896	$	2,312,724		$	634,849	$	863		$	(887,776	)	$	2,061,556		$	318,084		$	2,379,640

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

F- 4

SELECT INCOME REIT

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

	Nine Months Ended
	September 30,			Year Ended December 31,
	2018			2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	90,223		$	66,906		$	116,354
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	61,162			80,239			78,151
Net amortization of debt issuance costs, premiums and discounts	5,245			6,182			5,508
Amortization of acquired real estate leases and assumed real estate lease obligations	41,331			54,061			52,691
Amortization of deferred leasing costs	1,440			1,591			1,413
Write-off of straight line rents and provision for losses on rents receivable	11,509			13,104			496
Straight line rental income	(9,994		)	(20,969		)	(24,744		)
Impairment losses	9,706			4,276			5,484
Loss on early extinguishment of debt	1,192			—			—
Gain on sale of real estate	(4,075		)	—			—
Other non-cash expenses, net	155			(651		)	(607		)
Unrealized gain on equity securities	(53,159		)	—			—
Equity in earnings of an investee	(882		)	(608		)	(137		)
Change in assets and liabilities:
Rents receivable	(5,485		)	543			(534		)
Deferred leasing costs	(1,677		)	(5,239		)	(4,485		)
Other assets	(1,285		)	(3,042		)	(883		)
Accounts payable and other liabilities	(8,208		)	3,934			(572		)
Rents collected in advance	5,982			(3,171		)	2,520
Security deposits	1,024			198			42
Due to related persons	(3,257		)	25,531			735
Net cash provided by operating activities	140,947			222,885			231,432
CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate acquisitions	(95,078		)	(117,468		)	(18,046		)
Real estate improvements	(16,630		)	(15,162		)	(8,862		)
Proceeds from sale of real estate, net	9,394			—			—
Net cash used in investing activities	(102,314		)	(132,630		)	(26,908		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common shares in subsidiary, net	444,309			—			—
Proceeds from issuance of senior unsecured notes, net of discounts	—			345,394			—
Repayments of mortgage notes payable	(54		)	(34,223		)	(40,525		)
Borrowings under revolving credit facilities	342,000			1,012,000			205,000
Repayments of revolving credit facilities	(604,000		)	(589,000		)	(181,000		)
Payment of debt issuance costs	(4,183		)	(4,921		)	—
Repayment of unsecured term loan	(350,000		)	—			—
Repayment of senior unsecured notes	(350,000		)	—			—
Distributions to common shareholders	(136,926		)	(182,470		)	(180,570		)
Repurchase of common shares	(283		)	(309		)	(331		)
Purchase of noncontrolling interest	—			—			(3,908		)
Distributions to noncontrolling interest	(12,008		)	—			(66		)
Net cash (used in) provided by in financing activities	(671,145		)	546,471			(201,400		)
(Decrease) increase in cash, cash equivalents and restricted cash	(632,512		)	636,726			3,124
Cash, cash equivalents and restricted cash at beginning of period	658,897			22,171			19,047
Cash, cash equivalents and restricted cash at end of period	$	26,385		$	658,897		$	22,171

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

F- 5

SELECT INCOME REIT

CONSOLIDATED STATEMENTS OF CASH FLOWS(CONTINUED)

(dollars in thousands)

	Nine Months
	Ended
	September 30,		Year Ended December 31,
	2018		2017		2016
SUPPLEMENTAL DISCLOSURES:
Interest paid	$	76,142	$	84,589	$	76,930
Income taxes paid	$	421	$	348	$	428

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
	September 30,		As of December 31,
	2018		2017		2016
Cash and cash equivalents	$	25,982	$	658,719	$	22,127
Restricted cash	403		178		44
Total cash, cash equivalents and restricted cash shown in the statements of cash flows	$	26,385	$	658,897	$	22,171

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

F- 6

SELECT INCOME REIT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Note 1. Organization

The consolidated financial statements of Select Income REIT, and the following notes thereto, are presented as of September 30, 2018 and refer to and include data for Select Income REIT, or SIR, we, us or our, at September 30, 2018. References to “SIR,” “we,” “us,” and “our” refer to and include data for Select Income REIT and its consolidated subsidiaries, including Industrial Logistics Properties Trust and its consolidated subsidiaries, or ILPT, at September 30, 2018 unless the context indicates otherwise.

The consolidated financial statements of Select Income REIT do not give effect to the various transactions consummated after September 30, 2018, including, without limitation, that certain merger consummated on December 31, 2018, pursuant to which SIR merged with and into GOV MS REIT, a Maryland real estate trust, with GOV MS REIT continuing as the surviving entity, as further described below.

Select Income REIT is a real estate investment trust, or REIT, that was organized under Maryland law in 2011. As of September 30, 2018, our consolidated portfolio included 368 buildings, leasable land parcels and easements with approximately 45,754,000 rentable square feet.

Industrial Logistics Properties Trust

On January 17, 2018, ILPT, our then wholly owned subsidiary, completed an initial public offering, or the ILPT IPO, and listing on The Nasdaq Stock Market LLC, or Nasdaq, of 20,000,000 of its common shares of beneficial interest, or the ILPT common shares. ILPT intends to qualify for taxation as a REIT under the Internal Revenue Code of 1986, as amended, or the IRC, for U.S. federal income tax purposes, commencing with its taxable year ending December 31, 2018 and to maintain such qualification thereafter. Upon the completion of the ILPT IPO, ILPT owned 266 of our consolidated buildings leasable land parcels and easements with a combined 28,540,000 rentable square feet, consisting of 226 buildings, leasable land parcels and easements with approximately 16,834,000 rentable square feet located on the island of Oahu, HI, and 40 industrial buildings with approximately 11,706,000 rentable square feet located in 24 other states, or collectively, ILPT's Initial Properties. Following the ILPT IPO, most of our 100% owned properties were office properties. As of September 30, 2018, we continued to own 45,000,000 ILPT common shares, or approximately 69.2% of the outstanding ILPT common shares. We accounted for the sale of the ILPT common shares in the ILPT IPO in accordance with Accounting Standards Codification Topic 810, Consolidation, and concluded that we retained control under the voting interest model given our ownership percentage in ILPT; therefore, ILPT remained one of our consolidated subsidiaries following the ILPT IPO and for all subsequent periods presented in our consolidated financial statements to which these notes relate. The difference between the net book value of the ILPT common shares that were sold in the ILPT IPO and the share price paid for those shares is treated as an increase to additional paid in capital. The 30.8% portion of ILPT that is not controlled by us, or the noncontrolling interest, is presented as a separate component of equity in our consolidated balance sheets. In addition, net income attributable to the noncontrolling interest is calculated based on the 30.8% of ILPT common shares not owned by us and is presented separately in our consolidated statements of comprehensive income. See Note 12 for additional information regarding the ILPT IPO.

On December 27, 2018, we distributed all 45,000,000 ILPT common shares we then owned to our shareholders of record as of the close of business on December 20, 2018, or the ILPT Distribution.

F- 7

Merger with Government Properties Income Trust (now known as Office Properties Income Trust)

On September 14, 2018, we, Government Properties Income Trust (now known as Office Properties Income Trust, or OPI), a Maryland real estate investment trust and OPI’s wholly owned subsidiary, GOV MS REIT, a Maryland real estate investment trust, or Merger Sub, entered into an Agreement and Plan of Merger, or the Merger Agreement, pursuant to which we agreed to merge with and into Merger Sub, with Merger Sub continuing as the surviving entity in the merger, or the Merger. At the time we entered the Merger Agreement, OPI owned 24,918,421 of our common shares, or 27.8% of our then outstanding common shares.

On October 9, 2018, OPI sold all 24,918,421 of our common shares it then owned pursuant to an underwritten public offering, or the Secondary Sale, at a price of $18.25 per share, raising net proceeds of $435,125 after deducting underwriting discounts and offering expenses, including costs and expenses incurred by us and our affiliates.

Both the Secondary Sale and the ILPT Distribution were contemplated by the Merger Agreement.

The Merger was effective on December 31, 2018. Pursuant to the terms of the Merger Agreement, at the effective time of the Merger, OPI issued to our shareholders 1.04 of OPI common shares for each common share of us issued and outstanding immediately prior to the effective time of the Merger (other than our common shares held by us or any of our or OPI’s wholly owned subsidiaries), with cash paid in lieu of fractional shares and any of our outstanding unvested common share awards under our 2012 Equity Compensation Plan, or the 2012 Plan, were converted into awards under OPI’s equity compensation plan, subject to substantially similar vesting requirements and other terms and conditions, of a number of OPI common shares determined by multiplying the number of unvested common shares of us subject to such award by 1.04 (rounded down to the nearest whole number). Also on December 31, 2018, following the Merger, Merger Sub merged with and into OPI, with OPI as the surviving entity and OPI changed its name to “Office Properties Income Trust.” Effective January 1, 2019, the ticker symbol for OPI common shares was changed to “OPI.” OPI’s common shares continue to be traded on Nasdaq.

Upon consummation of the Merger, we terminated our business and property management agreements with The RMR Group LLC, or RMR LLC, for convenience. RMR LLC waived its right to receive payment of the termination fee otherwise due as a result of our termination, pursuant to the terms of the letter agreement we entered into with RMR LLC on September 14, 2018.

On December 31, 2018, in connection with the Merger, OPI assumed all of the principal and interest on all of our outstanding $400,000 aggregate principal amount of 3.60% Senior Notes due 2020, $300,000 aggregate principal amount of 4.15% Senior Notes due 2022, $350,000 aggregate principal amount of 4.250% Senior Notes due 2024, $400,000 aggregate principal amount of 4.50% Senior Notes due 2025 and $161,772 aggregate principal amount of mortgage debt.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation. These consolidated financial statements include our accounts and the accounts of our subsidiaries, which are 100% owned or controlled directly or indirectly by us. The portion of a consolidated subsidiary that is not controlled by us, or the noncontrolling interest, is presented as a separate component of equity in our consolidated balance sheets and separately as net income allocated to noncontrolling interest in our consolidated statements of comprehensive income. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated.

Real Estate Properties. We record our properties at cost, and we calculate depreciation on real estate investments on a straight line basis over estimated useful lives generally ranging from seven to 40 years. In some circumstances, we engage independent real estate appraisal firms to provide market information and evaluations which are relevant to our purchase price allocations and determinations of useful lives; however, we are ultimately responsible for the purchase price allocations and determinations of useful lives.

We allocate the purchase prices of our properties to land, building and improvements based on determinations of the fair values of these assets assuming the properties are vacant. We determine the fair value of each property using methods similar to those used by independent appraisers. We allocate a portion of the purchase price to above market and below market leases based on the present value (using an interest rate which reflects the risks associated with acquired in place leases at the time each property was acquired by us) of the difference, if any, between (i) the contractual amounts to be paid pursuant to the acquired in place leases and (ii) our estimates of fair market lease rates for the corresponding leases, measured over a period equal to the terms of the respective leases. The terms of below market leases that include bargain renewal options, if any, are further adjusted if we determine that renewal to be probable. We allocate a portion of the purchase price to acquired in place leases and tenant relationships based upon market estimates to lease up the property based on the leases in place at the time of

F- 8

purchase. In making these allocations, we consider factors such as estimated carrying costs during the expected lease up periods, including real estate taxes, insurance and other operating income and expenses and costs, such as leasing commissions, legal and other related expenses, to execute similar leases in current market conditions at the time a property was acquired by us. We allocate this aggregate value between acquired in place lease values and tenant relationships based on our evaluation of the specific characteristics of each tenant’s lease. However, we have not separated the value of tenant relationships from the value of acquired in place leases because such value and related amortization expense is immaterial to the accompanying consolidated financial statements.

We amortize capitalized above market lease values (included in acquired real estate leases, net in our consolidated balance sheets) and below market lease values (presented as assumed real estate lease obligations, net in our consolidated balance sheets) as a reduction or increase, respectively, to rental income over the terms of the associated leases. Such amortization resulted in changes to rental income of $1,615, $2,054 and $1,732 during the nine months ended September 30, 2018 and the years ended December 31, 2017 and 2016, respectively. We amortize the value of acquired in place leases (included in acquired real estate leases, net in our consolidated balance sheets), exclusive of the value of above market and below market acquired in place leases, or lease origination value, over the terms of the associated leases. Such amortization, which is included in depreciation and amortization expense, totaled $42,946, $56,115 and $54,422 during the nine months ended September 30, 2018 and the years ended December 31, 2017 and 2016, respectively. If a lease is terminated prior to its stated expiration, we write off the unamortized amounts relating to that lease.

At September 30, 2018 and December 31, 2017, our acquired real estate leases and assumed real estate lease obligations were as follows:

	September 30, 2018			December 31, 2017
Acquired real estate leases:
Capitalized above market lease values	$	92,117		$	92,887
Less: accumulated amortization	(35,586		)	(31,364		)
Capitalized above market lease values, net	56,531			61,523
Lease origination value	597,095			598,927
Less: accumulated amortization	(219,679		)	(182,873		)
Lease origination value, net	377,416			416,054
Acquired real estate leases, net	$	433,947		$	477,577
Assumed real estate lease obligations:
Capitalized below market lease values	$	106,778		$	107,290
Less: accumulated amortization	(44,602		)	(38,507		)
Assumed real estate lease obligations, net	$	62,176		$	68,783

As of September 30, 2018, the weighted average amortization periods for capitalized above market lease values, lease origination value and capitalized below market lease values were 11.4 years, 8.1 years, and 9.8 years, respectively. Future amortization of net intangible acquired real estate lease assets and liabilities to be recognized over the current terms of the associated leases as of September 30, 2018 are estimated to be $13,776 for the period from October 1, 2018 to December 31, 2018, $53,615 in 2019, $51,292 in 2020, $50,486 in 2021, $48,808 in 2022, $41,232 in 2023 and $112,562 thereafter. 

We recognize impairment losses on real estate investments when indicators of impairment are present and the estimated undiscounted cash flow from our real estate investments is less than the carrying amount of such real estate investments. Impairment indicators may include declining tenant occupancy, lack of progress releasing vacant space, tenant bankruptcies, low long term prospects for improvement in property performance, weak or declining tenant profitability, cash flow or liquidity, our decision to dispose of an asset before the end of its estimated useful life and legislative, market or industry changes that could permanently reduce the value of a property. We review our properties for impairment quarterly, or whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. If indicators of impairment are present, we evaluate the carrying value of the related property by comparing it to the expected future undiscounted cash flows expected to be generated from that property. If the sum of these expected future undiscounted cash flows is less than the carrying value, we reduce the net carrying value of the property to its estimated fair value. The determination of undiscounted cash flow includes consideration of many factors including income to be earned from the investment, holding costs (exclusive of interest), estimated selling prices, and prevailing economic and market conditions.

F- 9

Cash and Cash Equivalents. We consider highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.

Restricted Cash. Restricted cash consists of amounts escrowed for future capital expenditures as required by certain of our mortgage debts.

Deferred Leasing Costs. Deferred leasing costs include capitalized brokerage, legal and other fees associated with the successful negotiation of leases, which are amortized to depreciation and amortization expense on a straight line basis over the terms of the respective leases. Deferred leasing costs totaled $20,116 and $18,808 at September 30, 2018 and December 31, 2017, respectively, and accumulated amortization of deferred leasing costs totaled $5,548 and $4,513 at September 30, 2018 and December 31, 2017, respectively. Included in deferred leasing costs at September 30, 2018, was $65 of estimated costs associated with leases under negotiation. Future amortization of deferred leasing costs to be recognized during the current terms of our existing leases as of September 30, 2018, are estimated to be $594 for the period from October 1, 2018 to December 31, 2018, $2,091 in 2019, $2,067 in 2020, $1,918 in 2021, $1,636 in 2022, $1,305 in 2023 and $4,957 thereafter.

Debt Issuance Costs. Debt issuance costs include capitalized issuance costs related to borrowings, which are amortized to interest expense over the terms of the respective loans. Debt issuance costs, net of accumulated amortization, for our and ILPT's revolving credit facilities are included in other assets in our consolidated balance sheets. Debt issuance costs, net of accumulated amortization, for our unsecured term loan and senior unsecured notes are presented as a direct deduction from the associated debt liability in our consolidated balance sheets. As of September 30, 2018 and December 31, 2017, debt issuance costs for our and ILPT's revolving credit facilities were $11,818 and $7,634, respectively, and accumulated amortization of debt issuance costs for our and ILPT's revolving credit facilities were $6,292 and $4,142, respectively. As of September 30, 2018 and December 31, 2017, debt issuance costs, net of accumulated amortization for our senior unsecured notes were $7,123 and $8,470, respectively. As of December 31, 2017, debt issuance costs, net of accumulated amortization, for our unsecured term loan were $1,130. Future amortization of debt issuance costs to be recognized with respect to our loans and notes as of September 30, 2018, are estimated to be $1,153 for the period from October 1, 2018 to December 31, 2018, $3,649 in 2019, $2,700 in 2020, $2,698 in 2021, $898 in 2022, $906 in 2023 and $645 thereafter.

Equity securities. As of September 30, 2018, we owned 1,586,836 shares of class A common stock of The RMR Group Inc., or RMR Inc. Our equity securities are recorded at fair value based on their quoted market price at the end of the reporting period. Effective January 1, 2018, changes in the fair value of our equity securities are recorded through earnings in accordance with the Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. Prior to January 1, 2018, unrealized gains and losses on available for sale securities were recorded as a component of cumulative other comprehensive income (loss) in shareholders’ equity. As further described in Note 12, we initially acquired 3,166,891 shares of class A common stock of RMR Inc. on June 5, 2015 for cash and share consideration of $35,954. We concluded, for accounting purposes, that the cash and share consideration we paid for our investment in these shares represented a discount to the fair value of these shares. We initially accounted for this investment under the cost method of accounting and recorded this investment at its estimated fair value of $81,850 as of June 5, 2015 using Level 3 inputs, as defined in the fair value hierarchy under U.S. generally accepted accounting principles, or GAAP. As a result, we recorded a liability for the amount by which the estimated fair value of these shares exceeded the price we paid for these shares. This liability is included in accounts payable and other liabilities in our consolidated balance sheets. A part of this liability is being amortized on a straight line basis through December 31, 2035 as an allocated reduction to our business management and property management fee expense. We amortized $1,672, $2,230 and $2,230 of this liability during the nine months ended September 30, 2018 and the years ended December 31, 2017 and 2016, respectively. These amounts are included in the net business management and property management fee amounts for such periods. As of September 30, 2018, the remaining unamortized amount of this liability was $38,498. Future amortization of this liability as of September 30, 2018, is estimated to be $558 for the period from October 1, 2018 to December 31, 2018, $2,230 for each of the years from 2019 through 2023 and $26,790 thereafter.

Other Assets. Other assets consist primarily of deposits on potential acquisitions, our investments in RMR Inc. and Affiliates Insurance Company, or AIC, debt issuance costs on our and ILPT's revolving credit facilities, prepaid real estate taxes and other prepaid expenses. We account for our investment in AIC using the equity method of accounting. Significant influence is present through common representation on the boards of trustees or directors of us and AIC. One of our Managing Trustees, Adam D. Portnoy, as the sole trustee of ABP Trust, is the controlling shareholder of RMR Inc. RMR Inc. is the managing member of our manager, RMR LLC. Mr. Portnoy is also a managing director and president and chief executive officer of RMR Inc. and an officer and employee of RMR LLC. David M. Blackman, our other Managing Trustee and our President and Chief Executive Officer, and each of our other officers, also serve as executive officers of RMR LLC. RMR LLC also provides

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management and administrative services to AIC, and each of our Trustees is a director of AIC. See Notes 7 and 12 for further information regarding our investments in RMR Inc. and AIC.

We evaluate our equity method investments to determine if there are any events or circumstances (impairment indicators) that are likely to have a significant adverse effect on the fair value of the investment. Fair value estimates consider all available financial information related to the investee. Examples of such impairment indicators include, but are not limited to: a significant deterioration in earnings performance; a significant adverse change in the regulatory or economic environment of an investee; or a significant doubt about an investee’s ability to continue as a going concern. If an impairment indicator is identified, an estimate of the fair value of the investment is compared to its carrying value. If the fair value of the investment is less than its carrying value, a determination is made as to whether the related impairment is other than temporary. For other than temporary impairments, an impairment loss equal to the difference between the investment’s carrying value and its fair value is recognized in earnings to adjust the basis of the investment to its fair value.

Derivative Instruments and Hedging Activities. We account for our derivative instruments at fair value. Accounting for changes in the fair value of a derivative instrument depends on the intended use of the derivative instrument and the designation of the derivative instrument. The change in fair value of the effective portion of the derivative instrument that is not designated as a hedge or that does not meet the hedge accounting criteria are recorded as a gain or loss to operations.

Revenue Recognition. Rental income from operating leases is recognized on a straight line basis over the lives of lease agreements. We defer the recognition of contingent rental income, such as percentage rents, until the specific targets that trigger the contingent rental income are achieved. Contingent rental income recognized for the nine months ended September 30, 2018, and the years ended December 31, 2017 and 2016, totaled $941, $650, and $846, respectively. Tenant reimbursements and other income include property level operating expenses and capital expenditures reimbursed by our tenants as well as other incidental revenues. Certain tenants are obligated to pay directly their obligations under their leases for insurance, real estate taxes and certain other expenses. These costs, which have been assumed by the tenants under the terms of their respective leases, are not reflected in our consolidated financial statements. To the extent any tenant responsible for these costs under their respective lease defaults on its lease or it is deemed probable that the tenant will fail to pay for such costs, we would record a liability for such obligation.

Allowance for Doubtful Accounts. We maintain an allowance for doubtful accounts for estimated losses resulting from the inability or unwillingness of certain tenants to make payments required under their leases. The computation of the allowance is based on the tenants’ payment histories and current credit profiles, as well as other considerations.

Income Taxes. We have elected to be taxed as a REIT under the IRC, and, accordingly, we generally will not be subject to federal income taxes provided we distribute our taxable income and meet certain other requirements to qualify as a REIT. We are, however, subject to certain state and local taxes.

Cumulative Other Comprehensive Income. Cumulative other comprehensive income consists of changes in the fair value of our interest rate derivative and, prior to the adoption of ASU 2016-01 on January 1, 2018, unrealized gains and losses related to our investments in RMR Inc. and AIC.

Use of Estimates. Preparation of these financial statements in conformity with GAAP requires us to make estimates and assumptions that may affect the amounts reported in these consolidated financial statements and related notes. The actual results could differ from these estimates. Significant estimates in the consolidated financial statements include the allowance for doubtful accounts, purchase price allocations, useful lives of fixed assets and the assessments of the carrying values and impairments of long lived assets.

Net Income Per Common Share. We calculate basic earnings per common share by dividing net income attributed to SIR by the weighted average number of common shares outstanding during the period. We calculate diluted net income per share using the more dilutive of the two class method or the treasury stock method.

Segment Information. As of September 30, 2018, we had two operating segments: properties 100% owned by SIR and properties owned by ILPT.

Reclassifications. Reclassifications have been made to the prior years' consolidated financial statements to conform to the current year's presentation.

New Accounting Pronouncements. On January 1, 2018, we adopted FASB ASU No. 2014-09 (and related clarifying guidance issued by the FASB), Revenue From Contracts With Customers, which outlines a comprehensive model for entities to

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use in accounting for revenue arising from contracts with customers. ASU No. 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” A substantial portion of our revenue consists of rental income from leasing arrangements, which is specifically excluded from ASU No. 2014-09. We have adopted ASU No. 2014-09 using the modified retrospective approach. The adoption of ASU No. 2014-09 did not have a material impact on the amount or timing of our revenue recognition in our consolidated financial statements.

On January 1, 2018, we adopted FASB ASU No. 2016-01, Recognition and Measurement of Financial Assets andFinancial Liabilities, which changes how entities measure certain equity investments and present changes in the fair value of financial liabilities measured under the fair value option that are attributable to their own credit. The implementation of ASU No. 2016-01 resulted in the reclassification of historical changes in the fair value of our available for sale equity securities of $51,413 from cumulative other comprehensive income to cumulative net income. We also reclassified $841 from cumulative other comprehensive income to cumulative net income for our share of cumulative other comprehensive income of our equity method investee. Effective January 1, 2018, changes in the fair value of our equity securities are recorded through earnings in accordance with ASU No. 2016-01.

On January 1, 2018, we adopted FASB ASU No. 2016-18, Restricted Cash, which requires companies to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statements of cash flows. This update also requires a reconciliation of the totals in the statements of cash flows to the related captions in the balance sheets. As a result, amounts included in restricted cash in our consolidated balance sheets are presented with cash and cash equivalents and restricted cash in the consolidated statements of cash flows. The implementation of ASU No. 2016-18 resulted in a decrease of $1,127 to net cash provided by operating activities for the year ended December 31, 2016. The adoption of this update did not change our balance sheet presentation.

Note 3. Real Estate Properties

As of September 30, 2018, we owned 368 buildings, leasable land parcels and easements with approximately 45,754,000 rentable square feet, including 269 buildings, leasable land parcels and easements with approximately 29,216,000 rentable square feet owned by ILPT. During the periods presented in these financial statements, no single tenant accounted for more than 10% of our total revenues.

In connection with the ILPT IPO, on September 29, 2017, we contributed ILPT's Initial Properties to ILPT. In connection with ILPT’s formation and this contribution, ILPT issued to us 45,000,000 of its common shares and a non-interest bearing demand note for $750,000, or the ILPT Demand Note, and ILPT assumed three mortgage notes totaling $63,069 as of September 30, 2017, that were secured by three of ILPT's Initial Properties. In December 2017, ILPT paid to us the entire principal amount outstanding under the ILPT Demand Note with initial borrowings under its revolving credit facility, and we prepaid on ILPT’s behalf two of the mortgage notes totaling $14,319 that had encumbered two of ILPT's Initial Properties.

2018 Acquisitions:

During the nine months ended September 30, 2018, ILPT acquired three properties with a combined 666,173 rentable square feet for an aggregate purchase price of $93,578, including acquisition related costs of $1,253. These acquisitions were accounted for as acquisitions of assets and these properties are included in our ILPT segment. We allocated the purchase prices of these acquisitions based on the estimated fair values of the acquired assets as follows:

			Rentable							Acquired
		Number of	Square	Purchase				Buildings and		Real Estate
Date	Location	Properties	Feet	Price		Land		Improvements		Leases
June 2018	Doral, FL (1)	1	240,283	$	43,326	$	15,225	$	28,101	$	—
September 2018	Carlisle, PA	1	205,090	20,451		3,299		15,515		1,637
September 2018	Upper Marlboro, MD	1	220,800	29,801		5,296		21,833		2,672
		3	666,173	$	93,578	$	23,820	$	65,449	$	4,309

(1) This property was acquired and simultaneously leased back to the seller.

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In October 2018, ILPT acquired a land parcel adjacent to a property it owns located in Ankeny, IA for a purchase price of $450, excluding acquisition related costs. This land parcel will be used for a 194,000 square foot expansion for the existing tenant at such property.

Also in October 2018, ILPT acquired a multi-tenant, net leased property located in Maple Grove, MN with approximately 319,000 rentable square feet for a purchase price of $27,700, excluding acquisition related costs.

2018 Dispositions:

In August 2018, we sold a 100% owned vacant land parcel in Kapolei, HI with 417,610 rentable square feet for $10,300, excluding closing costs, resulting in a net gain of $4,075.

In September 2018, we accepted offers to sell a 100% owned vacant land parcel in Kapolei, HI with 416,956 rentable square feet and a 100% owned vacant office building in Hanover, PA with 502,300 rentable square feet. We recorded a loss on impairment of real estate assets for the property in Hanover, PA of $9,706 in September 2018 to reduce its carrying value from $21,450 to its estimated fair value less costs to sell of $11,744. As of September 30, 2018, both of these properties were classified as held for sale in our consolidated balance sheets and included in continuing operations in our consolidated statements of comprehensive income.

2017 Acquisitions:

On January 13, 2017, we acquired a land parcel adjacent to one of our properties, included in our ILPT segment, located in McAlester, OK for $281, including $55 of acquisition related costs. In September 2017, we substantially completed the development of a 35,000 square foot expansion for the tenant at our McAlester, OK property which is located on this adjacent parcel.

During the year ended December 31, 2017, we also acquired three properties included in our SIR segment with a combined 648,017 rentable square feet for an aggregate purchase price of $117,187, including acquisition related costs of $729. These acquisitions were accounted for as asset acquisitions. We allocated the purchase prices of these acquisitions based on the estimated fair values of the acquired assets as follows:

			Rentable							Acquired
		Number of	Square	Purchase				Buildings and		Real Estate
Date	Location	Properties	Feet	Price		Land		Improvements		Leases
April 2017	Norfolk, VA	1	288,662	$	55,506	$	4,497	$	32,505	$	18,504
May 2017	Houston, TX	1	84,150	20,459		887		12,594		6,978
July 2017	Indianapolis, IN	1	275,205	41,222		3,279		25,200		12,743
		3	648,017	$	117,187	$	8,663	$	70,299	$	38,225

2017 Dispositions:

In June 2017, we entered an agreement to sell an office building included in our SIR segment located in Maynard, MA with 287,037 rentable square feet. We recorded a loss on impairment of real estate assets of $229 in June 2017 to reduce its carrying value from $17,489 to its estimated fair value less costs to sell of $17,260. In July 2017, the prospective buyer of the property in Maynard, MA terminated that purchase agreement and we determined this property no longer met the criteria to be classified as held for sale and accordingly, we reclassified the carrying amount to held and used in operations.

2016 Acquisitions:

On February 29, 2016, we acquired the remaining 11.0% interest we did not own in a joint venture interest in an office building, included in our SIR segment, containing approximately 344,000 square feet located in Duluth, GA. We paid $3,908 for this 11.0% ownership interest. Following this acquisition, we own 100% of this office building.

During the year ended December 31, 2016, we also acquired two properties included in our SIR segment, located in Huntsville, AL and Richmond, VA with a combined 107,657 rentable square feet for an aggregate purchase price of $17,960, excluding acquisition related costs. The Huntsville, AL acquisition was accounted for as an asset acquisition and the Richmond, VA acquisition was accounted for as a business combination. We allocated the purchase prices of these acquisitions based on the estimated fair values of the acquired assets and assumed liabilities as follows:

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			Rentable							Acquired
		Number of	Square	Purchase				Buildings and		Real Estate
Date	Location	Properties	Feet	Price (1)		Land		Improvements		Leases
July 2016	Huntsville, AL (2)	1	57,420	$	10,200	$	1,652	$	8,548	$	—
October 2016	Richmond, VA	1	50,237	7,760		1,270		4,824		1,666
		2	107,657	$	17,960	$	2,922	$	13,372	$	1,666

(1) Purchase price excludes acquisition related costs.

(2) This property was acquired and simultaneously leased back to the seller. We accounted for this acquisition as an asset acquisition and capitalized acquisition related costs of $86 related to this transaction.

2016 Impairment:

During the year ended December 31, 2016, we recorded an impairment charge of $5,484 to reduce the carrying value of one property located in Maynard, MA from $23,484 to its estimated fair value of $18,000.

2018 Tenant Improvements and Leasing Costs:

We committed $1,533 for expenditures related to tenant improvements and leasing costs for approximately 967,000 square feet of leases executed during the nine months ended September 30, 2018. Committed but unspent tenant related obligations based on existing leases as of September 30, 2018, were $23,814.  

Future Minimum Lease Payments:

The future minimum lease payments scheduled to be received by us during the current terms of our leases as of September 30, 2018 are as follows:

	Minimum
	Lease
Year	Payment
2018 (October 1, 2018 to December 31, 2018)	$	96,792
2019	384,274
2020	385,358
2021	378,599
2022	364,893
2023	325,160
Thereafter	1,713,143
	$	3,648,219

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Note 4. Segment Information

In this Note 4, references to SIR refer to SIR and its consolidated subsidiaries, excluding ILPT.

As of September 30, 2018, we had two operating segments: properties 100% owned by SIR (primarily net leased office properties) and properties owned by ILPT (primarily industrial and logistics properties).

	For the Nine Months Ended September 30, 2018
	SIR			ILPT			Corporate			Consolidated
REVENUES:
Rental income	$	194,533		$	103,470		$	—		$	298,003
Tenant reimbursements and other income	43,528			16,986			—			60,514
Total revenues	238,061			120,456			—			358,517
EXPENSES:
Real estate taxes	22,639			14,109			—			36,748
Other operating expenses	34,064			9,650			—			43,714
Depreciation and amortization	84,411			20,915			—			105,326
Acquisition and transaction related costs	—			—			3,796			3,796
General and administrative	—			—			47,353			47,353
Write-off of straight line rents receivable, net	10,626			—			—			10,626
Loss on impairment of real estate assets	9,706			—			—			9,706
Total expenses	161,446			44,674			51,149			257,269
Gain on sale of real estate	4,075			—			—			4,075
Dividend income	—			—			1,190			1,190
Unrealized gain on equity securities	—			—			53,159			53,159
Interest income	—			—			753			753
Interest expense	(4,393		)	(1,251		)	(63,802		)	(69,446		)
Loss on early extinguishment of debt	—			—			(1,192		)	(1,192		)
Income (loss) before income tax expense and equity in earnings of an investee	76,297			74,531			(61,041		)	89,787
Income tax expense	—			—			(446		)	(446		)
Equity in earnings of an investee	—			—			882			882
Net income (loss)	76,297			74,531			(60,605		)	90,223
Net income allocated to noncontrolling interest	—			—			(15,841		)	(15,841		)
Net income (loss) attributed to SIR	$	76,297		$	74,531		$	(76,446	)	$	74,382
	At September 30, 2018
	SIR			ILPT			Corporate			Consolidated
Total assets	$	3,042,049		$	1,489,094		$	190,356		$	4,721,499

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	For the Year Ended December 31, 2017
	SIR			ILPT			Corporate			Consolidated
REVENUES:
Rental income	$	257,459		$	134,826		$	—		$	392,285
Tenant reimbursements and other income	54,138			21,680			—			75,818
Total revenues	311,597			156,506			—			468,103
EXPENSES:
Real estate taxes	26,263			17,868			—			44,131
Other operating expenses	44,654			10,913			—			55,567
Depreciation and amortization	110,357			27,315			—			137,672
Acquisition and transaction related costs	—			—			1,075			1,075
General and administrative	—			—			54,909			54,909
Write-off of straight line rents receivable, net	12,517			—			—			12,517
Loss on asset impairment	4,047			—			—			4,047
Loss on impairment of real estate assets	229			—			—			229
Total expenses	198,067			56,096			55,984			310,147
Dividend income	—			—			1,587			1,587
Interest income	—			—			91			91
Interest expense	(6,332		)	(2,259		)	(84,279		)	(92,870		)
Income (loss) before income tax expense and equity in earnings of an investee	107,198			98,151			(138,585		)	66,764
Income tax expense	—			—			(466		)	(466		)
Equity in earnings of an investee	—			—			608			608
Net income (loss)	$	107,198		$	98,151		$	(138,443	)	$	66,906
	At December 31, 2017
	SIR			ILPT			Corporate			Consolidated
Total assets	$	3,128,182		$	1,405,592		$	769,256		$	5,303,030

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	For the Year Ended December 31, 2016
	SIR			ILPT			Corporate			Consolidated
REVENUES:
Rental income	$	254,497		$	132,518		$	—		$	387,015
Tenant reimbursements and other income	54,200			20,792			—			74,992
Total revenues	308,697			153,310			—			462,007
EXPENSES:
Real estate taxes	25,675			17,204			—			42,879
Other operating expenses	42,364			10,593			—			52,957
Depreciation and amortization	106,688			27,074			—			133,762
Acquisition and transaction related costs	—			—			306			306
General and administrative	—			—			28,632			28,632
Loss on impairment of real estate assets	5,484			—			—			5,484
Total expenses	180,211			54,871			28,938			264,020
Dividend income	—			—			1,268			1,268
Interest income	—			—			30			30
Interest expense	(7,431		)	(2,262		)	(72,927		)	(82,620		)
Income (loss) before income tax expense and equity in earnings of an investee	121,055			96,177			(100,567		)	116,665
Income tax expense	—			—			(448		)	(448		)
Equity in earnings of an investee	—			—			137			137
Net income (loss)	121,055			96,177			(100,878		)	116,354
Net income allocated to noncontrolling interest	(33		)	—			—			(33		)
Net income (loss) attributed to SIR	$	121,022		$	96,177		$	(100,878	)	$	116,321
	At December 31, 2016
	SIR			ILPT			Corporate			Consolidated
Total assets	$	3,120,475		$	1,422,335		$	96,872		$	4,639,682

Note 5. Derivatives and Hedging Activities

We are exposed to certain risks relating to our ongoing business operations, including the effect of changes in interest rates. We use derivative instruments to manage only a part of our interest rate risk. We have an interest rate swap agreement to manage our interest rate risk exposure on a $40,946 mortgage note due 2020, with interest payable at a rate equal to LIBOR plus a premium.

We record all derivatives on our balance sheet at fair value. The following table summarizes the terms of our outstanding interest rate swap agreement, which we designate as a cash flow hedge:

								Fair Value
		Notional						of Asset
		Amount as of		Interest		Effective	Maturity	as of
	Balance Sheet Location	September 30, 2018		Rate (1)		Date	Date	September 30, 2018
Interest rate swap	Other assets	$	40,946	4.16	%	1/29/2015	8/3/2020	$	458

(1) The interest rate consists of the underlying index swapped to a fixed rate rather than floating rate LIBOR, plus a premium.

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The table below presents the effects of our interest rate derivative on our consolidated statements of comprehensive income for the nine months ended September 30, 2018, and for the years ended December 31, 2017 and 2016:

	For the Nine
	Months Ended			For the Year Ended December 31,
	September 30, 2018			2017		2016
Amount of gain (loss) recognized in cumulative other comprehensive income (effective portion)	$	482		$	87	$	(284	)
Amount of gain reclassified from cumulative other comprehensive income into interest expense (effective portion)	$	(120	)	$	226	$	377

Note 6. Indebtedness

At September 30, 2018 and December 31, 2017, our outstanding indebtedness consisted of the following:

	September 30,			December 31,
	2018			2017
Unsecured revolving credit facility, due in 2019 (1)	$	108,000		$	—
ILPT revolving credit facility, due in 2021 (2)	380,000			750,000
Unsecured term loan, due in 2020 (3)	—			350,000
Senior unsecured notes, 2.85%, due in 2018 (4)	—			350,000
Senior unsecured notes, 3.60%, due in 2020 (1)	400,000			400,000
Senior unsecured notes, 4.15%, due in 2022 (1)	300,000			300,000
Senior unsecured notes, 4.25%, due in 2024 (1)	350,000			350,000
Senior unsecured notes, 4.50%, due in 2025 (1)	400,000			400,000
Mortgage note payable, 4.16%, due in 2020 (1) (5) (6)	40,946			41,000
Mortgage note payable, 3.99%, due in 2020 (5)	48,750			48,750
Mortgage note payable, 3.55%, due in 2023 (1) (5)	71,000			71,000
Mortgage note payable, 3.70%, due in 2023 (1) (5)	50,000			50,000
	2,148,696			3,110,750
Unamortized debt issuance costs, premiums and discounts	(19,384		)	(23,670		)
	$	2,129,312		$	3,087,080

(1) Represents indebtedness assumed by OPI in connection with the Merger.

(2) ILPT repaid certain amounts outstanding under its revolving credit facility on January 17, 2018 with part of the $444,309 of net proceeds from the ILPT IPO. Upon the completion of the ILPT IPO, the maturity date of ILPT's revolving credit facility was extended from March 29, 2018 to December 29, 2021.

(3) On January 31, 2018, we repaid this term loan in full without penalty with cash on hand at December 31, 2017 and borrowings under our revolving credit facility.

(4) On January 2, 2018, we redeemed at par plus accrued interest all of these senior unsecured notes with cash on hand at December 31, 2017.

(5) We assumed all of these mortgage notes in connection with our acquisition of certain properties. The stated interest rates for these mortgage debts are the contractually stated rates; we recorded the assumed mortgages at estimated fair value on the date of acquisition, and we amortize the fair value premiums to interest expense over the respective terms of the mortgage notes to reduce interest expense to the estimated market interest rates as of the date of acquisition.

(6) Interest on this mortgage note is payable at a rate equal to LIBOR plus a premium but has been fixed by a cash flow hedge which sets the rate at approximately 4.16% until August 3, 2020, which is the maturity date of the mortgage note.

Our $750,000 unsecured revolving credit facility had a maturity date of March 29, 2019, interest payable on borrowings of LIBOR plus 125 basis points and a facility fee of 25 basis points per annum, based on the total amount of lending commitments. Both the interest rate premium and the facility fee for our revolving credit facility were subject to adjustment based on changes to our credit ratings. As of September 30, 2018 and December 31, 2017, the interest rate payable on borrowings under our revolving credit facility was 3.34% and 2.53%, respectively. The weighted average interest rate for

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borrowings under our revolving credit facility was 3.04% for the nine months ended September 30, 2018, and 2.00% and 1.49% for the years ended December 31, 2017 and 2016, respectively. We could borrow, repay and reborrow funds available under our revolving credit facility until maturity, and no principal repayment was due until maturity. As of September 30, 2018, we had $108,000 outstanding under our revolving credit facility and $642,000 available to borrow under our revolving credit facility. On December 31, 2018, our credit facility was repaid and terminated in connection with the Merger more fully described in Note 1.

Our $350,000 term loan had a maturity date of March 31, 2020 and interest payable on the amount outstanding of LIBOR plus 115 basis points. The interest rate premium for this term loan was subject to adjustment based on changes to our credit ratings. As of December 31, 2017, the interest rate payable for the amount outstanding under this term loan was 2.51%. The weighted average interest rate for the amount outstanding under this term loan was 2.24% and 1.63% for the years ended December 31, 2017 and 2016, respectively. We repaid this term loan in full without penalty on January 31, 2018 using cash on hand and borrowings under our revolving credit facility.

ILPT has a $750,000 unsecured revolving credit facility that is available for ILPT's general business purposes, including acquisitions. The maturity date of ILPT's revolving credit facility is December 29, 2021. ILPT may borrow, repay and reborrow funds under its revolving credit facility until maturity, and no principal repayment is due until maturity. Interest on borrowings under ILPT's revolving credit facility is calculated at floating rates based on LIBOR plus a premium that varies based on ILPT's leverage ratio. ILPT has the option to extend the maturity date of its revolving credit facility for two, six month periods, subject to payment of extension fees and satisfaction of other conditions. ILPT is also required to pay a commitment fee on the unused portion of ILPT's revolving credit facility. The agreement governing ILPT's revolving credit facility, or ILPT's credit agreement, also includes a feature under which the maximum borrowing availability under ILPT's revolving credit facility may be increased to up to $1,500,000 in certain circumstances. In addition, during the first quarter of 2018, ILPT completed the syndication of its revolving credit facility with a group of institutional lenders. As of September 30, 2018 and December 31, 2017, the interest rate payable on borrowings under ILPT's revolving credit facility was 3.50% and 2.89%, respectively. The weighted average interest rate for borrowings under ILPT's revolving credit facility was 3.21% for the nine months ended September 30, 2018. As of September 30, 2018, ILPT had $380,000 outstanding under its revolving credit facility, and $370,000 available to borrow under its revolving credit facility.

On January 2, 2018, we redeemed at par plus accrued interest all $350,000 of our 2.85% senior unsecured notes due 2018 and, on January 31, 2018, we repaid our $350,000 term loan in full without penalty. During the nine months ended September 30, 2018, we recognized a loss on early extinguishment of debt aggregating $1,192 from the write-off of unamortized debt issuance costs and discounts related to these repayments.

On May 15, 2017, we issued $350,000 aggregate principal amount of 4.25% senior unsecured notes due 2024 in an underwritten public offering. Net proceeds from this offering were $342,197 after discounts and expenses.

Our credit agreement, ILPT's credit agreement, and our senior unsecured notes indenture and its supplements provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default, such as, in the case of our credit agreement and ILPT's credit agreement, a change of control of us or ILPT, respectively, which includes RMR LLC ceasing to act as our business manager and property manager for us or ILPT, respectively. Our senior unsecured notes indenture and its supplements, our credit agreement and ILPT's credit agreement also contain a number of covenants, including covenants that restrict our ability to incur debts or to make distributions in certain circumstances, and generally require us to maintain certain financial ratios. We believe we were in compliance with the terms and conditions of the respective covenants under our senior unsecured notes indenture and its supplements and our credit agreement and that ILPT was in compliance with the terms and conditions of the covenants under ILPT's credit agreement at September 30, 2018.

At September 30, 2018, six of our buildings with a net book value of $336,329 were encumbered by mortgages we assumed in connection with our acquisition of those buildings. One of these buildings with a net book value of $65,323 is owned by ILPT. The aggregate principal amount outstanding under these mortgage notes as of September 30, 2018 was $210,696, of which $48,750 was owed by ILPT. These mortgage notes are non-recourse, subject to certain limited exceptions, and do not contain any material financial covenants.

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The required principal payments due during the next five years and thereafter under all our outstanding debt as of September 30, 2018 are as follows:

	Principal
Year	Payment
2018 (October 1, 2018 to December 31, 2018)	$	174
2019	108,710
2020	488,812
2021	380,000
2022	300,000
2023	121,000
Thereafter	750,000
	$	2,148,696	(1)

(1) Total debt outstanding as of September 30, 2018, including unamortized debt issuance costs, premiums and discounts was $2,129,312.

Note 7. Fair Value of Assets and Liabilities

The table below presents certain of our assets measured at fair value at September 30, 2018, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset:

			Fair Value at Reporting Date Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
Description	Total		(Level 1)		(Level 2)		(Level 3)
Recurring Fair Value Measurements:
Assets:
Investment in RMR Inc. (1)	$	147,258	$	147,258	$	—	$	—
Interest rate swap (2)	458		—		458		—
Total	$	147,716	$	147,258	$	458	$	—
Non-Recurring Fair Value Measurements:
Assets:
Properties held for sale (3)	$	11,744	$	—	$	11,744	$	—

(1) Our 1,586,836 shares of class A common stock of RMR Inc., which are included in other assets in our consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs). Our historical cost basis for these shares is $42,686. During the nine months ended September 30, 2018, we recorded an unrealized gain of $53,159 to adjust our investment in RMR Inc. to its fair value.

(2) As discussed in Note 5, we have an interest rate swap agreement in connection with a $40,946 mortgage note. This interest rate swap agreement is carried at fair value, and is included in other assets in our consolidated balance sheet as of September 30, 2018 and is valued using Level 2 inputs. The fair value of this instrument is determined using interest rate pricing models. Considerable judgment is necessary to develop estimated fair values of financial assets and liabilities. Accordingly, the estimate presented in the table above is not necessarily indicative of the amount for which we could receive upon settlement of the swap agreement.

(3) As of September 30, 2018, we recorded a loss on impairment of real estate assets of $9,706 to reduce the carrying value of a property located in Hanover, PA from $21,450 to its estimate fair value less costs to sell of $11,744. We estimated the fair value of this property based on an offer we accepted to sell this property.

In addition to the assets described in the table above, our financial instruments include cash and cash equivalents, restricted cash, rents receivable, our revolving credit facility, ILPT's revolving credit facility, a prior term loan, senior

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unsecured notes, mortgage notes payable, accounts payable, rents collected in advance, security deposits and amounts due to related persons. At September 30, 2018 and December 31, 2017, the fair value of our financial instruments approximated their carrying values in our consolidated financial statements, due to their short term nature or variable interest rates, except as follows: 

	At September 30, 2018				At December 31, 2017
	Carrying		Estimated		Carrying		Estimated
	Value (1)		Fair Value		Value (1)		Fair Value
Senior unsecured notes, due 2018 at 2.85% (2)	$	—	$	—	$	349,896	$	349,731
Senior unsecured notes, due 2020 at 3.60%	398,192		397,406		397,214		404,050
Senior unsecured notes, due 2022 at 4.15%	296,801		298,581		296,143		304,199
Senior unsecured notes, due 2024 at 4.25%	343,539		335,375		342,797		347,877
Senior unsecured notes, due 2025 at 4.50%	392,156		384,468		391,375		403,998
Mortgage notes payable	210,624		205,278		210,785		209,200
Total	$	1,641,312	$	1,621,108	$	1,988,210	$	2,019,055

(1) Includes unamortized debt issuance costs, premiums and discounts.

(2) On January 2, 2018, we redeemed at par plus accrued interest all of these senior unsecured notes.

We estimate the fair value of our senior unsecured notes using an average of the bid and ask prices of the notes as of the measurement date (Level 2 inputs). We estimate the fair value of our mortgage notes payable using discounted cash flow analyses and currently prevailing market rates as of the measurement date (Level 3 inputs). Because Level 3 inputs are unobservable, our estimated fair value may differ materially from the actual fair value.

Note 8. Shareholders’ Equity

Share Awards:

We have common shares available for issuance under the terms of the 2012 Plan. During the nine months ended September 30, 2018 and the years ended December 31, 2017 and 2016, we awarded to our officers and other employees of RMR LLC annual share awards of 58,700, 57,850 and 53,400 of our common shares, respectively, valued at $1,183, $1,337 and $1,397, in aggregate, respectively. We also granted each of our Trustees 3,000 common shares with an aggregate value of $303 ($61 per Trustee), 3,000 common shares with an aggregate value of $362 ($72 per Trustee) and 2,500 common shares with an aggregate value of $303 ($61 per Trustee) during the nine months ended September 30, 2018 and the years ended December 31, 2017 and 2016, respectively, as part of their annual compensation. In addition, we granted 3,000 common shares with a value of $57 to one of our Managing Trustees in connection with his election as a Managing Trustee during the nine months ended September 30, 2018. The values of the share grants were based upon the closing price of our common shares trading on the New York Stock Exchange through June 30, 2016, and on Nasdaq beginning on July 1, 2016, on the dates of grants. The common shares granted to our Trustees vested immediately. The common shares granted to our officers and certain other employees of RMR LLC vest in five equal annual installments beginning on the date of grant. We include the value of granted shares in general and administrative expenses ratably over the vesting period.

A summary of shares granted, vested, forfeited and unvested under the terms of the 2012 Plan for the nine months ended September 30, 2018 and the years ended December 31, 2017 and 2016 is as follows:

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			Weighted
			Average
	Number		Grant Date
	of Shares		Fair Value
Unvested shares at December 31, 2015	89,250		$22.11
2016 Activity:
Granted	65,900		$25.80
Vested	(58,090	)	$25.89
Unvested shares at December 31, 2016	97,060		$23.65
2017 Activity:
Granted	72,850		$23.32
Vested	(65,390	)	$23.50
Unvested shares at December 31, 2017	104,520		$23.40
Activity (January 1, 2018 to September 30, 2018):
Granted	76,700		$20.12
Vested	(71,010	)	$20.34
Forfeited	(480	)	$21.11
Unvested shares at September 30, 2018	109,730		$22.02

The 109,730 unvested shares as of September 30, 2018 are scheduled to vest as follows: 600 in 2018, 41,950 in 2019, 32,750 in 2020, 22,690 in 2021 and 11,740 in 2022. As of September 30, 2018, the estimated future compensation expense for the unvested shares was approximately $2,407. The weighted average period over which the compensation expense will be recorded is approximately 24 months. During the nine months ended September 30, 2018 and the years ended December 31, 2017 and 2016, we recorded $1,146, $1,579 and $1,623, respectively, of compensation expense related to the 2012 Plan. At September 30, 2018, 2,622,481 common shares remained available for issuance under the 2012 Plan. Pursuant to the Merger Agreement, at the effective time of the Merger, all outstanding unvested common share awards under the 2012 Plan were converted into awards under OPI’s equity compensation plan, subject to substantially similar vesting requirements and other terms and conditions.

ILPT also has common shares available for issuance under the terms of its equity compensation plan, or the ILPT Plan. Pursuant to the ILPT Plan, ILPT granted to each of its trustees 4,000 of its common shares valued at $418 ($84 per Trustee), as part of their annual compensation, and an aggregate of 54,400 of its common shares to ILPT's officers and certain other employees of RMR LLC during the nine months ended September 30, 2018. The value of ILPT's shares granted during the nine months ended September 30, 2018 was $681 and is included in general and administrative expenses in our consolidated statements of comprehensive income.

2018 Share Purchases:

On January 1, 2018, we purchased 617 of our common shares valued at $25.13 per common share, the closing price of our common shares on Nasdaq on December 29, 2017, from a former employee of RMR LLC in satisfaction of tax withholding and payment obligations in connection with awards of our common shares.

On September 24, 2018, we purchased an aggregate of 12,446 of our common shares, valued at $21.46 per common share, the closing price of our common shares on Nasdaq on that day, from our officers and certain other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with awards of our common shares.

On September 24, 2018, ILPT purchased an aggregate of 2,369 of its common shares, valued at $22.08 per common share, the closing price of ILPT common shares on Nasdaq on that day, from certain of ILPT's officers and certain other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with awards of ILPT's common shares.

2017 Share Purchases:

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On June 30, 2017, we purchased 222 of our common shares valued at $24.03 per common share, the closing price of our common shares on Nasdaq on that day, from a former employee of RMR LLC in satisfaction of tax withholding and payment obligations in connection with awards of our common shares.

On September 19, 2017, we purchased an aggregate of 13,126 of our common shares valued at $23.18 per common share, the closing price of our common shares on Nasdaq on that day, from our officers and certain other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with awards of our common shares.

2016 Share Purchases:

On September 26, 2016 and September 30, 2016, we purchased an aggregate of 11,017 and 1,043, respectively, of our common shares valued at $27.64 and $26.90 per common share, respectively, the closing price of our common shares on Nasdaq on those days, from certain of our officers and other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with awards of our common shares.

Distributions:

During the nine months ended September 30, 2018 and the years ended December 31, 2017 and 2016, we paid distributions on our common shares as follows:

Declaration	Record	Paid	Distributions		Total
Date	Date	Date	Per Share		Distributions
1/19/2018	1/29/2018	2/22/2018	$	0.5100	$	45,639
4/19/2018	4/30/2018	5/17/2018	0.5100		45,639
7/19/2018	7/30/2018	8/16/2018	0.5100		45,648
			$	1.5300	$	136,926
1/13/2017	1/23/2017	2/21/2017	$	0.5100	$	45,608
4/11/2017	4/21/2017	5/18/2017	0.5100		45,608
7/12/2017	7/24/2017	8/17/2017	0.5100		45,616
10/12/2017	10/23/2017	11/16/2017	0.5100		45,638
			$	2.0400	$	182,470
1/11/2016	1/22/2016	2/23/2016	$	0.5000	$	44,709
4/13/2016	4/25/2016	5/19/2016	0.5000		44,687
7/12/2016	7/22/2016	8/18/2016	0.5100		45,587
10/11/2016	10/21/2016	11/17/2016	0.5100		45,587
			$	2.0200	$	180,570

In addition to the distributions in the table above, on November 15, 2018, we paid a quarterly distribution of $0.51 per common share, or $45,671, to shareholders of record on October 29, 2018. As described in Note 1, we also completed the ILPT Distribution, pursuant to which approximately 0.503 ILPT common shares were distributed to our shareholders for every one of SIR common shares owned, valued at $9.80 per SIR common share.

Distributions per share paid or payable by us to our common shareholders for the years ended December 31, 2018, 2017 and 2016 were $11.84, $2.04 and $2.02, respectively. The characterization of our distributions for 2018 was 4.95% ordinary income, 38.19% total capital gain and 56.86% return of capital, for 2017 was 46.20% ordinary income and 53.80% return of capital, and for 2016 was 62.72% ordinary income, 0.70% qualified dividend and 36.58% return of capital.

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Note 9. Cumulative Other Comprehensive Income (Loss)

The following table presents changes in the amounts we recognized in cumulative other comprehensive income (loss) by component for the nine months ended September 30, 2018, and the years ended December 31, 2017 and 2016:

	Unrealized Gain (Loss)			Unrealized			Equity in
	on Investment in			Gain (Loss)			Unrealized Gain
	Available for			on Derivative			(Loss) of an
	Sale Securities			Instruments (1)			Investee (2)			Total
Balance at December 31, 2015	$	(19,820	)	$	276		$	(43	)	$	(19,587	)
Other comprehensive income (loss) before reclassifications	39,814			(284		)	152			39,682
Amounts reclassified from cumulative other comprehensive income (loss) to net income	—			377			—			377
Net current period other comprehensive income	39,814			93			152			40,059
Balance at December 31, 2016	19,994			369			109			20,472
Other comprehensive income before reclassifications	31,419			87			537			32,043
Amounts reclassified from cumulative other comprehensive income to net income	—			226			(76		)	150
Net current period other comprehensive income	31,419			313			461			32,193
Balance at December 31, 2017	51,413			682			570			52,665
Amounts reclassified from cumulative other comprehensive income to cumulative net income	(51,413		)	—			(841		)	(52,254		)
Subtotal	—			682			(271		)	411
Other comprehensive income before reclassifications	—			482			121			603
Amounts reclassified from cumulative other comprehensive income to net income	—			(120		)	(31		)	(151		)
Net current period other comprehensive income	—			362			90			452
Balance at September 31, 2018	$	—		$	1,044		$	(181	)	$	863

(1) Amounts reclassified from cumulative other comprehensive income are included in interest expense in our consolidated statements of comprehensive income.

(2) Amounts reclassified from cumulative other comprehensive income are included in equity in earnings of an investee in our consolidated statements of comprehensive income.

Note 10. Weighted Average Common Shares

We calculate basic earnings per common share by dividing net income attributed to SIR by the weighted average number of common shares outstanding during the period. We calculate diluted earnings per common share by using the more dilutive of the two class method or the treasury stock method. Unvested share awards and other potentially dilutive common shares, and the related impact on earnings, are considered when calculating diluted earnings per share. The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted earnings per share (in thousands):

	Nine Months Ended	Year Ended December 31,
	September 30, 2018	2017	2016
Weighted average common shares for basic earnings per share	89,395	89,351	89,304
Effect of dilutive securities: unvested share awards	16	19	20
Weighted average common shares for diluted earnings per share	89,411	89,370	89,324

Note 11. Business and Property Management Agreements with RMR LLC

Neither we nor ILPT have any employees. The personnel and various services we and ILPT require to operate our respective businesses are provided to us by RMR LLC. We have two agreements with RMR LLC to provide management

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services to us: (1) a business management agreement, which relates to our business generally; and (2) a property management agreement, which relates to our property level operations. ILPT also has similar agreements with RMR LLC under which RMR LLC provides management services to ILPT comparable to those provided to us. On January 17, 2018, simultaneously with ILPT entering into its agreements with RMR LLC in connection with the ILPT IPO, our agreements with RMR LLC were amended to avoid any payments by us for services rendered by RMR LLC to ILPT subsequent to that time; ILPT pays for those services directly. See Note 12 for further information regarding our relationship, agreements and transactions with RMR LLC.

Management Agreements with RMR LLC. Our and ILPT’s management agreements with RMR LLC provide for an annual base management fee, an annual incentive management fee and property management and construction supervision fees, payable in cash, among other terms:

• Base Management Fee. The annual base management fee payable to RMR LLC by us or ILPT, respectively, for each applicable period is equal to the lesser of:

◦ the sum of (a) 0.5% of the average aggregate historical cost of the real estate assets acquired from a REIT to which RMR LLC provided business management or property management services, or the Transferred Assets, which for ILPT includes ILPT’s Initial Properties that it acquired from us, plus (b) 0.7% of the average aggregate historical cost of our or ILPT’s real estate investments excluding the Transferred Assets up to $250,000, plus (c) 0.5% of the average aggregate historical cost of our or ILPT’s real estate investments excluding the Transferred Assets exceeding $250,000; and

◦ the sum of (a) 0.7% of the average closing price per share of our or ILPT’s common shares on the stock exchange on which such shares are principally traded during such period, multiplied by the average number of our or ILPT’s common shares outstanding during such period, plus the daily weighted average of the aggregate liquidation preference of each class of our or ILPT’s preferred shares outstanding during such period, plus the daily weighted average of the aggregate principal amount of our or ILPT’s consolidated indebtedness during such period, or, together, our or ILPT’s Average Market Capitalization, up to $250,000, plus (b) 0.5% of our Average Market Capitalization exceeding $250,000.

The average aggregate historical cost of our or ILPT’s real estate investments includes our or ILPT’s consolidated assets invested, directly or indirectly, in equity interests in or loans secured by real estate and personal property owned in connection with such real estate (including acquisition related costs and costs which may be allocated to intangibles or are unallocated), all before reserves for depreciation, amortization, impairment charges or bad debts or other similar non-cash reserves. We do not include our ownership of ILPT common shares or the assets of ILPT and its subsidiaries owned following the ILPT IPO as part of our real estate investments for purposes of calculating our base management fee due to RMR LLC since ILPT pays separate business management fees to RMR LLC.

• Incentive Management Fee. The incentive management fee which may be earned by RMR LLC for an annual period is calculated as follows:

◦ An amount, subject to a cap, based on the value of our common shares outstanding, equal to 12.0% of the product of:

– our or ILPT’s equity market capitalization on the last trading day of the year immediately prior to the relevant three year measurement period, except that, for ILPT, if the relevant measurement period ends on or before December 31, 2020, $1,560,000 (ILPT’s unadjusted equity market capitalization as calculated at the ILPT IPO), and

– the amount (expressed as a percentage) by which the total return per share, as defined in the business management agreement and further described below, of our or ILPT’s common shareholders (i.e., share price appreciation plus dividends) exceeds the total shareholder return of the applicable market index, or the benchmark return per share, for the relevant measurement period. Our applicable market index is the SNL U.S. REIT Equity Index and ILPT’s applicable market index, effective as of January 1, 2019 through an amendment to ILPT’s business management agreement with RMR LLC, is the SNL U.S. REIT Industrial Index for periods beginning on and after January 1, 2019, with the SNL U.S. REIT Equity Index used for periods ending on or prior to December 31, 2018.

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◦ For purposes of the total return per share of our common shareholders or ILPT's common shareholders, share price appreciation for a measurement period is determined by subtracting (1) the closing price of our common shares or ILPT’s common shares on the Nasdaq on the last trading day of the year immediately before the first year of the applicable measurement period, or the initial share price, from (2) the average closing price of our common shares or ILPT's common shares on the 10 consecutive trading days having the highest average closing prices during the final 30 trading days in the last year of the measurement period. For ILPT, if the measurement period ends on or before December 31, 2020, the initial share price is $24.00 per ILPT common share (ILPT’s unadjusted initial share price, as defined under the business management agreement, based on the ILPT IPO price of ILPT’s common shares).

◦ The calculation of the incentive management fee (including the determinations of equity market capitalization, initial share price and the total return per share) is subject to adjustments if additional common shares are issued during the measurement period.

◦ No incentive management fee is payable unless the total return per share during the measurement period is positive.

◦ The measurement periods are generally three year periods ending with the year for which the incentive management fee is being calculated, except that shorter periods apply to ILPT in the case of the calculation of the incentive fee for 2020 (the period beginning on January 12, 2018, the first day ILPT’s common shares began trading, and ending on December 31, 2020), 2019 (the period beginning on January 12, 2018 and ending on December 31, 2019) and 2018 (the period beginning on January 12, 2018 and ending on December 31, 2018).

◦ If the total return per share exceeds 12.0% per year in any measurement period, the benchmark return per share is adjusted to be the lesser of the total shareholder return of the applicable market index for such measurement period and 12.0% per year, or the adjusted benchmark return per share. In instances where the adjusted benchmark return per share applies, the incentive management fee will be reduced if the total return per share, as applicable, is between 200 basis points and 500 basis points below the applicable market index by a low return factor, as defined in the business management agreement, and there will be no incentive management fee paid if, in these instances, the total return per share, as applicable, is more than 500 basis points below the applicable market index.

◦ The incentive management fee is subject to a cap. The cap is equal to the value of the number of our or ILPT’s common shares which would, after issuance, represent 1.5% of the number of our or ILPT’s common shares then outstanding multiplied by the average closing price of our or ILPT’s common shares during the 10 consecutive trading days having the highest average closing prices during the final 30 trading days of the relevant measurement period.

◦ Incentive management fees we and ILPT paid to RMR LLC for any period may be subject to “clawback” if our and ILPT’s financial statements for that period are restated due to material non-compliance with any financial reporting requirements under the securities laws as a result of the bad faith, fraud, willful misconduct or gross negligence of RMR LLC and the amount of the incentive management fee we or ILPT paid was greater than the amount we or ILPT would have paid based on the restated financial statements.

Pursuant to our business management agreement with RMR LLC and ILPT’s business management agreement with RMR LLC, we recognized net business management fees of $38,934, $22,384 and $21,746 for the nine months ended September 30, 2018 and the years ended December 31, 2017 and 2016, respectively, which amount for the nine months ended September 30, 2018 includes $5,229 of estimated business management fees incurred and payable by ILPT for the period beginning on January 17, 2018, the date on which ILPT entered into its business management agreement with RMR LLC, through September 30, 2018. The net business management fees we recognized reflects a reduction of $1,310 for the nine months ended September 30, 2018 and $1,378 for each of the years ended December 31, 2017 and 2016 for the amortization of the liability we recorded in connection with our investment in RMR Inc., as further described in Note 2.

Pursuant to our business management agreement and ILPT’s business management agreement with RMR LLC, the net business management fees payable to RMR LLC for the nine months ended September 30, 2018 include $21,479 of estimated business management incentive fees for 2018, payable by us based on our common share total return, as defined, as of September 30, 2018 and do not include any estimated business management

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incentive fees that may be payable by ILPT under its business management agreement with RMR LLC because, as of September 30, 2018, ILPT had not accrued any business management incentive fees payable by it for 2018. In January 2018, we paid RMR LLC an incentive management fee of $25,569 for the year ended December 31, 2017. No incentive management fee was payable to RMR LLC under our business management agreement for the year ended December 31, 2016. In calculating the incentive management fee payable by us, our total shareholder return per share was adjusted in accordance with the business management agreement to reflect aggregate net increases in the number of our common shares outstanding as a result of certain share issuances and repurchases by us during the three year measurement period. In addition, the calculation of our benchmark return per share was also adjusted for these issuances and repurchases in accordance with the business management agreement during the applicable three year measurement period. We incurred business management incentive fees of $25,817 for the year ended December 31, 2018, of which $21,479 was recognized in general and administrative expenses in our consolidated statement of comprehensive income for the nine months ended September 30, 2018, which were assumed by OPI as a result of the Merger and paid by OPI to RMR LLC in January 2019. ILPT did not incur a business management incentive fees for 2018.

The net business management fees we recognized are included in general and administrative expenses in our consolidated statements of comprehensive income for these periods.

• Property Management and Construction Supervision Fees. The property management fees payable to RMR LLC by us and ILPT for each applicable period are equal to 3.0% of gross collected rents and the construction supervision fees payable to RMR LLC by us or ILPT for each applicable period are equal to 5.0% of construction costs.

During the period from January 1, 2018 to January 16, 2018 and the years ended December 31, 2017 and 2016, ILPT's Initial Properties were included in the calculation of property management fees paid by us to RMR LLC. On January 17, 2018, upon the closing of the ILPT IPO, ILPT entered a property management agreement with RMR LLC to provide property management services to ILPT on terms substantially similar to the terms of our property management agreement with RMR LLC. We do not include the assets of ILPT and its subsidiaries owned following the ILPT IPO for purposes of calculating our property management fee due to RMR LLC since ILPT pays separate property management fees to RMR LLC.

Pursuant to our property management agreement with RMR LLC and ILPT’s property management agreement with RMR LLC, we recognized aggregate net property management and construction supervision fees of $10,598, $13,037 and $12,681 for the nine months ended September 30, 2018 and the years ended December 31, 2017 and 2016, respectively, which amount for the nine months ended September 30, 2018 includes $3,327 of property management fees incurred and payable by ILPT for the period beginning on January 17, 2018, the date on which ILPT entered into its property management agreement with RMR LLC, through September 30, 2018. The net property management and construction supervision fees we recognized reflects a reduction of $362 for the nine months ended September 30, 2018 and $852 for each of the years ended December 31, 2017 and 2016 for the amortization of the liability we recorded in connection with our investment in RMR Inc., as further described in Note 2. These amounts are included in other operating expenses or have been capitalized, as appropriate, in our consolidated financial statements.

• Expense Reimbursement. We and ILPT are each generally responsible for all our respective operating expenses. We and ILPT are generally not responsible for payment of RMR LLC’s employment, office or administrative expenses incurred to provide management services to us or ILPT, except for the employment and related expenses of RMR LLC’s employees assigned to work exclusively or partly at our or ILPT’s properties, our or ILPT’s share of the wages, benefits and other related costs of RMR LLC’s centralized accounting personnel, our or ILPT’s share of RMR LLC’s costs for providing our internal audit function and as otherwise agreed. Our and ILPT’s property level operating expenses are generally incorporated into rents charged to our or ILPT’s tenants, including certain payroll and related costs incurred by RMR LLC. We reimbursed RMR LLC $6,460, $8,174 and $7,533 for property management related expenses, including with respect to properties owned by ILPT, for the nine months ended September 30, 2018 and the years ended December 31, 2017 and 2016, respectively, which amount for the nine months ended September 30, 2018 includes $1,943 of expenses incurred and paid by ILPT for the period beginning on January 17, 2018 through September 30, 2018. These amounts are included in other operating expenses in our consolidated statements of comprehensive income for these periods. Our and ILPT’s Audit Committee appoints our and ILPT’s Director of Internal Audit and our and ILPT’s Compensation Committee approves the costs of our and ILPT’s internal audit function. The amounts recognized as expense for internal audit costs, including amounts allocated to ILPT, were $346, $276 and $235 for the nine months ended September 30,

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2018 and the years ended December 31, 2017 and 2016, respectively, which amount for the nine months ended September 30, 2018 includes $173 of expense recognized and payable by ILPT for the period beginning on January 17, 2018 through September 30, 2018. These amounts are included in general and administrative expenses in our consolidated statements of comprehensive income (loss) for these periods.

• Term. Our and ILPT’s management agreements with RMR LLC have terms that end on December 31, 2038, and automatically extend on December 31st of each year for an additional year, so that the terms of our and ILPT’s management agreements thereafter end on the 20th anniversary of the date of the extension. As noted above, in connection with the Merger, we terminated our business and property management agreements with RMR LLC for convenience.

• Termination Rights. We and ILPT have the right to terminate one or both of our or ILPT’s management agreements with RMR LLC: (i) at any time on 60 days’ written notice for convenience, (ii) immediately on written notice for cause, as defined therein, (iii) on written notice given within 60 days after the end of an applicable calendar year for a performance reason, as defined therein, and (iv) by written notice during the 12 months following a change of control of RMR LLC, as defined therein. RMR LLC has the right to terminate the management agreements for good reason, as defined therein. As noted above, in connection with the Merger, we terminated our business and property management agreements with RMR LLC for convenience.

• Termination Fee. If we or ILPT terminate one or both of our or ILPT’s management agreements with RMR LLC for convenience, or if RMR LLC terminates one or both of our or ILPT’s management agreements for good reason, we and ILPT have agreed to pay RMR LLC a termination fee in an amount equal to the sum of the present values of the monthly future fees, as defined therein, for the terminated management agreement(s) for the term that was remaining prior to such termination, which, depending on the time of termination would be between 19 and 20 years. If we or ILPT terminate one or both of our management agreements with RMR LLC for a performance reason, we or ILPT have agreed to pay RMR LLC the termination fee calculated as described above, but assuming a 10 year term was remaining prior to the termination. We or ILPT are not required to pay any termination fee if we or ILPT terminate our or ILPT’s management agreements with RMR LLC for cause or as a result of a change of control of RMR LLC. As noted above, RMR LLC waived the termination fee otherwise payable by us as a result of our terminating our business and property management agreements with RMR LLC for convenience in connection with the Merger.

• Transition Services. RMR LLC has agreed to provide certain transition services to us or ILPT for 120 days following an applicable termination by us or ILPT or notice of termination by RMR LLC, including cooperating with us or ILPT and using commercially reasonable efforts to facilitate the orderly transfer of the management and real estate investment services provided under our or ILPT’s business management agreement and to facilitate the orderly transfer of the management of the managed properties under our or ILPT’s property management agreement, as applicable.

• Vendors. Pursuant to our and ILPT’s management agreements with RMR LLC, RMR LLC may from time to time negotiate on our or ILPT’s behalf with certain third party vendors and suppliers for the procurement of goods and services to us or ILPT. As part of this arrangement, we and ILPT may enter agreements with RMR LLC and other companies to which RMR LLC provides management services for the purpose of obtaining more favorable terms from such vendors and suppliers.

• Investment Opportunities. Under our and ILPT’s business management agreements with RMR LLC, we and ILPT each acknowledge that RMR LLC may engage in other activities or businesses and act as the manager to any other person or entity (including other REITs) even though such person or entity has investment policies and objectives similar to ours and ILPT’s and we and ILPT are not entitled to preferential treatment in receiving information, recommendations and other services from RMR LLC.

Note 12. Related Person Transactions

We have and had relationships and transactions with RMR LLC, RMR Inc., ILPT, OPI, AIC and others related to them, including other companies to which RMR LLC or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. One of our Managing Trustees, Adam Portnoy, as the sole trustee of ABP Trust, is the controlling shareholder of RMR Inc. and is a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR LLC. David M. Blackman, our other Managing Trustee

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and our President and Chief Executive Officer, and each of our other officers is also an officer and employee of RMR LLC. RMR LLC provides management services to us, OPI and ILPT.

Adam Portnoy also serves as a managing trustee of OPI and ILPT. David Blackman also serves as president and chief executive officer of OPI. Our former Chief Financial Officer and Treasurer, John C. Popeo, served as a managing trustee, president and chief executive officer of ILPT until he resigned those positions effective November 30, 2018. Each of OPI’s and ILPT’s officers are also officers and employees of RMR LLC. Our Independent Trustees also serve as independent directors or independent trustees of other public companies to which RMR LLC or its subsidiaries provide management services, including OPI. Adam Portnoy serves as a managing director or managing trustee of these companies, including OPI and ILPT, and other officers of RMR LLC serve as managing trustees or managing directors of certain of these companies, including OPI and ILPT. In addition, officers of RMR LLC and RMR Inc. serve as our officers and officers of other companies to which RMR LLC or its subsidiaries provide management services, including OPI and ILPT.

Our Manager, RMR LLC. We and ILPT each have two agreements with RMR LLC to provide management services to us: (i) a business management agreement, which relates to our and ILPT’s business generally, and (ii) a property management agreement, which relates to our and ILPT’s property level operations. See Note 11 for further information regarding these management agreements with RMR LLC.

Lease with RMR LLC. We lease office space to RMR LLC in one of our properties located in Seattle, WA. Pursuant to our lease agreement with RMR LLC, we recognized rental income from RMR LLC for leased office space of $17, $35, and $33 for the nine months ended September 30, 2018 and the years ended December 31, 2017 and 2016, respectively. Our office space lease with RMR LLC is terminable by RMR LLC if our management agreements with RMR LLC are terminated.

Share Awards to RMR LLC Employees. We and ILPT each award shares to our respective officers and other employees of RMR LLC annually. Generally, one fifth of these awards vest on the grant date and one fifth vests on each of the next four anniversaries of the grant dates. In certain instances, we or ILPT may accelerate the vesting of an award, such as in connection with the award holder’s retirement as an officer of us or ILPT, as applicable, or an officer or employee of RMR LLC. These awards to RMR LLC employees are in addition to the share awards granted to our and ILPT’s current and former Managing Trustees, as Trustee compensation, and the fees we and ILPT paid to RMR LLC. See Note 8 for information regarding our and ILPT’s share awards and activity as well as certain share purchases we and ILPT made in connection with share award recipients satisfying tax withholding obligations on vesting share awards.

Ownership Interest in RMR Inc. and Registration and Lock-up Agreements. As of September 30, 2018, we held 1,586,836 shares of class A common stock of RMR Inc. which we acquired in June 2015 in a transaction pursuant to which, among other things, we, OPI and two other REITs then managed by RMR LLC acquired class A common stock of RMR Inc. and entered into amended and restated business and property management agreements with RMR LLC. We are party to a registration rights agreement with RMR Inc. covering the shares of class A common stock of RMR Inc. issued to us in this transaction, pursuant to which we have demand and piggyback registration rights, subject to certain limitations. We are also party to a lock up and registration rights agreement with ABP Trust and Adam Portnoy pursuant to which they (on behalf of themselves and their permitted transferees) agreed not to transfer the 880,000 of our common shares ABP Trust received in this transaction for a 10 year period ending on June 5, 2025 and they have certain registration rights, subject, in each case, to certain exceptions.

ILPT. As of September 30, 2018, we owned 45,000,000 ILPT common shares, or approximately 69.2% of the outstanding ILPT common shares. ILPT was our wholly owned subsidiary until it completed the ILPT IPO on January 17, 2018. As described further in Note 1, on December 27, 2018, we completed the ILPT Distribution. In November 2017, ILPT filed a registration statement with the SEC for the ILPT IPO. On September 29, 2017, we contributed ILPT's Initial Properties to ILPT. In connection with ILPT’s formation and this contribution, ILPT issued to us 45,000,000 of its common shares and a non-interest bearing demand note for $750,000, or the ILPT Demand Note, and ILPT assumed three mortgage notes totaling $63,069 as of September 30, 2017, that were secured by three of ILPT's Initial Properties. In December 2017, ILPT paid to us the entire principal amount outstanding under the ILPT Demand Note with initial borrowings under its secured revolving credit facility, and we prepaid on ILPT’s behalf two of the mortgage notes totaling $14,319 that had encumbered two of ILPT's Initial Properties. In connection with the ILPT IPO, ILPT reimbursed us for approximately $7,271 of the costs that we incurred in connection with ILPT’s formation and preparation for the ILPT IPO. Also, in connection with the ILPT IPO, we entered a transaction agreement with ILPT that governs ILPT’s separation from and relationship with us. The transaction agreement provides that, among other things, (1) the current assets and current liabilities of ILPT, as of the time of closing of the ILPT IPO, were settled so that we retain all pre-closing current assets and pre-closing current liabilities and ILPT assumes all post-closing current assets and post-closing current liabilities, (2) ILPT will indemnify us with respect to any of ILPT’s liabilities, and we will indemnify ILPT with respect to any of our liabilities, after giving effect to the settlement between us and ILPT of

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ILPT’s current assets and current liabilities and (3) we and ILPT will cooperate to enforce the ownership limitations in our and ILPT’s respective declaration of trust as may be appropriate to qualify for and maintain qualification for taxation as a REIT under the IRC, and otherwise to ensure each receives the economics of its assets and liabilities and to file future tax returns, including appropriate allocations of taxable income, expenses and other tax attributes. See Notes 1 and 11 for further information regarding ILPT and the ILPT IPO.

OPI. As of September 30, 2018, OPI owned 24,918,421 of our common shares, or approximately 27.8% of our outstanding common shares. As described further in Note 1, on October 9, 2018, OPI completed the Secondary Sale, pursuant to which OPI sold all 24,918,421 of our common shares it then owned, and on December 31, 2018, we and OPI completed the Merger. 

AIC. As of September 30, 2018, we, ABP Trust, OPI and four other companies to which RMR LLC provides management services owned AIC, an Indiana insurance company, in equal amounts and are parties to a shareholders agreement regarding AIC. All our Trustees (other than David Blackman) and all the independent trustees and independent directors of the other AIC shareholders currently serve on the board of directors of AIC. RMR LLC provides management and administrative services to AIC pursuant to a management and administrative services agreement with AIC. Pursuant to this agreement, AIC pays to RMR LLC a service fee equal to 3.0% of the total annual net earned premiums payable under then active policies issued or underwritten by AIC or by a vendor or an agent of AIC on its behalf or in furtherance of AIC’s business.

We and the other AIC shareholders participate in a combined property insurance program arranged and insured or reinsured in part by AIC. We paid aggregate annual premiums, including taxes and fees, of $1,666, $2,029 and $2,162 in connection with this insurance program for the policy years ending June 30, 2019, 2018 and 2017, respectively, which amount for the current policy year ending June 30, 2019 may be adjusted from time to time as we acquire or dispose of properties that are included in this insurance program. Historically, ILPT participated in this program through us, as our subsidiary, and we allocated to ILPT the portion of the premiums for this insurance program, including taxes and fees, covering ILPT’s Initial Properties, which allocations were $266, $320 and $351 for the policy years ending June 30, 2019, 2018 and 2017, respectively, which amount for the policy year ending June 30, 2019 may be adjusted from time to time as we acquire or dispose of properties included in this insurance program. ILPT paid or reimbursed us approximately $266 in respect of this insurance program for the policy year ending June 30, 2019.

As of September 30, 2018 and December 31, 2017 and 2016, our investment in AIC had a carrying value of $9,157, $8,185 and $7,116, respectively. These amounts are included in other assets in our consolidated balance sheets. We recognized income of $882, $608 and $137 related to our investment in AIC for the nine months ended September 30, 2018 and the years ended December 31, 2017 and 2016, respectively. These amounts are presented as equity in earnings of an investee in our consolidated statements of comprehensive income. Our other comprehensive income (loss) includes our proportionate part of unrealized gains (losses) on securities which are owned and held for sale by AIC of $90, $461 and $152 related to our investment in AIC for the nine months ended September 30, 2018 and the years ended December 31, 2017 and 2016, respectively.

Effective December 31, 2018, we sold all of our shares of common stock of AIC to ILPT for a purchase price of $8,632 pursuant to a stock purchase agreement with ILPT. As a result of this purchase, ILPT, ABP Trust and five other companies to which RMR LLC provide management services currently own AIC in equal amounts and are parties to a shareholders agreement regarding AIC.

Directors’ and Officers’ Liability Insurance. We, RMR Inc., RMR LLC and certain other companies to which RMR LLC or its subsidiaries provide management services, including OPI, participate in a combined directors’ and officers’ liability insurance policy. The current combined policy expires in September 2020. We paid aggregate premiums of $206, $95 and $111 in 2018, 2017 and 2016, respectively, for these policies. Prior to the completion of the ILPT Distribution, as a majority owned subsidiary of us, ILPT was provided coverage under this policy and we allocated a portion of our cost of the policy to ILPT. The cost of this insurance we allocated to ILPT was $71, $116 and $93 for the nine months ended September 30, 2018 and the years December 31, 2017 and 2016, respectively.

Note 13. Contingencies

We believe some of our properties may contain asbestos. We believe any asbestos on our properties is contained in accordance with applicable laws and regulations, and we have no current plans to remove it. If we removed the asbestos or demolished the affected properties, certain environmental regulations govern the manner in which the asbestos must be handled and removed, and we could incur substantial costs complying with such regulations. Due to the uncertainty of the timing and amount of costs we may incur, we cannot reasonably estimate the fair value and we have not recognized a liability in our

F- 30

financial statements for these costs. Certain of our industrial lands in Hawaii may require environmental remediation, especially if the use of those lands is changed; however, we do not have any present plans to change the use of those lands or to undertake this environmental cleanup. In general, we do not have any insurance to limit losses that we may incur as a result of known or unknown environmental conditions, although some of our tenants may maintain such insurance. As of September 30, 2018 and December 31, 2017, we had accrued environmental remediation costs of $7,987 and $8,112, respectively, which were included in accounts payable and other liabilities in our consolidated balance sheets, including $7,002 for both periods related to the ILPT Properties. These accrued environmental remediation costs relate to maintenance of our properties for current uses, and, because of the indeterminable timing of the remediation, these amounts have not been discounted to present value. Although we do not believe that there are environmental conditions at any of our properties that will have a material adverse effect on us, we cannot be sure that such conditions or costs are not present in our properties or that other costs we incur to remediate contamination will not have a material adverse effect on our business or financial condition. Charges for environmental remediation costs, if any, are included in other operating expenses in our consolidated statements of comprehensive income.

In May 2018, one of our tenants defaulted on its lease for a property located in Naperville, IL with approximately 820,000 rentable square feet and an original lease expiration date of March 31, 2029. During the nine months ended September 30, 2018, we recorded a non-cash charge of $10,626 to write off straight line rents receivable related to this lease. The lease with the tenant that defaulted was amended effective October 1, 2018. Under the terms of such lease amendment, the tenant paid amounts outstanding under the original lease for the period through September 30, 2018 and made a partial payment for unpaid real estate taxes. In addition, the tenant made a one time payment of $2,000 for deferred capital costs, and its first monthly payment of $250 to offset building expenses that were previously paid directly by the tenant but that are currently paid by us. The tenant assigned its subleases at the property to us and continues to occupy and pay rent on 147,045 square feet and has agreed to do so for 30 months from the date of the amendment.

In March 2017, one of our tenants filed for bankruptcy and rejected two leases with us: (i) a lease for a property located in Huntsville, AL with approximately 1,400,000 rentable square feet and an original lease term until August 2032 and (ii) a lease for a property in Hanover, PA with approximately 502,000 rentable square feet and an original lease term until September 2028. The Huntsville, AL property is occupied by a subtenant of our former tenant who is now contractually obligated to pay rent to us in an amount equal to the rent under the former tenant’s lease for a term that runs concurrently with our former tenant’s original lease term, but subject to certain tenant termination rights. We expect that the lost rents plus carrying costs, such as real estate taxes, insurance, security and other operating costs, from a fully vacant Hanover, PA property may total approximately $3,800 per year. On November 30, 2018, the bankruptcy court overseeing the matter confirmed the tenant’s plan of reorganization (the “Plan”). In addition to the $3,739 security deposit previously retained by SIR, the Plan provides for payment of approximately $8,500 to SIR within 60 days of the Plan’s effective date, which date is to be determined pending the occurrence of certain conditions and as to which there is no outside date. Pursuant to the Plan, the $8,500 payment owed to SIR began accruing simple interest at the rate of 8% as of October 1, 2018 and will continue to accrue such interest until paid in full.

On June 29, 2016, we received an assessment from the State of Washington for real estate excise tax, interest and penalties of $2,837 on certain properties we acquired in connection with our acquisition of Cole Corporate Income Trust, Inc. in January 2015. We believe we are not liable for this tax and are disputing the assessment. As of September 30, 2018, we have not recorded a loss reserve related to this matter.

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Note 14. Selected Quarterly Financial Data (Unaudited)

The following is a summary of our unaudited quarterly results of operations for the nine months ended September 30, 2018 and the year ended December 31, 2017:

	2018
	First		Second		Third
	Quarter		Quarter		Quarter
Total revenues	$	120,629	$	116,007	$	121,881
Net income	$	37,679	$	17,464	$	35,080
Net income attributed to SIR	$	33,200	$	11,699	$	29,483
Net income attributed to SIR per common share - basic and diluted	$	0.37	$	0.13	$	0.33
Common distributions declared	$	0.51	$	0.51	$	0.51

	2017
	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter
Total revenues	$	116,294	$	115,870	$	118,014	$	117,925
Net income	$	6,728	$	26,661	$	31,442	$	2,075
Net income attributed to SIR	$	6,728	$	26,661	$	31,442	$	2,075
Net income attributed to SIR per common share - basic and diluted	$	0.08	$	0.30	$	0.35	$	0.02
Common distributions declared	$	0.51	$	0.51	$	0.51	$	0.51

Note 15. Subsequent Events

Upon consummation of the Merger, we ceased to exist as a separate entity after December 31, 2018. Subsequent events have been evaluated through February 28, 2019, the date the consolidated financial statements were available to be issued.

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SELECT INCOME REIT

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

September 30, 2018

(dollars in thousands)

	Balance at		Charged to					Balance
	Beginning		Costs and					at End
Description	of Period		Expenses		Deductions			of Period
Year ended December 31, 2016:
Allowance for doubtful accounts	$	464	$	496	$	(87	)	$	873
Year ended December 31, 2017:
Allowance for doubtful accounts	$	873	$	587	$	(64	)	$	1,396
Nine months ended September 30, 2018:
Allowance for doubtful accounts	$	1,396	$	883	$	(52	)	$	2,227

S- 1

SELECT INCOME REIT

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

September 30, 2018

(dollars in thousands)

			Number of				Initial Cost to				Costs					Gross Amount Carried at
			Buildings,				Company				Capitalized					Close of Period(4)									Original
			Land Parcels						Buildings and		Subsequent to							Buildings and				Accumulated		Date	Construction
Property	Location	State	and Easements	Property Type	Encumbrances(1)		Land		Equipment		Acquisition			Impairment		Land		Equipment		Total(2)		Depreciation(3)		Acquired	Date
40 Inverness Center Parkway	Birmingham	AL	1	Office	$	—	$	1,427	$	10,634	$	232		$	—	$	1,427	$	10,866	$	12,293	$	2,100	12/9/2010	1984
42 Inverness Center Parkway	Birmingham	AL	1	Office	—		1,273		10,824		246			—		1,273		11,070		12,343		2,137		12/9/2010	1985
44 Inverness Center Parkway	Birmingham	AL	1	Office	—		1,508		10,638		8,393			—		1,508		19,031		20,539		2,103		12/9/2010	1985
46 Inverness Center Parkway	Birmingham	AL	—	Land	—		2,000		—		—			—		2,000		—		2,000		—		12/9/2010	—
445 Jan Davis Drive	Huntsville	AL	1	Office	—		1,652		8,634		(6		)	—		1,652		8,628		10,280		467		7/22/2016	2007
4905 Moores Mill Road	Huntsville	AL	1	Industrial	—		5,628		67,373		—			—		5,628		67,373		73,001		10,246		8/31/2012	1979
4501 Industrial Drive*	Fort Smith	AR	1	Industrial	—		900		3,485		—			—		900		3,485		4,385		320		1/29/2015	2013
16001 North 28th Avenue	Phoenix	AZ	1	Office	—		2,490		10,799		460			—		2,490		11,259		13,749		956		4/16/2015	1998
2149 West Dunlap Avenue	Phoenix	AZ	1	Office	—		5,600		14,433		102			—		5,600		14,535		20,135		1,331		1/29/2015	1983
1920 and 1930 W University Drive	Tempe	AZ	2	Office	—		1,122		10,122		2,217			—		1,122		12,339		13,461		5,332		6/30/1999	1988
2544 and 2548 Campbell Place	Carlsbad	CA	2	Office	—		3,381		17,918		15			—		3,381		17,933		21,314		2,691		9/21/2012	2007
2235 Iron Point Road	Folsom	CA	1	Office	—		3,450		25,504		—			—		3,450		25,504		28,954		4,941		12/17/2010	2008
47131 Bayside Parkway	Fremont	CA	1	Office	—		5,200		4,860		1,852			—		5,200		6,712		11,912		1,279		3/19/2009	1990
100 Redwood Shores Parkway	Redwood City	CA	1	Office	—		12,300		23,231		—			—		12,300		23,231		35,531		2,130		1/29/2015	1993
3875 Atherton Road	Rocklin	CA	1	Office	—		200		3,980		—			—		200		3,980		4,180		365		1/29/2015	1991
145 Rio Robles Drive	San Jose	CA	1	Office	—		5,063		8,437		299			—		5,063		8,736		13,799		1,006		12/23/2013	1984
2090 Fortune Drive	San Jose	CA	1	Office	—		5,700		1,998		—			—		5,700		1,998		7,698		183		1/29/2015	1996
2115 O'Nel Drive	San Jose	CA	1	Office	—		8,000		25,098		102			—		8,000		25,200		33,200		2,305		1/29/2015	1984
3939 North First Street	San Jose	CA	1	Office	—		6,160		7,961		373			—		6,160		8,334		14,494		965		12/23/2013	1984
51 and 77 Rio Robles Drive	San Jose	CA	2	Office	—		11,545		19,879		54			—		11,545		19,933		31,478		2,365		12/23/2013	1,984
6448-6450 Via Del Oro	San Jose	CA	1	Office	—		2,700		11,549		488			—		2,700		12,037		14,737		1,093		1/29/2015	1983
2450 and 2500 Walsh Avenue	Santa Clara	CA	2	Office	—		8,200		36,597		172			—		8,200		36,769		44,969		3,361		1/29/2015	1982
3250 and 3260 Jay Street	Santa Clara	CA	2	Office	—		11,900		52,059		—			—		11,900		52,059		63,959		4,772		1/29/2015	1982
350 West Java Drive	Sunnyvale	CA	1	Office	—		11,552		12,461		70			—		11,552		12,531		24,083		1,844		11/15/2012	1984
7958 South Chester Street	Centennial	CO	1	Office	—		7,400		23,278		371			—		7,400		23,649		31,049		2,159		1/29/2015	2000
350 Spectrum Loop	Colorado Springs	CO	1	Office	—		3,100		20,165		7			—		3,100		20,172		23,272		1,849		1/29/2015	2000
955 Aeroplaza Drive*	Colorado Springs	CO	1	Industrial	—		800		7,412		—			—		800		7,412		8,212		680		1/29/2015	2012
13400 East 39th Avenue and 3800 Wheeling Street*	Denver	CO	2	Industrial	—		3,100		12,955		46			—		3,100		13,001		16,101		1,214		1/29/2015	1973
333 Inverness Drive South	Englewood	CO	1	Office	—		3,230		11,801		2,275			—		3,230		14,076		17,306		1,920		6/15/2012	1998
150 Greenhorn Drive*	Pueblo	CO	1	Industrial	—		200		4,177		—			—		200		4,177		4,377		383		1/29/2015	2013
2 Tower Drive*	Wallingford	CT	1	Industrial	—		1,471		2,165		7			—		1,471		2,172		3,643		655		10/24/2006	1978

S- 2

SELECT INCOME REIT

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)

September 30, 2018

(dollars in thousands)

			Number of				Initial Cost to				Costs				Gross Amount Carried at
			Buildings,				Company				Capitalized				Close of Period(4)									Original
			Land Parcels						Buildings and		Subsequent to						Buildings and				Accumulated		Date	Construction
Property	Location	State	and Easements	Property Type	Encumbrances(1)		Land		Equipment		Acquisition		Impairment		Land		Equipment		Total(2)		Depreciation(3)		Acquired	Date
1 Targeting Center	Windsor	CT	1	Office	$	—	$	1,850	$	7,226	$	—	$	—	$	1,850	$	7,226	$	9,076	$	1,114	7/20/2012	1980
235 Great Pond Drive*	Windsor	CT	1	Industrial	—		2,400		9,469		—		—		2,400		9,469		11,869		1,460		7/20/2012	2004
10450 Doral Boulevard*	Doral	FL	1	Industrial	—		15,225		28,101		—		—		15,225		28,101		43,326		235		6/27/2018	1996
10350 NW 112th Avenue	Miami	FL	1	Office	—		3,500		19,954		289		—		3,500		20,243		23,743		1,841		1/29/2015	2002
2100 NW 82nd Avenue*	Miami	FL	1	Industrial	—		144		1,297		454		—		144		1,751		1,895		737		3/19/1998	1987
One Primerica Parkway	Duluth	GA	1	Office	—		6,900		50,433		—		—		6,900		50,433		57,333		4,623		1/29/2015	2013
1000 Mapunapuna Street*	Honolulu	HI	1	Land	—		2,252		—		—		—		2,252		—		2,252		—		12/5/2003	—
1001 Ahua Street*	Honolulu	HI	1	Land	—		15,155		3,312		92		—		15,155		3,404		18,559		1,247		12/5/2003	—
1024 Kikowaena Place*	Honolulu	HI	1	Land	—		1,818		—		—		—		1,818		—		1,818		—		12/5/2003	—
1024 Mapunapuna Street*	Honolulu	HI	1	Land	—		1,385		—		—		—		1,385		—		1,385		—		12/5/2003	—
1027 Kikowaena Place*	Honolulu	HI	1	Land	—		5,444		—		—		—		5,444		—		5,444		—		12/5/2003	—
1030 Mapunapuna Street*	Honolulu	HI	1	Land	—		5,655		—		—		—		5,655		—		5,655		—		12/5/2003	—
1038 Kikowaena Place*	Honolulu	HI	1	Land	—		2,576		—		—		—		2,576		—		2,576		—		12/5/2003	—
1045 Mapunapuna Street*	Honolulu	HI	1	Land	—		819		—		—		—		819		—		819		—		12/5/2003	—
1050 Kikowaena Place*	Honolulu	HI	1	Land	—		1,404		873		—		—		1,404		873		2,277		323		12/5/2003	—
1052 Ahua Street*	Honolulu	HI	1	Land	—		1,703		—		240		—		1,703		240		1,943		78		12/5/2003	—
1055 Ahua Street*	Honolulu	HI	1	Land	—		1,216		—		—		—		1,216		—		1,216		—		12/5/2003	—
106 Puuhale Road*	Honolulu	HI	1	Industrial	—		1,113		—		229		—		1,113		229		1,342		51		12/5/2003	1966
1062 Kikowaena Place*	Honolulu	HI	1	Land	—		1,049		599		—		—		1,049		599		1,648		221		12/5/2003	—
1122 Mapunapuna Street*	Honolulu	HI	1	Land	—		5,782		—		—		—		5,782		—		5,782		—		12/5/2003	—
113 Puuhale Road*	Honolulu	HI	1	Land	—		3,729		—		—		—		3,729		—		3,729		—		12/5/2003	—
1150 Kikowaena Place*	Honolulu	HI	1	Land	—		2,445		—		—		—		2,445		—		2,445		—		12/5/2003	—
120 Mokauea Street*	Honolulu	HI	1	Industrial	—		1,953		—		655		—		1,953		655		2,608		99		12/5/2003	1970
120 Sand Island Access Road*	Honolulu	HI	1	Industrial	—		1,130		11,307		1,298		—		1,130		12,605		13,735		4,242		11/23/2004	2004
120B Mokauea Street*	Honolulu	HI	1	Industrial	—		1,953		—		—		—		1,953		—		1,953		—		12/5/2003	1970
125 Puuhale Road*	Honolulu	HI	1	Land	—		1,630		—		—		—		1,630		—		1,630		—		12/5/2003	—
125B Puuhale Road*	Honolulu	HI	1	Land	—		2,815		—		—		—		2,815		—		2,815		—		12/5/2003	—
1330 Pali Highway*	Honolulu	HI	1	Land	—		1,423		—		—		—		1,423		—		1,423		—		12/5/2003	—
1360 Pali Highway*	Honolulu	HI	1	Land	—		9,170		—		161		—		9,170		161		9,331		101		12/5/2003	—
140 Puuhale Road*	Honolulu	HI	1	Land	—		1,100		—		—		—		1,100		—		1,100		—		12/5/2003	—
142 Mokauea Street*	Honolulu	HI	1	Industrial	—		2,182		—		1,455		—		2,182		1,455		3,637		349		12/5/2003	1972

S- 3

SELECT INCOME REIT

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)

September 30, 2018

(dollars in thousands)

			Number of				Initial Cost to				Costs				Gross Amount Carried at
			Buildings,				Company				Capitalized				Close of Period(4)									Original
			Land Parcels						Buildings and		Subsequent to						Buildings and				Accumulated		Date	Construction
Property	Location	State	and Easements	Property Type	Encumbrances(1)		Land		Equipment		Acquisition		Impairment		Land		Equipment		Total(2)		Depreciation(3)		Acquired	Date
148 Mokauea Street*	Honolulu	HI	1	Land	$	—	$	3,476	$	—	$	—	$	—	$	3,476	$	—	$	3,476	$	—	12/5/2003	—
150 Puuhale Road*	Honolulu	HI	1	Land	—		4,887		—		—		—		4,887		—		4,887		—		12/5/2003	—
151 Puuhale Road*	Honolulu	HI	1	Land	—		1,956		—		—		—		1,956		—		1,956		—		12/5/2003	—
158 Sand Island Access Road*	Honolulu	HI	1	Land	—		2,488		—		—		—		2,488		—		2,488		—		12/5/2003	—
165 Sand Island Access Road*	Honolulu	HI	1	Land	—		758		—		—		—		758		—		758		—		12/5/2003	—
179 Sand Island Access Road*	Honolulu	HI	1	Land	—		2,480		—		—		—		2,480		—		2,480		—		12/5/2003	—
180 Sand Island Access Road*	Honolulu	HI	1	Land	—		1,655		—		—		—		1,655		—		1,655		—		12/5/2003	—
1926 Auiki Street*	Honolulu	HI	1	Industrial	—		2,872		—		1,564		—		2,874		1,562		4,436		454		12/5/2003	1959
1931 Kahai Street*	Honolulu	HI	1	Land	—		3,779		—		—		—		3,779		—		3,779		—		12/5/2003	—
197 Sand Island Access Road*	Honolulu	HI	1	Land	—		1,238		—		—		—		1,238		—		1,238		—		12/5/2003	—
2001 Kahai Street*	Honolulu	HI	1	Land	—		1,091		—		—		—		1,091		—		1,091		—		12/5/2003	—
2019 Kahai Street*	Honolulu	HI	1	Land	—		1,377		—		—		—		1,377		—		1,377		—		12/5/2003	—
2020 Auiki Street*	Honolulu	HI	1	Land	—		2,385		—		—		—		2,385		—		2,385		—		12/5/2003	—
204 Sand Island Access Road*	Honolulu	HI	1	Land	—		1,689		—		—		—		1,689		—		1,689		—		12/5/2003	—
207 Puuhale Road*	Honolulu	HI	1	Land	—		2,024		—		—		—		2,024		—		2,024		—		12/5/2003	—
2103 Kaliawa Street*	Honolulu	HI	1	Land	—		3,212		—		—		—		3,212		—		3,212		—		12/5/2003	—
2106 Kaliawa Street*	Honolulu	HI	1	Land	—		1,568		—		169		—		1,568		169		1,737		64		12/5/2003	—
2110 Auiki Street*	Honolulu	HI	1	Land	—		837		—		—		—		837		—		837		—		12/5/2003	—
212 Mohonua Place*	Honolulu	HI	1	Land	—		1,067		—		—		—		1,067		—		1,067		—		12/5/2003	—
2122 Kaliawa Street*	Honolulu	HI	1	Land	—		1,365		—		—		—		1,365		—		1,365		—		12/5/2003	—
2127 Auiki Street*	Honolulu	HI	1	Land	—		2,906		—		97		—		2,906		97		3,003		23		12/5/2003	—
2135 Auiki Street*	Honolulu	HI	1	Land	—		825		—		—		—		825		—		825		—		12/5/2003	—
2139 Kaliawa Street*	Honolulu	HI	1	Land	—		885		—		—		—		885		—		885		—		12/5/2003	—
214 Sand Island Access Road*	Honolulu	HI	1	Industrial	—		1,864		—		404		—		1,864		404		2,268		40		12/5/2003	1981
2140 Kaliawa Street*	Honolulu	HI	1	Land	—		931		—		—		—		931		—		931		—		12/5/2003	—
2144 Auiki Street*	Honolulu	HI	1	Industrial	—		2,640		—		6,958		—		2,640		6,958		9,598		2,017		12/5/2003	1953
215 Puuhale Road*	Honolulu	HI	1	Land	—		2,117		—		—		—		2,117		—		2,117		—		12/5/2003	—
218 Mohonua Place*	Honolulu	HI	1	Land	—		1,741		—		—		—		1,741		—		1,741		—		12/5/2003	—
220 Puuhale Road*	Honolulu	HI	1	Land	—		2,619		—		—		—		2,619		—		2,619		—		12/5/2003	—
2250 Pahounui Drive*	Honolulu	HI	1	Land	—		3,862		—		—		—		3,862		—		3,862		—		12/5/2003	—
2264 Pahounui Drive*	Honolulu	HI	1	Land	—		1,632		—		—		—		1,632		—		1,632		—		12/5/2003	—

S- 4

SELECT INCOME REIT

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)

September 30, 2018

(dollars in thousands)

			Number of				Initial Cost to				Costs				Gross Amount Carried at
			Buildings,				Company				Capitalized				Close of Period(4)									Original
			Land Parcels						Buildings and		Subsequent to						Buildings and				Accumulated		Date	Construction
Property	Location	State	and Easements	Property Type	Encumbrances(1)		Land		Equipment		Acquisition		Impairment		Land		Equipment		Total(2)		Depreciation(3)		Acquired	Date
2276 Pahounui Drive*	Honolulu	HI	1	Land	$	—	$	1,619	$	—	$	—	$	—	$	1,619	$	—	$	1,619	$	—	12/5/2003	—
228 Mohonua Place*	Honolulu	HI	1	Land	—		1,865		—		—		—		1,865		—		1,865		—		12/5/2003	—
2308 Pahounui Drive*	Honolulu	HI	1	Land	—		3,314		—		—		—		3,314		—		3,314		—		12/5/2003	—
231 Sand Island Access Road*	Honolulu	HI	1	Land	—		752		—		—		—		752		—		752		—		12/5/2003	—
231B Sand Island Access Road*	Honolulu	HI	1	Land	—		1,539		—		—		—		1,539		—		1,539		—		12/5/2003	—
2344 Pahounui Drive*	Honolulu	HI	1	Land	—		6,709		—		—		—		6,709		—		6,709		—		12/5/2003	—
238 Sand Island Access Road*	Honolulu	HI	1	Land	—		2,273		—		—		—		2,273		—		2,273		—		12/5/2003	—
2635 Waiwai Loop A*	Honolulu	HI	1	Land	—		934		350		—		—		934		350		1,284		129		12/5/2003	—
2635 Waiwai Loop B*	Honolulu	HI	1	Land	—		1,177		105		—		—		1,177		105		1,282		39		12/5/2003	—
2760 Kam Highway*	Honolulu	HI	1	Land	—		703		—		115		—		703		115		818		—		12/5/2003	—
2804 Kilihau Street*	Honolulu	HI	1	Land	—		1,775		2		—		—		1,775		2		1,777		1		12/5/2003	—
2806 Kaihikapu Street*	Honolulu	HI	1	Land	—		1,801		—		—		—		1,801		—		1,801		—		12/5/2003	—
2808 Kam Highway*	Honolulu	HI	1	Land	—		310		—		—		—		310		—		310		—		12/5/2003	—
2809 Kaihikapu Street*	Honolulu	HI	1	Land	—		1,837		—		—		—		1,837		—		1,837		—		12/5/2003	—
2810 Paa Street*	Honolulu	HI	1	Land	—		3,340		—		—		—		3,340		—		3,340		—		12/5/2003	—
2810 Pukoloa Street*	Honolulu	HI	1	Land	—		27,699		—		4		—		27,699		4		27,703		4		12/5/2003	—
2812 Awaawaloa Street*	Honolulu	HI	1	Land	—		1,801		2		1		—		1,801		3		1,804		2		12/5/2003	—
2814 Kilihau Street*	Honolulu	HI	1	Land	—		1,925		—		—		—		1,925		—		1,925		—		12/5/2003	—
2815 Kaihikapu Street*	Honolulu	HI	1	Land	—		1,818		—		5		—		1,818		5		1,823		1		12/5/2003	—
2815 Kilihau Street*	Honolulu	HI	1	Land	—		287		—		—		—		287		—		287		—		12/5/2003	—
2816 Awaawaloa Street*	Honolulu	HI	1	Land	—		1,009		27		—		—		1,009		27		1,036		10		12/5/2003	—
2819 Mokumoa Street - A*	Honolulu	HI	1	Land	—		1,821		—		—		—		1,821		—		1,821		—		12/5/2003	—
2819 Mokumoa Street - B*	Honolulu	HI	1	Land	—		1,816		—		—		—		1,816		—		1,816		—		12/5/2003	—
2819 Pukoloa Street*	Honolulu	HI	1	Land	—		2,090		—		33		—		2,090		33		2,123		8		12/5/2003	—
2821 Kilihau Street*	Honolulu	HI	1	Land	—		287		—		—		—		287		—		287		—		12/5/2003	—
2826 Kaihikapu Street*	Honolulu	HI	1	Land	—		3,921		—		—		—		3,921		—		3,921		—		12/5/2003	—
2827 Kaihikapu Street*	Honolulu	HI	1	Land	—		1,801		—		—		—		1,801		—		1,801		—		12/5/2003	—
2828 Paa Street*	Honolulu	HI	1	Land	—		12,448		—		—		—		12,448		—		12,448		—		12/5/2003	—
2829 Awaawaloa Street*	Honolulu	HI	1	Land	—		1,720		3		—		—		1,720		3		1,723		2		12/5/2003	—
2928 Kaihikapu Street - A*	Honolulu	HI	1	Land	—		1,801		—		—		—		1,801		—		1,801		—		12/5/2003	—
2829 Kilihau Street*	Honolulu	HI	1	Land	—		287		—		—		—		287		—		287		—		12/5/2003	—

S- 5

SELECT INCOME REIT

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)

September 30, 2018

(dollars in thousands)

			Number of				Initial Cost to				Costs				Gross Amount Carried at
			Buildings,				Company				Capitalized				Close of Period(4)									Original
			Land Parcels						Buildings  and		Subsequent to						Buildings  and				Accumulated		Date	Construction
Property	Location	State	and Easements	Property Type	Encumbrances(1)		Land		Equipment		Acquisition		Impairment		Land		Equipment		Total(2)		Depreciation(3)		Acquired	Date
2829 Pukoloa Street*	Honolulu	HI	1	Land	$	—	$	2,088	$	—	$	—	$	—	$	2,088	$	—	$	2,088	$	—	12/5/2003	—
2830 Mokumoa Street*	Honolulu	HI	1	Land	—		2,146		—		—		—		2,146		—		2,146		—		12/5/2003	—
2831 Awaawaloa Street*	Honolulu	HI	1	Land	—		860		—		—		—		860		—		860		—		12/5/2003	—
2831 Kaihikapu Street*	Honolulu	HI	1	Land	—		1,272		529		56		—		1,272		585		1,857		215		12/5/2003	—
2833 Kilihau Street*	Honolulu	HI	1	Land	—		601		—		—		—		601		—		601		—		12/5/2003	—
2833 Paa Street #2*	Honolulu	HI	1	Land	—		1,675		—		—		—		1,675		—		1,675		—		12/5/2003	—
2833 Paa Street*	Honolulu	HI	1	Land	—		1,701		—		—		—		1,701		—		1,701		—		12/5/2003	—
2836 Awaawaloa Street*	Honolulu	HI	1	Land	—		1,353		—		—		—		1,353		—		1,353		—		12/5/2003	—
2838 Kilihau Street*	Honolulu	HI	1	Land	—		4,262		—		—		—		4,262		—		4,262		—		12/5/2003	—
2839 Kilihau Street*	Honolulu	HI	1	Land	—		627		—		—		—		627		—		627		—		12/5/2003	—
2839 Mokumoa Street*	Honolulu	HI	1	Land	—		1,942		—		—		—		1,942		—		1,942		—		12/5/2003	—
2840 Mokumoa Street*	Honolulu	HI	1	Land	—		2,149		—		—		—		2,149		—		2,149		—		12/5/2003	—
2841 Pukoloa Street*	Honolulu	HI	1	Land	—		2,088		—		—		—		2,088		—		2,088		—		12/5/2003	—
2844 Kaihikapu Street*	Honolulu	HI	1	Land	—		1,960		14		—		—		1,960		14		1,974		11		12/5/2003	—
2846-A Awaawaloa Street*	Honolulu	HI	1	Land	—		2,181		954		—		—		2,181		954		3,135		353		12/5/2003	—
2847 Awaawaloa Street*	Honolulu	HI	1	Land	—		582		303		—		—		582		303		885		112		12/5/2003	—
2849 Kaihikapu Street*	Honolulu	HI	1	Land	—		860		—		—		—		860		—		860		—		12/5/2003	—
2850 Awaawaloa Street*	Honolulu	HI	1	Land	—		286		172		1		—		286		173		459		64		12/5/2003	—
2850 Mokumoa Street*	Honolulu	HI	1	Land	—		2,143		—		—		—		2,143		—		2,143		—		12/5/2003	—
2850 Paa Street*	Honolulu	HI	1	Land	—		22,827		—		—		—		22,827		—		22,827		—		12/5/2003	—
2855 Kaihikapu Street*	Honolulu	HI	1	Land	—		1,807		—		—		—		1,807		—		1,807		—		12/5/2003	—
2855 Pukoloa Street*	Honolulu	HI	1	Land	—		1,934		—		—		—		1,934		—		1,934		—		12/5/2003	—
2857 Awaawaloa Street*	Honolulu	HI	1	Land	—		983		—		—		—		983		—		983		—		12/5/2003	—
2858 Kaihikapu Street*	Honolulu	HI	1	Land	—		1,801		—		—		—		1,801		—		1,801		—		12/5/2003	—
2861 Mokumoa Street*	Honolulu	HI	1	Land	—		3,867		—		—		—		3,867		—		3,867		—		12/5/2003	—
2864 Awaawaloa Street*	Honolulu	HI	1	Land	—		1,836		—		6		—		1,836		6		1,842		3		12/5/2003	—
2864 Mokumoa Street*	Honolulu	HI	1	Land	—		2,092		—		—		—		2,092		—		2,092		—		12/5/2003	—
2865 Pukoloa Street*	Honolulu	HI	1	Land	—		1,934		—		—		—		1,934		—		1,934		—		12/5/2003	—
2868 Kaihikapu Street*	Honolulu	HI	1	Land	—		1,801		—		—		—		1,801		—		1,801		—		12/5/2003	—
2869 Mokumoa Street*	Honolulu	HI	1	Land	—		1,794		—		—		—		1,794		—		1,794		—		12/5/2003	—
2875 Paa Street*	Honolulu	HI	1	Land	—		1,330		—		—		—		1,330		—		1,330		—		12/5/2003	—

S- 6

SELECT INCOME REIT

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)

September 30, 2018

(dollars in thousands)

			Number of				Initial Cost to				Costs				Gross Amount Carried at
			Buildings,				Company				Capitalized				Close of Period(4)									Original
			Land Parcels						Buildings  and		Subsequent to						Buildings  and				Accumulated		Date	Construction
Property	Location	State	and Easements	Property Type	Encumbrances(1)		Land		Equipment		Acquisition		Impairment		Land		Equipment		Total(2)		Depreciation(3)		Acquired	Date
2879 Mokumoa Street*	Honolulu	HI	1	Land	$	—	$	1,789	$	—	$	—	$	—	$	1,789	$	—	$	1,789	$	—	12/5/2003	—
2879 Paa Street*	Honolulu	HI	1	Land	—		1,691		—		44		—		1,691		44		1,735		11		12/5/2003	—
2886 Paa Street*	Honolulu	HI	1	Land	—		2,205		—		—		—		2,205		—		2,205		—		12/5/2003	—
2889 Mokumoa Street*	Honolulu	HI	1	Land	—		1,783		—		—		—		1,783		—		1,783		—		12/5/2003	—
2906 Kaihikapu Street*	Honolulu	HI	1	Land	—		1,814		2		—		—		1,814		2		1,816		1		12/5/2003	—
2908 Kaihikapu Street*	Honolulu	HI	1	Land	—		1,798		12		—		—		1,798		12		1,810		1		12/5/2003	—
2915 Kaihikapu Street*	Honolulu	HI	1	Land	—		2,579		—		—		—		2,579		—		2,579		—		12/5/2003	—
2927 Mokumoa Street*	Honolulu	HI	1	Land	—		1,778		—		—		—		1,778		—		1,778		—		12/5/2003	—
2928 Kaihikapu Street - B*	Honolulu	HI	1	Land	—		1,948		—		—		—		1,948		—		1,948		—		12/5/2003	—
2960 Mokumoa Street*	Honolulu	HI	1	Land	—		1,977		—		—		—		1,977		—		1,977		—		12/5/2003	—
2965 Mokumoa Street*	Honolulu	HI	1	Land	—		2,140		—		—		—		2,140		—		2,140		—		12/5/2003	—
2969 Mapunapuna Street*	Honolulu	HI	1	Land	—		4,038		15		—		—		4,038		15		4,053		8		12/5/2003	—
2970 Mokumoa Street*	Honolulu	HI	1	Land	—		1,722		—		—		—		1,722		—		1,722		—		12/5/2003	—
33 S. Vineyard Boulevard*	Honolulu	HI	1	Land	—		844		—		6		—		844		6		850		6		12/5/2003	—
525 N. King Street*	Honolulu	HI	1	Land	—		1,342		—		—		—		1,342		—		1,342		—		12/5/2003	—
609 Ahua Street*	Honolulu	HI	1	Land	—		616		—		8		—		616		8		624		6		12/5/2003	—
619 Mapunapuna Street*	Honolulu	HI	1	Land	—		1,401		2		12		—		1,401		14		1,415		1		12/5/2003	—
645 Ahua Street*	Honolulu	HI	1	Land	—		882		—		—		—		882		—		882		—		12/5/2003	—
659 Ahua Street*	Honolulu	HI	1	Land	—		860		20		—		—		860		20		880		16		12/5/2003	—
659 Puuloa Road*	Honolulu	HI	1	Land	—		1,807		—		—		—		1,807		—		1,807		—		12/5/2003	—
660 Ahua Street*	Honolulu	HI	1	Land	—		1,783		3		—		—		1,783		3		1,786		3		12/5/2003	—
667 Puuloa Road*	Honolulu	HI	1	Land	—		860		2		—		—		860		2		862		2		12/5/2003	—
669 Ahua Street*	Honolulu	HI	1	Land	—		1,801		14		62		—		1,801		76		1,877		17		12/5/2003	—
673 Ahua Street*	Honolulu	HI	1	Land	—		1,801		—		—		—		1,801		—		1,801		—		12/5/2003	—
675 Mapunapuna Street*	Honolulu	HI	1	Land	—		1,081		—		—		—		1,081		—		1,081		—		12/5/2003	—
679 Puuloa Road*	Honolulu	HI	1	Land	—		1,807		3		—		—		1,807		3		1,810		2		12/5/2003	—
685 Ahua Street*	Honolulu	HI	1	Land	—		1,801		—		—		—		1,801		—		1,801		—		12/5/2003	—
673 Mapunapuna Street*	Honolulu	HI	1	Land	—		1,801		20		—		—		1,801		20		1,821		15		12/5/2003	—
692 Mapunapuna Street*	Honolulu	HI	1	Land	—		1,798		—		—		—		1,798		—		1,798		—		12/5/2003	—
697 Ahua Street*	Honolulu	HI	1	Land	—		994		811		—		—		994		811		1,805		302		12/5/2003	—
702 Ahua Street*	Honolulu	HI	1	Land	—		1,783		4		—		—		1,783		4		1,787		3		12/5/2003	—
704 Mapunapuna Street*	Honolulu	HI	1	Land	—		2,390		685		—		—		2,390		685		3,075		254		12/5/2003	—

S- 7

SELECT INCOME REIT

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)

September 30, 2018

(dollars in thousands)

			Number of				Initial Cost to				Costs				Gross Amount Carried at
			Buildings,				Company				Capitalized				Close of Period(4)									Original
			Land Parcels						Buildings  and		Subsequent to						Buildings  and				Accumulated		Date	Construction
Property	Location	State	and Easements	Property Type	Encumbrances(1)		Land		Equipment		Acquisition		Impairment		Land		Equipment		Total(2)		Depreciation(3)		Acquired	Date
709 Ahua Street*	Honolulu	HI	1	Land	$	—	$	1,801	$	—	$	—	$	—	$	1,801	$	—	$	1,801	$	—	12/5/2003	—
719 Ahua Street*	Honolulu	HI	1	Land	—		1,960		—		—		—		1,960		—		1,960		—		12/5/2003	—
729 Ahua Street*	Honolulu	HI	1	Land	—		1,801		—		—		—		1,801		—		1,801		—		12/5/2003	—
733 Mapunapuna Street*	Honolulu	HI	1	Land	—		3,403		—		—		—		3,403		—		3,403		—		12/5/2003	—
739 Ahua Street*	Honolulu	HI	1	Land	—		1,801		—		—		—		1,801		—		1,801		—		12/5/2003	—
759 Puuloa Road*	Honolulu	HI	1	Land	—		1,766		3		—		—		1,766		3		1,769		3		12/5/2003	—
761 Ahua Street*	Honolulu	HI	1	Land	—		3,757		1		—		—		3,757		1		3,758		1		12/5/2003	—
766 Mapunapuna Street*	Honolulu	HI	1	Land	—		1,801		—		—		—		1,801		—		1,801		—		12/5/2003	—
770 Mapunapuna Street*	Honolulu	HI	1	Land	—		1,801		—		—		—		1,801		—		1,801		—		12/5/2003	—
789 Mapunapuna Street*	Honolulu	HI	1	Land	—		2,608		3		—		—		2,608		3		2,611		2		12/5/2003	—
80 Sand Island Access Road*	Honolulu	HI	1	Land	—		7,972		—		—		—		7,972		—		7,972		—		12/5/2003	—
803 Ahua Street*	Honolulu	HI	1	Land	—		3,804		—		—		—		3,804		—		3,804		—		12/5/2003	—
808 Ahua Street*	Honolulu	HI	1	Land	—		3,279		—		—		—		3,279		—		3,279		—		12/5/2003	—
812 Mapunapuna Street*	Honolulu	HI	1	Land	—		1,960		25		628		—		2,613		—		2,613		—		12/5/2003	—
819 Ahua Street*	Honolulu	HI	1	Land	—		4,821		583		30		—		4,821		613		5,434		226		12/5/2003	—
822 Mapunapuna Street*	Honolulu	HI	1	Land	—		1,795		15		—		—		1,795		15		1,810		12		12/5/2003	—
830 Mapunapuna Street*	Honolulu	HI	1	Land	—		1,801		25		—		—		1,801		25		1,826		19		12/5/2003	—
842 Mapunapuna Street*	Honolulu	HI	1	Land	—		1,795		14		—		—		1,795		14		1,809		11		12/5/2003	—
846 Ala Lilikoi Boulevard B*	Honolulu	HI	1	Land	—		234		—		—		—		234		—		234		—		12/5/2003	—
848 Ala Lilikoi Boulevard A*	Honolulu	HI	1	Land	—		9,426		—		—		—		9,426		—		9,426		—		12/5/2003	—
850 Ahua Street*	Honolulu	HI	1	Land	—		2,682		2		—		—		2,682		2		2,684		2		12/5/2003	—
852 Mapunapuna Street*	Honolulu	HI	1	Land	—		1,801		—		—		—		1,801		—		1,801		—		12/5/2003	—
855 Ahua Street*	Honolulu	HI	1	Land	—		1,834		—		—		—		1,834		—		1,834		—		12/5/2003	—
841 Mapunapuna Street*	Honolulu	HI	1	Land	—		3,265		—		—		—		3,265		—		3,265		—		12/5/2003	—
865 Ahua Street*	Honolulu	HI	1	Land	—		1,846		—		—		—		1,846		—		1,846		—		12/5/2003	—
889 Ahua Street*	Honolulu	HI	1	Land	—		5,888		315		—		—		5,888		315		6,203		46		11/21/2012	—
905 Ahua Street*	Honolulu	HI	1	Land	—		1,148		—		—		—		1,148		—		1,148		—		12/5/2003	—
918 Ahua Street*	Honolulu	HI	1	Land	—		3,820		—		—		—		3,820		—		3,820		—		12/5/2003	—
930 Mapunapuna Street*	Honolulu	HI	1	Land	—		3,654		—		—		—		3,654		—		3,654		—		12/5/2003	—
944 Ahua Street*	Honolulu	HI	1	Land	—		1,219		—		—		—		1,219		—		1,219		—		12/5/2003	—
949 Mapunapuna Street*	Honolulu	HI	1	Land	—		11,568		—		—		—		11,568		—		11,568		—		12/5/2003	—

S- 8

SELECT INCOME REIT

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)

September 30, 2018

(dollars in thousands)

			Number of				Initial Cost to				Costs				Gross Amount Carried at
			Buildings,				Company				Capitalized				Close of Period(4)									Original
			Land Parcels						Buildings  and		Subsequent to						Buildings  and				Accumulated		Date	Construction
Property	Location	State	and Easements	Property Type	Encumbrances(1)		Land		Equipment		Acquisition		Impairment		Land		Equipment		Total(2)		Depreciation(3)		Acquired	Date
950 Mapunapuna Street*	Honolulu	HI	1	Land	$	—	$	1,724	$	—	$	—	$	—	$	1,724	$	—	$	1,724	$	—	12/5/2003	—
960 Ahua Street*	Honolulu	HI	1	Land	—		614		—		—		—		614		—		614		—		12/5/2003	—
960 Mapunapuna Street*	Honolulu	HI	1	Land	—		1,933		—		—		—		1,933		—		1,933		—		12/5/2003	—
970 Ahua Street*	Honolulu	HI	1	Land	—		817		—		—		—		817		—		817		—		12/5/2003	—
91-027 Kaomi Loop*	Kapolei	HI	1	Land	—		2,667		—		—		—		2,667		—		2,667		—		6/15/2005	—
91-064 Kaomi Loop*	Kapolei	HI	1	Land	—		1,826		—		—		—		1,826		—		1,826		—		6/15/2005	—
91-080 Hanua*	Kapolei	HI	1	Land	—		2,187		—		—		—		2,187		—		2,187		—		6/15/2005	—
91-083 Hanua*	Kapolei	HI	1	Land	—		716		—		—		—		716		—		716		—		6/15/2005	—
91-086 Kaomi Loop*	Kapolei	HI	1	Land	—		13,884		—		—		—		13,884		—		13,884		—		6/15/2005	—
91-087 Hanua*	Kapolei	HI	1	Land	—		381		—		—		—		381		—		381		—		6/15/2005	—
91-091 Hanua*	Kapolei	HI	1	Land	—		552		—		—		—		552		—		552		—		6/15/2005	—
91-102 Kaomi Loop*	Kapolei	HI	1	Land	—		1,599		—		—		—		1,599		—		1,599		—		6/15/2005	—
91-110 Kaomi Loop*	Kapolei	HI	1	Land	—		1,293		—		—		—		1,293		—		1,293		—		6/15/2005	—
91-119 Olai*	Kapolei	HI	1	Land	—		1,981		—		—		—		1,981		—		1,981		—		6/15/2005	—
91-210 Kauhi*	Kapolei	HI	1	Land	—		567		—		—		—		567		—		567		—		6/15/2005	—
91-141 Kalaeloa*	Kapolei	HI	1	Land	—		11,624		—		—		—		11,624		—		11,624		—		6/15/2005	—
91-150 Kaomi Loop*	Kapolei	HI	1	Land	—		3,159		—		—		—		3,159		—		3,159		—		6/15/2005	—
91-171 Olai*	Kapolei	HI	1	Land	—		218		—		47		—		218		47		265		11		6/15/2005	—
91-174 Olai*	Kapolei	HI	1	Land	—		962		—		47		—		962		47		1,009		15		6/15/2005	—
91-175 Olai*	Kapolei	HI	1	Land	—		1,243		—		43		—		1,243		43		1,286		17		6/15/2005	—
91-185 Kalaeloa*	Kapolei	HI	1	Land	—		1,761		—		—		—		1,761		—		1,761		—		6/15/2005	—
91-202 Kalaeloa*	Kapolei	HI	1	Industrial	—		1,722		—		326		—		1,722		326		2,048		43		6/15/2005	1964
91-209 Kuhela	Kapolei	HI	1	Land	—		1,352		—		26		—		1,352		26		1,378		1		6/15/2005	—
91-210 Olai*	Kapolei	HI	1	Land	—		706		—		—		—		706		—		706		—		6/15/2005	—
91-218 Olai*	Kapolei	HI	1	Land	—		1,622		—		61		—		1,622		61		1,683		16		6/15/2005	—
91-220 Kalaeloa*	Kapolei	HI	1	Industrial	—		242		1,457		172		—		242		1,629		1,871		526		6/15/2005	1991
91-222 Olai*	Kapolei	HI	1	Land	—		2,035		—		—		—		2,035		—		2,035		—		6/15/2005	—
91-238 Kauhi*	Kapolei	HI	1	Industrial	—		1,390		—		9,209		—		1,390		9,209		10,599		2,548		6/15/2005	1981
91-241 Kalaeloa*	Kapolei	HI	1	Industrial	—		426		3,983		838		—		426		4,821		5,247		1,540		6/15/2005	1990
91-250 Komohana*	Kapolei	HI	1	Land	—		1,506		—		—		—		1,506		—		1,506		—		6/15/2005	—
91-252 Kauhi*	Kapolei	HI	1	Land	—		536		—		—		—		536		—		536		—		6/15/2005	—

S- 9

SELECT INCOME REIT

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)

September 30, 2018

(dollars in thousands)

			Number of				Initial Cost to				Costs				Gross Amount Carried at
			Buildings,				Company				Capitalized				Close of Period(4)									Original
			Land Parcels						Buildings  and		Subsequent to						Buildings  and				Accumulated		Date	Construction
Property	Location	State	and Easements	Property Type	Encumbrances(1)		Land		Equipment		Acquisition		Impairment		Land		Equipment		Total(2)		Depreciation(3)		Acquired	Date
91-255 Hanua*	Kapolei	HI	1	Land	$	—	$	1,230	$	—	$	44	$	—	$	1,230	$	44	$	1,274	$	29	6/15/2005	—
91-259 Olai*	Kapolei	HI	1	Land	—		2,944		—		—		—		2,944		—		2,944		—		6/15/2005	—
91-265 Hanua*	Kapolei	HI	1	Land	—		1,569		—		—		—		1,569		—		1,569		—		6/15/2005	—
91-300 Hanua*	Kapolei	HI	1	Land	—		1,381		—		—		—		1,381		—		1,381		—		6/15/2005	—
91-329 Kauhi*	Kapolei	HI	1	Industrial	—		294		2,297		2,380		—		294		4,677		4,971		1,314		6/15/2005	1980
91-349 Kauhi*	Kapolei	HI	1	Land	—		649		—		—		—		649		—		649		—		6/15/2005	—
91-399 Kauhi*	Kapolei	HI	1	Land	—		27,405		—		—		—		27,405		—		27,405		—		6/15/2005	—
91-400 Komohana*	Kapolei	HI	1	Land	—		1,494		—		—		—		1,494		—		1,494		—		6/15/2005	—
91-410 Komohana*	Kapolei	HI	1	Land	—		418		—		12		—		418		12		430		1		6/15/2005	—
91-416 Komohana*	Kapolei	HI	1	Land	—		713		—		11		—		713		11		724		—		6/15/2005	—
AES HI Easement*	Kapolei	HI	1	Land	—		1,250		—		—		—		1,250		—		1,250		—		6/15/2005	—
Other Easements & Lots*	Kapolei	HI	1	Land	—		358		—		1,246		—		358		1,246		1,604		335		6/15/2005	—
Tesaro 967 Easement*	Kapolei	HI	1	Land	—		6,593		—		—		—		6,593		—		6,593		—		6/15/2005	—
Texaco Easement*	Kapolei	HI	1	Land	—		2,653		—		—		—		2,653		—		2,653		—		6/15/2005	—
94-240 Pupuole Street*	Waipahu	HI	1	Land	—		717		—		—		—		717		—		717		—		12/5/2003	—
5500 SE Delaware Avenue*	Ankeny	IA	1	Industrial	—		2,200		16,994		—		—		2,200		16,994		19,194		1,557		1/29/2015	2012
951 Trails Road*	Eldridge	IA	1	Industrial	—		470		7,480		745		—		470		8,225		8,695		2,281		4/2/2007	1994
8305 NW 62nd Avenue	Johnston	IA	1	Office	—		2,500		31,508		—		—		2,500		31,508		34,008		2,888		1/29/2015	2011
2300 North 33rd Avenue East*	Newton	IA	1	Industrial	—		500		13,236		395		—		500		13,631		14,131		3,411		9/29/2008	2008
7121 South Fifth Avenue*	Pocatello	ID	1	Industrial	—		400		4,201		145		—		400		4,346		4,746		391		1/29/2015	2007
400 South Jefferson Street	Chicago	IL	1	Office	50,082		17,200		73,279		—		—		17,200		73,279		90,479		6,718		1/29/2015	1947
1230 West 171st Street*	Harvey	IL	1	Industrial	—		800		1,673		—		—		800		1,673		2,473		153		1/29/2015	2004
475 Bond Street	Lincolnshire	IL	1	Industrial	—		4,900		16,058		—		—		4,900		16,058		20,958		1,472		1/29/2015	2000
1415 West Diehl Road	Naperville	IL	1	Office	—		13,757		174,718		—		—		13,757		174,718		188,475		19,656		4/1/2014	2001
5156 American Road*	Rockford	IL	1	Industrial	—		400		1,529		—		—		400		1,529		1,929		140		1/29/2015	1996
440 North Fairway Drive	Vernon Hills	IL	1	Office	—		4,095		9,882		—		—		4,095		9,882		13,977		1,235		10/15/2013	1992
7601 Genesys Way	Indianapolis	IN	1	Office	—		1,421		10,832		—		—		1,421		10,832		12,253		316		7/19/2017	2003
7635 Genesys Way	Indianapolis	IN	1	Office	—		1,858		14,368		12		—		1,858		14,380		16,238		419		7/19/2017	2008
400 SW 8th Avenue	Topeka	KS	1	Office	—		1,300		15,918		456		—		1,300		16,374		17,674		2,509		7/30/2012	1983
1061 Pacific Avenue	Erlanger	KY	—	Land	—		732		—		—		—		732		—		732		—		6/30/2003	—
1101 Pacific Avenue	Erlanger	KY	1	Office	—		1,288		9,545		1,526		—		1,288		11,071		12,359		4,448		6/30/2003	1999

S- 10

SELECT INCOME REIT

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)

September 30, 2018

(dollars in thousands)

			Number of				Initial Cost to				Costs					Gross Amount Carried at
			Buildings,				Company				Capitalized					Close of Period(4)									Original
			Land Parcels						Buildings  and		Subsequent to							Buildings  and				Accumulated		Date	Construction
Property	Location	State	and Easements	Property Type	Encumbrances(1)		Land		Equipment		Acquisition		Impairment			Land		Equipment		Total(2)		Depreciation(3)		Acquired	Date
17200 Manchac Park Lane*	Baton Rouge	LA	1	Industrial	$	—	$	1,700	$	8,860	$	—	$	—		$	1,700	$	8,860	$	10,560	$	812	1/29/2015	2014
209 South Bud Street*	Lafayette	LA	1	Industrial	—		700		4,549		9		—			700		4,558		5,258		417		1/29/2015	2010
300 Billerica Road	Chelmsford	MA	1	Office	—		2,009		6,727		114		—			2,009		6,841		8,850		1,011		9/27/2012	1984
330 Billerica Road	Chelmsford	MA	1	Office	—		1,410		7,322		1,220		—			1,410		8,542		9,952		1,527		1/18/2011	1984
111 Powdermill Road	Maynard	MA	1	Office	—		3,603		26,180		479		(12,651		)	2,909		14,702		17,611		527		3/30/2007	1990
314 Littleton Road	Westford	MA	1	Office	—		3,500		30,444		—		—			3,500		30,444		33,944		2,791		1/29/2015	2007
7001 Columbia Gateway Drive	Columbia	MD	1	Office	—		3,700		24,592		—		—			3,700		24,592		28,292		3,535		12/21/2012	2008
4000 Principio Parkway*	North East	MD	1	Industrial	—		4,200		71,518		632		—			4,200		72,150		76,350		6,567		1/29/2015	2012
16101 Queens Court*	Upper Marlboro	MD	1	Industrial	—		5,296		21,833		—		—			5,296		21,833		27,129		—		9/28/2018	2016
3550 Green Court	Ann Arbor	MI	1	Office	—		2,877		9,081		1,061		—			2,877		10,142		13,019		1,567		12/21/2012	1998
3800 Midlink Drive*	Kalamazoo	MI	1	Industrial	—		2,630		40,599		—		—			2,630		40,599		43,229		3,722		1/29/2015	2014
2401 Cram Avenue SE*	Bemidji	MN	1	Industrial	—		100		2,137		—		—			100		2,137		2,237		196		1/29/2015	2013
110 Stanbury Industrial Drive*	Brookfield	MO	1	Industrial	—		200		1,859		—		—			200		1,859		2,059		170		1/29/2015	2012
2555 Grand Boulevard	Kansas City	MO	1	Office	—		4,263		73,891		1,035		—			4,263		74,926		79,189		5,897		7/31/2015	2003
628 Patton Avenue*	Asheville	NC	1	Industrial	—		500		1,514		—		—			500		1,514		2,014		139		1/29/2015	1994
2300 Yorkmont Road	Charlotte	NC	1	Office	—		637		22,351		4,109		—			637		26,460		27,097		2,340		1/29/2015	1995
2400 Yorkmont Road	Charlotte	NC	1	Office	—		563		19,722		2,712		—			563		22,434		22,997		2,037		1/29/2015	1995
3900 NE 6th Street*	Minot	ND	1	Industrial	—		700		3,223		—		—			700		3,223		3,923		296		1/29/2015	2013
1415 West Commerce Way*	Lincoln	NE	1	Industrial	—		2,200		8,518		—		—			2,200		8,518		10,718		781		1/29/2015	1971
18010 and 18020 Burt Street	Omaha	NE	2	Office	—		2,600		47,226		16		—			2,600		47,242		49,842		4,331		1/29/2015	2012
309 Dulty's Lane*	Burlington	NJ	1	Industrial	—		1,600		51,400		—		—			1,600		51,400		53,000		4,712		1/29/2015	2001
500 Charles Ewing Boulevard	Ewing	NJ	1	Office	—		5,300		69,074		—		—			5,300		69,074		74,374		6,332		1/29/2015	2012
725 Darlington Avenue*	Mahwah	NJ	1	Industrial	—		8,492		9,451		953		—			8,492		10,404		18,896		1,104		4/9/2014	1999
299 Jefferson Road	Parsippany	NJ	1	Office	—		4,900		25,987		177		—			4,900		26,164		31,064		2,399		1/29/2015	2011
One Jefferson Road	Parsippany	NJ	1	Office	—		4,188		14,919		50		—			4,188		14,969		19,157		1,089		11/13/2015	2009
2375 East Newlands Road*	Fernley	NV	1	Industrial	—		1,100		17,314		286		—			1,100		17,600		18,700		1,620		1/29/2015	2007
55 Commerce Avenue*	Albany	NY	1	Industrial	—		1,000		10,105		179		—			1,000		10,284		11,284		946		1/29/2015	2013
8687 Carling Road	Liverpool	NY	1	Office	—		375		3,265		1,924		—			375		5,189		5,564		1,612		1/6/2006	1997
1212 Pittsford - Victor Road	Pittsford	NY	1	Office	—		528		3,755		1,253		—			528		5,008		5,536		1,688		11/30/2004	1965
500 Canal View Boulevard	Rochester	NY	1	Office	—		1,462		12,482		434		—			1,462		12,916		14,378		4,004		1/6/2006	1996
32150 Just Imagine Drive*	Avon	OH	1	Industrial	—		2,200		23,280		—		—			2,200		23,280		25,480		5,432		5/29/2009	1996

S- 11

SELECT INCOME REIT

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)

September 30, 2018

(dollars in thousands)

			Number of				Initial Cost to				Costs					Gross Amount Carried at
			Buildings,				Company				Capitalized					Close of Period(4)									Original
			Land Parcels						Buildings  and		Subsequent to							Buildings  and				Accumulated		Date	Construction
Property	Location	State	and Easements	Property Type	Encumbrances(1)		Land		Equipment		Acquisition			Impairment		Land		Equipment		Total(2)		Depreciation(3)		Acquired	Date
1415 Industrial Drive*	Chillicothe	OH	1	Industrial	$	—	$	1,200	$	3,265	$	—		$	—	$	1,200	$	3,265	$	4,465	$	299	1/29/2015	2012
2231 Schrock Road	Columbus	OH	1	Office	—		700		4,472		455			—		700		4,927		5,627		439		1/29/2015	1999
5300 Centerpoint Parkway*	Groveport	OH	1	Industrial	—		2,700		29,863		—			—		2,700		29,863		32,563		2,737		1/29/2015	2014
200 Orange Point Drive*	Lewis Center	OH	1	Industrial	—		1,300		8,613		158			—		1,300		8,771		10,071		791		1/29/2015	2013
301 Commerce Drive*	South Point	OH	1	Industrial	—		600		4,530		—			—		600		4,530		5,130		415		1/29/2015	2013
2820 State Highway 31*	McAlester	OK	1	Industrial	—		581		2,237		4,632			—		581		6,869		7,450		322		1/29/2015	2012
5 Logistics Drive*	Carlisle	PA	1	Industrial	—		3,299		15,515		—			—		3,299		15,515		18,814		—		9/20/2018	2016
8800 Tinicum Boulevard	Philadelphia	PA	1	Office	40,945		3,900		67,116		303			—		3,900		67,419		71,319		6,168		1/29/2015	2000
9680 Old Bailes Road	Fort Mill	SC	1	Office	—		800		8,057		—			—		800		8,057		8,857		739		1/29/2015	2007
996 Paragon Way*	Rock Hill	SC	1	Industrial	—		2,600		35,920		—			—		2,600		35,920		38,520		3,293		1/29/2015	2014
510 John Dodd Road*	Spartanburg	SC	1	Industrial	—		3,300		57,998		38			—		3,300		58,036		61,336		5,317		1/29/2015	2012
4836 Hickory Hill Road*	Memphis	TN	1	Industrial	—		1,402		10,769		635			—		1,402		11,404		12,806		1,052		12/23/2014	1984
2020 Joe B. Jackson Parkway*	Murfreesboro	TN	1	Industrial	—		7,500		55,259		—			—		7,500		55,259		62,759		5,065		1/29/2015	2012
16001 North Dallas Parkway	Addison	TX	2	Office	—		10,107		95,124		1,328			—		10,107		96,452		106,559		13,603		1/16/2013	1987
2115-2116 East Randol Mill Road	Arlington	TX	1	Office	—		2,100		9,769		1,373			—		2,100		11,142		13,242		1,450		1/29/2015	1989
Research Park-Cisco Building 3	Austin	TX	1	Industrial	—		539		4,849		471			—		539		5,320		5,859		2,412		6/16/1999	1999
Research Park-Cisco Building 4	Austin	TX	1	Industrial	—		902		8,158		720			—		902		8,878		9,780		3,996		6/16/1999	1999
1001 Noble Energy Way	Houston	TX	1	Office	—		3,500		118,128		739			—		3,500		118,867		122,367		10,872		1/29/2015	1998
10451 Clay Road	Houston	TX	1	Office	—		5,200		21,812		—			—		5,200		21,812		27,012		1,999		1/29/2015	2013
202 North Castlegory Road	Houston	TX	1	Office	—		887		12,594		1			—		887		12,595		13,482		446		5/12/2017	2016
6380 Rogerdale Road	Houston	TX	1	Office	—		13,600		33,228		638			—		13,600		33,866		47,466		3,056		1/29/2015	2006
4221 W. John Carpenter Freeway	Irving	TX	1	Office	—		542		4,879		186			—		542		5,065		5,607		2,526		3/19/1998	1995
8675,8701-8711 Freeport Pkwy and 8901 Esters Blvd	Irving	TX	3	Office	—		12,300		69,310		—			—		12,300		69,310		81,610		6,354		1/29/2015	1990
1511 East Common Street	New Braunfels	TX	1	Office	—		2,700		11,712		—			—		2,700		11,712		14,412		1,074		1/29/2015	2005
2900 West Plano Parkway	Plano	TX	1	Office	—		5,200		22,291		—			—		5,200		22,291		27,491		2,043		1/29/2015	1998
3400 West Plano Parkway	Plano	TX	1	Office	—		3,000		31,392		212			—		3,000		31,604		34,604		2,880		1/29/2015	1994
19100 Ridgewood Parkway	San Antonio	TX	1	Office	—		4,600		187,539		522			—		4,600		188,061		192,661		17,230		1/29/2015	2008
3600 Wiseman Boulevard	San Antonio	TX	1	Office	—		3,197		12,175		112			—		3,197		12,287		15,484		1,688		3/19/2013	2004
1800 Novell Place	Provo	UT	1	Office	—		6,700		78,940		(50		)	—		6,651		78,939		85,590		12,499		6/1/2012	2000
4885-4931 North 300 West	Provo	UT	2	Office	—		3,400		25,938		—			—		3,400		25,938		29,338		3,621		2/28/2013	2009

S- 12

SELECT INCOME REIT

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)

September 30, 2018

(dollars in thousands)

			Number of				Initial Cost to				Costs						Gross Amount Carried at
			Buildings,				Company				Capitalized						Close of Period(4)									Original
			Land Parcels	Property					Buildings  and		Subsequent to								Buildings  and				Accumulated		Date	Construction
Property	Location	State	and Easements	Type	Encumbrances(1)		Land		Equipment		Acquisition		Impairment				Land		Equipment		Total(2)		Depreciation(3)		Acquired	Date
1095 South 4800 West*	Salt Lake City	UT	1	Industrial	$	—	$	1,500	$	6,913	$	—	$	—			$	1,500	$	6,913	$	8,413	$	634	1/29/2015	2012
1901 Meadowville Technology Parkway*	Chester	VA	1	Industrial	49,251		4,000		67,511		—		—				4,000		67,511		71,511		6,188		1/29/2015	2012
Two Commercial Place	Norfolk	VA	1	Office	—		4,497		32,505		16		—				4,497		32,521		37,018		1,151		4/28/2017	1974
1910 East Parham Road	Richmond	VA	1	Office	—		778		2,362		12		—				778		2,374		3,152		188		7/20/2015	1989
1920 East Parham Road	Richmond	VA	1	Office	—		916		2,780		174		—				916		2,954		3,870		228		7/20/2015	1989
1950 East Parham Road	Richmond	VA	1	Office	—		708		2,148		—		—				708		2,148		2,856		170		7/20/2015	2012
501 South 5th Street	Richmond	VA	1	Office	—		13,849		109,823		254		—				13,849		110,077		123,926		14,427		7/2/2013	2009
9201 Forest Hill Avenue	Richmond	VA	1	Office	—		1,270		4,824		145		—				1,270		4,969		6,239		241		10/12/2016	1985
1751 Blue Hills Drive	Roanoke	VA	1	Industrial	—		4,300		19,236		224		—				4,300		19,460		23,760		1,853		1/29/2015	2003
45101 Warp Drive	Sterling	VA	1	Office	—		4,336		29,910		52		—				4,336		29,962		34,298		4,367		11/29/2012	2001
45201 Warp Drive	Sterling	VA	1	Office	—		2,735		16,198		—		—				2,735		16,198		18,933		2,362		11/29/2012	2000
45301 Warp Drive	Sterling	VA	1	Office	—		2,803		16,130		—		—				2,803		16,130		18,933		2,352		11/29/2012	2000
181 Battaile Drive*	Winchester	VA	1	Industrial	—		1,487		12,854		11		—				1,487		12,865		14,352		4,006		4/20/2006	1987
351, 401, 501 Elliott Ave West	Seattle	WA	3	Office	70,346		34,999		94,407		1,401		—				34,999		95,808		130,807		8,713		1/29/2015	2000
Total			366		210,624		1,057,285		3,169,227		81,997		(12,651		)	—	1,057,197		3,238,661		4,295,858		369,252
Properties Held For Sale
501 Ridge Avenue	Hanover	PA	1	Industrial	—		4,800		22,200		31		(15,241		)		3,076		8,714		11,790		46		9/24/2008	1948
91-008 Hanua	Kapolei	HI	1	Land	—		3,541		—		7		—				3,541		7		3,548		3		6/15/2005	—
Total			2		—		8,341		22,200		38		(15,241		)		6,617		8,721		15,338		49
Grand Total			368		$	210,624	$	1,065,626	$	3,191,427	$	82,035	$	(27,892	)		$	1,063,814	$	3,247,382	$	4,311,196	$	369,301
Segment Data
SIR			99		$	161,373	$	399,755	$	2,460,978	$	43,941	$	(27,892	)		$	397,288	$	2,479,494	$	2,876,782	$	281,023
ILPT			269		49,251		665,871		730,449		38,094		—				666,526		767,888		1,434,414		88,278
Total			368		$	210,624	$	1,065,626	$	3,191,427	$	82,035	$	(27,892	)		$	1,063,814	$	3,247,382	$	4,311,196	$	369,301

(1) Represents mortgage debt and includes the unamortized balance of the fair value adjustments and debt issuance costs totaling $72.

(2) Excludes value of real estate intangibles.

(3) Depreciation on buildings and improvements is provided for periods ranging up to 40 years and on equipment up to 12 years.

(4) The total aggregate cost for U.S. federal income tax purposes is approximately $4,711,542.

* Owned by ILPT.

S- 13

SELECT INCOME REIT

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)

September 30, 2018

(dollars in thousands)

Analysis of the carrying amount of real estate properties and accumulated depreciation:

	Real Estate			Accumulated
	Properties			Depreciation
Balance at December 31, 2015	$	4,119,668		$	(164,779	)
Additions	28,538			(78,151		)
Asset impairment	(5,484		)	—
Disposals	(302		)	302
Balance at December 31, 2016	4,142,420			(242,628		)
Additions	92,029			(80,239		)
Asset impairment	(229		)	—
Disposals	(1,680		)	1,680
Cost basis adjustment (1)	(6,846		)	6,938
Reclassification of property held for sale	(5,829		)	—
Balance at December 31, 2017	4,219,865			(314,249		)
Additions	107,147			(61,162		)
Asset impairment	(9,706		)	—
Disposals	(576		)	576
Cost basis adjustment (1)	(5,535		)	5,535
Reclassification of property held for sale	(15,337		)	48
Balance at September 30, 2018	$	4,295,858		$	(369,252	)

(1) Represents the reclassification between accumulated depreciation and building made to a property at fair value, that was previously classified as held for sale, in accordance with GAAP.

S- 14

XML

Document and Entity Information - USD ($) $ in Billions	12 Months Ended
	Dec. 31, 2018	Feb. 25, 2019	Jun. 29, 2018
Document and Entity Information
Entity Registrant Name	OFFICE PROPERTIES INCOME TRUST
Entity Central Index Key	0001456772
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-K
Document Period End Date	Dec. 31, 2018
Document Fiscal Year Focus	2018
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Common Stock, Shares Outstanding		48,082,903
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 1.6

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
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	0	467,499
Assets of properties held for sale	253,501	0
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
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	0
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	0	20,496
Shareholders’ equity:
Common shares of beneficial interest, $.01 par value: 200,000,000 shares authorized, respectively, 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

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Common shares of beneficial interest, par value (in dollars per share)	$ 0.01	$ 0.01
Common shares of beneficial interest, shares authorized	200,000,000	200,000,000
Common shares of beneficial interest, shares issued	48,082,903	24,786,479
Common shares of beneficial interest, shares outstanding	48,082,903	24,786,479

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Statement [Abstract]
Rental income	$ 426,560	$ 316,532	$ 258,180
EXPENSES:
Real estate taxes	49,708	37,942	30,703
Cost of goods and services sold	26,425	20,998	17,269
Other operating expenses	89,610	65,349	54,290
Depreciation and amortization	162,488	109,588	73,153
Loss on impairment of real estate	8,630	9,490	0
Acquisition and transaction related costs	14,508	0	1,191
General and administrative	24,922	18,847	14,897
Total expenses	376,291	262,214	191,503
Gain on sale of real estate	20,661	0	79
Dividend income	1,337	1,216	971
Unrealized loss on equity securities	(7,552)	0	0
Interest income	639	1,962	158
Interest expense (including net amortization of debt premiums and discounts and deferred financing fees of $3,626, $3,420, and $2,832, respectively)	(89,865)	(65,406)	(45,060)
Gain (loss) on early extinguishment of debt	(709)	(1,715)	104
Income (loss) from continuing operations before income taxes, equity in earnings of investees and gain on sale of real estate	(25,220)	(9,625)	22,929
Income tax expense	(117)	(101)	(101)
Equity in net earnings (losses) of investees	(2,269)	(13)	137
Income (loss) from continuing operations	(27,606)	(9,739)	22,965
Income from discontinued operations	5,722	21,829	34,878
Net income (loss)	(21,884)	12,090	57,843
Other comprehensive income (loss):
Unrealized gain on equity securities	0	24,042	30,465
Equity in unrealized gain (loss) of investees	(40)	9,428	11,359
Other comprehensive income (loss)	(40)	33,470	41,824
Comprehensive income (loss)	(21,924)	45,560	99,667
Net income (loss)	(21,884)	12,090	57,843
Preferred units of limited partnership distributions	(371)	(275)	0
Net income (loss) available for common shareholders	$ (22,255)	$ 11,815	$ 57,843
Weighted average common shares outstanding (basic) (in shares)	24,830	21,158	17,763
Weighted average common shares outstanding (diluted) (in shares)	24,830	21,158	17,768
Per common share amounts (basic and diluted):
Income (loss) from continuing operations (in dollars per share)	$ (1.13)	$ (0.47)	$ 1.29
Income from discontinued operations (in dollars per share)	0.23	1.03	1.96
Net income (loss) available for common shareholders (in dollars per share)	$ (0.90)	$ 0.56	$ 3.26

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Statement [Abstract]
Net amortization of debt premiums and discounts and debt issuance costs	$ 3,626	$ 3,420	$ 2,832

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Shares	Additional Paid In Capital	Cumulative Net Income	Cumulative Other Comprehensive Income (Loss)	Cumulative Common Distributions
Balance beginning at Dec. 31, 2015	$ 956,651	$ 178	$ 1,473,015	$ 38,486	$ (14,867)	$ (540,161)
Balance (in shares) at Dec. 31, 2015		17,781,577
Increase (Decrease) in Shareholders' Equity
Share grants	1,389		1,389
Share grants (in shares)		16,475
Share repurchases	(337)		(337)
Share repurchases (in shares)		(3,575)
Equity in unrealized gain of investees	11,359				11,359
Unrealized gain on equity securities	30,465				30,465
Net income (loss) available for common shareholders	57,843			57,843
Distributions to common shareholders	(122,366)					(122,366)
Balance ending at Dec. 31, 2016	935,004	$ 178	1,474,067	96,329	26,957	(662,527)
Balance (in shares) at Dec. 31, 2016		17,794,477
Increase (Decrease) in Shareholders' Equity
Issuance of shares, net	493,866	$ 70	493,796
Issuance of shares, net (in shares)		6,976,757
Share grants	1,361		1,361
Share grants (in shares)		18,836
Share repurchases	(264)		(264)
Share repurchases (in shares)		(3,591)
Equity in unrealized gain of investees	9,428				9,428
Unrealized gain on equity securities	24,042				24,042
Net income (loss) available for common shareholders	11,815			11,815
Distributions to common shareholders	(145,209)					(145,209)
Balance ending at Dec. 31, 2017	1,330,043	$ 248	1,968,960	108,144	60,427	(807,736)
Balance (in shares) at Dec. 31, 2017		24,786,479
Increase (Decrease) in Shareholders' Equity
Cumulative adjustment upon adoption | ASU 2016-01				60,281	(60,281)
Cumulative adjustment upon adoption | ASU 2014-09	712			712
Adjusted balance	1,330,755	$ 248	1,968,960	169,137	146	(807,736)
Issuance of shares, net	639,783	$ 233	639,550
Issuance of shares, net (in shares)		23,281,738
Share grants	1,523		1,523
Share grants (in shares)		19,925
Shares forfeitures or repurchases	(232)		(232)
Shares forfeitures or repurchases (in shares)		(5,239)
Equity in unrealized gain of investees	(40)				(40)
Net income (loss) available for common shareholders	(22,255)			(22,255)
Distributions to common shareholders	(170,566)					(170,566)
Balance ending at Dec. 31, 2018	$ 1,778,968	$ 481	$ 2,609,801	$ 146,882	$ 106	$ (978,302)
Balance (in shares) at Dec. 31, 2018		48,082,903

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ (21,884)	$ 12,090	$ 57,843
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	66,685	52,427	42,489
Net amortization of debt premiums, discounts and issuance costs	3,626	3,420	2,832
Gain on sale of real estate	(20,661)	0	(79)
(Gain) loss on early extinguishment of debt	709	1,715	(104)
Straight line rental income	(10,164)	(5,582)	(2,691)
Amortization of acquired real estate leases	94,375	56,174	29,003
Amortization of deferred leasing costs	4,833	3,802	3,265
Other non-cash expenses, net	250	300	284
Loss on impairment of real estate	8,630	9,490	0
Unrealized loss on equity securities	7,552	0	0
Increase in carrying value of property included in discontinued operations	0	(619)	0
Equity in net (earnings) losses of investees	2,269	13	(137)
Equity in earnings of Select Income REIT included in discontinued operations	(20,873)	(21,584)	(35,381)
Net gain on issuance of shares by Select Income REIT included in discontinued operations	(29)	(72)	(86)
Loss on sale of Select Income REIT shares included in discontinued operations	15,180	0	0
Distributions of earnings from Select Income REIT	20,873	21,584	35,381
Change in assets and liabilities:
Deferred leasing costs	(9,203)	(5,017)	(10,196)
Rents receivable	5,021	(4,990)	1,670
Other assets	1,127	1,368	25
Accounts payable and other liabilities	(3,303)	11,696	1,970
Due to related persons	(97)	1,339	634
Net cash provided by operating activities	144,916	137,554	126,722
CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate acquisitions and deposits	25,221	(1,187,012)	(200,331)
Real estate improvements	(47,500)	(45,940)	(32,999)
Distributions in excess of earnings from Select Income REIT	17,251	29,248	14,954
Distributions in excess of earnings from unconsolidated joint ventures	3,751	482	0
Proceeds from sale of properties, net	304,808	15,083	263
Proceeds from sale of Select Income REIT shares	435,125	0	0
Net cash provided by (used in) investing activities	738,656	(1,188,139)	(218,113)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of mortgage notes payable	(3,708)	(11,909)	(107,933)
Repayment of unsecured term loan	(162,000)	0	0
Proceeds from issuance of senior notes, after discounts	0	297,954	300,235
Proceeds from issuance of common shares, net	0	493,866	0
Borrowings on unsecured revolving credit facility	238,000	645,000	399,000
Repayments on unsecured revolving credit facility	(741,000)	(235,000)	(356,000)
Payment of debt issuance costs	(3,936)	(4,644)	(544)
Repurchase of common shares	(232)	(264)	(337)
Redemption of preferred units of limited partnership	(20,221)	0	0
Preferred units of limited partnership distributions	(646)	0	0
Distributions to common shareholders	(170,566)	(145,209)	(122,366)
Net cash (used in) provided by financing activities	(864,309)	1,039,794	112,055
Increase (decrease) in cash, cash equivalents and restricted cash	19,263	(10,791)	20,664
Cash, cash equivalents and restricted cash at beginning of period	19,680	30,471	9,807
Cash, cash equivalents and restricted cash at end of period	38,943	19,680	30,471
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid	65,188	55,048	41,139
Income taxes paid	68	117	111
NON-CASH INVESTING ACTIVITIES:
Sale of real estate	0	0	3,600
Mortgage note receivable related to sale of real estate	0	0	(3,600)
Working capital assumed	30,483	(1,596)	0
Real estate and investment acquired by issuance of common shares	(639,809)	0	0
Real estate and investment acquired by assumption of debt	(1,719,772)	0	0
NON-CASH FINANCING ACTIVITIES:
SIR unsecured revolving credit facility	108,000	0
Assumption of mortgage notes payable	161,772	167,548	0
Assumption of senior unsecured notes	1,450,000	0	0
Preferred units of limited partnership issued	0	20,221	0
Issuance of common shares	$ 639,809	$ 0	$ 0

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CONSOLIDATED STATEMENTS OF CASH FLOWS - SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Statement of Cash Flows [Abstract]
Cash and cash equivalents	$ 35,349	$ 16,569	$ 29,941
Restricted cash	3,594	3,111	530
Total cash, cash equivalents and restricted cash shown in the statements of cash flows	$ 38,943	$ 19,680	$ 30,471	$ 9,807

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Organization

12 Months Ended

Dec. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Organization

Office Properties Income Trust (formerly Government Properties Income Trust, or GOV), or OPI, we, us or our, is a real estate investment trust, or REIT, formed in 2009 under Maryland law.

As of December 31, 2018, our wholly owned properties were comprised of 247 buildings, or our consolidated properties, located in 38 states and the District of Columbia containing approximately 31.9 million rentable square feet and we had a noncontrolling ownership interest in two unconsolidated joint ventures that own three buildings totaling an additional approximately 0.4 million rentable square feet.

Merger with Select Income REIT

On September 14, 2018, we and our wholly owned subsidiary, GOV MS REIT, a Maryland real estate investment trust, or Merger Sub, and Select Income REIT, or SIR, a REIT that owned properties that are primarily net leased to single tenants, entered into an Agreement and Plan of Merger, or the SIR Merger Agreement, pursuant to which SIR merged with and into Merger Sub, with Merger Sub continuing as the surviving entity in the merger, or the SIR Merger.

The SIR Merger was consummated and became effective at 4:01 p.m., Eastern Time, on December 31, 2018. Pursuant to the terms set forth in the SIR Merger Agreement, at the effective time of the SIR Merger, we issued to SIR’s shareholders 1.04 of our common shares of beneficial interest, $.01 par value per share, or our common shares, for each common share of SIR issued and outstanding immediately prior to the effective time of the SIR Merger (other than SIR common shares held by us or any of our or SIR’s wholly owned subsidiaries), with cash paid in lieu of fractional shares and any outstanding unvested SIR common share awards under SIR’s equity compensation plan were converted into awards under our 2009 Incentive Share Award Plan, or the 2009 Plan, subject to substantially similar vesting requirements and other terms and conditions, of a number of our common shares determined by multiplying the number of unvested SIR common shares subject to such award by 1.04 (rounded down to the nearest whole number), or the Exchange Ratio. Later on December 31, 2018, Merger Sub merged with and into us, with us as the surviving entity and we changed our name to “Office Properties Income Trust.” Effective January 1, 2019, the ticker symbol for our common shares, which continue to be traded on The Nasdaq Stock Market LLC, or Nasdaq, was changed to “OPI.”

As a condition of the SIR Merger, on October 9, 2018, we sold all of the 24,918,421 common shares of SIR we then owned, or the Secondary Sale, in an underwritten public offering at a price of $18.25 per share, raising net proceeds of $435,125 after deducting underwriting discounts and offering expenses. We used the net proceeds from the Secondary Sale to repay amounts outstanding under our revolving credit facility.

In addition, as a condition of the SIR Merger, on December 27, 2018, SIR paid a pro rata distribution to SIR's shareholders as of the close of business on December 20, 2018 of all 45,000,000 common shares of beneficial interest of Industrial Logistics Properties Trust, or ILPT, that SIR owned, or the ILPT Distribution.

Upon consummation of the SIR Merger, SIR’s separate business and property management agreements with RMR LLC were terminated for convenience and RMR LLC waived its right to receive payment of the termination fees due on account thereof, pursuant to the terms of the letter agreement entered into between SIR and RMR LLC on September 14, 2018.

Also upon consummation of the SIR Merger, we assumed all of the principal and interest on all of SIR’s outstanding $400,000 aggregate principal amount of 3.60% Senior Notes due 2020, $300,000 aggregate principal amount of 4.15% Senior Notes due 2022, $350,000 aggregate principal amount of 4.250% Senior Notes due 2024 and $400,000 aggregate principal amount of 4.50% Senior Notes due 2025.

The aggregate transaction value, based on the closing price of our common shares on December 31, 2018 of $6.87 per share (prior to the Reverse Share Split, as defined below), was approximately $2,415,053, excluding closing costs of approximately $27,497 ($14,508 of which was paid by us and $12,989 of which was paid by SIR) and including the repayment or assumption of $1,719,772 of SIR debt. Following the SIR Merger and the other transactions contemplated by the SIR Merger Agreement, including the Secondary Sale and the ILPT Distribution, or, collectively, the SIR Transactions, we acquired SIR's property portfolio of 99 buildings with approximately 16.5 million rentable square feet.

Reverse Share Split

After the SIR Merger and the other SIR Transactions, on December 31, 2018, we effected a reverse share split of our common shares, or the Reverse Share Split, pursuant to which every four of our common shares issued and outstanding as of the effective time of the Reverse Share Split were converted and reclassified into one of our common shares of beneficial interest, par value $.04 per share, subject to the receipt of cash in lieu of fractional shares. Following the effective time of the Reverse Share Split on December 31, 2018, we changed the par value of our common shares from $.04 per share back to $.01 per share. The Reverse Share Split affected all record holders of our common shares uniformly and did not affect any record shareholder’s percentage ownership interest in us. The Reverse Share Split reduced the number of our issued and outstanding common shares from 192,331,612 to 48,082,903. All impacted amounts and share information included in the consolidated financial statements and notes hereto 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 in the notes to these consolidated financial statements may not agree with previously reported amounts due to rounding of fractional shares.

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of Presentation.  These consolidated financial statements include the accounts of us and our subsidiaries, all of which are wholly owned directly or indirectly by us. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated.

Real Estate Properties.  We record our properties at cost and provide depreciation on real estate investments on a straight line basis over estimated useful lives generally ranging from 7 to 40 years.  In some circumstances, we engage independent real estate appraisal firms to provide market information and evaluations which are relevant to our purchase price allocations and determinations of useful lives; however, we are ultimately responsible for the purchase price allocations and determinations of useful lives.

We allocate the purchase prices of our properties to land, building and improvements based on determinations of the relative fair values of these assets assuming the properties are vacant. We determine the fair value of each property using methods similar to those used by independent appraisers. We allocate a portion of the purchase price of our properties to above market and below market leases based on the present value (using an interest rate which reflects the risks associated with acquired in place leases at the time each property was acquired by us) of the difference, if any, between (i) the contractual amounts to be paid pursuant to the acquired in place leases and (ii) our estimates of fair market lease rates for the corresponding leases, measured over a period equal to the terms of the respective leases. We allocate a portion of the purchase price to acquired in place leases and tenant relationships based upon market estimates to lease up the property based on the leases in place at the time of purchase.  We allocate this aggregate value between acquired in place lease values and tenant relationships based on our evaluation of the specific characteristics of each tenant’s lease. However, we have not separated the value of tenant relationships from the value of acquired in place leases because such value and related amortization expense is immaterial to the accompanying consolidated financial statements. In making these allocations, we consider factors such as estimated carrying costs during the expected lease up periods, including real estate taxes, insurance and other operating income and expenses and costs, such as leasing commissions, legal and other related expenses, to execute similar leases in current market conditions at the time a property was acquired by us. If the value of tenant relationships becomes material in the future, we may separately allocate those amounts and amortize the allocated amounts over the estimated life of the relationships. For transactions that qualify as business combinations, we allocate the excess, if any, of the consideration over the fair value of the assets acquired to goodwill.

We amortize capitalized above market lease values (included in acquired in place real estate leases, net in our consolidated balance sheets) and below market lease values (presented as assumed real estate lease obligations, net in our consolidated balance sheets) as a reduction or increase, respectively, to rental income over the terms of the associated leases. Such amortization resulted in net decreases to rental income of $2,903, $2,764 and $1,457 during the years ended December 31, 2018, 2017 and 2016, respectively. We amortize the value of acquired in place leases (included in acquired real estate leases, net in our consolidated balance sheets), exclusive of the value of above market and below market acquired in place leases, over the terms of the associated leases. Such amortization, which is included in depreciation and amortization expense, amounted to $91,472, $53,410, and $27,546 during the years ended December 31, 2018, 2017 and 2016, respectively. If a lease is terminated prior to its stated expiration, we write off the unamortized amounts relating to that lease.

As of December 31, 2018 and 2017, our acquired real estate leases and assumed real estate obligations, excluding properties classified as held for sale, were as follows:

	December 31,
	2018			2017
Acquired real estate leases:
Capitalized above market lease values	$	62,260		$	46,096
Less: accumulated amortization	(20,956		)	(27,259		)
Capitalized above market lease values, net	41,304			18,837
Lease origination value	1,168,979			472,928
Less: accumulated amortization	(153,725		)	(139,893		)
Lease origination value, net	1,015,254			333,035
Acquired real estate leases, net	$	1,056,558		$	351,872
Assumed real estate lease obligations:
Capitalized below market lease values	$	31,091		$	25,973
Less: accumulated amortization	(11,060		)	(12,338		)
Assumed real estate lease obligations, net	$	20,031		$	13,635

As of December 31, 2018, the weighted average amortization periods for capitalized above market leases, lease origination value and capitalized below market lease values were 5.4 years, 6.9 years and 5.8 years, respectively.  Future amortization of net intangible lease assets and liabilities, to be recognized over the current terms of the associated leases as of December 31, 2018 are estimated to be $203,554 in 2019, $180,025 in 2020, $153,089in 2021, $136,515 in 2022, $112,524 in 2023 and $250,820 thereafter.

We regularly evaluate whether events or changes in circumstances have occurred that could indicate an impairment in the value of long lived assets. If there is an indication that the carrying value of an asset is not recoverable, we estimate the projected undiscounted cash flows to determine if an impairment loss should be recognized. We determine the amount of any impairment loss by comparing the historical carrying value to estimated fair value. We estimate fair value through an evaluation of recent financial performance and projected discounted cash flows using standard industry valuation techniques. In addition to consideration of impairment upon the events or changes in circumstances described above, we regularly evaluate the remaining lives of our long lived assets. If we change our estimate of the remaining lives, we allocate the carrying value of the affected assets over their revised remaining lives.

Cash and Cash Equivalents. We consider highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.

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

Deferred Leasing Costs. Deferred leasing costs include brokerage, legal and other fees associated with our entering leases and we amortize those costs, which are included in depreciation and amortization expense, on a straight line basis over the terms of the respective leases. Deferred leasing costs, excluding properties classified as held for sale, totaled $38,840 and $32,990 at December 31, 2018 and 2017, respectively, and accumulated amortization of deferred leasing costs totaled $13,168 and $10,013 at December 31, 2018 and 2017, respectively. Future amortization of deferred leasing costs to be recognized during the current terms of our existing leases as of December 31, 2018 are estimated to be $4,925 in 2019, $4,215 in 2020, $3,599 in 2021, $2,902 in 2022, $2,363 in 2023 and $7,668 thereafter.

Debt Issuance Costs. Debt issuance costs include capitalized issuance or assumption costs related to borrowings, which are amortized to interest expense over the terms of the respective loans. Debt issuance costs, net of accumulated amortization, for our revolving credit facility are included in other assets in our consolidated balance sheets. As of December 31, 2018 and 2017, debt issuance costs for our revolving credit facility were $4,125 and $5,234 and accumulated amortization of debt issuance costs for our revolving credit facility were $49 and $3,849, respectively. Debt issuance costs, net of accumulated amortization, for our unsecured term loans, senior unsecured notes and mortgage notes payable are presented as a direct deduction from the associated debt liability in our consolidated balance sheets. As of December 31, 2018 and 2017, debt issuance costs, net of accumulated amortization, for our unsecured term loans, senior unsecured notes, and mortgage notes payable totaled $12,888 and $15,750, respectively. Future amortization of debt issuance costs to be recognized with respect to our revolving credit facility, unsecured term loans, senior unsecured notes and mortgage notes as of December 31, 2018 are estimated to be $2,890 in 2019, $2,189 in 2020, $2,049 in 2021, $1,725 in 2022, $406 in 2023 and $7,705 thereafter.

Equity Securities. As of December 31, 2018, we owned 2,801,061 common shares of class A common stock of RMR Inc., including 1,586,836 common shares acquired from SIR on December 31, 2018 in connection with the SIR Merger. Our equity securities are recorded at fair value based on their quoted market price at the end of each reporting period. Effective January 1, 2018, changes in the fair value of our equity securities are recorded through earnings in accordance with the Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. Prior to January 1, 2018, unrealized gains and losses on equity securities were recorded as a component of cumulative comprehensive income (loss) in shareholders' equity. As further described in Note 7, we initially acquired 1,541,201 shares of class A common stock of RMR Inc. on June 5, 2015 for cash and share consideration of $17,462. We concluded, for accounting purposes, that the cash and share consideration we paid for our investment in these shares represented a discount to the fair value of these shares. We initially accounted for this investment under the cost method of accounting and recorded this investment at its estimated fair value of $39,833 as of June 5, 2015 using Level 3 inputs, as defined in the fair value hierarchy under U.S. generally accepted accounting principles, or GAAP.  As a result, we recorded a liability for the amount by which the estimated fair value of these shares exceeded the price we paid for these shares. This liability is included in accounts payable and other liabilities in our consolidated balance sheets. This liability is being amortized on a straight line basis through December 31, 2035 as an allocated reduction to our business management and property management fee expense. We amortized $1,087 of this liability during each of the years ended December 31, 2018, 2017 and 2016. These amounts are included in the net business management and property management fee amounts for such periods. As of December 31, 2018, the remaining unamortized amount of this liability was $18,493. Future amortization of this liability as of December 31, 2018 is estimated to be $1,087 in 2019 through 2023 and $13,058 thereafter.

Equity Method Investments.  We account for our investments in Affiliates Insurance Company, or AIC, and SIR, until we sold the SIR common shares we owned as described in Note 1, using the equity method of accounting. Significant influence is present through common representation on the boards of trustees or directors of us, AIC and, until December 31, 2018, SIR. One of our Managing Trustees, Adam D. Portnoy, as the sole trustee of ABP Trust, is the controlling shareholder of The RMR Group Inc., or RMR Inc. He is also a director and officer of RMR Inc. Substantially all of the business of RMR Inc. is conducted by its majority owned subsidiary, RMR LLC, which is our manager, the manager of AIC and, until December 31, 2018, SIR. Most of our Trustees are directors of AIC. See Notes 7, 12 and 13 for further information of our investments in AIC and SIR.

In connection with our acquisition of First Potomac Realty Trust, or FPO, in 2017, we acquired 50% and 51% interests in two unconsolidated joint ventures which own three buildings. The buildings owned by these joint ventures are encumbered by an aggregate $82,000 of mortgage indebtedness. We do not control the activities that are most significant to these joint ventures and, as a result, we account for our investment in these joint ventures under the equity method of accounting. See Note 5 for further information regarding our unconsolidated joint ventures.

We periodically evaluate our equity method investments for possible indicators of other than temporary impairment whenever events or changes in circumstances indicate the carrying amount of the investment might not be recoverable. These indicators may include the length of time and the extent to which the market value of our investment is below our carrying value, the financial condition of our investees, our intent and ability to be a long term holder of the investment and other considerations. If the decline in fair value is judged to be other than temporary, we record an impairment charge to adjust the basis of the investment to its estimated fair value.  

Revenue Recognition. We recognize rental income from operating leases that contain fixed contractual rent changes on a straight line basis over the term of the lease agreements. We increased rental income by $10,164, $5,582 and $2,691 to record revenue on a straight line basis during the years ended December 31, 2018, 2017 and 2016, respectively. Rents receivable, excluding properties classified as held for sale, include $34,006 and $27,267 of straight line rent receivables at December 31, 2018 and 2017, respectively.

Certain of our leases with government tenants provide the tenant the right to terminate its lease if its respective legislature or other funding authority does not appropriate the funding necessary for the government tenant to meet its lease obligations; we have determined the fixed non-cancelable lease term of these leases to be the fully executed term of the lease because we believe the occurrence of termination to be a remote contingency based on both our historical experience and our assessment of the likelihood of lease cancellation on a separate lease basis. 

Income Taxes. We have elected to be taxed as a REIT under the United States Internal Revenue Code of 1986, as amended, or the IRC, and, accordingly, we generally will not be subject to federal income taxes provided we distribute our taxable income and meet certain other requirements to qualify as a REIT. We are, however, subject to certain state and local taxes.

Cumulative Other Comprehensive Income.Cumulative other comprehensive income represents our share of the cumulative comprehensive income of our equity method investees and, prior to the adoption of FASB ASU No. 2016-01 on January 1, 2018, unrealized gains and losses related to our investment in RMR Inc. See Notes 5 and 7 for further information regarding these investments.

Per Common Share Amounts. We calculate basic earnings per common share by dividing net income (loss) available for common shareholders by the weighted average number of our common shares of beneficial ownership, $.01 par value, or our common shares, outstanding during the period. We calculate diluted earnings per share using the more dilutive of the two class method or the treasury stock method.  Unvested share awards and other potentially dilutive common shares and the related impact on earnings, are considered when calculating diluted earnings per share.

Use of Estimates. Preparation of these financial statements in conformity with GAAP requires us to make estimates and assumptions that may affect the amounts reported in these consolidated financial statements and related notes. The actual results could differ from these estimates.

Reclassifications. Reclassifications have been made to the prior years’ consolidated financial statements to conform to the current year’s presentation.

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

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Weighted Average Common Shares

12 Months Ended

Dec. 31, 2018

Earnings Per Share, Basic and Diluted [Abstract]

Weighted Average Common Shares

Weighted Average Common Shares

The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted earnings per share (in thousands):

	For the Year Ended December 31,
	2018	2017	2016
Weighted average common shares for basic earnings per share	24,830	21,158	17,763
Effect of dilutive securities: unvested share awards	—	—	5
Weighted average common shares for diluted earnings per share (1)	24,830	21,158	17,768

(1) For the years ended December 31, 2018 and 2017, four and five unvested common shares, respectively, were not included in the calculation of diluted earnings per share because to do so would have been antidilutive.

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New Accounting Pronouncements

12 Months Ended

Dec. 31, 2018

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Pronouncements

New Accounting Pronouncements

On January 1, 2018, we adopted FASB ASU No. 2014-09 (and related clarifying guidance issued by the FASB), Revenue From Contracts With Customers, which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU No. 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU No. 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. A substantial portion of our revenue consists of rental income from leasing arrangements, which is specifically excluded from ASU No. 2014-09. We have adopted ASU No. 2014-09 using the modified retrospective approach, which resulted in an adjustment to reclassify a previous deferred gain on sale of real estate of $712 from accounts payable and other liabilities to cumulative net income. The adoption of ASU No. 2014-09 did not have a material impact on the amount or timing of our revenue recognition in our consolidated financial statements except for profit recognition on real estate sales.

On January 1, 2018, we adopted FASB ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which changes how entities measure certain equity investments and present changes in the fair value of financial liabilities measured under the fair value option that are attributable to their own credit. The implementation of ASU No. 2016-01 resulted in the reclassification of historical changes in the fair value of our equity securities of $45,116 from cumulative other comprehensive income to cumulative net income. We also reclassified $15,165 from cumulative other comprehensive income to cumulative net income for our share of cumulative other comprehensive income of certain of our equity method investees. Effective January 1, 2018, changes in the fair value of our equity securities are recorded through earnings in accordance with ASU No. 2016-01.

On January 1, 2018, we adopted FASB ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies how companies present and classify certain cash receipts and cash payments in the statements of cash flows. The implementation of this update resulted in the reclassification of $2,944 and $2,956 of accretion recorded in our equity in the earnings of SIR from cash flow from investing activities to cash flow from operating activities for the year ended December 31, 2017 and 2016, respectively. See Note 12 for further information regarding our investment in SIR.

On January 1, 2018, we adopted FASB ASU No. 2016-18, Restricted Cash, which requires companies to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The implementation of ASU No. 2016-18 resulted in a decrease of $1,563 and an increase of $492 of net cash provided by operating activities for the years ended December 31, 2017 and 2016, respectively. This update also requires a reconciliation of the totals in the statements of cash flows to the related captions in the balance sheets. As a result, amounts included in restricted cash on our consolidated balance sheets are included with cash and cash equivalents on the consolidated statements of cash flows. The adoption of this update did not change our balance sheet presentation.

On October 1, 2018, we adopted FASB ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which aligns the measurement and classification guidance for share based payments to nonemployees with the guidance for share based payments to employees, with certain exceptions. The adoption of this standard did not have a material impact in our consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements. In December 2018, the FASB issued ASU No. 2018-20 Leases (Topic 842), Narrow-Scope Improvements for Lessors. Collectively, these standards set out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. These standards are effective as of January 1, 2019. Upon adoption, we applied the package of practical expedients that allows an entity to not reassess (i) whether any expired or existing contracts are or contain leases, (ii) lease classification for any expired or existing leases and (iii) initial direct costs for any expired or existing leases. Furthermore, we applied the optional transition method in ASU No. 2018-11 which allows entities to initially apply the new leases standard at the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption, if any. Additionally, our leases met the criteria in ASU No. 2018-11 to not separate non-lease components from the related lease component; therefore, the accounting for these leases remained largely unchanged from the previous standard. The adoption of ASU No. 2016-02 and the related improvements did not have a material impact in our consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires that entities use a new forward looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are currently assessing the potential impact the adoption of ASU No. 2016-13 will have in our consolidated financial statements. We currently expect to adopt the standard using the modified retrospective approach.

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Real Estate Properties

12 Months Ended

Dec. 31, 2018

Real Estate [Abstract]

Real Estate Properties

Real Estate Properties

As of December 31, 2018, our wholly owned properties were comprised of 247 buildings, with an undepreciated carrying value of $4,161,591 and had a noncontrolling ownership interest in two unconsolidated joint ventures that own three buildings. We generally lease space at our properties on a gross lease, modified gross lease or net lease basis pursuant to fixed term contracts expiring between 2019 and 2039. Our leases generally require us to pay all or some property operating expenses and to provide all or most property management services. During the year endedDecember 31, 2018, we entered into 128 leases for 1,382,821 rentable square feet for a weighted (by rentable square feet) average lease term of 6.8 years and we made commitments for approximately $37,135 of leasing related costs. As of December 31, 2018, we have estimated unspent leasing related obligations of $58,380.

Merger with Select Income REIT

As described in Note 1, on December 31, 2018, we completed the SIR Merger, pursuant to which we acquired SIR's property portfolio of 99 buildings with approximately 16.5 million rentable square feet. The total consideration transferred and assumed debt for the SIR Merger is $2,415,053, including the assumption of $1,719,772 of debt and excluding acquisition related costs.

The following table summarizes the estimated consideration transferred and liabilities assumed:

Total Purchase Price (excluding acquisition costs):
	OPI common shares issued	23,282,704
	Closing price of OPI common shares on December 31, 2018	$	27.48
	Value of consideration transferred	$	639,809
	Cash consideration for fractional shares	8
	Equity issuance costs	(239		)
	Value of consideration transferred	$	639,578
	Assumed working capital	55,703
	Assumed senior unsecured notes, principal balance	1,450,000
	Assumed mortgage notes payable, principal balance	161,772
	SIR unsecured revolving credit facility repaid at closing	108,000
	Non-cash portion of purchase price	1,775,475
	Total consideration transferred and liabilities assumed	$	2,415,053

The following table summarizes the preliminary purchase price allocation for SIR based on estimated fair values as of the December 31, 2018:

Preliminary Purchase Price Allocation:
	Land	$	475,893
	Buildings and improvements	960,286
	Assets of properties held for sale	7,022
	Acquired real estate leases	858,121
	Cash	24,744
	Restricted cash	476
	Rents receivable, net	11,389
	Other assets (1)	89,188
	Total assets	2,427,119
	Unsecured revolving credit facility (2)	(108,000		)
	Senior unsecured notes (3)	(1,410,947		)
	Mortgage notes payable (4)	(159,490		)
	Accounts payable and other liabilities	(67,151		)
	Assumed real estate lease obligations	(11,833		)
	Due to related persons	(30,120		)
	Net assets acquired	639,578
	Assumed working capital	55,703
	SIR unsecured revolving credit facility repaid at closing (2)	108,000
	Assumed senior unsecured notes, principal balance	1,450,000
	Assumed mortgage notes payable, principal balance	161,772
	Consideration transferred and liabilities assumed (5)	$	2,415,053

(1) Other assets includes $84,229 for SIR's investment in shares of class A common stock of RMR Inc. which was recorded at fair value as of December 31, 2018.

(2) We repaid the outstanding balance under SIR's revolving credit facility at the closing of the SIR Merger with borrowings under our revolving credit facility.

(3) The aggregate principal balance of the senior unsecured notes was $1,450,000 as of December 31, 2018.

(4) The aggregate principal balance of the mortgage notes payable was $161,772 as of December 31, 2018.

(5) The allocation of purchase price is based on preliminary estimates and may change significantly following the completion of (i) third party appraisals and (ii) our analysis of intangibles and building valuations. Purchase price excludes acquisition related costs.

We were the accounting acquirer of SIR and accounted for the SIR Merger as a business combination because substantially all of the fair value of the gross assets acquired was not concentrated in a single identifiable asset or a group of similar identifiable assets and we acquired inputs and a substantive process that together significantly contributed to the ability to create outputs. Although we and SIR have no employees, the personnel and various services required to operate our businesses are provided pursuant to business and property management agreements with RMR LLC. These agreements were in effect before, and, in the case of us, remain in effect after, the SIR Merger. As a result, our acquisition of SIR included a substantive process for accounting purposes.

The assets acquired and liabilities assumed were recorded at their respective fair values and added to our consolidated balance sheet as of December 31, 2018. We allocated the purchase price based on the estimated fair values of the acquired assets and liabilities assumed in a manner consistent with our purchase price allocation accounting policy described in Note 2. We engaged an independent real estate consulting firm to assist us with determining the purchase price allocations and to provide market information and evaluations which are relevant to purchase price allocations and determinations of useful lives. As of the date acquired, the weighted average amortization periods for capitalized above market lease values, lease origination value and capitalized below market lease values were 5.8 years, 7.2 years and 5.7 years, respectively.

FPO Transaction

On October 2, 2017, we completed our acquisition of FPO pursuant to merger transactions, as a result of which we acquired 72 buildings with 6.0 million rentable square feet, and FPO's 50% and 51% interests in two joint ventures that own three buildings with 0.4 million rentable square feet, or collectively, the FPO Transaction. The aggregate value we paid for FPO was $1,370,888, including $651,696 in cash to FPO's shareholders, the repayment of $483,000 of FPO corporate debt, the assumption of $167,548 of mortgage debt; this amount excludes the $82,000 of mortgage debt that encumber the two properties owned by the two joint ventures and the payment of certain transaction fees and expenses, net of FPO cash on hand. We financed the cash payments for the FPO Transaction with borrowings under our revolving credit facility and with cash on hand, including net proceeds from our public offerings of common shares and senior unsecured notes, as described further in Notes 9 and 11. We accounted for the FPO Transaction as an asset acquisition. Our allocation of the purchase price was based on estimates of the relative fair value of the acquired assets and assumed liabilities.

The following table summarizes the total consideration paid and the estimated fair values of the assets acquired and liabilities assumed in the FPO Transaction:

Total Purchase Price:
	Cash consideration	$	1,175,140
	Acquisition related costs	9,575
	Total cash consideration	1,184,715
	Preferred units of limited partnership issued (1)	20,221
	Acquired net working capital	(1,596		)
	Assumed mortgage notes	167,548
	Non-cash portion of purchase price	186,173
	Gross purchase price	$	1,370,888
Purchase Price Allocation:
	Land	$	360,909
	Buildings and improvements	681,340
	Acquired real estate leases (2)	283,498
	Investment in unconsolidated joint ventures	51,305
	Cash	11,191
	Restricted cash	1,018
	Rents receivable	2,672
	Other assets	3,640
	Total assets	1,395,573
	Mortgage notes payable (3)	(167,936		)
	Assumed real estate lease obligations (2)	(5,776		)
	Accounts payable and accrued expenses	(10,640		)
	Rents collected in advance	(1,436		)
	Security deposits	(4,849		)
	Net assets acquired	1,204,936
	Assumed working capital	(1,596		)
	Assumed principal balance of debt	167,548
	Gross purchase price	$	1,370,888

(1) Pursuant to the terms of the FPO Transaction, each unit of limited partnership interest in FPO's operating partnership that was not liquidated on the closing date was exchanged on a one-for-one basis for 5.5% Series A Cumulative Preferred Units of the surviving subsidiary. As of December 31, 2017, the carrying value of these Series A Cumulative Preferred Units was $20,496 and was recorded as temporary equity on our consolidated balance sheet. On May 1, 2018, we redeemed all 1,813,504 of the outstanding 5.5% Series A Cumulative Preferred Units for $11.15 per unit (plus accrued and unpaid distributions) for an aggregate of $20,310.

(2) As of the date acquired, the weighted average amortization periods for capitalized above market lease values, lease origination value and capitalized below market lease values were 3.2 years, 3.1 years and 3.8 years, respectively.

(3) Includes fair value adjustments totaling $388 on $167,936 principal amount of mortgage notes we assumed in connection with the FPO Transaction.

Pro Forma Information (Unaudited):

The following table presents our pro forma results of operations for the years ended December 31, 2018 and 2017 as if the SIR Transactions and the FPO Transaction and related financing activities, had occurred on January 1, 2017. The SIR results of operations included in this pro forma financial information have been adjusted to remove ILPT's results of operations for the years ended December 31, 2018 and 2017. The effect of these adjustments was to decrease pro forma rental income $152,735 and $156,506 for the years ended December 31, 2018 and 2017, respectively, and to decrease net income $46,237 and $64,661 for the years ended December 31, 2018 and 2017, respectively. The FPO results of operations included in this pro forma financial information have been adjusted to remove the results of operations of properties and joint venture interests FPO sold from January 1, 2017 to October 2, 2017, the closing date of the FPO Transaction. The effect of these adjustments was to decrease pro forma rental income $804 for the year ended December 31, 2017 and to decrease net loss $47,019 for the year ended December 31, 2017.

This pro forma financial information is not necessarily indicative of what our actual financial position or results of operations would have been for the periods presented or for any future period. Differences could result from numerous factors, including future changes in our portfolio of investments, capital structure, property level operating expenses and revenues, including rents expected to be received on our existing leases or leases we may enter during and after 2019, changes in interest rates and other reasons. Actual future results are likely to be different from amounts presented in this pro forma financial information and such differences could be significant.

	Year Ended December 31,
	2018			2017
Rental income	$	758,596		$	746,801
Net loss	$	(87,240	)	$	(74,556	)
Net loss per common share	$	(1.82	)	$	(1.55	)

During the year ended December 31, 2018, we did not recognize any revenue or operating income from the assets acquired and liabilities assumed in the SIR Merger. During the year ended December 31, 2017, we recognized revenues of $36,722 and operating income of $3,230 from the consolidated properties acquired in the FPO Transaction and ($621) in equity in losses from our unconsolidated joint ventures acquired in the FPO Transaction.

Unconsolidated Joint Ventures

    We own interests in two joint ventures that own three buildings. We account for these investments under the equity method of accounting. As of December 31, 2018 and 2017, our investment in unconsolidated joint ventures consisted of the following:

	OPI Ownership	OPI Carrying Value of Investment at December 31,				Number of Office Buildings	Location	Square Feet
Joint Venture		2018		2017
Prosperity Metro Plaza	51%	$	23,969	$	27,888	2	Fairfax, VA	328,456
1750 H Street, NW	50%	19,696		22,314		1	Washington, D.C.	115,411
Total		$	43,665	$	50,202	3		443,867

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

Joint Venture	Interest Rate (1)	Maturity Date	Principal Balance at December 31, 2018 and 2017
Prosperity Metro Plaza	4.09%	12/1/2029	$	50,000
1750 H Street, NW	3.69%	8/1/2024	32,000
Weighted Average/Total	3.93%		$	82,000

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

At December 31, 2018, the aggregate unamortized basis difference of our unconsolidated joint ventures of $8,442 is primarily attributable to the difference between the amount for which we purchased our interest in the joint ventures, including transaction costs, and the historical carrying value of the net assets of the joint ventures. This difference will be amortized over the remaining useful life of the related properties and included in the reported amount of equity in net earnings (losses) of investees.

Other 2017 Acquisition Activities

During the year endedDecember 31, 2017, we acquired one building located in Manassas, VA with 69,374 rentable square feet. This building was 100% leased to Prince William County on the date of acquisition. This transaction was accounted for as an asset acquisition. The purchase price was $12,657, including capitalized acquisition costs of $37. Our allocation of the purchase price of this acquisition is based on the relative estimated fair value of the acquired assets and assumed liabilities is presented in the table below.  

Acquisition Date	Location	Number of Office Buildings	Square Feet	Purchase Price		Land		Building and Improvements		Other Assumed Assets
Jan 2017	Manassas, VA	1	69,374	$	12,657	$	1,562	$	8,253	$	2,842

In September 2017, we acquired transferable development rights that allow us to expand a property we own in Washington, D.C. for a purchase price of $2,030, excluding acquisition costs.

2016 Acquisition Activities

During the year ended December 31, 2016, we acquired five buildings with a combined 830,185 rentable square feet and a land parcel adjacent to one of our existing properties for an aggregate purchase price of $199,304, excluding acquisition costs. Our allocation of the purchase price of these acquisitions based on the estimated fair value of the acquired assets and assumed liabilities is presented in the table below.

Acquisition Date	Location	Number of Office Buildings	Square Feet	Purchase Price (1)		Land		Buildings and Improvements		Other Assumed Assets		Acquired Leases		Acquired Lease Obligations
Jan 2016	Sacramento, CA (2)	1	337,811	$	79,508	$	4,688	$	61,995	$	2,167	$	11,245	$	(587	)
Jul 2016	Atlanta, GA (3)	—	—	1,670		1,670		—		—		—		—
Dec 2016	Rancho Cordova, CA (2)	1	82,896	13,943		1,466		8,797		—		3,680		—
Dec 2016	Chantilly, VA (2)	3	409,478	104,183		6,966		74,214		—		23,003		—
		5	830,185	$	199,304	$	14,790	$	145,006	$	2,167	$	37,928	$	(587	)

(1) Excludes acquisition related costs.

(2) Accounted for as a business combination. 

(3) On July 6, 2016, we acquired a land parcel adjacent to one of our existing properties for $1,623. We accounted for this transaction as an asset acquisition and capitalized acquisition related costs of $47.

2018 Disposition Activities

During the year ended December 31, 2018, we sold 19 buildings with a combined 2,174,637 rentable square feet for an aggregate purchase price of $320,255, excluding closing costs, in five separate transactions. The sales of these properties, as presented in the table below, do not represent significant dispositions individually or in the aggregate nor do they represent a strategic shift. As a result, the results of operations of these properties are included in continuing operations through the date of sale in our consolidated statements of income (loss).

Date of Sale	Number of Office Buildings	Location	Square Feet	Gross  Sale Price (1)
Mar 2018 (2)	1	Minneapolis, MN	193,594	$	20,000
May 2018 (3)	1	New York, NY	187,060	118,500
May 2018 (4)	1	Sacramento, CA	110,500	10,755
Nov 2018 (5)	1	Golden, CO	43,231	4,000
Dec 2018 (6)	15	Southern Virginia	1,640,252	167,000
	19		2,174,637	$	320,255

(1) Gross sale price includes purchase price adjustments, if any, excludes closing costs.

(2) We recorded a $640 loss on impairment of real estate to reduce the carrying value of this property to its estimated fair value less costs to sell during the year ended December 31, 2018.

(3) We recorded a $17,249 gain on sale of real estate during the year ended December 31, 2018 as a result of this sale.

(4) We recorded a loss on impairment of real estate of $3,029 to reduce the carrying value of this property to its estimated fair value less costs to sell during the year ended December 31, 2018.

(5) We recorded a $54 gain on sale of real estate during the year ended December 31, 2018 as a result of this sale.

(6) We recorded a $3,358 gain on sale of real estate during the year ended December 31, 2018 as a result of this sale.

In February 2018, we entered an agreement to sell an office building located in Safford, AZ with 36,139 rentable square feet for $8,250. We recorded a $2,453 loss on impairment of real estate to reduce the carrying value of the property to its estimated fair value less costs to sell in the three months ended March 31, 2018. In April 2018, the buyer terminated the sale agreement and we removed this property from held for sale status. We recorded a $322 adjustment to impairment of real estate to increase the carrying value of the property to its estimated fair value during the year ended December 31, 2018.

As of December 31, 2018, we had 36 buildings with an aggregate undepreciated carrying value of $216,955 under agreement to sell in three separate transactions, as presented in the table below. We have classified these properties as held for sale in our consolidated balance sheet at December 31, 2018.     

Date of Sale Agreement	Number of Office Buildings	Location	Square  Feet	Gross Sale Price (1)
Aug 2018 (2)	1	Washington, D.C.	129,035	$	70,000
Sep 2018 (3)	34	Northern Virginia and Maryland	1,635,868	198,500
Nov 2018 (2)(4)	1	Kapolei, HI	416,956	7,100
	36		2,181,859	$	275,600

(1) Gross sale price includes purchase price adjustments, if any, excludes closing costs.

(2) These pending sales are subject to conditions; accordingly, we cannot be sure that we will complete these sales or that these sales will not be delayed or their terms will not change.

(3) We recorded a $2,830 loss on impairment of real estate to reduce the carrying value of these buildings to their estimated fair value less costs to sell during the year ended December 31, 2018. On February 8, 2019, we completed the sale of these buildings.

(4) Represents a land parcel acquired from SIR in the SIR Merger.

In addition to the properties in the table above, we are currently marketing for sale 34 buildings, including properties acquired in the SIR Merger containing approximately 5.3 million square feet as of December 31, 2018. We have determined that these properties did not meet the held for sale criteria as of December 31, 2018. We cannot be sure we will sell any of our properties that we are currently marketing or plan to market for sale or sell them for prices in excess of our carrying values or that we will not recognize impairment losses with respect to these properties.

2017 Disposition Activities - Continuing Operations

In October 2017, we sold one vacant office building located in Albuquerque, NM with 29,045 rentable square feet and a net book value of $1,885 as of the date of sale, for $2,000, excluding closing costs. During the year endedDecember 31, 2017, we recorded a $230 loss on impairment of real estate to reduce the carrying value of this property to its estimated fair value.

2017 Disposition Activities – Discontinued Operations

In August 2017, we sold one vacant office building in Falls Church, VA with 164,746 rentable square feet and a net book value of $12,901 as of the date of sale for $13,523, excluding closing costs. Results of operations for this property, which qualified as held for sale prior to our adoption in 2014 of ASU No. 2014-8,Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, are classified as discontinued operations in our consolidated financial statements. During theyear endedDecember 31, 2017, we recorded an adjustment of $619 to increase the carrying value of this property to its estimated fair value less costs to sell.

Summarized income statement information for this property is as follows:

Statements of Income (Loss)

	Year Ended December 31,
	2017			2016
Rental income	$	17		$	68
Real estate taxes	(88		)	(97		)
Utility expenses	(97		)	(146		)
Other operating expenses	(202		)	(300		)
General and administrative	(76		)	(114		)
Increase in carrying value of property included in discontinued operations	619			—
Income (loss) from discontinued operations	$	173		$	(589	)

2016 Disposition Activities

In July 2016, we sold an office building in Savannah, GA with 35,228 rentable square feet that had a net book value of $2,986 for $4,000, excluding closing costs. In connection with this sale, we provided $3,600 of mortgage financing to the buyer. The mortgage note requires interest to be paid at an annual rate of LIBOR plus 4.0%, subject to a minimum annual interest rate of 5.0%, and requires monthly payments of interest only until maturity on June 30, 2021. When this sale was completed, this transaction did not qualify for full gain recognition under GAAP and was accounted for under the installment method. Accordingly, we recognized a gain on sale of real estate of $79 during the year ended December 31, 2016 and recorded a deferred gain of $712. As disclosed in Note 4, on January 1, 2018, we adopted ASU No. 2014-09, which resulted in an adjustment to reclassify the deferred gain on sale of real estate of $712 from accounts payable and other liabilities to cumulative net income. The mortgage note receivable of $3,600 is included in other assets in our consolidated balance sheets at December 31, 2018 and 2017.

Operating leases

Our future minimum lease payments related to our consolidated properties and estimated real estate tax and other expense reimbursements scheduled to be received during the current terms of the existing leases as of December 31, 2018, including the properties acquired in the SIR Merger, are as follows:

Year	Minimum Lease Payments
2019	$	569,874
2020	514,551
2021	479,401
2022	434,135
2023	383,695
Thereafter	1,236,540
	$	3,618,196

Certain of our tenants have the right to terminate their leases before the lease term expires. As of December 31, 2018, tenants who currently represent approximately 5.6% of our total future minimum lease payments have currently exercisable rights to terminate their leases before the stated terms of their leases expire. In 2019, 2020, 2021, 2022, 2023, 2024, 2025, 2026 and 2028, early termination rights become exercisable by other government tenants who currently represent an additional approximately 2.1%, 6.4%, 1.9%, 2.7%, 0.6%, 1.4%, 4.7%, 2.0% and 1.9% of our total future minimum lease payments, respectively. In addition, as of December 31, 2018, 22 of our tenants have the currently exercisable right to terminate their leases if the respective legislature or other funding authority does not appropriate the funding necessary for the tenant to meet its obligation. These 22 tenants represent approximately 5.8% of our total future minimum lease payments as of December 31, 2018.

As part of the FPO Transaction, we assumed the lease for FPO's former corporate headquarters, which expires on January 31, 2021. We sublease a portion of the space, which sublease expires on January 31, 2021. Rent expense incurred under the lease, net of sublease revenue, was $1,707 and $374 for the years ended December 31, 2018 and 2017, respectively.

Future minimum rental payments due under the lease, net of subleased revenue, as of December 31, 2018 are summarized as follows:

Year	Minimum Rental Payments
2019	$	1,584
2020	1,627
2021	139
	$	3,350

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Business and Property Management Agreements with RMR LLC

12 Months Ended

Dec. 31, 2018

Related Party Transactions [Abstract]

Business and Property Management Agreements with RMR LLC

Business and Property Management Agreements with RMR LLC

We have no employees. The personnel and various services we require to operate our business are provided to us by RMR LLC. We have two agreements with RMR LLC to provide management services to us: (1) a business management agreement, which relates to our business generally, and (2) a property management agreement, which relates to our property level operations. Prior to the consummation of the SIR Merger, SIR had similar business and property management agreements with RMR LLC on substantially similar terms, which agreements were terminated in connection with the SIR Merger. See Notes 1 and 7 for further information regarding our relationship, agreements and transactions with SIR and RMR LLC.

Management Agreements with RMR LLC. Our management agreements with RMR LLC provide for an annual base management fee, an annual incentive management fee and property management and construction supervision fees, payable in cash, among other terms:

• Base Management Fee. The annual base management fee payable to RMR LLC by us for each applicable period is equal to the lesser of:

• the sum of (a) 0.5% of the average aggregate historical cost of the real estate assets acquired from a REIT to which RMR LLC provided business management or property management services, or the Transferred Assets, plus (b) 0.7% of the average aggregate historical cost of our real estate investments excluding the Transferred Assets up to $250,000, plus (c) 0.5% of the average aggregate historical cost of our real estate investments excluding the Transferred Assets exceeding $250,000; and

• the sum of (a) 0.7% of the average closing price per share of our common shares on the stock exchange on which such shares are principally traded during such period, multiplied by the average number of our common shares outstanding during such period, plus the daily weighted average of the aggregate liquidation preference of each class of our preferred shares outstanding during such period, plus the daily weighted average of the aggregate principal amount of our consolidated indebtedness during such period, or, together, our Average Market Capitalization, up to $250,000, plus (b) 0.5% of our Average Market Capitalization exceeding $250,000.

The average aggregate historical cost of our real estate investments includes our consolidated assets invested, directly or indirectly, in equity interests in or loans secured by real estate and personal property owned in connection with such real estate (including acquisition related costs and costs which may be allocated to intangibles or are unallocated), all before reserves for depreciation, amortization, impairment charges or bad debts or other similar non-cash reserves; provided, however, our ownership of SIR common shares was not included as part of our real estate investments for purposes of calculating our base management fee due to RMR LLC since SIR paid separate business management fees to RMR LLC.

• Incentive Management Fee. The incentive management fee which may be earned by RMR LLC for an annual period is calculated as follows:

• An amount, subject to a cap based on the value of our common shares outstanding, equal to 12% of the product of:

• our equity market capitalization on the last trading day of the year immediately prior to the relevant three year measurement period, and

• the amount (expressed as a percentage) by which the total return per share, as defined in the business management agreement and further described below, of our common shareholders (i.e., share price appreciation plus dividends) exceeds the total shareholder return of the applicable index, or the benchmark return per share, for the relevant measurement period. Effective as of January 1, 2019, we amended our business management agreement with RMR LLC so that the SNL U.S. Office REIT Index will be used for periods beginning on and after January 1, 2019, with the SNL U.S. REIT Equity Index for periods ending on or prior to December 31, 2018.

For purposes of the total return per share of our common shareholders, share price appreciation for a measurement period is determined by subtracting (1) the closing price of our common shares on the Nasdaq on the last trading day of the year immediately before the first year of the applicable measurement period, or the initial share price, from (2) the average closing price of our common shares on the 10 consecutive trading days having the highest average closing prices during the final 30 trading days in the last year of the measurement period.

• The calculation of the incentive management fee (including the determinations of our equity market capitalization, initial share price and the total return per share of our common shareholders) is subject to adjustments if additional common shares are issued during the measurement period.

• No incentive management fee is payable by us unless our total return per share during the measurement period is positive.

• The measurement periods are three year periods ending with the year for which the incentive management fee is being calculated.

• If our total return per share exceeds 12% per year in any measurement period, the benchmark return per share is adjusted to be the lesser of the total shareholder return of the applicable index for such measurement period and 12% per year, or the adjusted benchmark return per share. In instances where the adjusted benchmark return per share applies, the incentive management fee will be reduced if our total return per share is between 200 basis points and 500 basis points below the applicable index by a low return factor, as defined in the business management agreement, and there will be no incentive management fee paid if, in these instances, our total return per share is more than 500 basis points below the applicable index.

• The incentive management fee is subject to a cap. The cap is equal to the value of the number of our common shares which would, after issuance, represent 1.5% of the number of our common shares then outstanding multiplied by the average closing price of our common shares during the 10 consecutive trading days having the highest average closing prices during the final 30 trading days of the relevant measurement period.

• Incentive management fees we paid to RMR LLC for any period may be subject to “clawback” if our financial statements for that period are restated due to material non-compliance with any financial reporting requirements under the securities laws as a result of the bad faith, fraud, willful misconduct or gross negligence of RMR LLC and the amount of the incentive management fee we paid was greater than the amount we would have paid based on the restated financial statements.

Pursuant to our business management agreement with RMR LLC, we recognized net business management fees of $16,381, $12,464 and $10,222 for the years ended December 31, 2018, 2017 and 2016, respectively. The net business management fees we recognized are included in general and administrative expenses in our consolidated statements of comprehensive income (loss) for these periods. The net business management fees we recognized for each of the years ended December 31, 2018, 2017 and 2016 reflect a reduction of $603, for the amortization of the liability we recorded in connection with our investment in RMR Inc., as further described in Note 2. No incentive management fee was payable to RMR LLC under our business management agreement for the years ended December 31, 2018, 2017 or 2016.

• Property Management and Construction Supervision Fees. The property management fees payable to RMR LLC by us for each applicable period are equal to 3.0% of gross collected rents and the construction supervision fees payable to RMR LLC by us for each applicable period are equal to 5.0% of construction costs.

Pursuant to our property management agreement with RMR LLC, we recognized aggregate net property management and construction supervision fees of $13,989, $11,566 and $8,949 for each of the years ended December 31, 2018, 2017 and 2016, respectively. The net property management and construction supervision fees we recognized for the years ended December 31, 2018, 2017 and 2016 reflect a reduction of $484, for the amortization of the liability we recorded in connection with our investment in RMR Inc., as further described in Note 2. These amounts are included in other operating expenses or have been capitalized, as appropriate, in our consolidated financial statements.

Prior to the SIR Merger, SIR was party to business and property management agreements with RMR LLC. The terms of those agreements were substantially similar to the terms of our business and property management agreements with RMR LLC, including the determination of the fees payable to RMR LLC. Pursuant to its business management agreement with RMR LLC, SIR incurred an incentive management fee of $25,817 for the year ended December 31, 2018, payable in January 2019. In addition, SIR had incurred, in the ordinary course, but not paid, aggregate business management, property management and construction supervision fees of $2,185 at December 31, 2018. As successor to SIR as a result of the SIR Merger, we assumed the obligations to pay SIR’s 2018 incentive management fee and the business management, property management and construction supervision fees it had accrued, but not paid, as of December 31, 2018. We paid these fees to RMR LLC in January 2019. In calculating the incentive management fee payable by SIR for the year ended December 31, 2018, SIR’s total shareholder return per share was adjusted in accordance with its business management agreement to reflect aggregate net increases in the number of SIR common shares outstanding as a result of certain share issuances and repurchases by SIR during the three year measurement period, and compared to the SNL U.S. REIT Equity Index. In addition, the calculation of SIR’s benchmark return per share was also adjusted for these issuances and repurchases in accordance with its business management agreement. Upon consummation of the SIR Merger, SIR’s separate business and property management agreements with RMR LLC were terminated for convenience and RMR LLC waived its right to receive payment of the termination fees due on account of that termination.

Expense Reimbursement. We are generally responsible for all of our operating expenses, including certain expenses incurred or arranged by RMR LLC on our behalf. We are generally not responsible for payment of RMR LLC’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR LLC’s employees assigned to work exclusively or partly at our properties, our share of the wages, benefits and other related costs of RMR LLC’s centralized accounting personnel, our share of RMR LLC’s costs for providing our internal audit function and as otherwise agreed. Our property level operating expenses are generally incorporated into rents charged to our tenants, including certain payroll and related costs incurred by RMR LLC. We reimbursed RMR LLC $21,042, $15,045 and $12,276 for property management related expenses for each of the years ended December 31, 2018, 2017 and 2016, respectively. These amounts are included in other operating expenses in our consolidated statements of comprehensive income (loss) for these periods. We assumed the obligation to reimburse RMR LLC for similar expenses that RMR LLC had incurred on behalf of SIR in the ordinary course but which SIR had not paid as of December 31, 2018. We reimbursed RMR LLC $462 in January 2019 for these expenses. Our Audit Committee appoints our Director of Internal Audit and our Compensation Committee approves the costs of our internal audit function. The amounts we recognized as expense for internal audit costs were $237, $276 and $235 for the years ended December 31, 2018, 2017 and 2016, respectively. These amounts are included in general and administrative expenses in our consolidated statements of comprehensive income (loss) for these periods.

• Term. Our management agreements with RMR LLC have terms that end on December 31, 2038, and automatically extend on December 31st of each year for an additional year, so that the terms of our management agreements thereafter end on the 20th anniversary of the date of the extension.

• Termination Rights. We have the right to terminate one or both of our management agreements with RMR LLC: (i) at any time on 60 days’ written notice for convenience, (ii) immediately on written notice for cause, as defined therein, (iii) on written notice given within 60 days after the end of an applicable calendar year for a performance reason, as defined therein, and (iv) by written notice during the 12 months following a change of control of RMR LLC, as defined therein. RMR LLC has the right to terminate the management agreements for good reason, as defined therein.

• Termination Fee. If we terminate one or both of our management agreements with RMR LLC for convenience, or if RMR LLC terminates one or both of our management agreements for good reason, we have agreed to pay RMR LLC a termination fee in an amount equal to the sum of the present values of the monthly future fees, as defined therein, for the terminated management agreement(s) for the term that was remaining prior to such termination, which, depending on the time of termination, would be between 19 and 20 years. If we terminate one or both of our management agreements with RMR LLC for a performance reason, we have agreed to pay RMR LLC the termination fee calculated as described above, but assuming a 10 year term was remaining prior to the termination. We are not required to pay any termination fee if we terminate our management agreements with RMR LLC for cause or as a result of a change of control of RMR LLC.

• Transition Services. RMR LLC has agreed to provide certain transition services to us for 120 days following an applicable termination by us or notice of termination by RMR LLC, including cooperating with us and using commercially reasonable efforts to facilitate the orderly transfer of the management and real estate investment services provided under our business management agreement and to facilitate the orderly transfer of the management of the managed properties under our property management agreement, as applicable.

• Vendors. Pursuant to our management agreements with RMR LLC, RMR LLC may from time to time negotiate on our behalf with certain third party vendors and suppliers for the procurement of goods and services to us. As part of this arrangement, we may enter agreements with RMR LLC and other companies to which RMR LLC or its subsidiaries provide management services for the purpose of obtaining more favorable terms from such vendors and suppliers.

• Investment Opportunities. Under our business management agreement with RMR LLC, we acknowledge that RMR LLC may engage in other activities or businesses and act as the manager to any other person or entity (including other REITs) even though such person or entity has investment policies and objectives similar to ours and we are not entitled to preferential treatment in receiving information, recommendations and other services from RMR LLC.

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Related Party Transactions

12 Months Ended

Dec. 31, 2018

Related Party Transactions [Abstract]

Related Party Transactions

Related Person Transactions

We have relationships and historical and continuing transactions with SIR (prior to the SIR Merger), RMR LLC, RMR Inc., AIC and others related to them, including other companies to which RMR LLC or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. One of our Managing Trustees, Adam D. Portnoy, as the sole trustee of ABP Trust, is the controlling shareholder of RMR Inc. and is a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR LLC. Barry M. Portnoy was our other Managing Trustee and a managing director and an officer of RMR Inc. and an officer and employee of RMR LLC until his death on February 25, 2018. Mr. Mark L. Kleifges, was our other Managing Trustee and our Chief Financial Officer and Treasurer until he resigned from his positions with us effective December 31, 2018 and was an officer of, and will remain an employee of, RMR LLC until June 30, 2019. David M. Blackman, our other Managing Trustee and our President and Chief Executive Officer, and each of our other officers is also an officer and employee of RMR LLC. RMR LLC provides management services to us and provided management services to SIR until it ceased to exist.

Our Managing Trustees also served as the managing trustees of SIR until it ceased to exist. David M. Blackman, our President and Chief Executive Officer, and Jeffrey C. Leer, our Chief Financial Officer and Treasurer, also served as president and chief executive officer and chief financial officer and treasurer, respectively, of SIR until it ceased to exist. Each of SIR’s officers was also an officer and employee of RMR LLC. Our Independent Trustees also serve as independent directors or independent trustees of other public companies to which RMR LLC or its subsidiaries provide management services, including SIR (until it ceased to exist). Adam Portnoy serves, and, until his death, Barry Portnoy served, as a managing director or managing trustee of these companies and other officers of RMR LLC serve as managing trustees or managing directors of certain of these companies. In addition, officers of RMR LLC and RMR Inc. serve as our officers and officers of other companies to which RMR LLC or its subsidiaries provide management services.

Our Manager, RMR LLC. We have two agreements with RMR LLC to provide management services to us: (1) a business management agreement, which relates to our business generally, and (2) a property management agreement, which relates to our property level operations. SIR had similar agreements with RMR LLC until it ceased to exist. See Note 6 for further information regarding these management agreements with RMR LLC.

Leases with RMR LLC. We lease office space to RMR LLC in certain of our properties for RMR LLC’s property management offices. Pursuant to our lease agreements with RMR LLC, we recognized rental income from RMR LLC for leased office space of $1,026, $303 and $366 for the years ended December 31, 2018, 2017 and 2016, respectively. Our office space leases with RMR LLC are terminable by RMR LLC if our management agreements with RMR LLC are terminated.

Share Awards to RMR LLC Employees. As described further in Note 11, we award shares to our officers and other employees of RMR LLC annually. Generally, one fifth of these awards vest on the grant date and one fifth vests on each of the next four anniversaries of the grant dates. In certain instances, we may accelerate the vesting of an award, such as in connection with the award holder’s retirement as an officer of us or an officer or employee of RMR LLC. These awards to RMR LLC employees are in addition to the share awards granted to our current and former Managing Trustees, as Trustee compensation, and the fees we paid to RMR LLC. See Note 11 for information regarding our share awards and activity as well as certain share purchases we made in connection with share award recipients satisfying tax withholding obligations on vesting share awards.

Prior to the SIR Merger, SIR historically made share awards to certain RMR LLC employees under its equity compensation plan and during the years ended December 31, 2018, 2017 and 2016, SIR awarded to its officers and other employees of RMR LLC annual share awards of 58,700, 57,850 and 53,400 of its common shares, respectively, valued at $1,183, $1,337 and $1,397, in aggregate, respectively. During these periods, SIR repurchased some common shares awarded to certain of its trustees and officers and employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares. During the years ended December 31, 2018, 2017 and 2016 SIR accelerated the vesting of its common shares previously awarded to certain of its officers and employees of RMR LLC in connection with their termination of employment from RMR LLC.

Ownership Interest in RMR Inc. and Registration and Lock-up Agreements. We currently hold 2,801,061 shares of class A common stock of RMR Inc. which we and SIR acquired in June 2015 in a transaction pursuant to which, among other things, we, SIR and two other REITs managed by RMR LLC acquired class A common stock of RMR Inc. and entered into amended and restated business and property management agreements with RMR LLC. We are party to a registration rights agreement with RMR Inc. covering the shares of class A common stock of RMR Inc. issued to us in this transaction, pursuant to which we have demand and piggyback registration rights, subject to certain limitations. We are also party to a lock up and registration rights agreement with ABP Trust, Adam Portnoy and Barry Portnoy pursuant to which they (on behalf of themselves and their permitted transferees) agreed not to transfer the 175,000 of our common shares (after giving effect to the Reverse Share Split) ABP Trust received in this transaction for a 10 year period ending on June 5, 2025 and they have certain registration rights, subject, in each case, to certain exceptions. Prior to the SIR Merger, SIR was party to similar agreements which we assumed in the SIR Merger.

SIR. Until October 9, 2018, we owned 24,918,421 SIR common shares, or approximately 27.8% of its then outstanding common shares. As described further in Note 1, we completed the SIR Merger effective December 31, 2018 pursuant to the SIR Merger Agreement we and SIR entered into on September 14, 2018. On October 9, 2018, we sold all of these shares in the Secondary Sale. During 2018, our Managing Trustees also served as managing trustees of SIR, our President and Chief Executive Officer also served as SIR’s president and chief executive officer and Jeffrey C. Leer, our Chief Financial Officer and Treasurer, served as SIR’s chief financial officer and treasurer. During 2018, each of SIR’s officers was also an officer and employee of RMR LLC. RMR LLC provides management services to us and provided management services to SIR until it ceased to exist. See Note 1 for further information regarding the SIR Merger Agreement and the Secondary Sale and Notes 12 and 13 for further information regarding our investment in SIR.

AIC. We, ABP Trust, ILPT and four other companies to which RMR LLC provides management services currently own AIC, an Indiana insurance company, in equal amounts and are parties to a shareholders agreement regarding AIC. All our Trustees (other than David M. Blackman) and all the independent trustees and independent directors of the other AIC shareholders currently serve on the board of directors of AIC. On December 28, 2018, SIR and ILPT entered a stock purchase agreement, or the AIC Stock Purchase Agreement, pursuant to which ILPT purchased all of SIR’s shares of common stock of AIC, effective December 31, 2018 for a purchase price of $8,632. RMR LLC provides management and administrative services to AIC pursuant to a management and administrative services agreement with AIC. Pursuant to this agreement, AIC pays to RMR LLC a service fee equal to 3.0% of the total annual net earned premiums payable under then active policies issued or underwritten by AIC or by a vendor or an agent of AIC on its behalf or in furtherance of AIC’s business.

We and the other AIC shareholders participate in a combined property insurance program arranged and insured or reinsured in part by AIC. We paid aggregate annual premiums, including taxes and fees, of $1,211, $757 and $1,032 in connection with this insurance program for the policy years ending June 30, 2019, 2018 and 2017, respectively, which amount for the current policy year ending June 30, 2019 may be adjusted from time to time as we acquire or dispose of properties that are included in this insurance program. Properties we acquired as a result of the SIR Merger were already previously included in this insurance program because SIR was a participant in the program. SIR paid an annual premium, including taxes and fees, of $1,666 in connection with this insurance program for the policy year ending June 30, 2019.

As of December 31, 2018, 2017 and 2016, our investment in AIC had a carrying value of $8,751, $8,304 and $7,235, respectively. These amounts are included in other assets in our consolidated balance sheets. We recognized income of $516, $608 and $137 related to our investment in AIC for the years ended December 31, 2018, 2017 and 2016, respectively. These amounts are presented as equity in net earnings (losses) of investees in our consolidated statements of comprehensive income (loss). Our other comprehensive income (loss) includes our proportionate part of unrealized gains on securities which are owned and held for sale by AIC of ($69), $461 and $152 related to our investment in AIC for the years ended December 31, 2018, 2017 and 2016, respectively.

Directors’ and Officers’ Liability Insurance. We, RMR Inc., RMR LLC and certain other companies to which RMR LLC or its subsidiaries provide management services, including SIR (until it ceased to exist), participate in a combined directors’ and officers’ liability insurance policy. The current combined policy expires in September 2020. We paid aggregate premiums of $198, $91 and $106 in 2018, 2017 and 2016, respectively, for these policies.

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Concentration

12 Months Ended

Dec. 31, 2018

Risks and Uncertainties [Abstract]

Concentration

Concentration

Tenant and Credit Concentration

We define annualized rental income as the annualized contractual base rents from our tenants pursuant to our lease agreements as of the measurement date, plus straight line rent adjustments and estimated recurring expense reimbursements to be paid to us, and excluding lease value amortization. The U.S. Government, 13 state governments, and three other government tenants combined were responsible for approximately 35.4%, 62.6% and 87.9% of our annualized rental income as of December 31, 2018, 2017 and 2016, respectively. The U.S. Government is our largest tenant by annualized rental income and represents approximately 25.6%, 43.5% and 60.6% of our annualized rental income as of December 31, 2018, 2017 and 2016, respectively.

Geographic Concentration

At December 31, 2018, our 247 wholly owned buildings were located in 38 states and the District of Columbia. Consolidated properties located in Virginia, California, Texas, the District of Columbia and Maryland were responsible for approximately 15.4%, 11.3%, 10.9%, 9.8%, 9.4% of our annualized rental income as of December 31, 2018, respectively. Consolidated properties located in the metropolitan Washington, D.C. market area were responsible for approximately 26.5% of our annualized rental income as of December 31, 2018.

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Indebtedness

12 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Indebtedness

At December 31, 2018 and 2017, our outstanding indebtedness consisted of the following:

	December 31,
	2018			2017
Revolving credit facility, due in 2023	$	175,000		$	570,000
Unsecured term loan, due in 2020	300,000			300,000
Unsecured term loan, due in 2022 (1)	88,000			250,000
Senior unsecured notes, 3.750% interest rate, due in 2019	350,000			350,000
Senior unsecured notes, 3.600% interest rate, due in 2020 (2)	400,000			—
Senior unsecured notes, 4.000% interest rate, due in 2022	300,000			300,000
Senior unsecured notes, 4.150% interest rate, due in 2022 (2)	300,000			—
Senior unsecured notes, 4.250% interest rate, due in 2024 (2)	350,000			—
Senior unsecured notes, 4.500% interest rate, due in 2025 (2)	400,000			—
Senior unsecured notes, 5.875% interest rate, due in 2046	310,000			310,000
Mortgage note payable, 7.000% interest rate, due in 2019 (3)	7,939			8,221
Mortgage note payable, 5.720% interest rate, due in 2020 (3)	33,703			34,474
Mortgage note payable, 4.260% interest rate, due in 2020 (3)(4)	—			3,173
Mortgage note payable, 4.160% interest rate, due in 2020 (2)(3)	40,772			—
Mortgage note payable, 8.150% interest rate, due in 2021 (3)	2,912			4,045
Mortgage note payable, 5.877% interest rate, due in 2021 (3)	13,437			13,693
Mortgage note payable, 4.220% interest rate, due in 2022 (3)	27,210			27,870
Mortgage note payable, 3.550% interest rate, due in 2023 (2)(3)	71,000			—
Mortgage note payable, 3.700% interest rate, due in 2023 (2)(3)	50,000			—
Mortgage note payable, 4.800% interest rate, due in 2023 (3)	24,509			24,891
Mortgage note payable, 4.050% interest rate, due in 2030 (3)	66,780			66,780
	3,311,262			2,263,147
Unamortized debt premiums, discounts and issuance costs	(56,372		)	(18,055		)
	$	3,254,890		$	2,245,092

(1) On December 18, 2018, we made a partial principal payment of $162,000 without penalty using proceeds from the sale of a property portfolio of 15 office buildings located in southern Virginia. As a result of this repayment, we recognized a loss on early extinguishment of debt of $625 for the year ended December 31, 2018 to write off a proportionate amount of unamortized debt issuance costs. On February 11, 2019, we repaid the remaining outstanding principal balance of $88,000 without penalty using proceeds from the sale of a property portfolio located in Northern Virginia and Maryland.

(2) As described in Notes 1 and 5, in connection with the SIR Merger, we assumed all of SIR's outstanding senior unsecured notes and mortgage notes on December 31, 2018.

(3) We assumed these mortgage notes in connection with our acquisitions of the encumbered properties. The stated interest rates for these mortgage debts are the contractually stated rates; we recorded the assumed mortgages at estimated fair value on the dates of acquisition, and we amortize the fair value premiums to interest expense over the respective terms of the mortgage notes to reduce interest expense to the estimated market interest rates as of the dates of acquisition.

(4) This mortgage note was secured by a property in southern Virginia that was sold on December 14, 2018. The mortgage note was repaid at closing and we recognized a loss on early extinguishment of debt of $60 for the year ended December 31, 2018.

Our $750,000 revolving credit facility and our term loans are governed by a credit agreement, or our credit agreement, with a syndicate of institutional lenders that includes a number of features common to all of these credit arrangements. Our credit agreement also includes a feature under which the maximum aggregate borrowing availability may be increased to up to $2,500,000 on a combined basis in certain circumstances.

Our $750,000 revolving credit facility is available for general business purposes, including acquisitions. We can borrow, repay and reborrow funds available under our revolving credit facility until maturity and no principal repayment is due until maturity. On December 13, 2018, we amended and restated the credit agreement governing our $750,000 revolving credit facility and $300,000 and $250,000 term loans. 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 LIBOR plus a premium of 125 basis points per annum to 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 facility fee are subject to adjustment based upon changes to our credit ratings. As a result of these amendments, we recognized a loss on early extinguishment of debt related to the revolving credit facility of $24during the year endedDecember 31, 2018 to write off unamortized debt issuance costs.

As of December 31, 2018 and 2017, the annual interest rate payable on borrowings under our revolving credit facility was 3.6% and 2.7%, respectively. The weighted average annual interest rate for borrowings under our revolving credit facility was 3.0%, 2.4% and 1.7%, for the years ended December 31, 2018, 2017 and 2016, respectively.  As of December 31, 2018 and February 25, 2019, we had $175,000 and $110,000 outstanding under our revolving credit facility, and $575,000 and $640,000, respectively, available for borrowing under our revolving credit facility.

One of our term loans, which matures on March 31, 2020, is prepayable without penalty at any time. We are required to pay interest at a rate of LIBOR plus a premium, which was 140 basis points per annum at December 31, 2018, on the amount outstanding under this term loan.  The interest rate premium is subject to adjustment based upon changes to our credit ratings. As of December 31, 2018 and 2017, the annual interest rate for the amount outstanding under this term loan was 3.9% and 3.0%, respectively.  The weighted average annual interest rate under this term loan was 3.4%, 2.5% and 1.9%, for the years ended December 31, 2018, 2017 and 2016, respectively.

Our other term loan, which matures on March 31, 2022, is prepayable without penalty at any time. We are required to pay interest at a rate of LIBOR plus a premium, which was 180 basis points per annum as of December 31, 2018, on the amount outstanding under this term loan. The interest rate premium is subject to adjustment based upon changes to our credit ratings. As of December 31, 2018 and 2017, the annual interest rate for the amount outstanding under this term loan was 4.3% and 3.4%, respectively. The weighted average annual interest rate under this term loan was 3.8%, 2.9% and 2.3%, for the years ended December 31, 2018, 2017 and 2016, respectively.    

Our credit agreement and senior unsecured notes indentures and their supplements provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default, such as, in the case of our credit agreement, a change of control of us, which includes RMR LLC ceasing to act as our business and property manager.  Our credit agreement and our senior unsecured notes indentures and their supplements also contain a number of covenants, including covenants that restrict our ability to incur debts, require us to maintain certain financial ratios and, in the case of our credit agreement, restrict our ability to make distributions under certain circumstances. We believe we were in compliance with the terms and conditions of the respective covenants under our credit agreement and senior unsecured notes indentures and their supplements at December 31, 2018.

On July 20, 2017, we issued $300,000 of 4.000% senior unsecured notes due 2022 in an underwritten public offering. The net proceeds from this offering of $295,399, after payment of the underwriters' discount and other offering expenses, were used to finance, in part, the FPO Transaction.

As described in Note 5, in connection with the SIR Merger, we assumed three mortgage notes with an aggregate principal balance of $161,772. We recorded these mortgage notes at their estimated fair value aggregating $159,490 on the date of acquisition. These mortgage notes are secured by five buildings.

Also as described in Note 5, in connection with the FPO Transaction we assumed five mortgage notes with an aggregate principal balance of $167,548. We recorded these mortgage notes at their estimated fair value aggregating $167,936 on the date of acquisition. These mortgage notes are secured by five buildings. In November 2017, we repaid $10,000 of principal of one of these mortgage notes as part of our assumption agreement with the lender. In connection with the FPO Transaction, we acquired FPO's 50% and 51% interests in two unconsolidated joint ventures which own three buildings encumbered by two mortgage notes with an aggregate principal balance of $82,000.

Concurrently with our entering into the FPO merger agreement, we entered a commitment letter with a group of institutional lenders for a 364-day senior unsecured bridge loan facility in an initial aggregate principal amount of up to $750,000. In July 2017, we and the lenders terminated this commitment letter and bridge loan facility as a result of our issuance of the senior unsecured notes described above and the proceeds from the sale of our common shares in July 2017 (see Note 11 for more information regarding this sale), and we recognized a loss on extinguishment of debt of $1,715.

At December 31, 2018, 12 of our consolidated buildings with an aggregate net book value of $627,173 are encumbered by mortgage notes with an aggregate principal amount of $338,262. Our mortgage notes are non-recourse, subject to certain limited exceptions and do not contain any material financial covenants.

None of our unsecured debt obligations require sinking fund payments prior to their maturity dates.

The required principal payments due during the next five years and thereafter under all our outstanding consolidated debt as of December 31, 2018 are as follows:

Year	Principal Payment
2019	$	362,054
2020	775,707
2021	14,420
2022	713,518
2023	318,783
Thereafter	1,126,780
	$	3,311,262	(1)

(1) Total consolidated debt outstanding as of December 31, 2018, net of unamortized premiums, discounts and issuance costs totaling $56,372 was $3,254,890.

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Fair Value of Assets and Liabilities

12 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

Fair Value of Assets and Liabilities

Fair Value of Assets and Liabilities

The table below presents certain of our assets measured at fair value at December 31, 2018, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset:

			Fair Value at Reporting Date Using
			Quoted Prices in  Active Markets for Identical Assets		Significant Other Observable Inputs		Significant  Unobservable Inputs
Description	Total		(Level 1)		(Level 2)		(Level 3)
Recurring Fair Value Measurements Assets:
Investment in RMR Inc. (1)	$	148,680	$	148,680	$	—	$	—
Non-Recurring Fair Value Measurements Assets:
Assets of properties held for sale (2)	$	195,107	$	—	$	195,107	$	—

(1) As of December 31, 2018, we owned 2,801,061 shares of class A common stock of RMR Inc., including 1,214,225 shares acquired in 2015 with a historical cost basis of $26,888, and 1,586,836 shares acquired from SIR in the SIR Merger with a cost basis of $84,229. Our shares of class A common stock of RMR Inc. are included in other assets in our consolidated balance sheets and are reported at fair value based on quoted market prices (Level 1 inputs as defined in the fair value hierarchy under GAAP). During the year ended December 31, 2018, we recorded an unrealized loss of $7,552 for the shares acquired in 2015 to adjust our investment in RMR Inc. to its fair value. As discussed in Note 5, the shares we acquired from SIR in the SIR Merger were recorded at fair value on December 31, 2018.

(2) We estimated the fair value of a property portfolio consisting of 34 buildings we agreed to sell located in Northern Virginia and Maryland at December 31, 2018 based on the selling price agreed to with a third party (Level 2 inputs as defined in the fair value hierarchy under GAAP). See Note 5 for further details.

In addition to the assets described in the table above, our financial instruments include our cash and cash equivalents, restricted cash, rents receivable, mortgage note receivable, accounts payable, a revolving credit facility, unsecured term loans, senior unsecured notes, mortgage notes payable, amounts due to related persons, other accrued expenses and security deposits.  At December 31, 2018 and 2017, the fair values of our financial instruments approximated their carrying values in our consolidated financial statements, due to their short term nature or floating interest rates, except as follows:

	As of December 31, 2018				As of December 31, 2017
Financial Instrument	Carrying Value (1)		Fair Value		Carrying Value (1)		Fair Value
Senior unsecured notes, 3.750% interest rate, due in 2019	$	349,239	$	348,903	$	348,096	$	354,993
Senior unsecured notes, 3.60% interest rate, due in 2020	399,146		399,146		—		—
Senior unsecured notes, 4.00% interest rate, due in 2022	296,735		295,047		295,812		302,655
Senior unsecured notes, 4.15% interest rate, due in 2022	296,736		296,736		—		—
Senior unsecured notes, 4.25% interest rate, due in 2024	337,736		337,736		—		—
Senior unsecured notes, 4.50% interest rate, due in 2025	377,329		377,329		—		—
Senior unsecured notes, 5.875% interest rate, due in 2046	300,576		274,288		300,232		320,416
Mortgage notes payable	335,241		336,365		183,100		186,542
Total	$	2,692,738	$	2,665,550	$	1,127,240	$	1,164,606

(1) Includes unamortized debt premiums, discounts and issuance costs.

We estimated the fair value of our senior unsecured notes (except for our senior unsecured notes due in 2046) using an average of the bid and ask price of the notes as of the measurement date (Level 2 inputs as defined in the fair value hierarchy under GAAP). We estimated the fair value of our senior unsecured notes due in 2046 based on the closing price on Nasdaq (Level 1 inputs as defined in the fair value hierarchy under GAAP) as of the measurement date. We estimated the fair values of our mortgage notes payable using discounted cash flow analyses and currently prevailing market rates as of the measurement date (Level 3 inputs as defined in the fair value hierarchy under GAAP).  Because Level 3 inputs are unobservable, our estimated fair value may differ materially from the actual fair value.

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Shareholders' Equity

12 Months Ended

Dec. 31, 2018

Equity [Abstract]

Shareholders' Equity

Shareholders’ Equity

Share Awards:

We have common shares available for issuance under the terms of the 2009 Plan. During the years ended December 31, 2018, 2017 and 2016, we granted to our officers and other employees of RMR LLC annual share awards of 14,675, 14,337 and 13,350 of our common shares, respectively, valued at $995, $1,067 and $1,183, in aggregate, respectively. We also granted each of our then six Trustees 750 of our common shares in 2018 with an aggregate value of $254 ($42 per Trustee), each of our then six Trustees 750 common shares in 2017 with an aggregate value of $392 ($65 per Trustee) and each of our then five Trustees 625 common shares in 2016 with an aggregate value of $244 ($49 per Trustee) as part of their annual compensation.  In addition, we granted 750 of our common shares, with a value of $41 in connection with the election of one of our Managing Trustees in 2018. The values of the share grants were based upon the closing price of our common shares trading on Nasdaq or the New York Stock Exchange, as applicable, on the date of grant. The common shares awarded to our Trustees vested immediately. The common shares granted to our officers and certain other employees of RMR LLC vest in five equal annual installments beginning on the date of grant. We include the value of granted shares in general and administrative expenses ratably over the vesting period.

A summary of shares granted, forfeited, vested and unvested under the terms of the 2009 Plan for the years ended December 31, 2018, 2017 and 2016, is as follows:

	2018			2017			2016
	Number of Shares		Weighted Average Grant Date Fair Value	Number of Shares		Weighted Average Grant Date Fair Value	Number of Shares		Weighted Average Grant Date Fair Value
Unvested at beginning of year	26,062		$78.24	24,743		$82.36	24,181		$80.44
Granted	19,925		$64.73	18,837		$77.44	16,475		$86.64
Forfeited	(255	)	$52.96	—		$—	—		$—
Vested	(18,634	)	$63.80	(17,518	)	$83.20	(15,913	)	$83.88
Unvested acquired in the SIR Merger (1)	28,223		$27.48	—		$—	—		$—
Unvested at end of year	55,321		$73.25	26,062		$78.24	24,743		$82.36

(1) Represents unvested shares granted under SIR's equity compensation plan that were converted at the Exchange Ratio into shares under the 2009 Plan, and which will have similar vesting requirements as shares granted under the 2009 Plan, as described in Note 1.

The 55,321 unvested shares as of December 31, 2018 are scheduled to vest as follows:27,998shares in 2019,13,259shares in 2020,9,232shares in 2021 and4,832shares in 2022. As of December 31, 2018, the estimated future compensation expense for the unvested shares was$984. The weighted average period over which the compensation expense will be recorded is approximately22 months. During the years ended December 31, 2018, 2017 and 2016, we recorded$1,337, $1,377and$1,371, respectively, of compensation expense related to the 2009 Plan.  At December 31, 2018,330,372of our common shares remained available for issuance under the 2009 Plan.

2018 Share Purchases

On January 1, 2018, we purchased 154 of our common shares valued at $74.16 per share, the closing price of our common shares on Nasdaq on December 29, 2017, from a former employee of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

On May 24, 2018, we purchased 112 of our common shares valued at $56.40 per share, the closing price of our common shares on Nasdaq on that day, from one of our Trustees in satisfaction of tax withholding and payment obligations in connection with the vesting of an award of our common shares.

On September 24, 2018, we purchased an aggregate of 4,718 of our common shares, valued at $45.40 per share, the closing price of our common shares on Nasdaq on that day, from our officers and certain other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

2017 Share Purchases

On May 17, 2017, we purchased 112 of our common shares, valued at $87.00 per share, the closing price of our common shares on Nasdaq on that day, from one of our Trustees to fund that Trustee's resulting minimum required tax withholding obligation.

During 2017, we purchased 3,478 of our common shares, valued at a weighted average price per share of $73.20, based on the closing price of our common shares on Nasdaq, on the date of purchase, from our officers and certain other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

Distributions

During the years ended December 31, 2018, 2017 and 2016, we paid distributions on our common shares as follows:

	Annual Per Share Distribution	Total Distribution		Characterization of Distribution
Year				Return of Capital	Ordinary Income	Qualified Dividend
2018	$6.88	$	170,566	68.60%	31.40%	—%
2017	$6.88	$	145,209	49.35%	50.65%	—%
2016	$6.88	$	122,366	36.21%	62.74%	1.05%

On January 18, 2019, we declared a dividend payable to common shareholders of record on January 28, 2019 in the amount of $0.55 per share, or $26,446. We paid this distribution on February 21, 2019.

2017 Sale of Shares

On July 5, 2017, we sold 6,250,000 of our common shares at a price of $74.00 per share in an underwritten public offering. On August 3, 2017, we sold 726,757 of our common shares at a price of $74.00 per share pursuant to an overallotment option granted to the underwriters for the July offering. The aggregate net proceeds from these sales of $493,866, after payment of the underwriters' discount and other offering expenses, were used to finance, in part, the FPO Transaction.

Cumulative Other Comprehensive Income (Loss)

Cumulative other comprehensive income (loss) represents our share of the comprehensive income (loss) of our equity method investees, and prior to December 31, 2017, the unrealized gain (loss) on the RMR Inc. shares we own. See Note 4 for further information on ASU No. 2016-01.

The following table presents changes in the amounts we recognized in cumulative other comprehensive income (loss) by component for the years ended December 31, 2018, 2017 and 2016:

	Unrealized Gain (Loss) on  Investment in Equity Securities			Equity in Unrealized Gains (Losses) of Investees (1)			Total
Balance at December 31, 2015	$	(9,391	)	$	(5,476	)	$	(14,867	)
Other comprehensive income before reclassifications	30,465			11,254			41,719
Amounts reclassified from cumulative other
comprehensive income to net income	—			105			105
Net current period other comprehensive income	30,465			11,359			41,824
Balance at December 31, 2016	21,074			5,883			26,957
Other comprehensive income before reclassifications	24,042			9,462			33,504
Amounts reclassified from cumulative other
comprehensive income to net income	—			(34		)	(34		)
Net current period other comprehensive income	24,042			9,428			33,470
Balance at December 31, 2017	45,116			15,311			60,427
Amounts reclassified from cumulative
other comprehensive income to cumulative net income	(45,116		)	(15,165		)	(60,281		)
Balance at January 1, 2018	—			146			146
Other comprehensive income before reclassifications	—			(3		)	(3		)
Amounts reclassified from cumulative other
comprehensive income to net income	—			(37		)	(37		)
Net current period other comprehensive income	—			(40		)	(40		)
Balance at December 31, 2018	$	—		$	106		$	106

(1) Amounts reclassified from cumulative other comprehensive income (loss) to net income (loss) is included in equity in net earnings (losses) of investees in our consolidated statements of comprehensive income (loss).

Preferred Units of Limited Partnership

On May 1, 2018, one of our subsidiaries redeemed all 1,813,504 of its outstanding 5.5% Series A Cumulative Preferred Units for $11.15 per unit plus accrued and unpaid distributions (an aggregate of $20,310).

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Equity Investment in Select Income REIT

12 Months Ended

Dec. 31, 2018

Equity Method Investments and Joint Ventures [Abstract]

Equity Investment in Select Income REIT

Equity Investment in Select Income REIT

Until October 9, 2018, we owned 24,918,421, or approximately 27.8%, of the then outstanding SIR common shares. As described in Note 1, we completed the Secondary Sale. As a result of the Secondary Sale, we recorded a loss of $18,665 during the year ended December 31, 2018.

We accounted for our investment in SIR under the equity method and had previously reported our investment in SIR as a reportable segment. As a result of the Secondary Sale and the elimination of a reportable segment, our equity method investment in SIR is classified as discontinued operations in our consolidated financial statements. See Note 13 for further information regarding discontinued operations.

Under the equity method, we recorded our proportionate share of SIR’s net income as equity in earnings of SIR in our consolidated statements of comprehensive income (loss). During the period from January 1, 2018 to October 9, 2018 and the years ended December 31, 2017 and 2016, we recorded $24,358, $21,584 and $35,381 of equity in earnings of SIR, respectively. Our other comprehensive income (loss) includes our proportionate share of SIR’s unrealized gains of $28, $8,967 and $11,207 for the period from January 1, 2018 to October 9, 2018 and the years ended December 31, 2017 and 2016, respectively.

The adjusted GAAP cost basis of our investment in SIR was less than our proportionate share of SIR’s total shareholders’ equity book value on the dates we acquired the shares. Prior to the Secondary Sale, we were accreting a basis difference to earnings over the estimated remaining useful lives of certain real estate assets and intangible assets and liabilities owned by SIR. This accretion increased our equity in the earnings of SIR by $3,233, $2,944 and $2,956 for the period from January 1, 2018 to October 9, 2018 and the years ended December 31, 2017 and 2016, respectively.

During the period from January 1, 2018 to October 9, 2018 and the years ended December 31, 2017 and 2016, we received cash distributions from SIR totaling $38,124, $50,832 and $50,335, respectively.

During the period from January 1, 2018 to October 9, 2018 and the years ended December 31, 2017 and 2016, SIR issued 63,157, 59,502 and 65,900 common shares, respectively. We recognized a gain on issuance of shares by SIR of $29, $72 and $86 during the period from January 1, 2018 to October 9, 2018, and the years ended December 31, 2017 and 2016, respectively, as a result of the per share issuance price of these SIR common shares being above the then average per share carrying value of our SIR common shares.

The following tables present summarized financial data of SIR:

Condensed Consolidated Balance Sheet

	December 31,
		2017
Real estate properties, net		$	3,905,616
Properties held for sale		5,829
Acquired real estate leases, net		477,577
Cash and cash equivalents		658,719
Rents receivable, net		127,672
Other assets, net		127,617
Total assets		$	5,303,030
ILPT revolving credit facility		$	750,000
Unsecured term loan, net		348,870
Senior unsecured notes, net		1,777,425
Mortgage notes payable, net		210,785
Assumed real estate lease obligations, net		68,783
Other liabilities		155,348
Total shareholders' equity		1,991,819
Total liabilities and shareholders' equity		$	5,303,030

Consolidated Statements of Income

	Nine Months Ended September 30,			Year Ended December 31,
REVENUES:	2018			2017			2016
Rental income	$	298,003		$	392,285		$	387,015
Tenant reimbursements and other income	60,514			75,818			74,992
Total revenues	358,517			468,103			462,007
EXPENSES:
Real estate taxes	36,748			44,131			42,879
Other operating expenses	43,714			55,567			52,957
Depreciation and amortization	105,326			137,672			133,762
Acquisition and transaction related costs	3,796			1,075			306
General and administrative	47,353			54,909			28,632
Write-off of straight line rents, net	10,626			12,517			—
Loss on asset impairment	—			4,047			—
Loss on impairment of real estate assets	9,706			229			5,484
Total expenses	257,269			310,147			264,020
Gain on sale of real estate	4,075			—			—
Dividend income	1,190			1,587			1,268
Unrealized gain on equity securities	53,159			—			—
Interest income	753			91			30
Interest expense	(69,446		)	(92,870		)	(82,620		)
Loss on early extinguishment of debt	(1,192		)	—			—
Income before income tax expense and equity in earnings of an investee	89,787			66,764			116,665
Income tax expense	(446		)	(466		)	(448		)
Equity in earnings of an investee	882			608			137
Net income	90,223			66,906			116,354
Net income allocated to noncontrolling interest	(15,841		)	—			(33		)
Net income attributed to SIR	$	74,382		$	66,906		$	116,321
Weighted average common shares outstanding (basic)	89,395			89,351			89,304
Weighted average common shares outstanding (diluted)	89,411			89,370			$	89,324
Net income attributed to SIR per common share (basic and diluted)	$	0.83		$	0.75		$	1.30

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Discontinued Operations

12 Months Ended

Dec. 31, 2018

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

As described in Notes 1 and 7, on October 9, 2018, we sold all 24,918,421 SIR common shares that we then owned in the Secondary Sale. We recorded a loss of $18,665 during the year ended December 31, 2018 related to this sale. The sale of the SIR common shares qualifies as discontinued operations; accordingly, our equity method investment in SIR is classified as discontinued operations in our consolidated financial statements.

As described in Note 5, in August 2017, we sold one vacant office property in Falls Church, VA with 164,746 rentable square feet and a net book value of $12,901 as of the date of sale for $13,523, excluding closing costs. Results of operations for this property, which qualified as held for sale prior to our adoption in 2014 of ASU No. 2014-8, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, are classified as discontinued operations in our consolidated financial statements.

The table below presents the components of income from discontinued operations for the years ended December 31, 2018, 2017 and 2016:

	Year Ended December 31,
	2018			2017		2016
Equity in earnings of Select Income REIT	$	24,358		$	21,584	$	35,381
Net gain on issuance of shares by Select Income REIT	29			72		86
Loss on sale of Select Income REIT shares	(18,665		)	—		—
Income (loss) from property discontinued operations	—			173		(589		)
Income from discontinued operations	$	5,722		$	21,829	$	34,878

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Selected Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2018

Quarterly Financial Information Disclosure [Abstract]

Selected Quarterly Financial Data (Unaudited)

Selected Quarterly Financial Data (Unaudited)

The following is a summary of our unaudited quarterly results of operations for 2018 and 2017.

	2018
	First Quarter		Second Quarter		Third Quarter			Fourth Quarter
Rental income	$	108,717	$	108,085	$	106,102		$	103,656
Net income (loss) available for common shareholders	$	6,287	$	29,602	$	(449	)	$	(57,695	)
Net income (loss) available for common shareholders per common share (basic and diluted)	$	0.25	$	1.20	$	(0.02	)	$	(2.31	)
Common distributions declared	$	1.72	$	1.72	$	1.72		$	1.72

	2017
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Rental income	$	69,296	$	69,887	$	70,179	$	107,170
Net income (loss) available for common shareholders	$	7,415	$	11,677	$	10,989	$	(18,266	)
Net income (loss) available for common shareholders per common share (basic and diluted)	$	0.42	$	0.66	$	0.45	$	(0.74	)
Common distributions declared	$	1.72	$	1.72	$	1.72	$	1.72

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SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION

12 Months Ended

Dec. 31, 2018

SEC Schedule, 12-28, Real Estate Companies, Investment in Real Estate and Accumulated Depreciation Disclosure [Abstract]

SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION

					Initial Cost to Company				Costs Capitalized Subsequent to Acquisition					Cost amount carried at Close of Period
Property	Location	Number of Buildings	Encumbrances (1)		Land		Buildings and Equipment				Impairments/ Writedowns			Land		Buildings and Equipment		Total (2)		Accumulated Depreciation (3)			Date(s) Acquired	Original Construction Date(s)
Inverness Center	Birmingham, AL	3	$	—	$	5,954	$	11,664	$	—	$	—		$	5,954	$	11,664	$	17,618	$	—		12/31/2018	1984; 1985
445 Jan Davis Drive	Huntsville, AL	1	—		1,513		1,503		—		—			1,513		1,503		3,016		—			12/31/2018	2007
4905 Moores Mill Road	Huntsville, AL	1	—		4,628		36,612		—		—			4,628		36,612		41,240		—			12/31/2018	1979
131 Clayton Street	Montgomery, AL	1	—		920		9,084		48		—			920		9,132		10,052		(1,708		)	6/22/2011	2007
4344 Carmichael Road	Montgomery, AL	1	—		1,374		11,658		10		—			1,374		11,668		13,042		(1,458		)	12/17/2013	2009
15451 North 28th Avenue	Phoenix, AZ	1	—		1,917		7,416		499		—			1,917		7,915		9,832		(836		)	9/10/2014	1996
16001 North 28th Avenue	Phoenix, AZ	1	—		3,382		416		—		—			3,382		416		3,798		—			12/31/2018	1998
2149 West Dunlap Avenue	Phoenix, AZ	1	—		6,606		218		—		—			6,606		218		6,824		—			12/31/2018	1983
711 S 14th Avenue	Safford, AZ	1	—		460		11,708		484		(4,440		)	364		7,848		8,212		(190		)	6/16/2010	1992
Regents Center	Tempe, AZ	2	—		4,154		3,066		—		—			4,154		3,066		7,220		—			12/31/2018	1988
Campbell Place	Carlsbad, CA	2	—		5,815		3,902		—		—			5,815		3,902		9,717		—			12/31/2018	2007
Folsom Corporate Center	Folsom, CA	1	—		2,927		5,628		—		—			2,927		5,628		8,555		—			12/31/2018	2008
Bayside Technology Park	Fremont, CA	1	—		10,869		653		—		—			10,869		653		11,522		—			12/31/2018	1990
5045 East Butler Street	Fresno, CA	1	—		7,276		61,118		139		—			7,276		61,257		68,533		(25,031		)	8/29/2002	1971
10949 N. Mather Boulevard	Rancho Cordova, CA	1	—		562		16,923		359		—			562		17,282		17,844		(2,201		)	10/30/2013	2012
11020 Sun Center Drive	Rancho Cordova, CA	1	64,490		1,466		8,797		671		—			1,466		9,468		10,934		(513		)	12/20/2016	1983
100 Redwood Shores Parkway	Redwood City, CA	1	—		14,568		7,783		—		—			14,568		7,783		22,351		—			12/31/2018	1993
3875 Atherton Road	Rocklin, CA	1	—		178		860		—		—			178		860		1,038		—			12/31/2018	1991
801 K Street	Sacramento, CA	1	—		4,688		61,995		6,275		—			4,688		68,270		72,958		(5,922		)	1/29/2016	1989
9815 Goethe Road	Sacramento, CA	1	—		1,450		9,465		1,523		—			1,450		10,988		12,438		(2,019		)	9/14/2011	1992
Capitol Place	Sacramento, CA	1	—		2,290		35,891		7,885		—			2,290		43,776		46,066		(10,059		)	12/17/2009	1988
4181 Ruffin Road	San Diego, CA	1	—		5,250		10,549		5,076		—			5,250		15,625		20,875		(3,914		)	7/16/2010	1981
4560 Viewridge Road	San Diego, CA	1	—		4,269		18,316		4,319		—			4,347		22,557		26,904		(10,672		)	3/31/1997	1996
9174 Sky Park Centre	San Diego, CA	1	7,983		685		5,530		2,708		—			685		8,238		8,923		(3,246		)	6/24/2002	1986
2090 Fortune Drive	San Jose, CA	1	—		9,074		—		—		—			9,074		—		9,074		—			12/31/2018	1996
2115 O’Nel Drive	San Jose, CA	1	—		12,402		5,103		—		—			12,402		5,103		17,505		—			12/31/2018	1984
6448-6450 Via Del Oro	San Jose, CA	1	—		4,747		2,027		—		—			4,747		2,027		6,774		—			12/31/2018	1983
North First Street	San Jose, CA	1	—		8,377		4,035		—		—			8,377		4,035		12,412		—			12/31/2018	1984
Rio Robles Drive	San Jose, CA	3	—		23,874		13,806		—		—			23,874		13,806		37,680		—			12/31/2018	1984
2450 and 2500 Walsh Avenue	Santa Clara, CA	2	—		13,480		16,783		—		—			13,480		16,783		30,263		—			12/31/2018	1982

				Initial Cost to Company		Costs Capitalized Subsequent to Acquisition		Cost amount carried at Close of Period
Property	Location	Number of Buildings	Encumbrances (1)	Land	Buildings and Equipment		Impairments/ Writedowns	Land	Buildings and Equipment	Total (2)	Accumulated Depreciation (3)		Date(s) Acquired	Original Construction Date(s)
3250 and 3260 Jay Street	Santa Clara, CA	2	—	20,056	14,163	—	—	20,056	14,163	34,219	—		12/31/2018	1982
603 San Juan Avenue	Stockton, CA	1	—	563	5,470	—	—	563	5,470	6,033	(878	)	7/20/2012	2012
350 West Java Drive	Sunnyvale, CA	1	—	24,804	464	—	—	24,804	464	25,268	—		12/31/2018	1984
7958 South Chester Street	Centennial, CO	1	—	6,735	7,210	—	—	6,735	7,210	13,945	—		12/31/2018	2000
350 Spectrum Loop	Colorado Springs, CO	1	—	3,679	7,793	—	—	3,679	7,793	11,472	—		12/31/2018	2000
333 Inverness Drive South	Englewood, CO	1	—	5,756	4,579	—	—	5,756	4,579	10,335	—		12/31/2018	1998
12795 West Alameda Parkway	Lakewood, CO	1	—	2,640	23,777	1,094	—	2,640	24,871	27,511	(5,559	)	1/15/2010	1988
Corporate Center	Lakewood, CO	3	—	2,887	27,537	3,889	—	2,887	31,426	34,313	(12,495	)	10/11/2002	1980
1 Targeting Center	Windsor, CT	1	—	1,404	574	—	—	1,404	574	1,978	—		12/31/2018	1980
11 Dupont Circle, NW	Washington, DC	1	—	28,255	44,743	1,994	—	28,255	46,737	74,992	(1,672	)	10/2/2017	1974
1211 Connecticut Avenue, NW	Washington, DC	1	—	30,388	24,667	1,391	—	30,388	26,058	56,446	(892	)	10/2/2017	1967
1401 K Street, NW	Washington, DC	1	—	29,215	34,656	3,210	—	29,215	37,866	67,081	(1,497	)	10/2/2017	1929
20 Massachusetts Avenue	Washington, DC	1	—	12,009	51,528	21,395	—	12,228	72,704	84,932	(35,137	)	3/31/1997	1996
440 First Street, NW	Washington, DC	1	—	27,903	38,624	1,293	—	27,903	39,917	67,820	(1,264	)	10/2/2017	1982
625 Indiana Avenue	Washington, DC	1	—	26,000	25,955	7,293	—	26,000	33,248	59,248	(7,555	)	8/17/2010	1989
840 First Street, NE	Washington, DC	1	—	42,727	73,249	472	—	42,727	73,721	116,448	(2,290	)	10/2/2017	2003
10350 NW 112th Avenue	Miami, FL	1	—	4,836	2,779	—	—	4,836	2,779	7,615	—		12/31/2018	2002
7850 Southwest 6th Court	Plantation, FL	1	—	4,800	30,592	383	—	4,800	30,975	35,775	(6,026	)	5/12/2011	1999
8900 Grand Oak Circle	Tampa, FL	1	—	1,100	11,773	288	—	1,100	12,061	13,161	(2,471	)	10/15/2010	1994
180 Ted Turner Drive SW	Atlanta, GA	1	—	5,717	20,017	186	—	5,717	20,203	25,920	(3,229	)	7/25/2012	2007
Corporate Square	Atlanta, GA	5	—	3,996	29,762	27,816	—	3,996	57,578	61,574	(13,371	)	7/16/2004	1967
Executive Park	Atlanta, GA	1	—	1,521	11,826	3,996	—	1,521	15,822	17,343	(5,781	)	7/16/2004	1972
One Georgia Center	Atlanta, GA	1	—	10,250	27,933	6,034	—	10,250	33,967	44,217	(5,419	)	9/30/2011	1968
One Primerica Parkway	Duluth, GA	1	—	6,982	23,132	—	—	6,982	23,132	30,114	—		12/31/2018	2013
4712 Southpark Boulevard	Ellenwood, GA	1	—	1,390	19,635	88	—	1,390	19,723	21,113	(3,156	)	7/25/2012	2005
91-209 Kuhela Street	Kapolei, HI	1	—	2,008	—	—	—	2,008	—	2,008	—		12/31/2018	—
8305 NW 62nd Avenue	Johnston, IA	1	—	2,670	8,060	—	—	2,670	8,060	10,730	—		12/31/2018	2011
1185, 1249 & 1387 S. Vinnell Way	Boise, ID	3	—	3,390	29,026	822	—	3,390	29,848	33,238	(4,871	)	9/11/2012	1996; 1997; 2002

				Initial Cost to Company		Costs Capitalized Subsequent to Acquisition		Cost amount carried at Close of Period
Property	Location	Number of Buildings	Encumbrances (1)	Land	Buildings and Equipment		Impairments/ Writedowns	Land	Buildings and Equipment	Total (2)	Accumulated Depreciation (3)		Date(s) Acquired	Original Construction Date(s)
2020 S. Arlington Heights	Arlington Heights, IL	1	—	1,450	13,160	872	—	1,450	14,032	15,482	(3,101	)	12/29/2009	1988
400 South Jefferson Street	Chicago, IL	1	13,384	19,532	20,274	—	—	19,532	20,274	39,806	—		12/31/2018	1947
475 Bond Street	Lincolnshire, IL	1	—	4,915	574	—	—	4,915	574	5,489	—		12/31/2018	2000
1415 West Diehl Road	Naperville, IL	1	—	12,431	20,749	—	—	12,431	20,749	33,180	—		12/31/2018	2001
440 North Fairway Drive	Vernon Hills, IL	1	—	4,500	445	—	—	4,500	445	4,945	—		12/31/2018	1992
Intech Park	Indianapolis, IN	3	—	4,170	68,888	4,337	—	4,170	73,225	77,395	(13,425	)	10/14/2011	2000; 2001; 2008
7601 and 7635 Interactive Way	Indianapolis, IN	2	—	3,363	14,636	—	—	3,363	14,636	17,999	—		12/31/2018	2003; 2008
400 State Street	Kansas City, KS	1	49,087	640	9,932	5,265	—	640	15,197	15,837	(3,309	)	6/16/2010	1971
Capitol Tower	Topeka, KS	1	—	1,236	3,115	—	—	1,236	3,115	4,351	—		12/31/2018	1983
The Atrium at Circleport II	Erlanger, KY	1	—	1,810	1,948	—	—	1,810	1,948	3,758	—		12/31/2018	1999
7125 Industrial Road	Florence, KY	1	—	1,698	11,722	151	—	1,698	11,873	13,571	(1,766	)	12/31/2012	1980
251 Causeway Street	Boston, MA	1	—	5,100	17,293	2,555	—	5,100	19,848	24,948	(4,061	)	8/17/2010	1987
300 and 330 Billerica Road	Chelmsford, MA	2	—	4,737	—	—	—	4,737	—	4,737	—		12/31/2018	1984
75 Pleasant Street	Malden, MA	1	—	1,050	31,086	271	—	1,050	31,357	32,407	(6,703	)	5/24/2010	2008
111 Powdermill Road	Maynard, MA	1	—	4,432	—	—	—	4,432	—	4,432	—		12/31/2018	1990
25 Newport Avenue	Quincy, MA	1	—	2,700	9,199	1,791	—	2,700	10,990	13,690	(2,021	)	2/16/2011	1985
One Montvale Avenue	Stoneham, MA	1	—	1,670	11,035	2,234	—	1,670	13,269	14,939	(2,693	)	6/16/2010	1945
314 Littleton Road	Westford, MA	1	—	5,736	8,555	—	—	5,736	8,555	14,291	—		12/31/2018	2007
Annapolis Commerce Center	Annapolis, MD	2	—	4,057	7,665	219	—	4,057	7,884	11,941	(275	)	10/2/2017	1989
4201 Patterson Avenue	Baltimore, MD	1	—	901	8,097	4,085	—	901	12,182	13,083	(4,961	)	10/15/1998	1989
Hillside Center	Columbia, MD	2	—	3,437	4,228	336	—	3,437	4,564	8,001	(131	)	10/2/2017	2001
TenThreeTwenty	Columbia, MD	1	—	3,126	16,361	869	—	3,126	17,230	20,356	(570	)	10/2/2017	1982
7001 Columbia Gateway Drive	Columbia, MD	1	—	5,687	10,433	—	—	5,687	10,433	16,120	—		12/31/2018	2008
3300 75th Avenue	Landover, MD	1	—	4,110	36,371	1,346	—	4,110	37,717	41,827	(8,281	)	2/26/2010	1985
1401 Rockville Pike	Rockville, MD	1	25,019	3,248	29,258	16,481	—	3,248	45,739	48,987	(19,266	)	2/2/1998	1986
2115 East Jefferson Street	Rockville, MD	1	—	3,349	11,152	385	—	3,349	11,537	14,886	(1,521	)	8/27/2013	1981
Redland 520/530	Rockville, MD	3	—	12,714	61,377	1,498	—	12,714	62,875	75,589	(1,945	)	10/2/2017	2008
Redland 540	Rockville, MD	1	—	10,740	17,714	2,896	—	10,740	20,610	31,350	(879	)	10/2/2017	2003

				Initial Cost to Company		Costs Capitalized Subsequent to Acquisition		Cost amount carried at Close of Period
Property	Location	Number of Buildings	Encumbrances (1)	Land	Buildings and Equipment		Impairments/ Writedowns	Land	Buildings and Equipment	Total (2)	Accumulated Depreciation (3)		Date(s) Acquired	Original Construction Date(s)
Rutherford Business Park	Windsor Mill, MD	1	—	1,598	10,219	330	—	1,598	10,549	12,147	(1,557	)	11/16/2012	1972
Meadows Business Park	Woodlawn, MD	2	—	3,735	21,509	2,268	—	3,735	23,777	27,512	(4,701	)	2/15/2011	1973
3550 Green Court	Ann Arbor, MI	1	69,304	3,659	4,896	—	—	3,659	4,896	8,555	—		12/31/2018	1998
11411 E. Jefferson Avenue	Detroit, MI	1	—	630	18,002	438	—	630	18,440	19,070	(3,930	)	4/23/2010	2009
Rosedale Corporate Plaza	Roseville, MN	1	—	672	6,045	1,505	—	672	7,550	8,222	(3,474	)	12/1/1999	1987
1300 Summit Street	Kansas City, MO	1	2,933	2,776	12,070	915	—	2,776	12,985	15,761	(1,939	)	9/27/2012	1998
4241-4300 NE 34th Street	Kansas City, MO	1	—	1,443	6,193	3,992	—	1,780	9,848	11,628	(4,199	)	3/31/1997	1995
2555 Grand Boulevard	Kansas City, MO	1	—	4,243	51,931	—	—	4,243	51,931	56,174	—		12/31/2018	2003
1220 Echelon Parkway	Jackson, MS	1	—	440	25,458	238	—	440	25,696	26,136	(4,100	)	7/25/2012	2009
2300 and 2400 Yorkmont Road	Charlotte, NC	2	—	1,345	19,226	—	—	1,345	19,226	20,571	—		12/31/2018	1995
18010 and 18020 Burt Street	Omaha, NE	2	—	7,032	12,599	—	—	7,032	12,599	19,631	—		12/31/2018	2012
10-12 Celina Avenue	Nashua, NH	1	—	3,000	14,052	1,569	—	3,000	15,621	18,621	(3,379	)	8/31/2009	1979
500 Charles Ewing Boulevard	Ewing, NJ	1	—	4,846	26,208	—	—	4,846	26,208	31,054	—		12/31/2018	2012
299 Jefferson Road	Parsippany, NJ	1	—	4,579	2,937	—	—	4,579	2,937	7,516	—		12/31/2018	2011
One Jefferson Road	Parsippany, NJ	1	—	4,450	5,291	—	—	4,450	5,291	9,741	—		12/31/2018	2009
50 West State Street	Trenton, NJ	1	—	5,000	38,203	3,313	—	5,000	41,516	46,516	(8,009	)	12/30/2010	1989
138 Delaware Avenue	Buffalo, NY	1	—	4,405	18,899	7,551	—	4,485	26,370	30,855	(11,830	)	3/31/1997	1994
Airline Corporate Center	Colonie, NY	1	—	790	6,400	406	—	790	6,806	7,596	(1,053	)	6/22/2012	2004
5000 Corporate Court	Holtsville, NY	1	—	6,530	17,711	2,734	—	6,530	20,445	26,975	(3,811	)	8/31/2011	2000
8687 Carling Road	Liverpool, NY	1	—	571	—	—	—	571	—	571	—		12/31/2018	1997
1212 Pittsford - Victor Road	Pittsford, NY	1	27,238	613	79	—	—	613	79	692	—		12/31/2018	1965
500 Canal View Boulevard	Rochester, NY	1	—	2,077	376	—	—	2,077	376	2,453	—		12/31/2018	1996
2231 Schrock Road	Columbus, OH	1	—	722	218	—	—	722	218	940	—		12/31/2018	1999
4600 25th Avenue	Salem, OR	1	—	6,510	17,973	5,165	—	6,510	23,138	29,648	(4,898	)	12/20/2011	1957
501 Ridge Avenue	Hanover, PA	1	—	3,452	5,152	—	—	3,452	5,152	8,604	—		12/31/2018	1948
8800 Tinicum Boulevard	Philadelphia, PA	1	—	5,617	22,866	—	—	5,617	22,866	28,483	—		12/31/2018	2000
Synergy Business Park	Columbia, SC	3	—	1,439	11,143	5,178	—	1,439	16,321	17,760	(4,335	)	5/10/2006;9/17/2010	1982; 1985
9680 Old Bailes Road	Fort Mill, SC	1	—	841	2,967	—	—	841	2,967	3,808	—		12/31/2018	2007
One Memphis Place	Memphis, TN	1	—	1,630	5,645	3,290	—	1,630	8,935	10,565	(1,742	)	9/17/2010	1985
16001 North Dallas Parkway	Addison, TX	2	—	10,364	63,661	—	—	10,364	63,661	74,025	—		12/31/2018	1987

				Initial Cost to Company		Costs Capitalized Subsequent to Acquisition		Cost amount carried at Close of Period
Property	Location	Number of Buildings	Encumbrances (1)	Land	Buildings and Equipment		Impairments/ Writedowns	Land	Buildings and Equipment	Total (2)	Accumulated Depreciation (3)		Date(s) Acquired	Original Construction Date(s)
2115-2116 East Randol Mill Road	Arlington, TX	1	—	2,146	5,469	—	—	2,146	5,469	7,615	—		12/31/2018	1989
Research Park	Austin, TX	2	—	4,292	13,856	—	—	4,292	13,856	18,148	—		12/31/2018	1999
1001 Noble Energy Way	Houston, TX	1	—	5,222	29,392	—	—	5,222	29,392	34,614	—		12/31/2018	1998
10451 Clay Road	Houston, TX	1	—	5,538	10,335	—	—	5,538	10,335	15,873	—		12/31/2018	2013
202 North Castlegory Road	Houston, TX	1	—	870	5,064	—	—	870	5,064	5,934	—		12/31/2018	2016
6380 Rogerdale Road	Houston, TX	1	—	12,728	6,161	—	—	12,728	6,161	18,889	—		12/31/2018	2006
4221 W. John Carpenter Freeway	Irving, TX	1	—	1,424	2,384	—	—	1,424	2,384	3,808	—		12/31/2018	1995
8675,8701-8711 Freeport Pkwy and 8901 Esters Boulevard	Irving, TX	3	—	10,266	31,815	—	—	10,266	31,815	42,081	—		12/31/2018	1990
1511 East Common Street	New Braunfels, TX	1	—	5,004	1,276	—	—	5,004	1,276	6,280	—		12/31/2018	2005
2900 West Plano Parkway	Plano, TX	1	—	6,873	8,901	—	—	6,873	8,901	15,774	—		12/31/2018	1998
3400 West Plano Parkway	Plano, TX	1	—	4,579	16,091	—	—	4,579	16,091	20,670	—		12/31/2018	1994
19100 Ridgewood Parkway	San Antonio, TX	1	—	4,223	144,519	—	—	4,223	144,519	148,742	—		12/31/2018	2008
3600 Wiseman Boulevard	San Antonio, TX	1	—	3,521	6,715	—	—	3,521	6,715	10,236	—		12/31/2018	2004
701 Clay Road	Waco, TX	1	—	2,030	8,708	3,584	—	2,060	12,262	14,322	(5,020	)	12/23/1997	1997
1800 Novell Place	Provo, UT	1	—	7,546	43,831	—	—	7,546	43,831	51,377	—		12/31/2018	2000
4885-4931 North 300 West	Provo, UT	2	—	3,946	9,504	—	—	3,946	9,504	13,450	—		12/31/2018	2009
14660, 14672 & 14668 Lee Road	Chantilly, VA	3	—	6,966	74,214	2,038	—	6,966	76,252	83,218	(3,757	)	12/22/2016	1998; 2002; 2006
1434 Crossways	Chesapeake, VA	2	—	3,617	19,527	1,817	—	3,617	21,344	24,961	(840	)	10/2/2017	1998
Greenbrier Towers	Chesapeake, VA	2	—	3,437	11,241	700	—	3,437	11,941	15,378	(507	)	10/2/2017	1985
Enterchange at Meadowville	Chester, VA	1	—	1,478	9,594	283	—	1,478	9,877	11,355	(1,309	)	8/28/2013	1999
Three Flint Hill	Fairfax, VA	1	—	5,991	25,619	1,515	—	5,991	27,134	33,125	(1,075	)	10/2/2017	1984
3920 Pender Drive	Fairfax, VA	1	—	2,963	12,840	231	—	2,963	13,071	16,034	(1,529	)	3/21/2014	1981
Pender Business Park	Fairfax, VA	4	—	2,529	21,386	636	—	2,529	22,022	24,551	(2,873	)	11/4/2013	2000
7987 Ashton Avenue	Manassas, VA	1	—	1,562	8,253	623	—	1,562	8,876	10,438	(439	)	1/3/2017	1989
Two Commercial Place	Norfolk, VA	1	—	4,530	21,678	—	—	4,530	21,678	26,208	—		12/31/2018	1974
1759 & 1760 Business Center Drive	Reston, VA	2	—	9,066	78,658	2,723	—	9,066	81,381	90,447	(9,273	)	5/28/2014	1987
1775 Wiehle Avenue	Reston, VA	1	—	4,138	26,120	756	—	4,138	26,876	31,014	(828	)	10/2/2017	2001
9960 Mayland Drive	Richmond, VA	1	—	2,614	15,930	1,891	—	2,614	17,821	20,435	(2,055	)	5/20/2014	1994
501 South 5th Street	Richmond, VA	1	—	14,884	39,411	—	—	14,884	39,411	54,295	—		12/31/2018	2009
9201 Forest Hill Avenue	Richmond, VA	1	—	1,355	376	—	—	1,355	376	1,731	—		12/31/2018	1985

					Initial Cost to Company				Costs Capitalized Subsequent to Acquisition					Cost amount carried at Close of Period
Property	Location	Number of Buildings	Encumbrances (1)		Land		Buildings and Equipment				Impairments/ Writedowns			Land		Buildings and Equipment		Total (2)		Accumulated Depreciation (3)			Date(s) Acquired	Original Construction Date(s)
Parham Place	Richmond, VA	3	—		920		1,107		—		—			920		1,107		2,027		—			12/31/2018	1989; 2012
1751 Blue Hills Drive	Roanoke, VA	1	—		2,710		7,823		—		—			2,710		7,823		10,533		—			12/31/2018	2003
Aquia Commerce Center	Stafford, VA	2	—		2,090		7,465		768		—			2,090		8,233		10,323		(1,549		)	6/22/2011	1988; 1999
Atlantic Corporate Park	Sterling, VA	2	—		5,752		29,323		178		—			5,752		29,501		35,253		(931		)	10/2/2017	2008
Sterling Business Park Lots 8 and 9	Sterling, VA	1	—		9,177		44,375		—		—			9,177		44,375		53,552		(1,385		)	10/2/2017	2016
Orbital Sciences Campus	Sterling, VA	3	—		12,372		19,473		—		—			12,372		19,473		31,845		—			12/31/2018	2000; 2001
65 Bowdoin Street	S. Burlington, VT	1	—		700		8,416		140		—			700		8,556		9,256		(1,873		)	4/9/2010	2009
840 North Broadway	Everett, WA	2	34,704		3,360		15,376		2,116		—			3,360		17,492		20,852		(3,099		)	6/28/2012	1985
Stevens Center	Richland, WA	2	—		3,970		17,035		4,137		—			4,045		21,097		25,142		(9,854		)	3/31/1997	1995
351, 401, 501 Elliott Ave West	Seattle, WA	3	—		26,851		53,157		—		—			26,851		53,157		80,008		—			12/31/2018	2000
11050 West Liberty Drive	Milwaukee, WI	1	—		945		4,539		103		—			945		4,642		5,587		(881		)	6/9/2011	2006
882 TJ Jackson Drive	Falling Waters, WV	1	41,099		906		3,886		270		—			922		4,140		5,062		(2,215		)	3/31/1997	1993
5353 Yellowstone Road	Cheyenne, WY	1	—		1,915		8,217		765		—			1,950		8,947		10,897		(4,658		)	3/31/1997	1995
		211	$	335,241	$	923,390	$	2,804,289	$	221,397	$	(4,440	)	$	924,164	$	3,020,472	$	3,944,636	$	(375,147	)
Properties Held for Sale														—		—		—		—
500 First Street, NW	Washington, DC	1	—		30,478		15,660		44		—			30,478		15,704		46,182		(448		)	10/2/2017	1969
91-008 Hanua Street	Kapolei, HI	1	—		6,846		—		—		—			6,846		—		6,846		—			12/31/2018	—
Ammendale Commerce Center	Beltsville, MD	3	—		4,879		9,498		99		—			4,879		9,597		14,476		(279		)	10/2/2017	1987
Indian Creek Technology Park	Beltsville, MD	4	—		8,796		12,093		394		(2,830		)	8,796		9,657		18,453		(363		)	10/2/2017	1988
Gateway 270 West	Clarksburg, MD	6	—		12,104		9,688		516		—			12,104		10,204		22,308		(257		)	10/2/2017	2002
Snowden Center	Columbia, MD	5	—		7,955		10,128		119		—			7,955		10,247		18,202		(258		)	10/2/2017	1982
20400 Century Boulevard	Germantown, MD	1	—		2,305		9,890		1,304		—			2,347		11,152		13,499		(5,520		)	3/31/1997	1995
Cloverleaf Center	Germantown, MD	4	—		11,890		4,639		481		—			11,890		5,120		17,010		(167		)	10/2/2017	2000
Metro Park North	Rockville, MD	4	—		11,159		7,624		235		—			11,159		7,859		19,018		(236		)	10/2/2017	2001
Sterling Park Business Center	Sterling, VA	7	—		18,935		21,191		835		—			18,935		22,026		40,961		(643		)	10/2/2017	1990
		36	—		115,347		100,411		4,027		(2,830		)	115,389		101,566		216,955		(8,171		)
		247	$	335,241	$	1,038,737	$	2,904,700	$	225,424	$	(7,270	)	$	1,039,553	$	3,122,038	$	4,161,591	$	(383,318	)

____________________

(1) Represents mortgage debt, net of the unamortized balance of the fair value adjustments and debt issuance costs totaling $3,021.

(2) Excludes value of real estate intangibles. Aggregate cost for federal income tax purposes is approximately $7,126,328.

(3) Depreciation on building and improvements is provided for periods ranging up to 40 years and on equipment up to 12 years. 

Analysis of the carrying amount of real estate properties and accumulated depreciation:

	Real Estate Properties			Accumulated Depreciation
Balance at December 31, 2015	$	1,696,132		$	255,879
Additions	194,107			42,404
Disposals	(1,479		)	(1,479		)
Balance at December 31, 2016	1,888,760			296,804
Additions	1,100,138			45,315
Loss on asset impairment	(9,490		)	—
Disposals	(3,687		)	(271		)
Balance at December 31, 2017	2,975,721			341,848
Additions	1,486,342			65,215
Loss on asset impairment	(8,630		)	—
Disposals	(286,837		)	(18,740		)
Cost basis adjustment (1)	(5,005		)	(5,005		)
Reclassification of assets of properties held for sale	(216,955		)	(8,171		)
Balance at December 31, 2018	$	3,944,636		$	375,147

(1) Represents the reclassification between accumulated depreciation and building made to certain properties reclassified as assets of properties held for sale at fair value in accordance with GAAP.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation.  These consolidated financial statements include the accounts of us and our subsidiaries, all of which are wholly owned directly or indirectly by us. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated.

Real Estate Properties

We regularly evaluate whether events or changes in circumstances have occurred that could indicate an impairment in the value of long lived assets. If there is an indication that the carrying value of an asset is not recoverable, we estimate the projected undiscounted cash flows to determine if an impairment loss should be recognized. We determine the amount of any impairment loss by comparing the historical carrying value to estimated fair value. We estimate fair value through an evaluation of recent financial performance and projected discounted cash flows using standard industry valuation techniques. In addition to consideration of impairment upon the events or changes in circumstances described above, we regularly evaluate the remaining lives of our long lived assets. If we change our estimate of the remaining lives, we allocate the carrying value of the affected assets over their revised remaining lives.

Real Estate Properties.  We record our properties at cost and provide depreciation on real estate investments on a straight line basis over estimated useful lives generally ranging from 7 to 40 years.  In some circumstances, we engage independent real estate appraisal firms to provide market information and evaluations which are relevant to our purchase price allocations and determinations of useful lives; however, we are ultimately responsible for the purchase price allocations and determinations of useful lives.

We allocate the purchase prices of our properties to land, building and improvements based on determinations of the relative fair values of these assets assuming the properties are vacant. We determine the fair value of each property using methods similar to those used by independent appraisers. We allocate a portion of the purchase price of our properties to above market and below market leases based on the present value (using an interest rate which reflects the risks associated with acquired in place leases at the time each property was acquired by us) of the difference, if any, between (i) the contractual amounts to be paid pursuant to the acquired in place leases and (ii) our estimates of fair market lease rates for the corresponding leases, measured over a period equal to the terms of the respective leases. We allocate a portion of the purchase price to acquired in place leases and tenant relationships based upon market estimates to lease up the property based on the leases in place at the time of purchase.  We allocate this aggregate value between acquired in place lease values and tenant relationships based on our evaluation of the specific characteristics of each tenant’s lease. However, we have not separated the value of tenant relationships from the value of acquired in place leases because such value and related amortization expense is immaterial to the accompanying consolidated financial statements. In making these allocations, we consider factors such as estimated carrying costs during the expected lease up periods, including real estate taxes, insurance and other operating income and expenses and costs, such as leasing commissions, legal and other related expenses, to execute similar leases in current market conditions at the time a property was acquired by us. If the value of tenant relationships becomes material in the future, we may separately allocate those amounts and amortize the allocated amounts over the estimated life of the relationships. For transactions that qualify as business combinations, we allocate the excess, if any, of the consideration over the fair value of the assets acquired to goodwill.

We amortize capitalized above market lease values (included in acquired in place real estate leases, net in our consolidated balance sheets) and below market lease values (presented as assumed real estate lease obligations, net in our consolidated balance sheets) as a reduction or increase, respectively, to rental income over the terms of the associated leases. Such amortization resulted in net decreases to rental income of $2,903, $2,764 and $1,457 during the years ended December 31, 2018, 2017 and 2016, respectively. We amortize the value of acquired in place leases (included in acquired real estate leases, net in our consolidated balance sheets), exclusive of the value of above market and below market acquired in place leases, over the terms of the associated leases. Such amortization, which is included in depreciation and amortization expense, amounted to $91,472, $53,410, and $27,546 during the years ended December 31, 2018, 2017 and 2016, respectively. If a lease is terminated prior to its stated expiration, we write off the unamortized amounts relating to that lease.

Cash and Cash Equivalents

Cash and Cash Equivalents. We consider highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.

Restricted Cash

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

Deferred Leasing Costs

Deferred Leasing Costs. Deferred leasing costs include brokerage, legal and other fees associated with our entering leases and we amortize those costs, which are included in depreciation and amortization expense, on a straight line basis over the terms of the respective leases. Deferred leasing costs, excluding properties classified as held for sale, totaled $38,840 and $32,990 at December 31, 2018 and 2017, respectively, and accumulated amortization of deferred leasing costs totaled $13,168 and $10,013 at December 31, 2018 and 2017, respectively. Future amortization of deferred leasing costs to be recognized during the current terms of our existing leases as of December 31, 2018 are estimated to be $4,925 in 2019, $4,215 in 2020, $3,599 in 2021, $2,902 in 2022, $2,363 in 2023 and $7,668 thereafter.

Debt Issuance Costs

Debt Issuance Costs. Debt issuance costs include capitalized issuance or assumption costs related to borrowings, which are amortized to interest expense over the terms of the respective loans. Debt issuance costs, net of accumulated amortization, for our revolving credit facility are included in other assets in our consolidated balance sheets. As of December 31, 2018 and 2017, debt issuance costs for our revolving credit facility were $4,125 and $5,234 and accumulated amortization of debt issuance costs for our revolving credit facility were $49 and $3,849, respectively. Debt issuance costs, net of accumulated amortization, for our unsecured term loans, senior unsecured notes and mortgage notes payable are presented as a direct deduction from the associated debt liability in our consolidated balance sheets. As of December 31, 2018 and 2017, debt issuance costs, net of accumulated amortization, for our unsecured term loans, senior unsecured notes, and mortgage notes payable totaled $12,888 and $15,750, respectively. Future amortization of debt issuance costs to be recognized with respect to our revolving credit facility, unsecured term loans, senior unsecured notes and mortgage notes as of December 31, 2018 are estimated to be $2,890 in 2019, $2,189 in 2020, $2,049 in 2021, $1,725 in 2022, $406 in 2023 and $7,705 thereafter.

Equity Securities

Equity Securities. As of December 31, 2018, we owned 2,801,061 common shares of class A common stock of RMR Inc., including 1,586,836 common shares acquired from SIR on December 31, 2018 in connection with the SIR Merger. Our equity securities are recorded at fair value based on their quoted market price at the end of each reporting period. Effective January 1, 2018, changes in the fair value of our equity securities are recorded through earnings in accordance with the Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. Prior to January 1, 2018, unrealized gains and losses on equity securities were recorded as a component of cumulative comprehensive income (loss) in shareholders' equity. As further described in Note 7, we initially acquired 1,541,201 shares of class A common stock of RMR Inc. on June 5, 2015 for cash and share consideration of $17,462. We concluded, for accounting purposes, that the cash and share consideration we paid for our investment in these shares represented a discount to the fair value of these shares. We initially accounted for this investment under the cost method of accounting and recorded this investment at its estimated fair value of $39,833 as of June 5, 2015 using Level 3 inputs, as defined in the fair value hierarchy under U.S. generally accepted accounting principles, or GAAP.  As a result, we recorded a liability for the amount by which the estimated fair value of these shares exceeded the price we paid for these shares. This liability is included in accounts payable and other liabilities in our consolidated balance sheets. This liability is being amortized on a straight line basis through December 31, 2035 as an allocated reduction to our business management and property management fee expense. We amortized $1,087 of this liability during each of the years ended December 31, 2018, 2017 and 2016. These amounts are included in the net business management and property management fee amounts for such periods. As of December 31, 2018, the remaining unamortized amount of this liability was $18,493. Future amortization of this liability as of December 31, 2018 is estimated to be $1,087 in 2019 through 2023 and $13,058 thereafter.

Equity Method Investments

Equity Method Investments.  We account for our investments in Affiliates Insurance Company, or AIC, and SIR, until we sold the SIR common shares we owned as described in Note 1, using the equity method of accounting. Significant influence is present through common representation on the boards of trustees or directors of us, AIC and, until December 31, 2018, SIR. One of our Managing Trustees, Adam D. Portnoy, as the sole trustee of ABP Trust, is the controlling shareholder of The RMR Group Inc., or RMR Inc. He is also a director and officer of RMR Inc. Substantially all of the business of RMR Inc. is conducted by its majority owned subsidiary, RMR LLC, which is our manager, the manager of AIC and, until December 31, 2018, SIR. Most of our Trustees are directors of AIC. See Notes 7, 12 and 13 for further information of our investments in AIC and SIR.

In connection with our acquisition of First Potomac Realty Trust, or FPO, in 2017, we acquired 50% and 51% interests in two unconsolidated joint ventures which own three buildings. The buildings owned by these joint ventures are encumbered by an aggregate $82,000 of mortgage indebtedness. We do not control the activities that are most significant to these joint ventures and, as a result, we account for our investment in these joint ventures under the equity method of accounting. See Note 5 for further information regarding our unconsolidated joint ventures.

We periodically evaluate our equity method investments for possible indicators of other than temporary impairment whenever events or changes in circumstances indicate the carrying amount of the investment might not be recoverable. These indicators may include the length of time and the extent to which the market value of our investment is below our carrying value, the financial condition of our investees, our intent and ability to be a long term holder of the investment and other considerations. If the decline in fair value is judged to be other than temporary, we record an impairment charge to adjust the basis of the investment to its estimated fair value.  

Revenue Recognition

Revenue Recognition. We recognize rental income from operating leases that contain fixed contractual rent changes on a straight line basis over the term of the lease agreements. We increased rental income by $10,164, $5,582 and $2,691 to record revenue on a straight line basis during the years ended December 31, 2018, 2017 and 2016, respectively. Rents receivable, excluding properties classified as held for sale, include $34,006 and $27,267 of straight line rent receivables at December 31, 2018 and 2017, respectively.

Certain of our leases with government tenants provide the tenant the right to terminate its lease if its respective legislature or other funding authority does not appropriate the funding necessary for the government tenant to meet its lease obligations; we have determined the fixed non-cancelable lease term of these leases to be the fully executed term of the lease because we believe the occurrence of termination to be a remote contingency based on both our historical experience and our assessment of the likelihood of lease cancellation on a separate lease basis. 

Income Taxes

Income Taxes. We have elected to be taxed as a REIT under the United States Internal Revenue Code of 1986, as amended, or the IRC, and, accordingly, we generally will not be subject to federal income taxes provided we distribute our taxable income and meet certain other requirements to qualify as a REIT. We are, however, subject to certain state and local taxes.

Cumulative Other Comprehensive Income

Cumulative Other Comprehensive Income.Cumulative other comprehensive income represents our share of the cumulative comprehensive income of our equity method investees and, prior to the adoption of FASB ASU No. 2016-01 on January 1, 2018, unrealized gains and losses related to our investment in RMR Inc. See Notes 5 and 7 for further information regarding these investments.

Per Common Share Amounts

Per Common Share Amounts. We calculate basic earnings per common share by dividing net income (loss) available for common shareholders by the weighted average number of our common shares of beneficial ownership, $.01 par value, or our common shares, outstanding during the period. We calculate diluted earnings per share using the more dilutive of the two class method or the treasury stock method.  Unvested share awards and other potentially dilutive common shares and the related impact on earnings, are considered when calculating diluted earnings per share.

Use of Estimates

Use of Estimates. Preparation of these financial statements in conformity with GAAP requires us to make estimates and assumptions that may affect the amounts reported in these consolidated financial statements and related notes. The actual results could differ from these estimates.

Reclassifications

Reclassifications. Reclassifications have been made to the prior years’ consolidated financial statements to conform to the current year’s presentation.

Segment Reporting

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

Recent Accounting Pronouncements

New Accounting Pronouncements

On January 1, 2018, we adopted FASB ASU No. 2014-09 (and related clarifying guidance issued by the FASB), Revenue From Contracts With Customers, which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU No. 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU No. 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. A substantial portion of our revenue consists of rental income from leasing arrangements, which is specifically excluded from ASU No. 2014-09. We have adopted ASU No. 2014-09 using the modified retrospective approach, which resulted in an adjustment to reclassify a previous deferred gain on sale of real estate of $712 from accounts payable and other liabilities to cumulative net income. The adoption of ASU No. 2014-09 did not have a material impact on the amount or timing of our revenue recognition in our consolidated financial statements except for profit recognition on real estate sales.

On January 1, 2018, we adopted FASB ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which changes how entities measure certain equity investments and present changes in the fair value of financial liabilities measured under the fair value option that are attributable to their own credit. The implementation of ASU No. 2016-01 resulted in the reclassification of historical changes in the fair value of our equity securities of $45,116 from cumulative other comprehensive income to cumulative net income. We also reclassified $15,165 from cumulative other comprehensive income to cumulative net income for our share of cumulative other comprehensive income of certain of our equity method investees. Effective January 1, 2018, changes in the fair value of our equity securities are recorded through earnings in accordance with ASU No. 2016-01.

On January 1, 2018, we adopted FASB ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies how companies present and classify certain cash receipts and cash payments in the statements of cash flows. The implementation of this update resulted in the reclassification of $2,944 and $2,956 of accretion recorded in our equity in the earnings of SIR from cash flow from investing activities to cash flow from operating activities for the year ended December 31, 2017 and 2016, respectively. See Note 12 for further information regarding our investment in SIR.

On January 1, 2018, we adopted FASB ASU No. 2016-18, Restricted Cash, which requires companies to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The implementation of ASU No. 2016-18 resulted in a decrease of $1,563 and an increase of $492 of net cash provided by operating activities for the years ended December 31, 2017 and 2016, respectively. This update also requires a reconciliation of the totals in the statements of cash flows to the related captions in the balance sheets. As a result, amounts included in restricted cash on our consolidated balance sheets are included with cash and cash equivalents on the consolidated statements of cash flows. The adoption of this update did not change our balance sheet presentation.

On October 1, 2018, we adopted FASB ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which aligns the measurement and classification guidance for share based payments to nonemployees with the guidance for share based payments to employees, with certain exceptions. The adoption of this standard did not have a material impact in our consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements. In December 2018, the FASB issued ASU No. 2018-20 Leases (Topic 842), Narrow-Scope Improvements for Lessors. Collectively, these standards set out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. These standards are effective as of January 1, 2019. Upon adoption, we applied the package of practical expedients that allows an entity to not reassess (i) whether any expired or existing contracts are or contain leases, (ii) lease classification for any expired or existing leases and (iii) initial direct costs for any expired or existing leases. Furthermore, we applied the optional transition method in ASU No. 2018-11 which allows entities to initially apply the new leases standard at the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption, if any. Additionally, our leases met the criteria in ASU No. 2018-11 to not separate non-lease components from the related lease component; therefore, the accounting for these leases remained largely unchanged from the previous standard. The adoption of ASU No. 2016-02 and the related improvements did not have a material impact in our consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires that entities use a new forward looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are currently assessing the potential impact the adoption of ASU No. 2016-13 will have in our consolidated financial statements. We currently expect to adopt the standard using the modified retrospective approach.

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Schedule of Real Estate Properties

As of December 31, 2018 and 2017, our acquired real estate leases and assumed real estate obligations, excluding properties classified as held for sale, were as follows:

	December 31,
	2018			2017
Acquired real estate leases:
Capitalized above market lease values	$	62,260		$	46,096
Less: accumulated amortization	(20,956		)	(27,259		)
Capitalized above market lease values, net	41,304			18,837
Lease origination value	1,168,979			472,928
Less: accumulated amortization	(153,725		)	(139,893		)
Lease origination value, net	1,015,254			333,035
Acquired real estate leases, net	$	1,056,558		$	351,872
Assumed real estate lease obligations:
Capitalized below market lease values	$	31,091		$	25,973
Less: accumulated amortization	(11,060		)	(12,338		)
Assumed real estate lease obligations, net	$	20,031		$	13,635

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Weighted Average Common Shares (Tables)

12 Months Ended

Dec. 31, 2018

Earnings Per Share, Basic and Diluted [Abstract]

Weighted Average Common Share Amounts

The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted earnings per share (in thousands):

	For the Year Ended December 31,
	2018	2017	2016
Weighted average common shares for basic earnings per share	24,830	21,158	17,763
Effect of dilutive securities: unvested share awards	—	—	5
Weighted average common shares for diluted earnings per share (1)	24,830	21,158	17,768

(1) For the years ended December 31, 2018 and 2017, four and five unvested common shares, respectively, were not included in the calculation of diluted earnings per share because to do so would have been antidilutive.

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Real Estate Properties (Tables)

12 Months Ended

Dec. 31, 2018

Real Estate [Abstract]

Schedule of allocation of purchase price

Our allocation of the purchase price of this acquisition is based on the relative estimated fair value of the acquired assets and assumed liabilities is presented in the table below.  

Acquisition Date	Location	Number of Office Buildings	Square Feet	Purchase Price		Land		Building and Improvements		Other Assumed Assets
Jan 2017	Manassas, VA	1	69,374	$	12,657	$	1,562	$	8,253	$	2,842

The following table summarizes the estimated consideration transferred and liabilities assumed:

Total Purchase Price (excluding acquisition costs):
	OPI common shares issued	23,282,704
	Closing price of OPI common shares on December 31, 2018	$	27.48
	Value of consideration transferred	$	639,809
	Cash consideration for fractional shares	8
	Equity issuance costs	(239		)
	Value of consideration transferred	$	639,578
	Assumed working capital	55,703
	Assumed senior unsecured notes, principal balance	1,450,000
	Assumed mortgage notes payable, principal balance	161,772
	SIR unsecured revolving credit facility repaid at closing	108,000
	Non-cash portion of purchase price	1,775,475
	Total consideration transferred and liabilities assumed	$	2,415,053

The following table summarizes the preliminary purchase price allocation for SIR based on estimated fair values as of the December 31, 2018:

Preliminary Purchase Price Allocation:
	Land	$	475,893
	Buildings and improvements	960,286
	Assets of properties held for sale	7,022
	Acquired real estate leases	858,121
	Cash	24,744
	Restricted cash	476
	Rents receivable, net	11,389
	Other assets (1)	89,188
	Total assets	2,427,119
	Unsecured revolving credit facility (2)	(108,000		)
	Senior unsecured notes (3)	(1,410,947		)
	Mortgage notes payable (4)	(159,490		)
	Accounts payable and other liabilities	(67,151		)
	Assumed real estate lease obligations	(11,833		)
	Due to related persons	(30,120		)
	Net assets acquired	639,578
	Assumed working capital	55,703
	SIR unsecured revolving credit facility repaid at closing (2)	108,000
	Assumed senior unsecured notes, principal balance	1,450,000
	Assumed mortgage notes payable, principal balance	161,772
	Consideration transferred and liabilities assumed (5)	$	2,415,053

(1) Other assets includes $84,229 for SIR's investment in shares of class A common stock of RMR Inc. which was recorded at fair value as of December 31, 2018.

(2) We repaid the outstanding balance under SIR's revolving credit facility at the closing of the SIR Merger with borrowings under our revolving credit facility.

(3) The aggregate principal balance of the senior unsecured notes was $1,450,000 as of December 31, 2018.

(4) The aggregate principal balance of the mortgage notes payable was $161,772 as of December 31, 2018.

(5) The allocation of purchase price is based on preliminary estimates and may change significantly following the completion of (i) third party appraisals and (ii) our analysis of intangibles and building valuations. Purchase price excludes acquisition related costs.

Our allocation of the purchase price of these acquisitions based on the estimated fair value of the acquired assets and assumed liabilities is presented in the table below.

Acquisition Date	Location	Number of Office Buildings	Square Feet	Purchase Price (1)		Land		Buildings and Improvements		Other Assumed Assets		Acquired Leases		Acquired Lease Obligations
Jan 2016	Sacramento, CA (2)	1	337,811	$	79,508	$	4,688	$	61,995	$	2,167	$	11,245	$	(587	)
Jul 2016	Atlanta, GA (3)	—	—	1,670		1,670		—		—		—		—
Dec 2016	Rancho Cordova, CA (2)	1	82,896	13,943		1,466		8,797		—		3,680		—
Dec 2016	Chantilly, VA (2)	3	409,478	104,183		6,966		74,214		—		23,003		—
		5	830,185	$	199,304	$	14,790	$	145,006	$	2,167	$	37,928	$	(587	)

(1) Excludes acquisition related costs.

(2) Accounted for as a business combination. 

(3) On July 6, 2016, we acquired a land parcel adjacent to one of our existing properties for $1,623. We accounted for this transaction as an asset acquisition and capitalized acquisition related costs of $47.

The following table summarizes the total consideration paid and the estimated fair values of the assets acquired and liabilities assumed in the FPO Transaction:

Total Purchase Price:
	Cash consideration	$	1,175,140
	Acquisition related costs	9,575
	Total cash consideration	1,184,715
	Preferred units of limited partnership issued (1)	20,221
	Acquired net working capital	(1,596		)
	Assumed mortgage notes	167,548
	Non-cash portion of purchase price	186,173
	Gross purchase price	$	1,370,888
Purchase Price Allocation:
	Land	$	360,909
	Buildings and improvements	681,340
	Acquired real estate leases (2)	283,498
	Investment in unconsolidated joint ventures	51,305
	Cash	11,191
	Restricted cash	1,018
	Rents receivable	2,672
	Other assets	3,640
	Total assets	1,395,573
	Mortgage notes payable (3)	(167,936		)
	Assumed real estate lease obligations (2)	(5,776		)
	Accounts payable and accrued expenses	(10,640		)
	Rents collected in advance	(1,436		)
	Security deposits	(4,849		)
	Net assets acquired	1,204,936
	Assumed working capital	(1,596		)
	Assumed principal balance of debt	167,548
	Gross purchase price	$	1,370,888

(1) Pursuant to the terms of the FPO Transaction, each unit of limited partnership interest in FPO's operating partnership that was not liquidated on the closing date was exchanged on a one-for-one basis for 5.5% Series A Cumulative Preferred Units of the surviving subsidiary. As of December 31, 2017, the carrying value of these Series A Cumulative Preferred Units was $20,496 and was recorded as temporary equity on our consolidated balance sheet. On May 1, 2018, we redeemed all 1,813,504 of the outstanding 5.5% Series A Cumulative Preferred Units for $11.15 per unit (plus accrued and unpaid distributions) for an aggregate of $20,310.

(2) As of the date acquired, the weighted average amortization periods for capitalized above market lease values, lease origination value and capitalized below market lease values were 3.2 years, 3.1 years and 3.8 years, respectively.

(3) Includes fair value adjustments totaling $388 on $167,936 principal amount of mortgage notes we assumed in connection with the FPO Transaction.

Schedule of Pro Forma Information

The following table presents our pro forma results of operations for the years ended December 31, 2018 and 2017 as if the SIR Transactions and the FPO Transaction and related financing activities, had occurred on January 1, 2017. The SIR results of operations included in this pro forma financial information have been adjusted to remove ILPT's results of operations for the years ended December 31, 2018 and 2017. The effect of these adjustments was to decrease pro forma rental income $152,735 and $156,506 for the years ended December 31, 2018 and 2017, respectively, and to decrease net income $46,237 and $64,661 for the years ended December 31, 2018 and 2017, respectively. The FPO results of operations included in this pro forma financial information have been adjusted to remove the results of operations of properties and joint venture interests FPO sold from January 1, 2017 to October 2, 2017, the closing date of the FPO Transaction. The effect of these adjustments was to decrease pro forma rental income $804 for the year ended December 31, 2017 and to decrease net loss $47,019 for the year ended December 31, 2017.

This pro forma financial information is not necessarily indicative of what our actual financial position or results of operations would have been for the periods presented or for any future period. Differences could result from numerous factors, including future changes in our portfolio of investments, capital structure, property level operating expenses and revenues, including rents expected to be received on our existing leases or leases we may enter during and after 2019, changes in interest rates and other reasons. Actual future results are likely to be different from amounts presented in this pro forma financial information and such differences could be significant.

	Year Ended December 31,
	2018			2017
Rental income	$	758,596		$	746,801
Net loss	$	(87,240	)	$	(74,556	)
Net loss per common share	$	(1.82	)	$	(1.55	)

Schedule of Joint Ventures

As of December 31, 2018 and 2017, our investment in unconsolidated joint ventures consisted of the following:

	OPI Ownership	OPI Carrying Value of Investment at December 31,				Number of Office Buildings	Location	Square Feet
Joint Venture		2018		2017
Prosperity Metro Plaza	51%	$	23,969	$	27,888	2	Fairfax, VA	328,456
1750 H Street, NW	50%	19,696		22,314		1	Washington, D.C.	115,411
Total		$	43,665	$	50,202	3		443,867

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

Joint Venture	Interest Rate (1)	Maturity Date	Principal Balance at December 31, 2018 and 2017
Prosperity Metro Plaza	4.09%	12/1/2029	$	50,000
1750 H Street, NW	3.69%	8/1/2024	32,000
Weighted Average/Total	3.93%		$	82,000

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

Schedule of disposal groups

Summarized income statement information for this property is as follows:

Statements of Income (Loss)

	Year Ended December 31,
	2017			2016
Rental income	$	17		$	68
Real estate taxes	(88		)	(97		)
Utility expenses	(97		)	(146		)
Other operating expenses	(202		)	(300		)
General and administrative	(76		)	(114		)
Increase in carrying value of property included in discontinued operations	619			—
Income (loss) from discontinued operations	$	173		$	(589	)

As of December 31, 2018, we had 36 buildings with an aggregate undepreciated carrying value of $216,955 under agreement to sell in three separate transactions, as presented in the table below. We have classified these properties as held for sale in our consolidated balance sheet at December 31, 2018.     

Date of Sale Agreement	Number of Office Buildings	Location	Square  Feet	Gross Sale Price (1)
Aug 2018 (2)	1	Washington, D.C.	129,035	$	70,000
Sep 2018 (3)	34	Northern Virginia and Maryland	1,635,868	198,500
Nov 2018 (2)(4)	1	Kapolei, HI	416,956	7,100
	36		2,181,859	$	275,600

(1) Gross sale price includes purchase price adjustments, if any, excludes closing costs.

(2) These pending sales are subject to conditions; accordingly, we cannot be sure that we will complete these sales or that these sales will not be delayed or their terms will not change.

(3) We recorded a $2,830 loss on impairment of real estate to reduce the carrying value of these buildings to their estimated fair value less costs to sell during the year ended December 31, 2018. On February 8, 2019, we completed the sale of these buildings.

(4) Represents a land parcel acquired from SIR in the SIR Merger.

As a result, the results of operations of these properties are included in continuing operations through the date of sale in our consolidated statements of income (loss).

Date of Sale	Number of Office Buildings	Location	Square Feet	Gross  Sale Price (1)
Mar 2018 (2)	1	Minneapolis, MN	193,594	$	20,000
May 2018 (3)	1	New York, NY	187,060	118,500
May 2018 (4)	1	Sacramento, CA	110,500	10,755
Nov 2018 (5)	1	Golden, CO	43,231	4,000
Dec 2018 (6)	15	Southern Virginia	1,640,252	167,000
	19		2,174,637	$	320,255

(1) Gross sale price includes purchase price adjustments, if any, excludes closing costs.

(2) We recorded a $640 loss on impairment of real estate to reduce the carrying value of this property to its estimated fair value less costs to sell during the year ended December 31, 2018.

(3) We recorded a $17,249 gain on sale of real estate during the year ended December 31, 2018 as a result of this sale.

(4) We recorded a loss on impairment of real estate of $3,029 to reduce the carrying value of this property to its estimated fair value less costs to sell during the year ended December 31, 2018.

(5) We recorded a $54 gain on sale of real estate during the year ended December 31, 2018 as a result of this sale.

(6) We recorded a $3,358 gain on sale of real estate during the year ended December 31, 2018 as a result of this sale.

The table below presents the components of income from discontinued operations for the years ended December 31, 2018, 2017 and 2016:

	Year Ended December 31,
	2018			2017		2016
Equity in earnings of Select Income REIT	$	24,358		$	21,584	$	35,381
Net gain on issuance of shares by Select Income REIT	29			72		86
Loss on sale of Select Income REIT shares	(18,665		)	—		—
Income (loss) from property discontinued operations	—			173		(589		)
Income from discontinued operations	$	5,722		$	21,829	$	34,878

Schedule of future minimum lease payments related properties (excluding real estate tax and other expense reimbursements)

Our future minimum lease payments related to our consolidated properties and estimated real estate tax and other expense reimbursements scheduled to be received during the current terms of the existing leases as of December 31, 2018, including the properties acquired in the SIR Merger, are as follows:

Year	Minimum Lease Payments
2019	$	569,874
2020	514,551
2021	479,401
2022	434,135
2023	383,695
Thereafter	1,236,540
	$	3,618,196

Schedule of minimum rental payments

Future minimum rental payments due under the lease, net of subleased revenue, as of December 31, 2018 are summarized as follows:

Year	Minimum Rental Payments
2019	$	1,584
2020	1,627
2021	139
	$	3,350

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Indebtedness (Tables)

12 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

At December 31, 2018 and 2017, our outstanding indebtedness consisted of the following:

	December 31,
	2018			2017
Revolving credit facility, due in 2023	$	175,000		$	570,000
Unsecured term loan, due in 2020	300,000			300,000
Unsecured term loan, due in 2022 (1)	88,000			250,000
Senior unsecured notes, 3.750% interest rate, due in 2019	350,000			350,000
Senior unsecured notes, 3.600% interest rate, due in 2020 (2)	400,000			—
Senior unsecured notes, 4.000% interest rate, due in 2022	300,000			300,000
Senior unsecured notes, 4.150% interest rate, due in 2022 (2)	300,000			—
Senior unsecured notes, 4.250% interest rate, due in 2024 (2)	350,000			—
Senior unsecured notes, 4.500% interest rate, due in 2025 (2)	400,000			—
Senior unsecured notes, 5.875% interest rate, due in 2046	310,000			310,000
Mortgage note payable, 7.000% interest rate, due in 2019 (3)	7,939			8,221
Mortgage note payable, 5.720% interest rate, due in 2020 (3)	33,703			34,474
Mortgage note payable, 4.260% interest rate, due in 2020 (3)(4)	—			3,173
Mortgage note payable, 4.160% interest rate, due in 2020 (2)(3)	40,772			—
Mortgage note payable, 8.150% interest rate, due in 2021 (3)	2,912			4,045
Mortgage note payable, 5.877% interest rate, due in 2021 (3)	13,437			13,693
Mortgage note payable, 4.220% interest rate, due in 2022 (3)	27,210			27,870
Mortgage note payable, 3.550% interest rate, due in 2023 (2)(3)	71,000			—
Mortgage note payable, 3.700% interest rate, due in 2023 (2)(3)	50,000			—
Mortgage note payable, 4.800% interest rate, due in 2023 (3)	24,509			24,891
Mortgage note payable, 4.050% interest rate, due in 2030 (3)	66,780			66,780
	3,311,262			2,263,147
Unamortized debt premiums, discounts and issuance costs	(56,372		)	(18,055		)
	$	3,254,890		$	2,245,092

(1) On December 18, 2018, we made a partial principal payment of $162,000 without penalty using proceeds from the sale of a property portfolio of 15 office buildings located in southern Virginia. As a result of this repayment, we recognized a loss on early extinguishment of debt of $625 for the year ended December 31, 2018 to write off a proportionate amount of unamortized debt issuance costs. On February 11, 2019, we repaid the remaining outstanding principal balance of $88,000 without penalty using proceeds from the sale of a property portfolio located in Northern Virginia and Maryland.

(2) As described in Notes 1 and 5, in connection with the SIR Merger, we assumed all of SIR's outstanding senior unsecured notes and mortgage notes on December 31, 2018.

(3) We assumed these mortgage notes in connection with our acquisitions of the encumbered properties. The stated interest rates for these mortgage debts are the contractually stated rates; we recorded the assumed mortgages at estimated fair value on the dates of acquisition, and we amortize the fair value premiums to interest expense over the respective terms of the mortgage notes to reduce interest expense to the estimated market interest rates as of the dates of acquisition.

(4) This mortgage note was secured by a property in southern Virginia that was sold on December 14, 2018. The mortgage note was repaid at closing and we recognized a loss on early extinguishment of debt of $60 for the year ended December 31, 2018.

Schedule of required principal payments

The required principal payments due during the next five years and thereafter under all our outstanding consolidated debt as of December 31, 2018 are as follows:

Year	Principal Payment
2019	$	362,054
2020	775,707
2021	14,420
2022	713,518
2023	318,783
Thereafter	1,126,780
	$	3,311,262	(1)

(1) Total consolidated debt outstanding as of December 31, 2018, net of unamortized premiums, discounts and issuance costs totaling $56,372 was $3,254,890.

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Fair Value of Assets and Liabilities (Tables)

12 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

Schedule of assets measured on a non-recurring basis at fair value, categorized by the level of inputs used in the valuation assets

The table below presents certain of our assets measured at fair value at December 31, 2018, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset:

			Fair Value at Reporting Date Using
			Quoted Prices in  Active Markets for Identical Assets		Significant Other Observable Inputs		Significant  Unobservable Inputs
Description	Total		(Level 1)		(Level 2)		(Level 3)
Recurring Fair Value Measurements Assets:
Investment in RMR Inc. (1)	$	148,680	$	148,680	$	—	$	—
Non-Recurring Fair Value Measurements Assets:
Assets of properties held for sale (2)	$	195,107	$	—	$	195,107	$	—

(1) As of December 31, 2018, we owned 2,801,061 shares of class A common stock of RMR Inc., including 1,214,225 shares acquired in 2015 with a historical cost basis of $26,888, and 1,586,836 shares acquired from SIR in the SIR Merger with a cost basis of $84,229. Our shares of class A common stock of RMR Inc. are included in other assets in our consolidated balance sheets and are reported at fair value based on quoted market prices (Level 1 inputs as defined in the fair value hierarchy under GAAP). During the year ended December 31, 2018, we recorded an unrealized loss of $7,552 for the shares acquired in 2015 to adjust our investment in RMR Inc. to its fair value. As discussed in Note 5, the shares we acquired from SIR in the SIR Merger were recorded at fair value on December 31, 2018.

(2) We estimated the fair value of a property portfolio consisting of 34 buildings we agreed to sell located in Northern Virginia and Maryland at December 31, 2018 based on the selling price agreed to with a third party (Level 2 inputs as defined in the fair value hierarchy under GAAP). See Note 5 for further details.

Schedule of fair value and carrying value of financial instruments

At December 31, 2018 and 2017, the fair values of our financial instruments approximated their carrying values in our consolidated financial statements, due to their short term nature or floating interest rates, except as follows:

	As of December 31, 2018				As of December 31, 2017
Financial Instrument	Carrying Value (1)		Fair Value		Carrying Value (1)		Fair Value
Senior unsecured notes, 3.750% interest rate, due in 2019	$	349,239	$	348,903	$	348,096	$	354,993
Senior unsecured notes, 3.60% interest rate, due in 2020	399,146		399,146		—		—
Senior unsecured notes, 4.00% interest rate, due in 2022	296,735		295,047		295,812		302,655
Senior unsecured notes, 4.15% interest rate, due in 2022	296,736		296,736		—		—
Senior unsecured notes, 4.25% interest rate, due in 2024	337,736		337,736		—		—
Senior unsecured notes, 4.50% interest rate, due in 2025	377,329		377,329		—		—
Senior unsecured notes, 5.875% interest rate, due in 2046	300,576		274,288		300,232		320,416
Mortgage notes payable	335,241		336,365		183,100		186,542
Total	$	2,692,738	$	2,665,550	$	1,127,240	$	1,164,606

(1) Includes unamortized debt premiums, discounts and issuance costs.

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Shareholders' Equity (Tables)

12 Months Ended

Dec. 31, 2018

Equity [Abstract]

Summary of shares granted and vested under the terms of the entity's 2009 Plan

A summary of shares granted, forfeited, vested and unvested under the terms of the 2009 Plan for the years ended December 31, 2018, 2017 and 2016, is as follows:

	2018			2017			2016
	Number of Shares		Weighted Average Grant Date Fair Value	Number of Shares		Weighted Average Grant Date Fair Value	Number of Shares		Weighted Average Grant Date Fair Value
Unvested at beginning of year	26,062		$78.24	24,743		$82.36	24,181		$80.44
Granted	19,925		$64.73	18,837		$77.44	16,475		$86.64
Forfeited	(255	)	$52.96	—		$—	—		$—
Vested	(18,634	)	$63.80	(17,518	)	$83.20	(15,913	)	$83.88
Unvested acquired in the SIR Merger (1)	28,223		$27.48	—		$—	—		$—
Unvested at end of year	55,321		$73.25	26,062		$78.24	24,743		$82.36

(1) Represents unvested shares granted under SIR's equity compensation plan that were converted at the Exchange Ratio into shares under the 2009 Plan, and which will have similar vesting requirements as shares granted under the 2009 Plan, as described in Note 1.

Schedule of dividends

During the years ended December 31, 2018, 2017 and 2016, we paid distributions on our common shares as follows:

	Annual Per Share Distribution	Total Distribution		Characterization of Distribution
Year				Return of Capital	Ordinary Income	Qualified Dividend
2018	$6.88	$	170,566	68.60%	31.40%	—%
2017	$6.88	$	145,209	49.35%	50.65%	—%
2016	$6.88	$	122,366	36.21%	62.74%	1.05%

Schedule of changes in each component of cumulative other comprehensive income (loss)

The following table presents changes in the amounts we recognized in cumulative other comprehensive income (loss) by component for the years ended December 31, 2018, 2017 and 2016:

	Unrealized Gain (Loss) on  Investment in Equity Securities			Equity in Unrealized Gains (Losses) of Investees (1)			Total
Balance at December 31, 2015	$	(9,391	)	$	(5,476	)	$	(14,867	)
Other comprehensive income before reclassifications	30,465			11,254			41,719
Amounts reclassified from cumulative other
comprehensive income to net income	—			105			105
Net current period other comprehensive income	30,465			11,359			41,824
Balance at December 31, 2016	21,074			5,883			26,957
Other comprehensive income before reclassifications	24,042			9,462			33,504
Amounts reclassified from cumulative other
comprehensive income to net income	—			(34		)	(34		)
Net current period other comprehensive income	24,042			9,428			33,470
Balance at December 31, 2017	45,116			15,311			60,427
Amounts reclassified from cumulative
other comprehensive income to cumulative net income	(45,116		)	(15,165		)	(60,281		)
Balance at January 1, 2018	—			146			146
Other comprehensive income before reclassifications	—			(3		)	(3		)
Amounts reclassified from cumulative other
comprehensive income to net income	—			(37		)	(37		)
Net current period other comprehensive income	—			(40		)	(40		)
Balance at December 31, 2018	$	—		$	106		$	106

(1) Amounts reclassified from cumulative other comprehensive income (loss) to net income (loss) is included in equity in net earnings (losses) of investees in our consolidated statements of comprehensive income (loss).

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Equity Investment in Select Income REIT (Tables)

12 Months Ended

Dec. 31, 2018

SIR

Summarized Financial Data of Select Income Realty (SIR)

The following tables present summarized financial data of SIR:

Condensed Consolidated Balance Sheet

	December 31,
		2017
Real estate properties, net		$	3,905,616
Properties held for sale		5,829
Acquired real estate leases, net		477,577
Cash and cash equivalents		658,719
Rents receivable, net		127,672
Other assets, net		127,617
Total assets		$	5,303,030
ILPT revolving credit facility		$	750,000
Unsecured term loan, net		348,870
Senior unsecured notes, net		1,777,425
Mortgage notes payable, net		210,785
Assumed real estate lease obligations, net		68,783
Other liabilities		155,348
Total shareholders' equity		1,991,819
Total liabilities and shareholders' equity		$	5,303,030

Consolidated Statements of Income

	Nine Months Ended September 30,			Year Ended December 31,
REVENUES:	2018			2017			2016
Rental income	$	298,003		$	392,285		$	387,015
Tenant reimbursements and other income	60,514			75,818			74,992
Total revenues	358,517			468,103			462,007
EXPENSES:
Real estate taxes	36,748			44,131			42,879
Other operating expenses	43,714			55,567			52,957
Depreciation and amortization	105,326			137,672			133,762
Acquisition and transaction related costs	3,796			1,075			306
General and administrative	47,353			54,909			28,632
Write-off of straight line rents, net	10,626			12,517			—
Loss on asset impairment	—			4,047			—
Loss on impairment of real estate assets	9,706			229			5,484
Total expenses	257,269			310,147			264,020
Gain on sale of real estate	4,075			—			—
Dividend income	1,190			1,587			1,268
Unrealized gain on equity securities	53,159			—			—
Interest income	753			91			30
Interest expense	(69,446		)	(92,870		)	(82,620		)
Loss on early extinguishment of debt	(1,192		)	—			—
Income before income tax expense and equity in earnings of an investee	89,787			66,764			116,665
Income tax expense	(446		)	(466		)	(448		)
Equity in earnings of an investee	882			608			137
Net income	90,223			66,906			116,354
Net income allocated to noncontrolling interest	(15,841		)	—			(33		)
Net income attributed to SIR	$	74,382		$	66,906		$	116,321
Weighted average common shares outstanding (basic)	89,395			89,351			89,304
Weighted average common shares outstanding (diluted)	89,411			89,370			$	89,324
Net income attributed to SIR per common share (basic and diluted)	$	0.83		$	0.75		$	1.30

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Discontinued Operations (Tables)

12 Months Ended

Dec. 31, 2018

Discontinued Operations and Disposal Groups [Abstract]

Schedule of discontinued operations

Summarized income statement information for this property is as follows:

Statements of Income (Loss)

	Year Ended December 31,
	2017			2016
Rental income	$	17		$	68
Real estate taxes	(88		)	(97		)
Utility expenses	(97		)	(146		)
Other operating expenses	(202		)	(300		)
General and administrative	(76		)	(114		)
Increase in carrying value of property included in discontinued operations	619			—
Income (loss) from discontinued operations	$	173		$	(589	)

As of December 31, 2018, we had 36 buildings with an aggregate undepreciated carrying value of $216,955 under agreement to sell in three separate transactions, as presented in the table below. We have classified these properties as held for sale in our consolidated balance sheet at December 31, 2018.     

Date of Sale Agreement	Number of Office Buildings	Location	Square  Feet	Gross Sale Price (1)
Aug 2018 (2)	1	Washington, D.C.	129,035	$	70,000
Sep 2018 (3)	34	Northern Virginia and Maryland	1,635,868	198,500
Nov 2018 (2)(4)	1	Kapolei, HI	416,956	7,100
	36		2,181,859	$	275,600

(1) Gross sale price includes purchase price adjustments, if any, excludes closing costs.

(2) These pending sales are subject to conditions; accordingly, we cannot be sure that we will complete these sales or that these sales will not be delayed or their terms will not change.

(3) We recorded a $2,830 loss on impairment of real estate to reduce the carrying value of these buildings to their estimated fair value less costs to sell during the year ended December 31, 2018. On February 8, 2019, we completed the sale of these buildings.

(4) Represents a land parcel acquired from SIR in the SIR Merger.

As a result, the results of operations of these properties are included in continuing operations through the date of sale in our consolidated statements of income (loss).

Date of Sale	Number of Office Buildings	Location	Square Feet	Gross  Sale Price (1)
Mar 2018 (2)	1	Minneapolis, MN	193,594	$	20,000
May 2018 (3)	1	New York, NY	187,060	118,500
May 2018 (4)	1	Sacramento, CA	110,500	10,755
Nov 2018 (5)	1	Golden, CO	43,231	4,000
Dec 2018 (6)	15	Southern Virginia	1,640,252	167,000
	19		2,174,637	$	320,255

(1) Gross sale price includes purchase price adjustments, if any, excludes closing costs.

(2) We recorded a $640 loss on impairment of real estate to reduce the carrying value of this property to its estimated fair value less costs to sell during the year ended December 31, 2018.

(3) We recorded a $17,249 gain on sale of real estate during the year ended December 31, 2018 as a result of this sale.

(4) We recorded a loss on impairment of real estate of $3,029 to reduce the carrying value of this property to its estimated fair value less costs to sell during the year ended December 31, 2018.

(5) We recorded a $54 gain on sale of real estate during the year ended December 31, 2018 as a result of this sale.

(6) We recorded a $3,358 gain on sale of real estate during the year ended December 31, 2018 as a result of this sale.

The table below presents the components of income from discontinued operations for the years ended December 31, 2018, 2017 and 2016:

	Year Ended December 31,
	2018			2017		2016
Equity in earnings of Select Income REIT	$	24,358		$	21,584	$	35,381
Net gain on issuance of shares by Select Income REIT	29			72		86
Loss on sale of Select Income REIT shares	(18,665		)	—		—
Income (loss) from property discontinued operations	—			173		(589		)
Income from discontinued operations	$	5,722		$	21,829	$	34,878

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Selected Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2018

Quarterly Financial Information Disclosure [Abstract]

Schedule of Quarterly Financial Information

The following is a summary of our unaudited quarterly results of operations for 2018 and 2017.

	2018
	First Quarter		Second Quarter		Third Quarter			Fourth Quarter
Rental income	$	108,717	$	108,085	$	106,102		$	103,656
Net income (loss) available for common shareholders	$	6,287	$	29,602	$	(449	)	$	(57,695	)
Net income (loss) available for common shareholders per common share (basic and diluted)	$	0.25	$	1.20	$	(0.02	)	$	(2.31	)
Common distributions declared	$	1.72	$	1.72	$	1.72		$	1.72

	2017
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Rental income	$	69,296	$	69,887	$	70,179	$	107,170
Net income (loss) available for common shareholders	$	7,415	$	11,677	$	10,989	$	(18,266	)
Net income (loss) available for common shareholders per common share (basic and diluted)	$	0.42	$	0.66	$	0.45	$	(0.74	)
Common distributions declared	$	1.72	$	1.72	$	1.72	$	1.72

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Organization (Details) $ / shares in Units, $ in Thousands							12 Months Ended
	Dec. 31, 2018 USD ($) ft² building state property $ / shares shares	Dec. 27, 2018 shares	Oct. 09, 2018 USD ($) $ / shares shares	Sep. 14, 2018 ft²	Oct. 02, 2017 USD ($) ft²	Jul. 05, 2017 $ / shares shares	Dec. 31, 2018 USD ($) ft² building state property $ / shares shares	Dec. 30, 2018 $ / shares shares	Dec. 31, 2017 $ / shares shares	Dec. 31, 2016 ft²
Real Estate Properties [Line Items]
Rentable area of properties (in square feet) | ft²										830,185
Number of properties, noncontrolling interest | property							2
Number of buildings, noncontrolling interest | building							3
Common shares of beneficial interest, par value (in dollars per share) | $ / shares	$ 0.01						$ 0.01	$ 0.04	$ 0.01
Reverse stock split ratio				0.25
Common shares of beneficial interest, shares outstanding | shares	48,082,903						48,082,903	192,331,612	24,786,479
Continuing operations
Real Estate Properties [Line Items]
Number of buildings | building	247						247
Number of states in which owned properties located | state	38						38
Rentable area of properties (in square feet) | ft²	31,900,000						31,900,000
First Potomac Realty Trust
Real Estate Properties [Line Items]
Rentable area of properties (in square feet) | ft²	400,000				6,000,000		400,000
Number of properties, noncontrolling interest | property							2
Number of buildings, noncontrolling interest | building							3
Long term debt acquired					$ 167,936
Purchase price					1,370,888
Liabilities assumed					$ 483,000
SIR
Real Estate Properties [Line Items]
Rentable area of properties (in square feet) | ft²	16,500,000			16,500,000			16,500,000
Share conversion ratio | shares	1.04						1.04
Common shares of beneficial interest, par value (in dollars per share) | $ / shares	$ 0.01						$ 0.01
Share price (in dollars per share) | $ / shares	$ 6.87						$ 6.87
Purchase price							$ 2,415,053
Transaction costs	$ 27,497						27,497
Payment transaction costs	$ 14,508
Liabilities assumed							$ 1,719,772
Number of properties acquired | property	99						99
Common Shares | SIR
Real Estate Properties [Line Items]
Share price (in dollars per share) | $ / shares	$ 27.48						$ 27.48
Underwritten Public Offering
Real Estate Properties [Line Items]
Number of shares sold (in shares) | shares						6,250,000
Sale of stock (in dollars per share) | $ / shares						$ 74.00
Underwritten Public Offering | Common Shares
Real Estate Properties [Line Items]
Number of shares sold (in shares) | shares			24,918,421
Sale of stock (in dollars per share) | $ / shares			$ 18.25
Proceeds from sale fo stock			$ 435,125
SIR | SIR
Real Estate Properties [Line Items]
Payment transaction costs	$ 12,989
Industrial Logistics Properties Trust | SIR
Real Estate Properties [Line Items]
Shares owned (in shares) | shares		45,000,000
Senior unsecured notes | SIR
Real Estate Properties [Line Items]
Long term debt acquired	$ 1,410,947						$ 1,410,947
3.60% Senior Notes Due 2020
Real Estate Properties [Line Items]
Interest rate (as a percent)	3.60%						3.60%
3.60% Senior Notes Due 2020 | Senior unsecured notes
Real Estate Properties [Line Items]
Interest rate (as a percent)	3.60%						3.60%
3.60% Senior Notes Due 2020 | Senior unsecured notes | SIR
Real Estate Properties [Line Items]
Long term debt acquired	$ 400,000						$ 400,000
Interest rate (as a percent)	3.60%						3.60%
4.15% Senior Notes Due 2022
Real Estate Properties [Line Items]
Interest rate (as a percent)	4.15%						4.15%
4.15% Senior Notes Due 2022 | Senior unsecured notes
Real Estate Properties [Line Items]
Interest rate (as a percent)	4.15%						4.15%
4.15% Senior Notes Due 2022 | Senior unsecured notes | SIR
Real Estate Properties [Line Items]
Long term debt acquired	$ 300,000						$ 300,000
Interest rate (as a percent)	4.15%						4.15%
4.25% Senior Notes Due 2024
Real Estate Properties [Line Items]
Interest rate (as a percent)	4.25%						4.25%
4.25% Senior Notes Due 2024 | Senior unsecured notes
Real Estate Properties [Line Items]
Interest rate (as a percent)	4.25%						4.25%
4.25% Senior Notes Due 2024 | Senior unsecured notes | SIR
Real Estate Properties [Line Items]
Long term debt acquired	$ 350,000						$ 350,000
Interest rate (as a percent)	4.25%						4.25%
4.50% Senior Notes Due 2025
Real Estate Properties [Line Items]
Interest rate (as a percent)	4.50%						4.50%
4.50% Senior Notes Due 2025 | Senior unsecured notes
Real Estate Properties [Line Items]
Interest rate (as a percent)	4.50%						4.50%
4.50% Senior Notes Due 2025 | Senior unsecured notes | SIR
Real Estate Properties [Line Items]
Long term debt acquired	$ 400,000						$ 400,000
Interest rate (as a percent)	4.50%						4.50%

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Summary of Significant Accounting Policies - Real Estate Properties (Details) - USD ($) $ in Thousands		12 Months Ended
	Oct. 02, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Real Estate [Line Items]
Net decreases to rental income from amortization of capitalized above market and below market leases		$ 2,903	$ 2,764	$ 1,457
Amortization of the value of leases		$ 94,375	56,174	29,003
Below market, acquired lease amortization period	3 years 9 months 18 days	5 years 8 months
Minimum | Buildings and improvements
Real Estate [Line Items]
Estimated useful lives		7 years
Maximum | Buildings and improvements
Real Estate [Line Items]
Estimated useful lives		40 years
Weighted Average
Real Estate [Line Items]
Below market, acquired lease amortization period		5 years 9 months 18 days
Original value lease
Real Estate [Line Items]
Amortization of the value of leases		$ 91,472	$ 53,410	$ 27,546
Original value lease | Weighted Average
Real Estate [Line Items]
Acquired lease amortization period		6 years 10 months 24 days
Above market lease | Weighted Average
Real Estate [Line Items]
Acquired lease amortization period		5 years 4 months 24 days
Continuing operations
Projected future amortization of net intangible lease assets and liabilities, excluding those classified as discontinued operations
2019		$ 203,554
2020		180,025
2021		153,089
2022		136,515
2023		112,524
Thereafter		$ 250,820

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Summary of Significant Accounting Policies - Real Estate Assets and Obligations (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Real Estate [Line Items]
Acquired real estate leases, net	$ 1,056,558	$ 351,872
Capitalized below market lease values	31,091	25,973
Less: accumulated amortization	(11,060)	(12,338)
Assumed real estate lease obligations, net	20,031	13,635
Above market lease
Real Estate [Line Items]
Real estate leases	62,260	46,096
Less: accumulated amortization	(20,956)	(27,259)
Acquired real estate leases, net	41,304	18,837
Original value lease
Real Estate [Line Items]
Real estate leases	1,168,979	472,928
Less: accumulated amortization	(153,725)	(139,893)
Acquired real estate leases, net	$ 1,015,254	$ 333,035

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Summary of Significant Accounting Policies - Leasing and Financing Costs (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Future amortization of deferred leasing costs, excluding those classified as discontinued operations
Deferred financing fees, net	$ 12,888	$ 15,750
Future amortization of deferred financing fees
2019	2,890
2020	2,189
2021	2,049
2022	1,725
2023	406
Thereafter	7,705
Continuing operations
Debt Instrument [Line Items]
Deferred leasing costs, gross	38,840	32,990
Accumulated amortization of deferred leasing costs	13,168	10,013
Future amortization of deferred leasing costs, excluding those classified as discontinued operations
2019	4,925
2020	4,215
2021	3,599
2022	2,902
2023	2,363
Thereafter	7,668
Unsecured revolving credit facility
Debt Instrument [Line Items]
Deferred financing fees, gross	4,125	5,234
Future amortization of deferred leasing costs, excluding those classified as discontinued operations
Accumulated amortization of deferred financing fees	$ 49	$ 3,849

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Summary of Significant Accounting Policies - Equity Securities (Details) - USD ($) $ in Thousands			12 Months Ended
	Dec. 31, 2018	Jun. 05, 2015	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2015
Related Party Transaction [Line Items]
Common shares owned in RMR Inc.	2,801,061		2,801,061		1,214,225
SIR
Related Party Transaction [Line Items]
Shares acquired (in shares)			1,586,836
Purchase price			$ 2,415,053
RMR Inc
Related Party Transaction [Line Items]
Purchase price		$ 17,462
Initial other liabilities				$ 18,493
Class A common shares | SIR
Related Party Transaction [Line Items]
Shares acquired (in shares)	1,586,836
Class A common shares | RMR Inc
Related Party Transaction [Line Items]
Shares acquired (in shares)		1,541,201
Cost method investment		$ 39,833
RMR Inc
Related Party Transaction [Line Items]
Recognized amortization of the liability			1,087
Amortization of liability, 2019			1,087
Amortization of liability, 2020			1,087
Amortization of liability, 2021			1,087
Amortization of liability, 2022			1,087
Amortization of liability, 2023			1,087
Amortization of liability, thereafter			$ 13,058

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Summary of Significant Accounting Policies - Additional Information (Details) $ / shares in Units, $ in Thousands		12 Months Ended
	Oct. 02, 2017 building joint_venture	Dec. 31, 2018 USD ($) segment building joint_venture $ / shares	Dec. 31, 2017 USD ($) joint_venture $ / shares	Dec. 31, 2016 USD ($)	Dec. 30, 2018 $ / shares
Schedule of Equity Method Investments [Line Items]
Number of joint ventures | joint_venture		2
Increase in rental income to record revenue on straight line basis		$ 10,164	$ 5,582	$ 2,691
Common shares of beneficial interest, par value (in dollars per share) | $ / shares		$ 0.01	$ 0.01		$ 0.04
Number of business segments | segment		1
First Potomac Realty Trust
Schedule of Equity Method Investments [Line Items]
Number of joint ventures | joint_venture	2		2
Number of buildings | building	3	3
Joint Venture Property 1 | First Potomac Realty Trust
Schedule of Equity Method Investments [Line Items]
Percentage of ownership interest	50.00%	50.00%
Joint Venture Property 2 | First Potomac Realty Trust
Schedule of Equity Method Investments [Line Items]
Percentage of ownership interest	51.00%	51.00%
Unconsolidated Joint Ventures
Schedule of Equity Method Investments [Line Items]
Number of buildings | building		3
Mortgage indebtedness		$ 82,000
Continuing operations
Schedule of Equity Method Investments [Line Items]
Number of buildings | building		247
Increase in rental income to record revenue on straight line basis		$ 10,164	$ 5,582	$ 2,691
Straight line rent receivables		$ 34,006	$ 27,267

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Weighted Average Common Share Amounts (Details) - shares shares in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Earnings Per Share, Basic and Diluted [Abstract]
Weighted average common shares for basic earnings per share (in shares)	24,830	21,158	17,763
Effect of dilutive securities: unvested share awards (in shares)	0	0	5
Weighted average common shares for diluted earnings per share (in shares)	24,830	21,158	17,768
Antidilutive securities	4	5

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New Accounting Pronouncements (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Deferred gain on sale of real estate		$ 712
Unrealized gain on investment in available for sale securities	$ 0	24,042	$ 30,465
Equity in net earnings (losses) of investees	(2,269)	(13)	137
Increase (decrease) in cash from operating activities	$ 144,916	137,554	126,722
ASU 2016-01 | Cumulative Other Comprehensive Income (Loss)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Unrealized gain on investment in available for sale securities		45,116
ASU 2016-15
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Accretion of equity in earnings		(2,944)	(2,956)
ASU 2016-18
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Increase (decrease) in cash from operating activities		(1,563)	$ 492
SIR and AIC | ASU 2016-01 | Cumulative Other Comprehensive Income (Loss)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Equity in net earnings (losses) of investees		$ 15,165

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Real Estate Properties - Additional Information (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2018 USD ($) ft² lease building property
Real Estate Properties [Line Items]
Number of properties, noncontrolling interest | property	2
Number of buildings, noncontrolling interest | building	3
Number of leases entered | lease	128
Rentable square feet (in sqft) | ft²	1,382,821
Weighted average lease term	6 years 10 months
Expenditures committed on leases	$ 37,135
Committed but unspent tenant related obligations estimated	$ 58,380
Continuing operations
Real Estate Properties [Line Items]
Number of buildings | building	247
Carrying value	$ 4,161,591

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Real Estate Properties - Merger with Select Income REIT (Details) $ in Thousands		12 Months Ended
	Oct. 02, 2017	Dec. 31, 2018 USD ($) ft² property	Sep. 14, 2018 ft²	Dec. 31, 2016 ft²
Business Acquisition [Line Items]
Rentable area of properties (in square feet) | ft²				830,185
Below market, acquired lease amortization period	3 years 9 months 18 days	5 years 8 months
SIR
Business Acquisition [Line Items]
Number of properties acquired | property		99
Rentable area of properties (in square feet) | ft²		16,500,000	16,500,000
Purchase price | $		$ 2,415,053
Liabilities assumed | $		$ 1,719,772
Above market lease
Business Acquisition [Line Items]
Weighted average amortization period, assets acquired	3 years 2 months 12 days	5 years 9 months
Lease origination value
Business Acquisition [Line Items]
Weighted average amortization period, assets acquired	3 years 1 month 6 days	7 years 2 months

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Real Estate Properties - Assets and Liabilities (Details) - USD ($) $ / shares in Units, $ in Thousands		12 Months Ended
	Oct. 02, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Total Purchase Price:
Acquisition related costs		$ (14,508)	$ 0	$ (1,191)
Acquired net working capital		30,483	(1,596)	0
Purchase Price Allocation:
Land				14,790
Acquired net working capital		$ 30,483	$ (1,596)	$ 0
SIR
Total Purchase Price:
Closing price of OPI common shares on December 31, 2018 (in dollars per share)		$ 6.87
Cash consideration		$ 8
Equity issuance costs		(239)
Total cash consideration		639,578
Acquired net working capital		55,703
SIR unsecured revolving credit facility repaid at closing		108,000
Non-cash portion of purchase price		1,775,475
Gross purchase price		2,415,053
Purchase Price Allocation:
Land		475,893
Buildings and improvements		960,286
Assets of properties held for sale		7,022
Acquired real estate leases		858,121
Cash		24,744
Restricted cash		476
Rents receivable, net		11,389
Other assets		89,188
Total assets		2,427,119
Assumed real estate lease obligations		(11,833)
Due to related persons		(30,120)
Accounts payable and accrued expenses		(67,151)
Net assets acquired		639,578
Acquired net working capital		55,703
Gross purchase price		2,415,053
First Potomac Realty Trust
Total Purchase Price:
Cash consideration	$ 1,175,140
Acquisition related costs	9,575
Total cash consideration	1,184,715
Preferred units of limited partnership issued	20,221
Acquired net working capital	(1,596)
Assumed mortgage notes	167,548
Non-cash portion of purchase price	186,173
Gross purchase price	1,370,888
Purchase Price Allocation:
Land	360,909
Buildings and improvements	681,340
Acquired real estate leases	283,498
Investment in unconsolidated joint ventures	51,305
Cash	11,191
Restricted cash	1,018
Rents receivable	2,672
Other assets	3,640
Total assets	1,395,573
Long term debt acquired	(167,936)
Assumed real estate lease obligations	(5,776)
Accounts payable and accrued expenses	(10,640)
Rents collected in advance	(1,436)
Security deposits	(4,849)
Net assets acquired	1,204,936
Acquired net working capital	(1,596)
Assumed mortgage notes	167,548
Gross purchase price	$ 1,370,888
Unsecured revolving credit facility | SIR
Purchase Price Allocation:
Long term debt acquired		(108,000)
Senior unsecured notes | SIR
Total Purchase Price:
Assumed mortgage notes		1,450,000
Purchase Price Allocation:
Long term debt acquired		(1,410,947)
Assumed mortgage notes		1,450,000
Face amount		1,450,000
Mortgage note payable | SIR
Total Purchase Price:
Assumed mortgage notes		161,772
Purchase Price Allocation:
Long term debt acquired		(159,490)
Assumed mortgage notes		161,772
Face amount		$ 161,772
Common Shares | SIR
Total Purchase Price:
OPI common shares issued		23,282,704
Closing price of OPI common shares on December 31, 2018 (in dollars per share)		$ 27.48
Value of consideration transferred		$ 639,809
RMR LLC | SIR
Purchase Price Allocation:
Investment at fair value		$ 84,229

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Real Estate Properties - FPO Transaction (Details) $ / shares in Units, $ in Thousands		12 Months Ended
	Oct. 02, 2017 USD ($) ft² building joint_venture property	Dec. 31, 2018 ft² building joint_venture	Dec. 31, 2017 USD ($) joint_venture	May 01, 2018 USD ($) $ / shares shares	Dec. 31, 2016 ft²
Business Acquisition [Line Items]
Rentable area of properties (in square feet) | ft²					830,185
Number of joint ventures | joint_venture		2
Below market, acquired lease amortization period	3 years 9 months 18 days	5 years 8 months
First Potomac Realty Trust
Business Acquisition [Line Items]
Number of buildings acquired | building	72
Rentable area of properties (in square feet) | ft²	6,000,000	400,000
Number of joint ventures | joint_venture	2
Purchase price	$ 1,370,888
Cash consideration	1,175,140
Repayment of debt assumed	483,000
Mortgage notes payable	$ 167,936
First Potomac Realty Trust
Business Acquisition [Line Items]
Number of joint ventures | joint_venture	2		2
Number of buildings | building	3	3
First Potomac Realty Trust | First Potomac Realty Trust
Business Acquisition [Line Items]
Rentable area of properties (in square feet) | ft²	400,000
Joint Venture Property 1 | First Potomac Realty Trust
Business Acquisition [Line Items]
Percentage of ownership interest	50.00%	50.00%
Joint Venture Property 2 | First Potomac Realty Trust
Business Acquisition [Line Items]
Percentage of ownership interest	51.00%	51.00%
Mortgage note payable | FPO Mortgage | First Potomac Realty Trust
Business Acquisition [Line Items]
Mortgage notes payable	$ 167,548
Fair value adjustment	388
Fair value of debt	167,936
Mortgage note payable | Joint Venture Mortgage | First Potomac Realty Trust
Business Acquisition [Line Items]
Mortgage notes payable	$ 82,000
Number of properties collateralized | property	2
FPO Shareholders | First Potomac Realty Trust
Business Acquisition [Line Items]
Cash consideration	$ 651,696
Above market lease
Business Acquisition [Line Items]
Weighted average amortization period, assets acquired	3 years 2 months 12 days	5 years 9 months
Lease origination value
Business Acquisition [Line Items]
Weighted average amortization period, assets acquired	3 years 1 month 6 days	7 years 2 months
Series A Cumulative Preferred Units
Business Acquisition [Line Items]
Preferred stock percentage			5.50%
Preferred stock carrying value			$ 20,496
Shares outstanding (in units) | shares				1,813,504
Redemption percentage			5.50%
Redemption price (in dollars per share) | $ / shares				$ 11.15
Redemption amount				$ 20,310

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Real Estate Properties - Pro Forma (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items]
Rental income	$ 758,596	$ 746,801
Net loss	$ (87,240)	$ (74,556)
Net income per share (in dollars per share)	$ (1.82)	$ (1.55)
Equity in losses from our unconsolidated joint ventures	$ (2,269)	$ (13)	$ 137
Acquisition-related costs
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items]
Decrease revenues	152,735	156,506
Decrease (increase) net income (loss)	$ 46,237	64,661
FPO Transaction
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items]
Revenue since acquisition		36,722
Operating income since acquisition		3,230
Equity in losses from our unconsolidated joint ventures		(621)
FPO Transaction | Acquisition-related costs
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items]
Decrease revenues		804
Decrease (increase) net income (loss)		$ 47,019

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Real Estate Properties - Schedule of Joint Ventures (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2018 USD ($) ft² building joint_venture	Dec. 31, 2017 USD ($)	Dec. 31, 2016 ft²
Real Estate [Line Items]
Number of joint ventures | joint_venture	2
Square Feet (in square feet) | ft²			830,185
Unconsolidated Joint Ventures
Real Estate [Line Items]
Investment at carrying value	$ 43,665	$ 50,202
Number of Office Buildings | building	3
Square Feet (in square feet) | ft²	443,867
Interest rate (as a percent)	3.93%
Principal Balance	$ 82,000
Unamortized basis difference	$ 8,442
Unconsolidated Joint Ventures | Prosperity Metro Plaza
Real Estate [Line Items]
OPI Ownership	51.00%
Investment at carrying value	$ 23,969	27,888
Number of Office Buildings | building	2
Square Feet (in square feet) | ft²	328,456
Interest rate (as a percent)	4.09%
Principal Balance	$ 50,000
Unconsolidated Joint Ventures | 1750 H Street, NW
Real Estate [Line Items]
OPI Ownership	50.00%
Investment at carrying value	$ 19,696	$ 22,314
Number of Office Buildings | building	1
Square Feet (in square feet) | ft²	115,411
Interest rate (as a percent)	3.69%
Principal Balance	$ 32,000

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Real Estate Properties - Acquisition Activities (Details) $ in Thousands	1 Months Ended		12 Months Ended
	Sep. 30, 2017 USD ($)	Jan. 31, 2017 USD ($) ft²	Dec. 31, 2017 USD ($) ft² building	Dec. 31, 2016 USD ($) ft² building
Real Estate Properties [Line Items]
Rentable area of properties (in square feet) | ft²				830,185
Purchase price				$ 199,304
Land				14,790
Buildings and Improvements				145,006
Other Assumed Assets				$ 2,167
Manassas, VA
Real Estate Properties [Line Items]
Rentable area of properties (in square feet) | ft²		69,374	69,374
Percentage of property lease			100.00%
Capitalized transaction costs			$ 37
Purchase price		$ 12,657	$ 12,657
Land		1,562
Buildings and Improvements		8,253
Other Assumed Assets		$ 2,842
Office Building
Real Estate Properties [Line Items]
Number of buildings acquired | building				5
Office Building | Manassas, VA
Real Estate Properties [Line Items]
Number of buildings acquired | building			1
Transferable Development Rights | Washington, D.C.
Real Estate Properties [Line Items]
Payments to acquire transferable development rights	$ 2,030

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Real Estate Properties - 2016 Acquisition Activities (Details) $ in Thousands		12 Months Ended
	Jul. 06, 2016 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($) ft² building
Business Acquisition [Line Items]
Rentable area of properties (in square feet) | ft²				830,185
Purchase price				$ 199,304
Land				14,790
Buildings and Improvements				145,006
Other Assumed Assets				2,167
Acquired Leases				37,928
Acquired Lease Obligations				587
Acquisition and transaction related costs		$ 14,508	$ 0	$ 1,191
Office Building
Business Acquisition [Line Items]
Number of buildings acquired | building				5
Sacramento, CA
Business Acquisition [Line Items]
Number of buildings acquired | building				1
Rentable area of properties (in square feet) | ft²				337,811
Purchase price				$ 79,508
Land				4,688
Buildings and Improvements				61,995
Other Assumed Assets				2,167
Acquired Leases				11,245
Acquired Lease Obligations				587
Atlanta, GA
Business Acquisition [Line Items]
Purchase price				1,670
Land				$ 1,670
Atlanta, GA | Land
Business Acquisition [Line Items]
Purchase price	$ 1,623
Acquisition and transaction related costs	$ 47
Rancho Cordova, CA
Business Acquisition [Line Items]
Number of buildings acquired | building				1
Rentable area of properties (in square feet) | ft²				82,896
Purchase price				$ 13,943
Land				1,466
Buildings and Improvements				8,797
Acquired Leases				$ 3,680
Chantilly, VA
Business Acquisition [Line Items]
Number of buildings acquired | building				3
Rentable area of properties (in square feet) | ft²				409,478
Purchase price				$ 104,183
Land				6,966
Buildings and Improvements				74,214
Acquired Leases				23,003
Acquired Lease Obligations				$ 0

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Real Estate Properties - 2018/2017 Disposition Activities (Details) $ in Thousands	1 Months Ended		3 Months Ended		12 Months Ended
	Oct. 31, 2017 USD ($) ft² property	Aug. 31, 2017 USD ($) ft² property	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2018 USD ($) ft² building	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($) ft²	Feb. 28, 2018 ft² property
Real Estate Properties [Line Items]
Rentable area of properties (in square feet) | ft²							830,185
Net book value					$ 3,569,489	$ 2,633,873
Loss on impairment of real estate					8,630	9,490	$ 0
Gain on sale of real estate					20,661	0	$ 79
Properties held for sale					$ 253,501	0
Sacramento, CA
Real Estate Properties [Line Items]
Rentable area of properties (in square feet) | ft²							337,811
Discontinued Operations, Held-for-sale
Real Estate Properties [Line Items]
Number of buildings | building					36
Rentable area of properties (in square feet) | ft²					2,181,859
Aggregate sale price of properties sold, excluding closing costs					$ 275,600
Properties held for sale					$ 216,955
Discontinued Operations, Held-for-sale | District of Columbia
Real Estate Properties [Line Items]
Number of buildings | building					1
Rentable area of properties (in square feet) | ft²					129,035
Aggregate sale price of properties sold, excluding closing costs					$ 70,000
Discontinued Operations, Held-for-sale | Northern Virginia and Maryland
Real Estate Properties [Line Items]
Number of buildings | building					34
Rentable area of properties (in square feet) | ft²					1,635,868
Aggregate sale price of properties sold, excluding closing costs					$ 198,500
Loss on impairment of real estate					$ 2,830
Discontinued Operations, Held-for-sale | Kapolei, HI
Real Estate Properties [Line Items]
Number of buildings | building					1
Rentable area of properties (in square feet) | ft²					416,956
Aggregate sale price of properties sold, excluding closing costs					$ 7,100
Discontinued operations | Falls Church, VA
Real Estate Properties [Line Items]
Rentable area of properties (in square feet) | ft²		164,746
Net book value		$ 12,901
Number of properties | property		1
Office Building | Disposal Group, Disposed of by Sale | One building
Real Estate Properties [Line Items]
Number of buildings | building					19
Rentable area of properties (in square feet) | ft²					2,174,637
Aggregate sale price of properties sold, excluding closing costs					$ 320,255
Office Building | Disposal Group, Disposed of by Sale | Minneapolis, NM | One building
Real Estate Properties [Line Items]
Number of buildings | building					1
Rentable area of properties (in square feet) | ft²					193,594
Aggregate sale price of properties sold, excluding closing costs					$ 20,000
Loss on impairment of real estate				$ 640
Number of properties | property								1
Office Building | Disposal Group, Disposed of by Sale | New York, NY | One building
Real Estate Properties [Line Items]
Number of buildings | building					1
Rentable area of properties (in square feet) | ft²					187,060
Aggregate sale price of properties sold, excluding closing costs					$ 118,500
Gain on sale of real estate					$ 17,249
Office Building | Disposal Group, Disposed of by Sale | Sacramento, CA | One building
Real Estate Properties [Line Items]
Number of buildings | building					1
Rentable area of properties (in square feet) | ft²					110,500
Aggregate sale price of properties sold, excluding closing costs					$ 10,755
Loss on impairment of real estate					$ 3,029
Number of properties | property								1
Office Building | Disposal Group, Disposed of by Sale | Golden, CO | One building
Real Estate Properties [Line Items]
Number of buildings | building					1
Rentable area of properties (in square feet) | ft²					43,231
Aggregate sale price of properties sold, excluding closing costs					$ 4,000
Gain on sale of real estate					$ 54
Office Building | Disposal Group, Disposed of by Sale | Southern Virginia | One building
Real Estate Properties [Line Items]
Number of buildings | building					15
Rentable area of properties (in square feet) | ft²					1,640,252
Aggregate sale price of properties sold, excluding closing costs					$ 167,000
Gain on sale of real estate					$ 3,358
Office Building | Disposal Group, Disposed of by Sale | Safford, AZ | One building
Real Estate Properties [Line Items]
Rentable area of properties (in square feet) | ft²								36,139
Aggregate sale price of properties sold, excluding closing costs				8,250
Loss on impairment of real estate				$ 2,453
Number of properties | property								1
Fair value adjustment			$ 322
Office Building | Disposal Group, Disposed of by Sale | Albuquerque, NM | One building
Real Estate Properties [Line Items]
Rentable area of properties (in square feet) | ft²	29,045
Aggregate sale price of properties sold, excluding closing costs	$ 2,000
Net book value	$ 1,885
Loss on impairment of real estate						230
Number of properties | property	1
Office Building | Discontinued operations | Falls Church, VA | One building
Real Estate Properties [Line Items]
Rentable area of properties (in square feet) | ft²		164,746
Aggregate sale price of properties sold, excluding closing costs		$ 13,523
Net book value		$ 12,901
Increase the carrying value of property						$ 619
Number of properties | property		1
FPO Transaction | Disposal Group, Disposed of by Sale
Real Estate Properties [Line Items]
Number of buildings | building					34
Rentable area of properties (in square feet) | ft²					5,300,000

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Real Estate Properties - Income Statement Information for Disposal of Property (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Income (loss) from discontinued operations	$ 5,722	$ 21,829	$ 34,878
Discontinued Operations, Held-for-sale | Discontinued operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Rental income		17	68
Real estate taxes		(88)	(97)
Utility expenses		(97)	(146)
Other operating expenses		(202)	(300)
General and administrative		(76)	(114)
Increase in carrying value of property included in discontinued operations		619	0
Income (loss) from discontinued operations		$ 173	$ (589)

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Real Estate Properties - 2016 Dispositions (Details) $ in Thousands	1 Months Ended	12 Months Ended
	Jul. 31, 2016 USD ($) ft² property	Dec. 31, 2018 USD ($) ft²	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($) ft²
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Rentable area of properties (in square feet) | ft²				830,185
Net book value		$ 3,569,489	$ 2,633,873
Gain on sale of real estate		$ 20,661	0	$ 79
Deferred gain on sale of real estate			$ 712
One building | Disposal Group, Held-for-sale | Savannah, GA | Office Building
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of properties owned | property	1
Rentable area of properties (in square feet) | ft²	35,228
Net book value	$ 2,986
Aggregate sale price of properties sold, excluding closing costs	4,000
Mortgage loan	$ 3,600
One building | Disposal Group, Disposed of by Sale | Office Building
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Rentable area of properties (in square feet) | ft²		2,174,637
Aggregate sale price of properties sold, excluding closing costs		$ 320,255
LIBOR | Disposal Group, Disposed of by Sale | Savannah, GA
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Basis spread on variable rate			4.00%
Minimum | LIBOR | Disposal Group, Disposed of by Sale | Savannah, GA
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Basis spread on variable rate			5.00%
Other Assets
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Deferred gain on sale of real estate				$ 712
Real Estate Loan | Other Assets
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Financing receivable		$ 3,600	$ 3,600

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Real Estate Properties - Future Minimum Lease Payments (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Real Estate [Abstract]
2019	$ 569,874
2020	514,551
2021	479,401
2022	434,135
2023	383,695
Thereafter	1,236,540
Total	$ 3,618,196

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Real Estate Properties - Operating Leases (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2018 USD ($) tenant	Dec. 31, 2017 USD ($)
Concentration Risk [Line Items]
Number of government tenants | tenant	22
Rent expense, net of subleased revenue | $	$ 1,707	$ 374
Tenant concentration
Concentration Risk [Line Items]
Percentage termination right, 2019	2.10%
Percentage termination right, 2020	6.40%
Percentage termination right, 2021	1.90%
Percentage termination right, 2023	2.70%
Percentage termination right, 2023	0.60%
Percentage termination right, 2024	1.40%
Percentage termination right, 2025	4.70%
Percentage termination right, 2026	2.00%
Percentage termination right, 2027	1.90%
Government Tenants, All Other | Tenant concentration
Concentration Risk [Line Items]
Concentration risk, percentage	5.60%
15 Government Tenants | Tenant concentration
Concentration Risk [Line Items]
Concentration risk, percentage	5.80%

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Real Estate Properties - Future Minimum Rental Payments (Details)	Dec. 31, 2018 USD ($)
Real Estate [Abstract]
2019	$ 1,584
2020	1,627
2021	139
Total	$ 3,350

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Business and Property Management Agreements with RMR LLC (Details) - RMR LLC $ in Thousands		1 Months Ended	12 Months Ended
	Jun. 05, 2015	Jan. 31, 2019 USD ($)	Dec. 31, 2018 USD ($) employee agreement	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Related Party Transaction [Line Items]
Number of employees | employee			0
Number of agreements with RMR LLC to provide management services | agreement			2
Management fees as percentage of gross collected rents			3.00%
Construction supervision fees as percentage of construction costs			5.00%
Net business management fees			$ 16,381	$ 12,464	$ 10,222
Recognized amortization of the liability			603	603	603
Reimbursement amounts			21,042	15,045	12,276
Internal audit costs			237	276	235
Net Property Management and Construction Supervision Fees
Related Party Transaction [Line Items]
Transaction amount			13,989	11,566	8,949
Net Property Management and Construction Supervision Fees, Amortization Liability
Related Party Transaction [Line Items]
Transaction amount			$ 484	$ 484	$ 484
Transition Services
Related Party Transaction [Line Items]
Duration of transition services			120 days
Amended And Restate Business Management Agreement
Related Party Transaction [Line Items]
Percentage applied on average historical cost of real estate investment properties acquired			0.50%
Base management fee payable as percentage of average historical cost of real estate investments			0.70%
Percentage of average closing stock price on stock exchange			0.70%
Management fee payable as percentage of average market capitalization exceeding specified amount			0.50%
Measurement period for incentive management fee			3 years
Percentage for limitation and adjustments of incentive management fee payable			12.00%
Percentage for limitation and adjustments of incentive management fee payable, minimum total return per share percentage change			5.00%
Average closing price of our common shares, consecutive trading days			10 days
Highest Average closing price of our common shares, final consecutive trading days			30 days
Percentage of base business management fee payable in common shares			1.50%
Amended And Restate Business Management Agreement | Up C Transaction
Related Party Transaction [Line Items]
Written notice for convenience	60 days
Window of written notice after calendar year	60 days
Window for written notice after change of control	12 months
Remaining termination fee term	10 years
Minimum | Amended And Restate Business Management Agreement
Related Party Transaction [Line Items]
Threshold amount of average market capitalization			$ 250,000
Percentage for limitation and adjustments of incentive management fee payable, total return per share percentage, reduction			2.00%
Minimum | Amended And Restate Business Management Agreement | Up C Transaction
Related Party Transaction [Line Items]
Termination fee term	19 years
Maximum | Amended And Restate Business Management Agreement
Related Party Transaction [Line Items]
Threshold amount of real estate investments			$ 250,000
Base management fee payable average market capitalization			$ 250,000
Percentage for limitation and adjustments of incentive management fee payable, total return per share percentage, reduction			5.00%
Maximum | Amended And Restate Business Management Agreement | Up C Transaction
Related Party Transaction [Line Items]
Termination fee term	20 years
SIR | Net Property Management and Construction Supervision Fees
Related Party Transaction [Line Items]
Transaction amount			$ 2,185
Incentive management fee			$ 25,817
Forecast
Related Party Transaction [Line Items]
Reimbursement amounts		$ 462

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Related Party Transactions - REITs, for which RMR LLC provides Management Services (Details) $ in Thousands	6 Months Ended			9 Months Ended		12 Months Ended
	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($)	Oct. 09, 2018 USD ($) shares	Sep. 30, 2018 USD ($)	Dec. 31, 2018 USD ($) agreement company shares	Dec. 31, 2017 USD ($) shares	Dec. 31, 2016 USD ($) shares	Dec. 31, 2015 shares
Related Party Transaction [Line Items]
Common shares owned in RMR Inc. | shares						2,801,061			1,214,225
Lock up agreement, transfer of shares (in shares) | shares						175,000
Duration of lock up agreement						10 years
Equity in earnings of Select Income REIT						$ (2,269)	$ (13)	$ 137
SIR
Related Party Transaction [Line Items]
Percentage of ownership interest					27.80%	27.80%
Equity in earnings of Select Income REIT				$ 24,358			$ 21,584	$ 35,381
Shares owned (in shares) | shares						24,918,421
SIR | SIR
Related Party Transaction [Line Items]
Issuance of shares, net (in shares) | shares				63,157			59,502	65,900
Equity in earnings of Select Income REIT					$ 882		$ 608	$ 137
AIC
Related Party Transaction [Line Items]
Number of entities to whom RMR provides management services | company						4
Amount invested in equity investee						$ 8,751	8,304	7,235
Equity in earnings of Select Income REIT						516	608	137
Equity in unrealized gain (loss) of investees						$ (69)	461	152
RMR LLC
Related Party Transaction [Line Items]
Number of agreements with RMR LLC to provide management services | agreement						2
Rental income earned						$ 1,026	303	366
Related party transaction						$ 16,381	12,464	10,222
RMR LLC | AIC
Related Party Transaction [Line Items]
Service fee percentage						3.00%
Property Insurance Premium Expense, June 2018 | AIC
Related Party Transaction [Line Items]
Related party transaction		$ 757
Property Insurance Premium Expense, June 2017 | AIC
Related Party Transaction [Line Items]
Related party transaction			$ 1,032
Property Insurance Premium Expense
Related Party Transaction [Line Items]
Related party transaction						$ 198	$ 91	$ 106
Common Shares
Related Party Transaction [Line Items]
Issuance of shares, net (in shares) | shares						23,281,738	6,976,757
Common Shares | SIR | Industrial Logistics Properties Trust
Related Party Transaction [Line Items]
Payments to acquire shares in investment						$ 8,632
Common Shares | Officers and Other Employees
Related Party Transaction [Line Items]
Issuance of shares, net (in shares) | shares						14,675	14,337	13,350
Aggregate market value of shares awarded						$ 995	$ 1,067	$ 1,183
Common Shares | Officers and Other Employees | SIR
Related Party Transaction [Line Items]
Issuance of shares, net (in shares) | shares						58,700	57,850	53,400
Aggregate market value of shares awarded						$ 1,183	$ 1,337	$ 1,397
Class A common shares
Related Party Transaction [Line Items]
Common shares owned in RMR Inc. | shares						2,801,061
Tranche 1 | 2009 Award Plan | Common Shares | Officers and Other Employees
Related Party Transaction [Line Items]
Vesting percentage						20.00%
Tranche 2 | 2009 Award Plan | Common Shares | Officers and Other Employees
Related Party Transaction [Line Items]
Vesting percentage						20.00%
Tranche 3 | 2009 Award Plan | Common Shares | Officers and Other Employees
Related Party Transaction [Line Items]
Vesting percentage						20.00%
Tranche 4 | 2009 Award Plan | Common Shares | Officers and Other Employees
Related Party Transaction [Line Items]
Vesting percentage						20.00%
Tranche 5 | 2009 Award Plan | Common Shares | Officers and Other Employees
Related Party Transaction [Line Items]
Vesting percentage						20.00%
Forecast | Property Insurance Premium Expense, June 2019 | AIC
Related Party Transaction [Line Items]
Related party transaction	$ 1,211
Forecast | Property Insurance Premium Expense, June 2019 | AIC | SIR
Related Party Transaction [Line Items]
Related party transaction	$ 1,666

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Concentration (Details)	12 Months Ended
	Dec. 31, 2018 building state government_tenant state_government	Dec. 31, 2017	Dec. 31, 2016
Concentration Risk [Line Items]
Number of state governments | state_government	13
Number of other governments | government_tenant	3
Annualized rental income, excluding properties classified as discontinued operations | Virginia
Concentration Risk [Line Items]
Annualized Rental income percent	15.40%
Annualized rental income, excluding properties classified as discontinued operations | California
Concentration Risk [Line Items]
Annualized Rental income percent	11.30%
Annualized rental income, excluding properties classified as discontinued operations | Texas
Concentration Risk [Line Items]
Annualized Rental income percent	10.90%
Annualized rental income, excluding properties classified as discontinued operations | District of Columbia
Concentration Risk [Line Items]
Concentration risk, percentage	26.50%
Annualized Rental income percent	9.80%
Annualized rental income, excluding properties classified as discontinued operations | Maryland
Concentration Risk [Line Items]
Annualized Rental income percent	9.40%
Annualized rental income, excluding properties classified as discontinued operations | Tenant concentration | U S Government, State Governments, and Other Governments
Concentration Risk [Line Items]
Concentration risk, percentage	35.40%	62.60%	87.90%
Annualized rental income, excluding properties classified as discontinued operations | Tenant concentration | U.S. Government
Concentration Risk [Line Items]
Concentration risk, percentage	25.60%	43.50%	60.60%
Continuing operations
Concentration Risk [Line Items]
Number of buildings | building	247
Number of states in which acquired properties located | state	38

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Indebtedness - Outstanding Debt (Details) $ in Thousands			12 Months Ended
	Feb. 11, 2019 USD ($)	Dec. 18, 2018 USD ($) building	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Jul. 20, 2017
Debt Instrument [Line Items]
Long term debt gross			$ 3,311,262	$ 2,263,147
Unamortized debt premiums, discounts and issuance costs			(56,372)	(18,055)
Total debt			3,254,890	2,245,092
Loss on early extinguishment of debt			$ 709	1,715	$ (104)
Senior unsecured notes, 3.60% interest rate, due in 2020
Debt Instrument [Line Items]
Interest rate (as a percent)			3.60%
Senior unsecured notes, 4.00% interest rate, due in 2022
Debt Instrument [Line Items]
Interest rate (as a percent)			4.00%
Senior unsecured notes, 4.15% interest rate, due in 2022
Debt Instrument [Line Items]
Interest rate (as a percent)			4.15%
Senior unsecured notes, 4.25% interest rate, due in 2024
Debt Instrument [Line Items]
Interest rate (as a percent)			4.25%
Senior unsecured notes, 4.50% interest rate, due in 2025
Debt Instrument [Line Items]
Interest rate (as a percent)			4.50%
Unsecured term loan | Unsecured term loan, due in 2020
Debt Instrument [Line Items]
Long term debt gross			$ 300,000	300,000
Unsecured term loan | Unsecured term loan, due in 2022
Debt Instrument [Line Items]
Long term debt gross			88,000	250,000
Repayment of principal		$ 162,000
Number of buildings sold in portfolio | building		15
Loss on early extinguishment of debt			625
Senior unsecured notes | Senior unsecured notes, 3.750% interest rate, due in 2019
Debt Instrument [Line Items]
Long term debt gross			$ 350,000	350,000
Interest rate (as a percent)			3.75%
Senior unsecured notes | Senior unsecured notes, 3.60% interest rate, due in 2020
Debt Instrument [Line Items]
Long term debt gross			$ 400,000	0
Interest rate (as a percent)			3.60%
Senior unsecured notes | Senior unsecured notes, 4.00% interest rate, due in 2022
Debt Instrument [Line Items]
Long term debt gross			$ 300,000	300,000
Interest rate (as a percent)			4.00%			4.00%
Senior unsecured notes | Senior unsecured notes, 4.15% interest rate, due in 2022
Debt Instrument [Line Items]
Long term debt gross			$ 300,000	0
Interest rate (as a percent)			4.15%
Senior unsecured notes | Senior unsecured notes, 4.25% interest rate, due in 2024
Debt Instrument [Line Items]
Long term debt gross			$ 350,000	0
Interest rate (as a percent)			4.25%
Senior unsecured notes | Senior unsecured notes, 4.50% interest rate, due in 2025
Debt Instrument [Line Items]
Long term debt gross			$ 400,000	0
Interest rate (as a percent)			4.50%
Senior unsecured notes | Senior unsecured notes, 5.875% interest rate, due in 2046
Debt Instrument [Line Items]
Long term debt gross			$ 310,000	310,000
Interest rate (as a percent)			5.875%
Mortgage note payable | Mortgage note payable, 7.000% interest rate, due in 2019
Debt Instrument [Line Items]
Long term debt gross			$ 7,939	8,221
Interest rate (as a percent)			7.00%
Mortgage note payable | Mortgage note payable, 5.720% interest rate, due in 2020
Debt Instrument [Line Items]
Long term debt gross			$ 33,703	34,474
Interest rate (as a percent)			5.72%
Mortgage note payable | Mortgage note payable, 4.260% interest rate, due in 2020
Debt Instrument [Line Items]
Long term debt gross			$ 0	3,173
Interest rate (as a percent)			4.26%
Loss on early extinguishment of debt			$ 60
Mortgage note payable | Mortgage note payable, 4.160% interest rate, due in 2020
Debt Instrument [Line Items]
Long term debt gross			$ 40,772	0
Interest rate (as a percent)			4.16%
Mortgage note payable | Mortgage note payable, 8.150% interest rate, due in 2021
Debt Instrument [Line Items]
Long term debt gross			$ 2,912	4,045
Interest rate (as a percent)			8.15%
Mortgage note payable | Mortgage note payable, 5.877% interest rate, due in 2021
Debt Instrument [Line Items]
Long term debt gross			$ 13,437	13,693
Interest rate (as a percent)			5.877%
Mortgage note payable | Mortgage note payable, 4.220% interest rate, due in 2022
Debt Instrument [Line Items]
Long term debt gross			$ 27,210	27,870
Interest rate (as a percent)			4.22%
Mortgage note payable | Mortgage note payable, 3.550% interest rate, due in 2023
Debt Instrument [Line Items]
Long term debt gross			$ 71,000	0
Interest rate (as a percent)			3.55%
Mortgage note payable | Mortgage note payable, 3.700% interest rate, due in 2023
Debt Instrument [Line Items]
Long term debt gross			$ 50,000	0
Interest rate (as a percent)			3.70%
Mortgage note payable | Mortgage note payable, 4.800% interest rate, due in 2023
Debt Instrument [Line Items]
Long term debt gross			$ 24,509	24,891
Interest rate (as a percent)			4.80%
Mortgage note payable | Mortgage note payable, 4.050% interest rate, due in 2030
Debt Instrument [Line Items]
Long term debt gross			$ 66,780	66,780
Interest rate (as a percent)			4.05%
Revolving credit facility, due in 2023 | Line of Credit
Debt Instrument [Line Items]
Long term debt gross			$ 175,000	$ 570,000
Subsequent Event | Unsecured term loan | Unsecured term loan, due in 2022
Debt Instrument [Line Items]
Extinguishment of debt	$ 88,000

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Indebtedness - Revolving Credit Facility (Details) - USD ($) $ in Thousands			12 Months Ended
	Dec. 13, 2018	Dec. 12, 2018	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Feb. 25, 2019
Line of Credit Facility [Line Items]
Maximum borrowing capacity on revolving credit facility			$ 2,500,000
Loss on early extinguishment of debt			709	$ 1,715	$ (104)
Unsecured revolving credit facility			175,000	$ 570,000
Unsecured revolving credit facility
Line of Credit Facility [Line Items]
Maximum borrowing capacity on revolving credit facility			750,000
Commitment fee percentage	0.25%
Loss on early extinguishment of debt			$ 24
Interest rate (as a percent)			3.60%	2.70%
The weighted average annual interest rate (as a percent)			3.00%	2.40%	1.70%
Unsecured revolving credit facility			$ 175,000
Available borrowings			575,000
Unsecured term loan, due in 2020
Line of Credit Facility [Line Items]
Face amount			$ 300,000
Interest rate (as a percent)			3.90%	3.00%
The weighted average annual interest rate (as a percent)			3.40%	2.50%	1.90%
Unsecured term loan, due in 2022
Line of Credit Facility [Line Items]
Face amount			$ 250,000
Interest rate (as a percent)			4.30%	3.40%
The weighted average annual interest rate (as a percent)			3.80%	2.90%	2.30%
Subsequent Event | Unsecured revolving credit facility
Line of Credit Facility [Line Items]
Unsecured revolving credit facility						$ 110,000
Available borrowings						$ 640,000
LIBOR | Unsecured revolving credit facility
Line of Credit Facility [Line Items]
Basis spread on variable rate	1.10%	1.25%
LIBOR | Unsecured term loan, due in 2020
Line of Credit Facility [Line Items]
Basis spread on variable rate	1.40%
LIBOR | Unsecured term loan, due in 2022
Line of Credit Facility [Line Items]
Basis spread on variable rate	1.80%

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Indebtedness - Narrative Information (Details) $ in Thousands			1 Months Ended		12 Months Ended
	Oct. 02, 2017 USD ($) building joint_venture mortgage_note	Jul. 20, 2017 USD ($)	Nov. 30, 2017 USD ($)	Jul. 31, 2017 USD ($)	Dec. 31, 2018 USD ($) building joint_venture loan	Dec. 31, 2017 USD ($) joint_venture	Dec. 31, 2016 USD ($)
Debt Instrument [Line Items]
Gain (loss) on early extinguishment of debt					$ (709)	$ (1,715)	$ 104
Number of Buildings Collateralized | building					12
Number of joint ventures | joint_venture					2
Book value of properties collateralized					$ 627,173
Principal of properties collateralized					$ 338,262
Senior unsecured notes, 4.00% interest rate, due in 2022
Debt Instrument [Line Items]
Interest rate (as a percent)					4.00%
Senior unsecured notes | Senior unsecured notes, 4.00% interest rate, due in 2022
Debt Instrument [Line Items]
Face amount		$ 300,000
Interest rate (as a percent)		4.00%			4.00%
Proceeds from Issuance of Debt		$ 295,399
SIR
Debt Instrument [Line Items]
Number loans assumed in acquisition | loan					3
Long-term Debt, Fair Value					$ 159,490
Number of Buildings Collateralized | building					5
SIR | Senior unsecured notes
Debt Instrument [Line Items]
Face amount					$ 1,450,000
Assumed mortgage notes					1,450,000
Mortgage notes payable					1,410,947
SIR | Mortgage note payable
Debt Instrument [Line Items]
Face amount					161,772
Assumed mortgage notes					161,772
Mortgage notes payable					$ 159,490
First Potomac Realty Trust
Debt Instrument [Line Items]
Number loans assumed in acquisition | mortgage_note	5
Assumed mortgage notes	$ 167,548
Mortgage notes payable	$ 167,936
Number of Buildings Collateralized | building	5
Number of joint ventures | joint_venture	2
Number of mortgage notes securing joint ventures | mortgage_note	2
First Potomac Realty Trust | Mortgage note payable | FPO Mortgage
Debt Instrument [Line Items]
Mortgage notes payable	$ 167,548
Long-term Debt, Fair Value	167,936
Repayment of principal			$ 10,000
First Potomac Realty Trust | Mortgage note payable | Joint Venture Mortgage
Debt Instrument [Line Items]
Mortgage notes payable	$ 82,000
Number of Buildings Collateralized | building	3
First Potomac Realty Trust
Debt Instrument [Line Items]
Number of joint ventures | joint_venture	2					2
Joint Venture Property 1 | First Potomac Realty Trust
Debt Instrument [Line Items]
Percentage of ownership interest	50.00%				50.00%
Joint Venture Property 2 | First Potomac Realty Trust
Debt Instrument [Line Items]
Percentage of ownership interest	51.00%				51.00%
Letter of Credit
Debt Instrument [Line Items]
Gain (loss) on early extinguishment of debt				$ (1,715)
Letter of Credit | Bridge Loan Facility [Member]
Debt Instrument [Line Items]
Face amount		$ 750,000
Debt Instrument, Term		364 days

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Indebtedness - Future Principal Payments (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Debt Disclosure [Abstract]
2019	$ 362,054
2020	775,707
2021	14,420
2022	713,518
2023	318,783
Thereafter	1,126,780
Total	3,311,262	$ 2,263,147
Unamortized premiums, discounts and certain issuance costs	56,372	18,055
Total debt outstanding	$ 3,254,890	$ 2,245,092

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Fair Value of Assets and Liabilities - Asset Measured at Fair Value (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2018 USD ($) building shares	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($) shares
Fair Value of Assets and Liabilities
Common shares owned in RMR Inc. | shares	2,801,061			1,214,225
Historical cost				$ 26,888
Unrealized loss on equity securities	$ 7,552	$ 0	$ 0
Recurring
Fair Value of Assets and Liabilities
Investment in RMR Inc.	148,680
Recurring | Level 1 inputs
Fair Value of Assets and Liabilities
Investment in RMR Inc.	148,680
Recurring | Level 2 inputs
Fair Value of Assets and Liabilities
Investment in RMR Inc.	0
Recurring | Level 3 inputs
Fair Value of Assets and Liabilities
Investment in RMR Inc.	$ 0
Discontinued Operations, Held-for-sale
Fair Value of Assets and Liabilities
Number of buildings | building	36
Discontinued Operations, Held-for-sale | Nonrecurring
Fair Value of Assets and Liabilities
Assets of properties held for sale	$ 195,107
Discontinued Operations, Held-for-sale | Nonrecurring | Level 1 inputs
Fair Value of Assets and Liabilities
Assets of properties held for sale	0
Discontinued Operations, Held-for-sale | Nonrecurring | Level 2 inputs
Fair Value of Assets and Liabilities
Assets of properties held for sale	195,107
Discontinued Operations, Held-for-sale | Nonrecurring | Level 3 inputs
Fair Value of Assets and Liabilities
Assets of properties held for sale	$ 0
SIR
Fair Value of Assets and Liabilities
Historical cost				$ 84,229
Shares acquired (in shares) | shares	1,586,836
Northern Virginia and Maryland | Discontinued Operations, Held-for-sale
Fair Value of Assets and Liabilities
Number of buildings | building	34

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Shareholders' Equity - Share Awards (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2018 USD ($) installment trustee shares	Dec. 31, 2017 USD ($) trustee shares	Dec. 31, 2016 USD ($) trustee shares	Dec. 31, 2015 shares
Common Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of shares, net (in shares)	23,281,738	6,976,757
Officers and Other Employees | Common Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of shares, net (in shares)	14,675	14,337	13,350
Aggregate market value of shares awarded | $	$ 995	$ 1,067	$ 1,183
2009 Award Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted to each trustee under the award plan	19,925	18,837	16,475
Number of installments | installment	5
Unvested shares	55,321	26,062	24,743	24,181
Unvested shares 2019	27,998
Unvested shares 2020	13,259
Unvested shares 2021	9,232
Unvested shares 2022	4,832
Share Awards, additional disclosures
Estimated future compensation expense for the unvested shares | $	$ 984
Weighted average period of recognition of compensation expenses (in years)	22 months
Compensation expense | $	$ 1,337	$ 1,377	$ 1,371
Shares available for issuance under the Award Plan	330,372
2009 Award Plan | Trustees | Common Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate market value of shares awarded | $	$ 254	$ 392	$ 244
Number of Trustees | trustee	6	6	5
Number of shares granted to each trustee under the award plan	750	750	625
Market value of common shares awarded to each trustee (in dollars) | $	$ 42	$ 65	$ 49
2009 Award Plan | Managing Trustee | Common Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate market value of shares awarded | $	$ 41
Number of shares granted to each trustee under the award plan	750

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Fair Value of Assets and Liabilities - Financial Instruments (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Fair Value of Financial Instruments
Senior Notes	$ 2,357,497	$ 944,140
Mortgage notes payable	$ 335,241	183,100
Senior unsecured notes, 3.750% interest rate, due in 2019
Fair Value of Financial Instruments
Interest rate (as a percent)	3.75%
Senior unsecured notes, 3.60% interest rate, due in 2020
Fair Value of Financial Instruments
Interest rate (as a percent)	3.60%
Senior unsecured notes, 4.00% interest rate, due in 2022
Fair Value of Financial Instruments
Interest rate (as a percent)	4.00%
Senior unsecured notes, 4.15% interest rate, due in 2022
Fair Value of Financial Instruments
Interest rate (as a percent)	4.15%
Senior unsecured notes, 4.25% interest rate, due in 2024
Fair Value of Financial Instruments
Interest rate (as a percent)	4.25%
Senior unsecured notes, 4.50% interest rate, due in 2025
Fair Value of Financial Instruments
Interest rate (as a percent)	4.50%
Senior unsecured notes, 5.875% interest rate, due in 2046
Fair Value of Financial Instruments
Interest rate (as a percent)	5.875%
Carrying Amount
Fair Value of Financial Instruments
Mortgage notes payable	$ 335,241	183,100
Fair value of debt	2,692,738	1,127,240
Carrying Amount | Senior unsecured notes, 3.750% interest rate, due in 2019
Fair Value of Financial Instruments
Senior Notes	349,239	348,096
Carrying Amount | Senior unsecured notes, 3.60% interest rate, due in 2020
Fair Value of Financial Instruments
Senior Notes	399,146	0
Carrying Amount | Senior unsecured notes, 4.00% interest rate, due in 2022
Fair Value of Financial Instruments
Senior Notes	296,735	295,812
Carrying Amount | Senior unsecured notes, 4.15% interest rate, due in 2022
Fair Value of Financial Instruments
Senior Notes	296,736	0
Carrying Amount | Senior unsecured notes, 4.25% interest rate, due in 2024
Fair Value of Financial Instruments
Senior Notes	337,736	0
Carrying Amount | Senior unsecured notes, 4.50% interest rate, due in 2025
Fair Value of Financial Instruments
Senior Notes	377,329	0
Carrying Amount | Senior unsecured notes, 5.875% interest rate, due in 2046
Fair Value of Financial Instruments
Senior Notes	300,576	300,232
Fair Value
Fair Value of Financial Instruments
Mortgage notes payable	336,365	186,542
Fair value of debt	2,665,550	1,164,606
Fair Value | Senior unsecured notes, 3.750% interest rate, due in 2019
Fair Value of Financial Instruments
Senior Notes	348,903	354,993
Fair Value | Senior unsecured notes, 3.60% interest rate, due in 2020
Fair Value of Financial Instruments
Senior Notes	399,146	0
Fair Value | Senior unsecured notes, 4.00% interest rate, due in 2022
Fair Value of Financial Instruments
Senior Notes	295,047	302,655
Fair Value | Senior unsecured notes, 4.15% interest rate, due in 2022
Fair Value of Financial Instruments
Senior Notes	296,736	0
Fair Value | Senior unsecured notes, 4.25% interest rate, due in 2024
Fair Value of Financial Instruments
Senior Notes	337,736	0
Fair Value | Senior unsecured notes, 4.50% interest rate, due in 2025
Fair Value of Financial Instruments
Senior Notes	377,329	0
Fair Value | Senior unsecured notes, 5.875% interest rate, due in 2046
Fair Value of Financial Instruments
Senior Notes	$ 274,288	$ 320,416

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Shareholders' Equity - Unvested Shares Activity (Details) - 2009 Award Plan - $ / shares	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Number of Shares
Unvested shares at the beginning of the period	26,062	24,743	24,181
Shares granted (in shares)	19,925	18,837	16,475
Shared forfeited (in shares)	(255)
Shares Vested (in shares)	(18,634)	(17,518)	(15,913)
Unvested acquired in the SIR Merger (in shares)	28,223
Unvested shares at the end of the period	55,321	26,062	24,743
Weighted Average Grant Date Fair Value
Unvested shares at the beginning of the period (in dollars per share)	$ 78.24	$ 82.36	$ 80.44
Granted (in dollars per share)	64.73	77.44	86.64
Shared forfeited (in dollars per share)	52.96
Vested (in dollars per share)	63.80	83.20	83.88
Unvested acquired in the SIR Merger (in dollars per share)	27.48
Unvested shares at the end of the period (in dollars per share)	$ 73.25	$ 78.24	$ 82.36

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Shareholders' Equity - Sale of Shares/Share Repurchases (Details) $ / shares in Units, $ in Thousands							12 Months Ended
	Sep. 24, 2018 $ / shares shares	May 24, 2018 trustee $ / shares shares	Jan. 01, 2018 $ / shares shares	Aug. 03, 2017 USD ($) $ / shares shares	Jul. 05, 2017 $ / shares shares	May 17, 2017 trustee $ / shares shares	Dec. 31, 2017 $ / shares shares
Class of Stock [Line Items]
Consideration received from sale of stock | $				$ 493,866
Former Employee Of RMR LLC
Class of Stock [Line Items]
Shares paid for tax withholding | shares			154
Shares paid for tax withholding (in dollars per share) | $ / shares			$ 74.16
Trustees
Class of Stock [Line Items]
Shares paid for tax withholding | shares		112				112
Shares paid for tax withholding (in dollars per share) | $ / shares		$ 56.4				$ 87.00
Number of Trustees | trustee		1				1
Officers and Other Employees
Class of Stock [Line Items]
Shares paid for tax withholding | shares	4,718						3,478
Shares paid for tax withholding (in dollars per share) | $ / shares	$ 45.4						$ 73.20
Underwritten Public Offering
Class of Stock [Line Items]
Number of shares sold (in shares) | shares					6,250,000
Sale of stock (in dollars per share) | $ / shares					$ 74.00
Over-Allotment Option
Class of Stock [Line Items]
Number of shares sold (in shares) | shares				726,757
Sale of stock (in dollars per share) | $ / shares				$ 74.00

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Shareholders' Equity - Distributions (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended								12 Months Ended
	Jan. 18, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Class of Stock [Line Items]
Distributions Per Share (in dollars per share)										$ 6.88	$ 6.88	$ 6.88
Total Distributions										$ 170,566	$ 145,209	$ 122,366
Characterization of distributions paid or accrued as a percentage of return of capital										68.60%	49.35%	36.21%
Characterization of distributions paid or accrued as a percentage of ordinary income										31.40%	50.65%	62.74%
Characterization of distributions paid or accrued as a percentage of qualified dividends										0.00%	0.00%	1.05%
Common distributions declared (in dollars per share)		$ 1.72	$ 1.72	$ 1.72	$ 1.72	$ 1.72	$ 1.72	$ 1.72	$ 1.72
Subsequent Event
Class of Stock [Line Items]
Common distributions declared (in dollars per share)	$ 0.55
Dividends payable	$ 26,446

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Shareholders' Equity - Cumulative Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands		12 Months Ended
	Jan. 01, 2018	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance beginning	$ 1,330,043	$ 1,330,043	$ 935,004	$ 956,651
Other comprehensive income (loss)		(40)	33,470	41,824
Balance ending		1,778,968	1,330,043	935,004
Unrealized Gain (Loss) on Investment in Equity Securities
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance beginning	45,116	45,116	21,074	(9,391)
Other comprehensive income before reclassifications		0	24,042	30,465
Amounts reclassified from cumulative other comprehensive income to net income (loss)	(45,116)	0	0	0
Other comprehensive income (loss)		0	24,042	30,465
Balance ending	0	0	45,116	21,074
Equity in Unrealized Gains (Losses) of Investees (1)
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance beginning	15,311	15,311	5,883	(5,476)
Other comprehensive income before reclassifications		(3)	9,462	11,254
Amounts reclassified from cumulative other comprehensive income to net income (loss)	(15,165)	(37)	(34)	105
Other comprehensive income (loss)		(40)	9,428	11,359
Balance ending	146	106	15,311	5,883
Total
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance beginning	60,427	60,427	26,957	(14,867)
Other comprehensive income before reclassifications		(3)	33,504	41,719
Amounts reclassified from cumulative other comprehensive income to net income (loss)	(60,281)	(37)	(34)	105
Other comprehensive income (loss)		(40)	33,470	41,824
Balance ending	$ 146	$ 106	$ 60,427	$ 26,957

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Shareholders' Equity - Preferred Units of Limited Partnership (Details) - Series A Cumulative Preferred Units - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2017	May 01, 2018
Class of Stock [Line Items]
Shares outstanding (in units)		1,813,504
Redemption percentage	5.50%
Redemption price (in dollars per share)		$ 11.15
Redemption amount		$ 20,310

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Equity Investment in Select Income REIT (Details) - USD ($) $ in Thousands	9 Months Ended		12 Months Ended
	Oct. 09, 2018	Sep. 30, 2018	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Schedule of Equity Method Investments [Line Items]
Equity in net earnings (losses) of investees			$ (2,269)	$ (13)	$ 137
Unrealized gain (loss) from investees			(40)	9,428	11,359
Distributions of earnings from Select Income REIT			20,873	21,584	35,381
Loss on impairment of real estate			8,630	9,490	0
Gain (loss) on issuance of shares by Select Income REIT			$ 29	72	86
SIR
Schedule of Equity Method Investments [Line Items]
Equity investments, common shares owned		24,918,421
Percentage of outstanding shares owned		27.80%	27.80%
Equity in net earnings (losses) of investees	$ 24,358			21,584	35,381
Unrealized gain (loss) from investees	28			8,967	11,207
Accretion of equity in earnings	3,233			2,944	2,956
Distributions of earnings from Select Income REIT	$ 38,124			50,832	50,335
SIR | SIR
Schedule of Equity Method Investments [Line Items]
Equity in net earnings (losses) of investees		$ 882		608	137
Loss on impairment of real estate		$ 9,706		$ 229	$ 5,484
Issuance of shares, net (in shares)	63,157			59,502	65,900
Gain (loss) on issuance of shares by Select Income REIT	$ 29			$ 72	$ 86
Secondary Sale
Schedule of Equity Method Investments [Line Items]
Loss on sale of stock			$ 18,665

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Equity Investment in Select Income REIT - Balance Sheet Information (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Schedule of Equity Method Investments [Line Items]
Real estate properties, net	$ 3,569,489	$ 2,633,873
Properties held for sale	253,501	0
Acquired real estate leases, net	1,056,558	351,872
Cash and cash equivalents	35,349	16,569	$ 29,941
Rents receivable, net	72,051	61,429
Other assets, net	178,704	96,033
Total assets	5,238,583	3,703,565
Unsecured term loan, net	387,152	547,852
Senior unsecured notes, net	2,357,497	944,140
Mortgage notes payable, net	335,241	183,100
Assumed real estate lease obligations, net	20,031	13,635
Other liabilities	145,536	89,440
Total shareholders' equity	1,778,968	1,330,043	$ 935,004	$ 956,651
Total liabilities and shareholders’ equity	$ 5,238,583	3,703,565
SIR | SIR
Schedule of Equity Method Investments [Line Items]
Real estate properties, net		3,905,616
Properties held for sale		5,829
Acquired real estate leases, net		477,577
Cash and cash equivalents		658,719
Rents receivable, net		127,672
Other assets, net		127,617
Total assets		5,303,030
ILPT revolving credit facility		750,000
Unsecured term loan, net		348,870
Senior unsecured notes, net		1,777,425
Mortgage notes payable, net		210,785
Assumed real estate lease obligations, net		68,783
Other liabilities		155,348
Total shareholders' equity		1,991,819
Total liabilities and shareholders’ equity		$ 5,303,030

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Equity Investment in Select Income REIT - Income Statement Information (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								9 Months Ended		12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Oct. 09, 2018	Sep. 30, 2018	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Schedule of Equity Method Investments [Line Items]
Rental income	$ 103,656	$ 106,102	$ 108,085	$ 108,717	$ 107,170	$ 70,179	$ 69,887	$ 69,296			$ 426,560	$ 316,532	$ 258,180
Real estate taxes											49,708	37,942	30,703
Other operating expenses											89,610	65,349	54,290
Depreciation and amortization											162,488	109,588	73,153
Acquisition and transaction related costs											14,508	0	1,191
General and administrative											24,922	18,847	14,897
Loss on impairment of real estate assets											8,630	9,490	0
Total expenses											376,291	262,214	191,503
Gain on sale of real estate											20,661	0	79
Dividend income											1,337	1,216	971
Unrealized gain on equity securities											(7,552)	0	0
Interest income											639	1,962	158
Interest expense											(89,865)	(65,406)	(45,060)
Loss on early extinguishment of debt											(709)	(1,715)	104
Income (loss) from continuing operations before income taxes, equity in earnings of investees and gain on sale of real estate											(25,220)	(9,625)	22,929
Income tax expense											(117)	(101)	(101)
Equity in net earnings (losses) of investees											(2,269)	(13)	137
Net income (loss)											$ (21,884)	$ 12,090	$ 57,843
Weighted average common shares outstanding (basic) (in shares)											24,830	21,158	17,763
Weighted average common shares outstanding (diluted) (in shares)											24,830	21,158	17,768
Net income attributed to SIR per common share (basic and diluted) (in dollars per share)	$ (2.31)	$ (0.02)	$ 1.20	$ 0.25	$ (0.74)	$ 0.45	$ 0.66	$ 0.42			$ (0.90)	$ 0.56	$ 3.26
SIR
Schedule of Equity Method Investments [Line Items]
Equity in net earnings (losses) of investees									$ 24,358			$ 21,584	$ 35,381
SIR | SIR
Schedule of Equity Method Investments [Line Items]
Rental income										$ 298,003		392,285	387,015
Tenant reimbursements and other income										60,514		75,818	74,992
Total revenues										358,517		468,103	462,007
Real estate taxes										36,748		44,131	42,879
Other operating expenses										43,714		55,567	52,957
Depreciation and amortization										105,326		137,672	133,762
Acquisition and transaction related costs										3,796		1,075	306
General and administrative										47,353		54,909	28,632
Write-off of straight line rents, net										10,626		12,517	0
Loss on asset impairment										0		4,047	0
Loss on impairment of real estate assets										9,706		229	5,484
Total expenses										257,269		310,147	264,020
Gain on sale of real estate										4,075		0	0
Dividend income										1,190		1,587	1,268
Unrealized gain on equity securities										53,159		0	0
Interest income										753		91	30
Interest expense										(69,446)		(92,870)	(82,620)
Loss on early extinguishment of debt										(1,192)		0	0
Income (loss) from continuing operations before income taxes, equity in earnings of investees and gain on sale of real estate										89,787		66,764	116,665
Income tax expense										(446)		(466)	(448)
Equity in net earnings (losses) of investees										882		608	137
Net income										90,223		66,906	116,354
Net income allocated to noncontrolling interest										(15,841)		0	(33)
Net income (loss)										$ 74,382		$ 66,906	$ 116,321
Weighted average common shares outstanding (basic) (in shares)										89,395		89,351	89,304
Weighted average common shares outstanding (diluted) (in shares)										89,411		89,370	89,324
Net income attributed to SIR per common share (basic and diluted) (in dollars per share)										$ 0.83		$ 0.75	$ 1.30

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Discontinued Operations - Additional Information (Details) $ in Thousands		1 Months Ended	12 Months Ended
	Oct. 09, 2018 shares	Aug. 31, 2017 USD ($) ft² property	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($) ft²
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Loss on impairment of Select Income REIT investment			$ 15,180	$ 0	$ 0
Rentable area of properties (in square feet) | ft²					830,185
Net book value			3,569,489	2,633,873
Falls Church, VA | Discontinued Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of properties | property		1
Rentable area of properties (in square feet) | ft²		164,746
Net book value		$ 12,901
Aggregate sale price of properties sold, excluding closing costs		$ 13,523
SIR | Discontinued Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Loss on impairment of Select Income REIT investment			18,665	$ 0	$ 0
SIR | Common Shares | Secondary Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of shares sold (in shares) | shares	24,918,421
Loss on impairment of Select Income REIT investment			$ 18,665

XML

Discontinued Operations - Schedule of Discontinued Operations (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Equity in earnings of Select Income REIT	$ (2,269)	$ (13)	$ 137
Net gain on issuance of shares by Select Income REIT	29	72	86
Loss on sale of Select Income REIT shares	(15,180)	0	0
Income (loss) from discontinued operations	5,722	21,829	34,878
SIR | Discontinued Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Equity in earnings of Select Income REIT	24,358	21,584	35,381
Net gain on issuance of shares by Select Income REIT	29	72	86
Loss on sale of Select Income REIT shares	(18,665)	0	0
Income (loss) from property discontinued operations	$ 0	$ 173	$ (589)

XML

Selected Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Quarterly Financial Data [Abstract]
Rental income	$ 103,656	$ 106,102	$ 108,085	$ 108,717	$ 107,170	$ 70,179	$ 69,887	$ 69,296	$ 426,560	$ 316,532	$ 258,180
Net income (loss) available for common shareholders	$ (57,695)	$ (449)	$ 29,602	$ 6,287	$ (18,266)	$ 10,989	$ 11,677	$ 7,415	$ (22,255)	$ 11,815	$ 57,843
Net income (loss) available for common shareholders per common share (basic and diluted) (in dollars per share)	$ (2.31)	$ (0.02)	$ 1.20	$ 0.25	$ (0.74)	$ 0.45	$ 0.66	$ 0.42	$ (0.90)	$ 0.56	$ 3.26
Common distributions declared (in dollars per share)	$ 1.72	$ 1.72	$ 1.72	$ 1.72	$ 1.72	$ 1.72	$ 1.72	$ 1.72

XML

SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2018 USD ($) building	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)
Real estate and accumulated depreciation
Number of Buildings | building	211
Encumbrances	$ 335,241
Initial Cost to Company
Land	923,390
Buildings and Equipment	2,804,289
Costs Capitalized Subsequent to Acquisition	221,397
Impairment/ Writedowns	(4,440)
Cost amount carried at Close of Period
Land	924,164
Buildings and Equipment	3,020,472
Total	3,944,636	$ 2,975,721	$ 1,888,760	$ 1,696,132
Accumulated Depreciation	$ (375,147)	$ (341,848)	$ (296,804)	$ (255,879)
Inverness Center, Birmingham, AL
Real estate and accumulated depreciation
Number of Buildings | building	3
Initial Cost to Company
Land	$ 5,954
Buildings and Equipment	11,664
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	5,954
Buildings and Equipment	11,664
Total	17,618
Accumulated Depreciation	$ 0
445 Jan Davis Drive, Huntsville, AL
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 1,513
Buildings and Equipment	1,503
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	1,513
Buildings and Equipment	1,503
Total	3,016
Accumulated Depreciation	$ 0
4905 Moores Mill Road, Huntsville, AL
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 4,628
Buildings and Equipment	36,612
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	4,628
Buildings and Equipment	36,612
Total	41,240
Accumulated Depreciation	$ 0
131 Clayton Street, Montgomery, AL
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 920
Buildings and Equipment	9,084
Costs Capitalized Subsequent to Acquisition	48
Cost amount carried at Close of Period
Land	920
Buildings and Equipment	9,132
Total	10,052
Accumulated Depreciation	$ (1,708)
4344 Carmichael Road, Montgomery, AL
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 1,374
Buildings and Equipment	11,658
Costs Capitalized Subsequent to Acquisition	10
Cost amount carried at Close of Period
Land	1,374
Buildings and Equipment	11,668
Total	13,042
Accumulated Depreciation	$ (1,458)
15451 North 28th Avenue, Phoenix, AZ
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 1,917
Buildings and Equipment	7,416
Costs Capitalized Subsequent to Acquisition	499
Cost amount carried at Close of Period
Land	1,917
Buildings and Equipment	7,915
Total	9,832
Accumulated Depreciation	$ (836)
16001 North 28th Avenue, Phoenix, AZ
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 3,382
Buildings and Equipment	416
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	3,382
Buildings and Equipment	416
Total	3,798
Accumulated Depreciation	$ 0
2149 West Dunlap Avenue, Phoenix, AZ
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 6,606
Buildings and Equipment	218
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	6,606
Buildings and Equipment	218
Total	6,824
Accumulated Depreciation	$ 0
711 14th Avenue, Safford, AZ
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 460
Buildings and Equipment	11,708
Costs Capitalized Subsequent to Acquisition	484
Impairment/ Writedowns	(4,440)
Cost amount carried at Close of Period
Land	364
Buildings and Equipment	7,848
Total	8,212
Accumulated Depreciation	$ (190)
Regents Center, Tempe, AZ
Real estate and accumulated depreciation
Number of Buildings | building	2
Initial Cost to Company
Land	$ 4,154
Buildings and Equipment	3,066
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	4,154
Buildings and Equipment	3,066
Total	7,220
Accumulated Depreciation	$ 0
Campbell Place, Carlsbad, CA
Real estate and accumulated depreciation
Number of Buildings | building	2
Initial Cost to Company
Land	$ 5,815
Buildings and Equipment	3,902
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	5,815
Buildings and Equipment	3,902
Total	9,717
Accumulated Depreciation	$ 0
Folsom Corporate Center, Folsom, CA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 2,927
Buildings and Equipment	5,628
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	2,927
Buildings and Equipment	5,628
Total	8,555
Accumulated Depreciation	$ 0
Bayside Technology Park, Fremont, CA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 10,869
Buildings and Equipment	653
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	10,869
Buildings and Equipment	653
Total	11,522
Accumulated Depreciation	$ 0
5045 East Butler Street, Fresno, CA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 7,276
Buildings and Equipment	61,118
Costs Capitalized Subsequent to Acquisition	139
Cost amount carried at Close of Period
Land	7,276
Buildings and Equipment	61,257
Total	68,533
Accumulated Depreciation	$ (25,031)
10949 N. Mather Boulevard, Rancho Cordova, CA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 562
Buildings and Equipment	16,923
Costs Capitalized Subsequent to Acquisition	359
Cost amount carried at Close of Period
Land	562
Buildings and Equipment	17,282
Total	17,844
Accumulated Depreciation	$ (2,201)
11020 Sun Center Drive, Rancho Cordova, CA
Real estate and accumulated depreciation
Number of Buildings | building	1
Encumbrances	$ 64,490
Initial Cost to Company
Land	1,466
Buildings and Equipment	8,797
Costs Capitalized Subsequent to Acquisition	671
Cost amount carried at Close of Period
Land	1,466
Buildings and Equipment	9,468
Total	10,934
Accumulated Depreciation	$ (513)
100 Redwood Shores Parkway, Redwood City, CA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 14,568
Buildings and Equipment	7,783
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	14,568
Buildings and Equipment	7,783
Total	22,351
Accumulated Depreciation	$ 0
3875 Atherton Road, Rocklin, CA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 178
Buildings and Equipment	860
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	178
Buildings and Equipment	860
Total	1,038
Accumulated Depreciation	$ 0
801 K Street, Sacramento, CA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 4,688
Buildings and Equipment	61,995
Costs Capitalized Subsequent to Acquisition	6,275
Cost amount carried at Close of Period
Land	4,688
Buildings and Equipment	68,270
Total	72,958
Accumulated Depreciation	$ (5,922)
9815 Goethe Road, Sacramento, CA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 1,450
Buildings and Equipment	9,465
Costs Capitalized Subsequent to Acquisition	1,523
Cost amount carried at Close of Period
Land	1,450
Buildings and Equipment	10,988
Total	12,438
Accumulated Depreciation	$ (2,019)
Capital Place, Sacramento, CA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 2,290
Buildings and Equipment	35,891
Costs Capitalized Subsequent to Acquisition	7,885
Cost amount carried at Close of Period
Land	2,290
Buildings and Equipment	43,776
Total	46,066
Accumulated Depreciation	$ (10,059)
4181 Ruffin Road, San Diego, CA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 5,250
Buildings and Equipment	10,549
Costs Capitalized Subsequent to Acquisition	5,076
Cost amount carried at Close of Period
Land	5,250
Buildings and Equipment	15,625
Total	20,875
Accumulated Depreciation	$ (3,914)
4560 Viewridge Road, San Diego, CA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 4,269
Buildings and Equipment	18,316
Costs Capitalized Subsequent to Acquisition	4,319
Cost amount carried at Close of Period
Land	4,347
Buildings and Equipment	22,557
Total	26,904
Accumulated Depreciation	$ (10,672)
9174 Sky Park Centre, San Diego, CA
Real estate and accumulated depreciation
Number of Buildings | building	1
Encumbrances	$ 7,983
Initial Cost to Company
Land	685
Buildings and Equipment	5,530
Costs Capitalized Subsequent to Acquisition	2,708
Cost amount carried at Close of Period
Land	685
Buildings and Equipment	8,238
Total	8,923
Accumulated Depreciation	$ (3,246)
2090 Fortune Drive, San Jose, CA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 9,074
Buildings and Equipment	0
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	9,074
Buildings and Equipment	0
Total	9,074
Accumulated Depreciation	$ 0
2115 O'Nel Drive, San Jose, CA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 12,402
Buildings and Equipment	5,103
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	12,402
Buildings and Equipment	5,103
Total	17,505
Accumulated Depreciation	$ 0
6448-6450 Via Del Oro, San Jose, CA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 4,747
Buildings and Equipment	2,027
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	4,747
Buildings and Equipment	2,027
Total	6,774
Accumulated Depreciation	$ 0
North First Street, San Jose, CA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 8,377
Buildings and Equipment	4,035
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	8,377
Buildings and Equipment	4,035
Total	12,412
Accumulated Depreciation	$ 0
Rio Robles Drive, San Jose, CA
Real estate and accumulated depreciation
Number of Buildings | building	3
Initial Cost to Company
Land	$ 23,874
Buildings and Equipment	13,806
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	23,874
Buildings and Equipment	13,806
Total	37,680
Accumulated Depreciation	$ 0
2450 and 2500 Walsh Avenue, Santa Clara, CA
Real estate and accumulated depreciation
Number of Buildings | building	2
Initial Cost to Company
Land	$ 13,480
Buildings and Equipment	16,783
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	13,480
Buildings and Equipment	16,783
Total	30,263
Accumulated Depreciation	$ 0
3250 and 3260 Jay Street, Santa Clara, CA
Real estate and accumulated depreciation
Number of Buildings | building	2
Initial Cost to Company
Land	$ 20,056
Buildings and Equipment	14,163
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	20,056
Buildings and Equipment	14,163
Total	34,219
Accumulated Depreciation	$ 0
603 San Juan Avenue, Stockton, CA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 563
Buildings and Equipment	5,470
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	563
Buildings and Equipment	5,470
Total	6,033
Accumulated Depreciation	$ (878)
350 West Java Drive, Sunnyvale, CA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 24,804
Buildings and Equipment	464
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	24,804
Buildings and Equipment	464
Total	25,268
Accumulated Depreciation	$ 0
7958 South Chester Street, Centennial, CO
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 6,735
Buildings and Equipment	7,210
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	6,735
Buildings and Equipment	7,210
Total	13,945
Accumulated Depreciation	$ 0
350 Spectrum Loop, Colorado Springs, CO
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 3,679
Buildings and Equipment	7,793
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	3,679
Buildings and Equipment	7,793
Total	11,472
Accumulated Depreciation	$ 0
333 Inverness Drive South, Englewood, CO
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 5,756
Buildings and Equipment	4,579
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	5,756
Buildings and Equipment	4,579
Total	10,335
Accumulated Depreciation	$ 0
12795 West Alameda Parkway, Lakewood, CO
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 2,640
Buildings and Equipment	23,777
Costs Capitalized Subsequent to Acquisition	1,094
Cost amount carried at Close of Period
Land	2,640
Buildings and Equipment	24,871
Total	27,511
Accumulated Depreciation	$ (5,559)
Corporate Center, Lakewood, CO
Real estate and accumulated depreciation
Number of Buildings | building	3
Initial Cost to Company
Land	$ 2,887
Buildings and Equipment	27,537
Costs Capitalized Subsequent to Acquisition	3,889
Cost amount carried at Close of Period
Land	2,887
Buildings and Equipment	31,426
Total	34,313
Accumulated Depreciation	$ (12,495)
1Targeting Center, Windsor, CT
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 1,404
Buildings and Equipment	574
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	1,404
Buildings and Equipment	574
Total	1,978
Accumulated Depreciation	$ 0
11 Dupont Circle, NW, Washington DC
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 28,255
Buildings and Equipment	44,743
Costs Capitalized Subsequent to Acquisition	1,994
Cost amount carried at Close of Period
Land	28,255
Buildings and Equipment	46,737
Total	74,992
Accumulated Depreciation	$ (1,672)
1211 Connecticut Avenue, NW, Washington DC
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 30,388
Buildings and Equipment	24,667
Costs Capitalized Subsequent to Acquisition	1,391
Cost amount carried at Close of Period
Land	30,388
Buildings and Equipment	26,058
Total	56,446
Accumulated Depreciation	$ (892)
1401 K Street, NW, Washington DC
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 29,215
Buildings and Equipment	34,656
Costs Capitalized Subsequent to Acquisition	3,210
Cost amount carried at Close of Period
Land	29,215
Buildings and Equipment	37,866
Total	67,081
Accumulated Depreciation	$ (1,497)
20 Massachusetts Avenue, Washington, DC
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 12,009
Buildings and Equipment	51,528
Costs Capitalized Subsequent to Acquisition	21,395
Cost amount carried at Close of Period
Land	12,228
Buildings and Equipment	72,704
Total	84,932
Accumulated Depreciation	$ (35,137)
440 First Street, NW, Washington DC
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 27,903
Buildings and Equipment	38,624
Costs Capitalized Subsequent to Acquisition	1,293
Cost amount carried at Close of Period
Land	27,903
Buildings and Equipment	39,917
Total	67,820
Accumulated Depreciation	$ (1,264)
625 Indiana Avenue, Washington, DC
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 26,000
Buildings and Equipment	25,955
Costs Capitalized Subsequent to Acquisition	7,293
Cost amount carried at Close of Period
Land	26,000
Buildings and Equipment	33,248
Total	59,248
Accumulated Depreciation	$ (7,555)
840 First Street, NE, Washington DC
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 42,727
Buildings and Equipment	73,249
Costs Capitalized Subsequent to Acquisition	472
Cost amount carried at Close of Period
Land	42,727
Buildings and Equipment	73,721
Total	116,448
Accumulated Depreciation	$ (2,290)
10350 NW 112th Avenue, Miami, FL
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 4,836
Buildings and Equipment	2,779
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	4,836
Buildings and Equipment	2,779
Total	7,615
Accumulated Depreciation	$ 0
7850 Southwest 6th Court, Plantation, FL
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 4,800
Buildings and Equipment	30,592
Costs Capitalized Subsequent to Acquisition	383
Cost amount carried at Close of Period
Land	4,800
Buildings and Equipment	30,975
Total	35,775
Accumulated Depreciation	$ (6,026)
8900 Grand Oak Circle, Tampa, FL
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 1,100
Buildings and Equipment	11,773
Costs Capitalized Subsequent to Acquisition	288
Cost amount carried at Close of Period
Land	1,100
Buildings and Equipment	12,061
Total	13,161
Accumulated Depreciation	$ (2,471)
180 Ted Turner Drive SW, Atlanta, GA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 5,717
Buildings and Equipment	20,017
Costs Capitalized Subsequent to Acquisition	186
Cost amount carried at Close of Period
Land	5,717
Buildings and Equipment	20,203
Total	25,920
Accumulated Depreciation	$ (3,229)
Corporate Square, Atlanta, GA
Real estate and accumulated depreciation
Number of Buildings | building	5
Initial Cost to Company
Land	$ 3,996
Buildings and Equipment	29,762
Costs Capitalized Subsequent to Acquisition	27,816
Cost amount carried at Close of Period
Land	3,996
Buildings and Equipment	57,578
Total	61,574
Accumulated Depreciation	$ (13,371)
Executive Park, Atlanta, GA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 1,521
Buildings and Equipment	11,826
Costs Capitalized Subsequent to Acquisition	3,996
Cost amount carried at Close of Period
Land	1,521
Buildings and Equipment	15,822
Total	17,343
Accumulated Depreciation	$ (5,781)
One Georgia Center, Atlanta, GA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 10,250
Buildings and Equipment	27,933
Costs Capitalized Subsequent to Acquisition	6,034
Cost amount carried at Close of Period
Land	10,250
Buildings and Equipment	33,967
Total	44,217
Accumulated Depreciation	$ (5,419)
One Primerica Parkway, Duluth, GA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 6,982
Buildings and Equipment	23,132
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	6,982
Buildings and Equipment	23,132
Total	30,114
Accumulated Depreciation	$ 0
4712 Southpark Boulevard, Ellenwood, GA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 1,390
Buildings and Equipment	19,635
Costs Capitalized Subsequent to Acquisition	88
Cost amount carried at Close of Period
Land	1,390
Buildings and Equipment	19,723
Total	21,113
Accumulated Depreciation	$ (3,156)
91-209 Kuhela Street, Kapolei, HI
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 2,008
Buildings and Equipment	0
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	2,008
Buildings and Equipment	0
Total	2,008
Accumulated Depreciation	$ 0
8305 NW 62nd Avenue, Johnston, IA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 2,670
Buildings and Equipment	8,060
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	2,670
Buildings and Equipment	8,060
Total	10,730
Accumulated Depreciation	$ 0
South Vinnell Way, Boise, ID
Real estate and accumulated depreciation
Number of Buildings | building	3
Initial Cost to Company
Land	$ 3,390
Buildings and Equipment	29,026
Costs Capitalized Subsequent to Acquisition	822
Cost amount carried at Close of Period
Land	3,390
Buildings and Equipment	29,848
Total	33,238
Accumulated Depreciation	$ (4,871)
2020 S. Arlington Heights, Arlington Heights, IL
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 1,450
Buildings and Equipment	13,160
Costs Capitalized Subsequent to Acquisition	872
Cost amount carried at Close of Period
Land	1,450
Buildings and Equipment	14,032
Total	15,482
Accumulated Depreciation	$ (3,101)
400 South Jefferson Street, Chicago, IL
Real estate and accumulated depreciation
Number of Buildings | building	1
Encumbrances	$ 13,384
Initial Cost to Company
Land	19,532
Buildings and Equipment	20,274
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	19,532
Buildings and Equipment	20,274
Total	39,806
Accumulated Depreciation	$ 0
475 Bond Street, Lincolnshire, IL
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 4,915
Buildings and Equipment	574
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	4,915
Buildings and Equipment	574
Total	5,489
Accumulated Depreciation	$ 0
1415 West Diehl Road, Naperville, IL
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 12,431
Buildings and Equipment	20,749
Costs Capitalized Subsequent to Acquisition	0
Impairment/ Writedowns	0
Cost amount carried at Close of Period
Land	12,431
Buildings and Equipment	20,749
Total	33,180
Accumulated Depreciation	$ 0
440 North Fairway Drive, Vernon Hills, IL
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 4,500
Buildings and Equipment	445
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	4,500
Buildings and Equipment	445
Total	4,945
Accumulated Depreciation	$ 0
Intech Park, Indianapolis, IN
Real estate and accumulated depreciation
Number of Buildings | building	3
Initial Cost to Company
Land	$ 4,170
Buildings and Equipment	68,888
Costs Capitalized Subsequent to Acquisition	4,337
Cost amount carried at Close of Period
Land	4,170
Buildings and Equipment	73,225
Total	77,395
Accumulated Depreciation	$ (13,425)
7601 and 7635 Interactive Way, Indianapolis, IN
Real estate and accumulated depreciation
Number of Buildings | building	2
Initial Cost to Company
Land	$ 3,363
Buildings and Equipment	14,636
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	3,363
Buildings and Equipment	14,636
Total	17,999
Accumulated Depreciation	$ 0
400 State Street, Kansas City, KS
Real estate and accumulated depreciation
Number of Buildings | building	1
Encumbrances	$ 49,087
Initial Cost to Company
Land	640
Buildings and Equipment	9,932
Costs Capitalized Subsequent to Acquisition	5,265
Cost amount carried at Close of Period
Land	640
Buildings and Equipment	15,197
Total	15,837
Accumulated Depreciation	$ (3,309)
Capital Tower, Topeka, KS [Member]
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 1,236
Buildings and Equipment	3,115
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	1,236
Buildings and Equipment	3,115
Total	4,351
Accumulated Depreciation	$ 0
The Atrium at Circleport II, Erlanger, KY
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 1,810
Buildings and Equipment	1,948
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	1,810
Buildings and Equipment	1,948
Total	3,758
Accumulated Depreciation	$ 0
7125 Industrial Road, Florence, KY
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 1,698
Buildings and Equipment	11,722
Costs Capitalized Subsequent to Acquisition	151
Cost amount carried at Close of Period
Land	1,698
Buildings and Equipment	11,873
Total	13,571
Accumulated Depreciation	$ (1,766)
251 Causeway Street, Boston, MA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 5,100
Buildings and Equipment	17,293
Costs Capitalized Subsequent to Acquisition	2,555
Cost amount carried at Close of Period
Land	5,100
Buildings and Equipment	19,848
Total	24,948
Accumulated Depreciation	$ (4,061)
300 and 330 Billerica Road, Chelmsford, MA
Real estate and accumulated depreciation
Number of Buildings | building	2
Initial Cost to Company
Land	$ 4,737
Buildings and Equipment	0
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	4,737
Buildings and Equipment	0
Total	4,737
Accumulated Depreciation	$ 0
75 Pleasant Street, Malden, MA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 1,050
Buildings and Equipment	31,086
Costs Capitalized Subsequent to Acquisition	271
Cost amount carried at Close of Period
Land	1,050
Buildings and Equipment	31,357
Total	32,407
Accumulated Depreciation	$ (6,703)
111 Powdermill Road, Maynard, MA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 4,432
Buildings and Equipment	0
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	4,432
Buildings and Equipment	0
Total	4,432
Accumulated Depreciation	$ 0
25 Newport Avenue, Quincy, MA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 2,700
Buildings and Equipment	9,199
Costs Capitalized Subsequent to Acquisition	1,791
Cost amount carried at Close of Period
Land	2,700
Buildings and Equipment	10,990
Total	13,690
Accumulated Depreciation	$ (2,021)
One Montvale Avenue, Stoneham, MA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 1,670
Buildings and Equipment	11,035
Costs Capitalized Subsequent to Acquisition	2,234
Cost amount carried at Close of Period
Land	1,670
Buildings and Equipment	13,269
Total	14,939
Accumulated Depreciation	$ (2,693)
314 Littleton Road, Westford, MA [Member]
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 5,736
Buildings and Equipment	8,555
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	5,736
Buildings and Equipment	8,555
Total	14,291
Accumulated Depreciation	$ 0
Annapolis Commerce Center, Annapolis, MD
Real estate and accumulated depreciation
Number of Buildings | building	2
Initial Cost to Company
Land	$ 4,057
Buildings and Equipment	7,665
Costs Capitalized Subsequent to Acquisition	219
Cost amount carried at Close of Period
Land	4,057
Buildings and Equipment	7,884
Total	11,941
Accumulated Depreciation	$ (275)
4201 Patterson Avenue, Baltimore, MD
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 901
Buildings and Equipment	8,097
Costs Capitalized Subsequent to Acquisition	4,085
Cost amount carried at Close of Period
Land	901
Buildings and Equipment	12,182
Total	13,083
Accumulated Depreciation	$ (4,961)
Hillside Center, Columbia, MD
Real estate and accumulated depreciation
Number of Buildings | building	2
Initial Cost to Company
Land	$ 3,437
Buildings and Equipment	4,228
Costs Capitalized Subsequent to Acquisition	336
Cost amount carried at Close of Period
Land	3,437
Buildings and Equipment	4,564
Total	8,001
Accumulated Depreciation	$ (131)
TenThreeTwenty, Columbia, MD
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 3,126
Buildings and Equipment	16,361
Costs Capitalized Subsequent to Acquisition	869
Cost amount carried at Close of Period
Land	3,126
Buildings and Equipment	17,230
Total	20,356
Accumulated Depreciation	$ (570)
7001 Columbia Gateway Drive, Columbia, MD
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 5,687
Buildings and Equipment	10,433
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	5,687
Buildings and Equipment	10,433
Total	16,120
Accumulated Depreciation	$ 0
3300 75th Avenue, Landover, MD
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 4,110
Buildings and Equipment	36,371
Costs Capitalized Subsequent to Acquisition	1,346
Cost amount carried at Close of Period
Land	4,110
Buildings and Equipment	37,717
Total	41,827
Accumulated Depreciation	$ (8,281)
1401 Rockville Pike, Rockville, MD
Real estate and accumulated depreciation
Number of Buildings | building	1
Encumbrances	$ 25,019
Initial Cost to Company
Land	3,248
Buildings and Equipment	29,258
Costs Capitalized Subsequent to Acquisition	16,481
Cost amount carried at Close of Period
Land	3,248
Buildings and Equipment	45,739
Total	48,987
Accumulated Depreciation	$ (19,266)
2115 East Jefferson Street, Rockville, MD
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 3,349
Buildings and Equipment	11,152
Costs Capitalized Subsequent to Acquisition	385
Cost amount carried at Close of Period
Land	3,349
Buildings and Equipment	11,537
Total	14,886
Accumulated Depreciation	$ (1,521)
Redland 520/530, Rockville, MD
Real estate and accumulated depreciation
Number of Buildings | building	3
Initial Cost to Company
Land	$ 12,714
Buildings and Equipment	61,377
Costs Capitalized Subsequent to Acquisition	1,498
Cost amount carried at Close of Period
Land	12,714
Buildings and Equipment	62,875
Total	75,589
Accumulated Depreciation	$ (1,945)
Redland 540, Rockville, MD
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 10,740
Buildings and Equipment	17,714
Costs Capitalized Subsequent to Acquisition	2,896
Cost amount carried at Close of Period
Land	10,740
Buildings and Equipment	20,610
Total	31,350
Accumulated Depreciation	$ (879)
Rutherford Business Park, Windsor Mill, MD
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 1,598
Buildings and Equipment	10,219
Costs Capitalized Subsequent to Acquisition	330
Cost amount carried at Close of Period
Land	1,598
Buildings and Equipment	10,549
Total	12,147
Accumulated Depreciation	$ (1,557)
Meadows Business Park, Woodlawn, MD
Real estate and accumulated depreciation
Number of Buildings | building	2
Initial Cost to Company
Land	$ 3,735
Buildings and Equipment	21,509
Costs Capitalized Subsequent to Acquisition	2,268
Cost amount carried at Close of Period
Land	3,735
Buildings and Equipment	23,777
Total	27,512
Accumulated Depreciation	$ (4,701)
3550 Green Court, Ann Arbor, MI
Real estate and accumulated depreciation
Number of Buildings | building	1
Encumbrances	$ 69,304
Initial Cost to Company
Land	3,659
Buildings and Equipment	4,896
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	3,659
Buildings and Equipment	4,896
Total	8,555
Accumulated Depreciation	$ 0
11411 E. Jefferson Avenue, Detroit, MI
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 630
Buildings and Equipment	18,002
Costs Capitalized Subsequent to Acquisition	438
Cost amount carried at Close of Period
Land	630
Buildings and Equipment	18,440
Total	19,070
Accumulated Depreciation	$ (3,930)
Rosedale Corporate Plaza, Roseville, MN
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 672
Buildings and Equipment	6,045
Costs Capitalized Subsequent to Acquisition	1,505
Cost amount carried at Close of Period
Land	672
Buildings and Equipment	7,550
Total	8,222
Accumulated Depreciation	$ (3,474)
1300 Summit Street, Kansas City, MO
Real estate and accumulated depreciation
Number of Buildings | building	1
Encumbrances	$ 2,933
Initial Cost to Company
Land	2,776
Buildings and Equipment	12,070
Costs Capitalized Subsequent to Acquisition	915
Cost amount carried at Close of Period
Land	2,776
Buildings and Equipment	12,985
Total	15,761
Accumulated Depreciation	$ (1,939)
4241-4300 NE 34th Street, Kansas City, MO
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 1,443
Buildings and Equipment	6,193
Costs Capitalized Subsequent to Acquisition	3,992
Cost amount carried at Close of Period
Land	1,780
Buildings and Equipment	9,848
Total	11,628
Accumulated Depreciation	$ (4,199)
2555 Grand Boulevard, Kansas City, MO
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 4,243
Buildings and Equipment	51,931
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	4,243
Buildings and Equipment	51,931
Total	56,174
Accumulated Depreciation	$ 0
1220 Echelon Parkway, Jackson, MS
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 440
Buildings and Equipment	25,458
Costs Capitalized Subsequent to Acquisition	238
Cost amount carried at Close of Period
Land	440
Buildings and Equipment	25,696
Total	26,136
Accumulated Depreciation	$ (4,100)
2300 and 2400 Yorkmont Road, Charlotte, NC
Real estate and accumulated depreciation
Number of Buildings | building	2
Initial Cost to Company
Land	$ 1,345
Buildings and Equipment	19,226
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	1,345
Buildings and Equipment	19,226
Total	20,571
Accumulated Depreciation	$ 0
18010 and 18020 Burt Street, Omaha, NE
Real estate and accumulated depreciation
Number of Buildings | building	2
Initial Cost to Company
Land	$ 7,032
Buildings and Equipment	12,599
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	7,032
Buildings and Equipment	12,599
Total	19,631
Accumulated Depreciation	$ 0
10-12 Celina Avenue, Nashua, NH
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 3,000
Buildings and Equipment	14,052
Costs Capitalized Subsequent to Acquisition	1,569
Cost amount carried at Close of Period
Land	3,000
Buildings and Equipment	15,621
Total	18,621
Accumulated Depreciation	$ (3,379)
500 Charles Ewing Boulevard, Ewing, NJ
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 4,846
Buildings and Equipment	26,208
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	4,846
Buildings and Equipment	26,208
Total	31,054
Accumulated Depreciation	$ 0
299 Jefferson Road, Parsippany, NJ
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 4,579
Buildings and Equipment	2,937
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	4,579
Buildings and Equipment	2,937
Total	7,516
Accumulated Depreciation	$ 0
One Jefferson Road, Parsippany, NJ
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 4,450
Buildings and Equipment	5,291
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	4,450
Buildings and Equipment	5,291
Total	9,741
Accumulated Depreciation	$ 0
50 West State Street, Trenton, NJ
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 5,000
Buildings and Equipment	38,203
Costs Capitalized Subsequent to Acquisition	3,313
Cost amount carried at Close of Period
Land	5,000
Buildings and Equipment	41,516
Total	46,516
Accumulated Depreciation	$ (8,009)
138 Delaware Avenue, Buffalo, NY
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 4,405
Buildings and Equipment	18,899
Costs Capitalized Subsequent to Acquisition	7,551
Cost amount carried at Close of Period
Land	4,485
Buildings and Equipment	26,370
Total	30,855
Accumulated Depreciation	$ (11,830)
Airline Corporate Center, Colonie, NY
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 790
Buildings and Equipment	6,400
Costs Capitalized Subsequent to Acquisition	406
Cost amount carried at Close of Period
Land	790
Buildings and Equipment	6,806
Total	7,596
Accumulated Depreciation	$ (1,053)
5000 Corporate Court, Holtsville, NY
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 6,530
Buildings and Equipment	17,711
Costs Capitalized Subsequent to Acquisition	2,734
Cost amount carried at Close of Period
Land	6,530
Buildings and Equipment	20,445
Total	26,975
Accumulated Depreciation	$ (3,811)
8687 Carling Road, Liverpool, NY
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 571
Buildings and Equipment	0
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	571
Buildings and Equipment	0
Total	571
Accumulated Depreciation	$ 0
1212 Pittsford - Victor Road, Pittsford, NY
Real estate and accumulated depreciation
Number of Buildings | building	1
Encumbrances	$ 27,238
Initial Cost to Company
Land	613
Buildings and Equipment	79
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	613
Buildings and Equipment	79
Total	692
Accumulated Depreciation	$ 0
500 Canal View Boulevard, Rochester, NY
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 2,077
Buildings and Equipment	376
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	2,077
Buildings and Equipment	376
Total	2,453
Accumulated Depreciation	$ 0
2231 Schrock Road, Columbus, OH
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 722
Buildings and Equipment	218
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	722
Buildings and Equipment	218
Total	940
Accumulated Depreciation	$ 0
4600 25th Avenue, Salem, OR
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 6,510
Buildings and Equipment	17,973
Costs Capitalized Subsequent to Acquisition	5,165
Cost amount carried at Close of Period
Land	6,510
Buildings and Equipment	23,138
Total	29,648
Accumulated Depreciation	$ (4,898)
501 Ridge Avenue, Hanover, PA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 3,452
Buildings and Equipment	5,152
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	3,452
Buildings and Equipment	5,152
Total	8,604
Accumulated Depreciation	$ 0
8800 Tinicum Boulevard, Philadelphia, PA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 5,617
Buildings and Equipment	22,866
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	5,617
Buildings and Equipment	22,866
Total	28,483
Accumulated Depreciation	$ 0
Synergy Business Park, Columbia, SC
Real estate and accumulated depreciation
Number of Buildings | building	3
Initial Cost to Company
Land	$ 1,439
Buildings and Equipment	11,143
Costs Capitalized Subsequent to Acquisition	5,178
Cost amount carried at Close of Period
Land	1,439
Buildings and Equipment	16,321
Total	17,760
Accumulated Depreciation	$ (4,335)
9680 Old Bailes Road, Fort Mill, SC
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 841
Buildings and Equipment	2,967
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	841
Buildings and Equipment	2,967
Total	3,808
Accumulated Depreciation	$ 0
One Memphis Place, Memphis, TN
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 1,630
Buildings and Equipment	5,645
Costs Capitalized Subsequent to Acquisition	3,290
Cost amount carried at Close of Period
Land	1,630
Buildings and Equipment	8,935
Total	10,565
Accumulated Depreciation	$ (1,742)
16001 North Dallas Parkway, Addison, TX
Real estate and accumulated depreciation
Number of Buildings | building	2
Initial Cost to Company
Land	$ 10,364
Buildings and Equipment	63,661
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	10,364
Buildings and Equipment	63,661
Total	74,025
Accumulated Depreciation	$ 0
2115-2116 East Randol Mill Road, Arlington, TX
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 2,146
Buildings and Equipment	5,469
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	2,146
Buildings and Equipment	5,469
Total	7,615
Accumulated Depreciation	$ 0
Research Park, Austin, TX
Real estate and accumulated depreciation
Number of Buildings | building	2
Initial Cost to Company
Land	$ 4,292
Buildings and Equipment	13,856
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	4,292
Buildings and Equipment	13,856
Total	18,148
Accumulated Depreciation	$ 0
1001 Noble Energy Way, Houston, TX
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 5,222
Buildings and Equipment	29,392
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	5,222
Buildings and Equipment	29,392
Total	34,614
Accumulated Depreciation	$ 0
10451 Clay Road, Houston, TX
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 5,538
Buildings and Equipment	10,335
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	5,538
Buildings and Equipment	10,335
Total	15,873
Accumulated Depreciation	$ 0
202 North Castlegory Road, Houston, TX
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 870
Buildings and Equipment	5,064
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	870
Buildings and Equipment	5,064
Total	5,934
Accumulated Depreciation	$ 0
6380 Rogerdale Road, Houston, TX
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 12,728
Buildings and Equipment	6,161
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	12,728
Buildings and Equipment	6,161
Total	18,889
Accumulated Depreciation	$ 0
4221 W. John Carpenter Freeway, Irving, TX
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 1,424
Buildings and Equipment	2,384
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	1,424
Buildings and Equipment	2,384
Total	3,808
Accumulated Depreciation	$ 0
8675, 8701-8711 Freeport Pkwy and 8901 Esters Boulevard, Irving, TX
Real estate and accumulated depreciation
Number of Buildings | building	3
Initial Cost to Company
Land	$ 10,266
Buildings and Equipment	31,815
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	10,266
Buildings and Equipment	31,815
Total	42,081
Accumulated Depreciation	$ 0
1511 East Common Street, New Braunfels, TX
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 5,004
Buildings and Equipment	1,276
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	5,004
Buildings and Equipment	1,276
Total	6,280
Accumulated Depreciation	$ 0
2900 West Plano Parkway, Plano, TX
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 6,873
Buildings and Equipment	8,901
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	6,873
Buildings and Equipment	8,901
Total	15,774
Accumulated Depreciation	$ 0
3400 West Plano Parkway, Plano, TX
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 4,579
Buildings and Equipment	16,091
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	4,579
Buildings and Equipment	16,091
Total	20,670
Accumulated Depreciation	$ 0
19100 Ridgewood Parkway, San Antonio, TX
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 4,223
Buildings and Equipment	144,519
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	4,223
Buildings and Equipment	144,519
Total	148,742
Accumulated Depreciation	$ 0
3600 Weismann Boulevard, San Antonio, TX
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 3,521
Buildings and Equipment	6,715
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	3,521
Buildings and Equipment	6,715
Total	10,236
Accumulated Depreciation	$ 0
701 Clay Road, Waco, TX
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 2,030
Buildings and Equipment	8,708
Costs Capitalized Subsequent to Acquisition	3,584
Cost amount carried at Close of Period
Land	2,060
Buildings and Equipment	12,262
Total	14,322
Accumulated Depreciation	$ (5,020)
1800 Novell Place, Provo, UT
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 7,546
Buildings and Equipment	43,831
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	7,546
Buildings and Equipment	43,831
Total	51,377
Accumulated Depreciation	$ 0
4885-4931 North 300 West, Provo, UT
Real estate and accumulated depreciation
Number of Buildings | building	2
Initial Cost to Company
Land	$ 3,946
Buildings and Equipment	9,504
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	3,946
Buildings and Equipment	9,504
Total	13,450
Accumulated Depreciation	$ 0
14660,14672 and 14668 Lee Road, Chantilly, VA
Real estate and accumulated depreciation
Number of Buildings | building	3
Initial Cost to Company
Land	$ 6,966
Buildings and Equipment	74,214
Costs Capitalized Subsequent to Acquisition	2,038
Cost amount carried at Close of Period
Land	6,966
Buildings and Equipment	76,252
Total	83,218
Accumulated Depreciation	$ (3,757)
1434 Crossways, Chesapeake, VA
Real estate and accumulated depreciation
Number of Buildings | building	2
Initial Cost to Company
Land	$ 3,617
Buildings and Equipment	19,527
Costs Capitalized Subsequent to Acquisition	1,817
Cost amount carried at Close of Period
Land	3,617
Buildings and Equipment	21,344
Total	24,961
Accumulated Depreciation	$ (840)
Greenbrier Towers, Chesapeake, VA
Real estate and accumulated depreciation
Number of Buildings | building	2
Initial Cost to Company
Land	$ 3,437
Buildings and Equipment	11,241
Costs Capitalized Subsequent to Acquisition	700
Cost amount carried at Close of Period
Land	3,437
Buildings and Equipment	11,941
Total	15,378
Accumulated Depreciation	$ (507)
Enterchange at Meadowville, Chester, VA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 1,478
Buildings and Equipment	9,594
Costs Capitalized Subsequent to Acquisition	283
Cost amount carried at Close of Period
Land	1,478
Buildings and Equipment	9,877
Total	11,355
Accumulated Depreciation	$ (1,309)
Three Flint Hill, Fairfax, VA [Member]
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 5,991
Buildings and Equipment	25,619
Costs Capitalized Subsequent to Acquisition	1,515
Cost amount carried at Close of Period
Land	5,991
Buildings and Equipment	27,134
Total	33,125
Accumulated Depreciation	$ (1,075)
3920 Pender Drive, Fairfax, VA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 2,963
Buildings and Equipment	12,840
Costs Capitalized Subsequent to Acquisition	231
Cost amount carried at Close of Period
Land	2,963
Buildings and Equipment	13,071
Total	16,034
Accumulated Depreciation	$ (1,529)
Pender Business Park, Fairfax, VA
Real estate and accumulated depreciation
Number of Buildings | building	4
Initial Cost to Company
Land	$ 2,529
Buildings and Equipment	21,386
Costs Capitalized Subsequent to Acquisition	636
Cost amount carried at Close of Period
Land	2,529
Buildings and Equipment	22,022
Total	24,551
Accumulated Depreciation	$ (2,873)
7987 Ashton Avenue, Manassas, VA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 1,562
Buildings and Equipment	8,253
Costs Capitalized Subsequent to Acquisition	623
Cost amount carried at Close of Period
Land	1,562
Buildings and Equipment	8,876
Total	10,438
Accumulated Depreciation	$ (439)
Two Commercial Place, Norfolk, VA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 4,530
Buildings and Equipment	21,678
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	4,530
Buildings and Equipment	21,678
Total	26,208
Accumulated Depreciation	$ 0
1759 & 1760 Business Park Drive Reston, VA
Real estate and accumulated depreciation
Number of Buildings | building	2
Initial Cost to Company
Land	$ 9,066
Buildings and Equipment	78,658
Costs Capitalized Subsequent to Acquisition	2,723
Cost amount carried at Close of Period
Land	9,066
Buildings and Equipment	81,381
Total	90,447
Accumulated Depreciation	$ (9,273)
1775 Wiehle Avenue, Reston, VA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 4,138
Buildings and Equipment	26,120
Costs Capitalized Subsequent to Acquisition	756
Cost amount carried at Close of Period
Land	4,138
Buildings and Equipment	26,876
Total	31,014
Accumulated Depreciation	$ (828)
9960 Mayland Drive, Richmond VA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 2,614
Buildings and Equipment	15,930
Costs Capitalized Subsequent to Acquisition	1,891
Cost amount carried at Close of Period
Land	2,614
Buildings and Equipment	17,821
Total	20,435
Accumulated Depreciation	$ (2,055)
501 South 5th Street, Richmond, VA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 14,884
Buildings and Equipment	39,411
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	14,884
Buildings and Equipment	39,411
Total	54,295
Accumulated Depreciation	$ 0
9201 Forest Hill Avenue, Richmond, VA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 1,355
Buildings and Equipment	376
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	1,355
Buildings and Equipment	376
Total	1,731
Accumulated Depreciation	$ 0
Parham Place, Richmond, VA
Real estate and accumulated depreciation
Number of Buildings | building	3
Initial Cost to Company
Land	$ 920
Buildings and Equipment	1,107
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	920
Buildings and Equipment	1,107
Total	2,027
Accumulated Depreciation	$ 0
1751 Blue Hills Drive, Roanoke, VA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 2,710
Buildings and Equipment	7,823
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	2,710
Buildings and Equipment	7,823
Total	10,533
Accumulated Depreciation	$ 0
Aquia Commerce Center, Stafford, VA
Real estate and accumulated depreciation
Number of Buildings | building	2
Initial Cost to Company
Land	$ 2,090
Buildings and Equipment	7,465
Costs Capitalized Subsequent to Acquisition	768
Cost amount carried at Close of Period
Land	2,090
Buildings and Equipment	8,233
Total	10,323
Accumulated Depreciation	$ (1,549)
Atlantic Corporate Park, Sterling, VA
Real estate and accumulated depreciation
Number of Buildings | building	2
Initial Cost to Company
Land	$ 5,752
Buildings and Equipment	29,323
Costs Capitalized Subsequent to Acquisition	178
Cost amount carried at Close of Period
Land	5,752
Buildings and Equipment	29,501
Total	35,253
Accumulated Depreciation	$ (931)
Sterling Business Park Lots 8 and 9, Sterling, VA
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 9,177
Buildings and Equipment	44,375
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	9,177
Buildings and Equipment	44,375
Total	53,552
Accumulated Depreciation	$ (1,385)
Orbital Sciences Campus, Sterling, VA
Real estate and accumulated depreciation
Number of Buildings | building	3
Initial Cost to Company
Land	$ 12,372
Buildings and Equipment	19,473
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	12,372
Buildings and Equipment	19,473
Total	31,845
Accumulated Depreciation	$ 0
65 Bowdoin Street, S. Burlington, VT
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 700
Buildings and Equipment	8,416
Costs Capitalized Subsequent to Acquisition	140
Cost amount carried at Close of Period
Land	700
Buildings and Equipment	8,556
Total	9,256
Accumulated Depreciation	$ (1,873)
840 North Broadway, Everett, WA
Real estate and accumulated depreciation
Number of Buildings | building	2
Encumbrances	$ 34,704
Initial Cost to Company
Land	3,360
Buildings and Equipment	15,376
Costs Capitalized Subsequent to Acquisition	2,116
Cost amount carried at Close of Period
Land	3,360
Buildings and Equipment	17,492
Total	20,852
Accumulated Depreciation	$ (3,099)
Stevens Center, Richland, WA
Real estate and accumulated depreciation
Number of Buildings | building	2
Initial Cost to Company
Land	$ 3,970
Buildings and Equipment	17,035
Costs Capitalized Subsequent to Acquisition	4,137
Cost amount carried at Close of Period
Land	4,045
Buildings and Equipment	21,097
Total	25,142
Accumulated Depreciation	$ (9,854)
351, 401, 501 Elliott Ave West, Seattle, WA
Real estate and accumulated depreciation
Number of Buildings | building	3
Initial Cost to Company
Land	$ 26,851
Buildings and Equipment	53,157
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	26,851
Buildings and Equipment	53,157
Total	80,008
Accumulated Depreciation	$ 0
11050 West Liberty Drive, Milwaukee, WI
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 945
Buildings and Equipment	4,539
Costs Capitalized Subsequent to Acquisition	103
Cost amount carried at Close of Period
Land	945
Buildings and Equipment	4,642
Total	5,587
Accumulated Depreciation	$ (881)
882 TJ Jackson Drive, Falling Waters, WV
Real estate and accumulated depreciation
Number of Buildings | building	1
Encumbrances	$ 41,099
Initial Cost to Company
Land	906
Buildings and Equipment	3,886
Costs Capitalized Subsequent to Acquisition	270
Cost amount carried at Close of Period
Land	922
Buildings and Equipment	4,140
Total	5,062
Accumulated Depreciation	$ (2,215)
5353 Yellowstone Road, Cheyenne, WY
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 1,915
Buildings and Equipment	8,217
Costs Capitalized Subsequent to Acquisition	765
Cost amount carried at Close of Period
Land	1,950
Buildings and Equipment	8,947
Total	10,897
Accumulated Depreciation	$ (4,658)
Total Real Estate Assets
Real estate and accumulated depreciation
Number of Buildings | building	247
Encumbrances	$ 335,241
Initial Cost to Company
Land	1,038,737
Buildings and Equipment	2,904,700
Costs Capitalized Subsequent to Acquisition	225,424
Impairment/ Writedowns	(7,270)
Cost amount carried at Close of Period
Land	1,039,553
Buildings and Equipment	3,122,038
Total	4,161,591
Accumulated Depreciation	$ (383,318)
Properties Held for Sale
Real estate and accumulated depreciation
Number of Buildings | building	36
Initial Cost to Company
Land	$ 115,347
Buildings and Equipment	100,411
Costs Capitalized Subsequent to Acquisition	4,027
Impairment/ Writedowns	(2,830)
Cost amount carried at Close of Period
Land	115,389
Buildings and Equipment	101,566
Total	216,955
Accumulated Depreciation	$ (8,171)
Properties Held for Sale | 500 First Street, NW, Washington DC
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 30,478
Buildings and Equipment	15,660
Costs Capitalized Subsequent to Acquisition	44
Cost amount carried at Close of Period
Land	30,478
Buildings and Equipment	15,704
Total	46,182
Accumulated Depreciation	$ (448)
Properties Held for Sale | 91-008 Hanua Street, Kapolei, HI
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 6,846
Buildings and Equipment	0
Costs Capitalized Subsequent to Acquisition	0
Cost amount carried at Close of Period
Land	6,846
Buildings and Equipment	0
Total	6,846
Accumulated Depreciation	$ 0
Properties Held for Sale | Ammendale Commerce Center, Beltsville, MD
Real estate and accumulated depreciation
Number of Buildings | building	3
Initial Cost to Company
Land	$ 4,879
Buildings and Equipment	9,498
Costs Capitalized Subsequent to Acquisition	99
Cost amount carried at Close of Period
Land	4,879
Buildings and Equipment	9,597
Total	14,476
Accumulated Depreciation	$ (279)
Properties Held for Sale | Indian Creek Technology Park, Beltsville, MD
Real estate and accumulated depreciation
Number of Buildings | building	4
Initial Cost to Company
Land	$ 8,796
Buildings and Equipment	12,093
Costs Capitalized Subsequent to Acquisition	394
Impairment/ Writedowns	(2,830)
Cost amount carried at Close of Period
Land	8,796
Buildings and Equipment	9,657
Total	18,453
Accumulated Depreciation	$ (363)
Properties Held for Sale | Gateway 270 West, Clarksburg, MD
Real estate and accumulated depreciation
Number of Buildings | building	6
Initial Cost to Company
Land	$ 12,104
Buildings and Equipment	9,688
Costs Capitalized Subsequent to Acquisition	516
Cost amount carried at Close of Period
Land	12,104
Buildings and Equipment	10,204
Total	22,308
Accumulated Depreciation	$ (257)
Properties Held for Sale | Snowden Center, Columbia, MD
Real estate and accumulated depreciation
Number of Buildings | building	5
Initial Cost to Company
Land	$ 7,955
Buildings and Equipment	10,128
Costs Capitalized Subsequent to Acquisition	119
Cost amount carried at Close of Period
Land	7,955
Buildings and Equipment	10,247
Total	18,202
Accumulated Depreciation	$ (258)
Properties Held for Sale | 20400 Century Boulevard, Germantown, MD
Real estate and accumulated depreciation
Number of Buildings | building	1
Initial Cost to Company
Land	$ 2,305
Buildings and Equipment	9,890
Costs Capitalized Subsequent to Acquisition	1,304
Cost amount carried at Close of Period
Land	2,347
Buildings and Equipment	11,152
Total	13,499
Accumulated Depreciation	$ (5,520)
Properties Held for Sale | Cloverleaf Center, Germantown, MD
Real estate and accumulated depreciation
Number of Buildings | building	4
Initial Cost to Company
Land	$ 11,890
Buildings and Equipment	4,639
Costs Capitalized Subsequent to Acquisition	481
Cost amount carried at Close of Period
Land	11,890
Buildings and Equipment	5,120
Total	17,010
Accumulated Depreciation	$ (167)
Properties Held for Sale | Metro Park North, Rockville, MD
Real estate and accumulated depreciation
Number of Buildings | building	4
Initial Cost to Company
Land	$ 11,159
Buildings and Equipment	7,624
Costs Capitalized Subsequent to Acquisition	235
Cost amount carried at Close of Period
Land	11,159
Buildings and Equipment	7,859
Total	19,018
Accumulated Depreciation	$ (236)
Properties Held for Sale | Sterling Park Business Center, Sterling, VA
Real estate and accumulated depreciation
Number of Buildings | building	7
Initial Cost to Company
Land	$ 18,935
Buildings and Equipment	21,191
Costs Capitalized Subsequent to Acquisition	835
Cost amount carried at Close of Period
Land	18,935
Buildings and Equipment	22,026
Total	40,961
Accumulated Depreciation	$ (643)

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SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION - Additional Information (Details)	12 Months Ended
	Dec. 31, 2018 USD ($)
SEC Schedule, 12-28, Real Estate Companies, Investment in Real Estate and Accumulated Depreciation Disclosure [Abstract]
Mortgage debt, net	$ 3,021,000
Aggregate cost for federal income tax purposes	$ 7,126,328
Useful life of buildings and improvements	40 years
Useful life of equipment	12 years

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SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION - Carrying Amount and Accumulated Depreciation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Real Estate Properties
Balance at the beginning of the period	$ 2,975,721	$ 1,888,760	$ 1,696,132
Additions	1,486,342	1,100,138	194,107
Loss on asset impairment	(8,630)	(9,490)
Disposals	(286,837)	(3,687)	(1,479)
Cost basis adjustment	(5,005)
Reclassification of assets of properties held for sale	(216,955)
Balance at the end of the period	3,944,636	2,975,721	1,888,760
Accumulated Depreciation
Balance at the beginning of the period	341,848	296,804	255,879
Additions	65,215	45,315	42,404
Loss on asset impairment	0	0
Disposals	(18,740)	(271)	(1,479)
Cost basis adjustment	(5,005)
Reclassification of assets of properties held for sale	(8,171)
Balance at the end of the period	$ 375,147	$ 341,848	$ 296,804