10-Q

Xa

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2015

OR

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

Commission File Number 1-34364

GOVERNMENT PROPERTIES INCOME TRUST

(Exact Name of Registrant as Specified in Its Charter)

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

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

(Address of Principal Executive Offices)  (Zip Code)

617-219-1440

(Registrant’s Telephone Number, Including Area Code)

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).  Yes ☒  No ☐

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

Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer☐	Smaller reporting company ☐
(Do not check if a smaller reporting company)

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

Number of registrant’s common shares of beneficial interest, $.01 par value per share, outstanding as ofJuly 28, 2015:  71,084,349

GOVERNMENT PROPERTIES INCOME TRUST

FORM 10-Q

June 30, 2015

INDEX

PART I	Financial Information
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets — June 30, 2015and December 31, 2014	2
	Condensed Consolidated Statements of Comprehensive Income — Three and Six Months Ended June 30, 2015 and 2014	3
	Condensed Consolidated Statements of Cash Flows —Six Months Ended June 30, 2015 and 2014	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	35
	Warning Concerning Forward Looking Statements	35
	Statement Concerning Limited Liability	39
PART II	Other Information
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item. 5	Other Information	40
Item 6.	Exhibits	41
	Signatures	43

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

1

PART I.       Financial Information

Item 1.  Financial Statements

GOVERNMENT PROPERTIES INCOME TRUST

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share data)

(unaudited)

	June 30,		December 31,
	2015		2014
ASSETS
Real estate properties:
Land	$	253,058	$	254,008
Buildings and improvements		1,430,653		1,428,472
Total real estate properties, gross		1,683,711		1,682,480
Accumulated depreciation		(238,469)		(219,791)
Total real estate properties, net		1,445,242		1,462,689
Equity investment in Select Income REIT		514,316		680,137
Assets of discontinued operations		12,449		13,165
Assets of property held for sale		3,161		32,797
Acquired real estate leases, net		133,837		150,080
Cash and cash equivalents		7,051		13,791
Restricted cash		2,454		2,280
Rents receivable, net		40,161		36,239
Deferred leasing costs, net		12,750		11,450
Deferred financing costs, net		11,327		12,782
Other assets, net		54,827		12,205
Total assets	$	2,237,575	$	2,427,615
LIABILITIES AND SHAREHOLDERS’ EQUITY
Unsecured revolving credit facility	$	59,000	$	—
Unsecured term loans		550,000		550,000
Senior unsecured notes, net of discount		347,702		347,423
Mortgage notes payable, including premiums		185,401		187,694
Liabilities of discontinued operations		277		150
Liabilities of property held for sale		11		343
Accounts payable and other liabilities		50,500		26,471
Due to related persons		3,144		2,161
Assumed real estate lease obligations, net		14,297		15,924
Total liabilities		1,210,332		1,130,166
Commitments and contingencies
Shareholders’ equity:
Common shares of beneficial interest, $.01 par value: 100,000,000 shares
authorized, 71,084,349 and 70,349,227 shares issued and outstanding, respectively		711		703
Additional paid in capital		1,472,270		1,457,631
Cumulative net income		23,914		248,447
Cumulative other comprehensive income		225		37
Cumulative common distributions		(469,877)		(409,369)
Total shareholders’ equity		1,027,243		1,297,449
Total liabilities and shareholders’ equity	$	2,237,575	$	2,427,615

See accompanying notes.

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GOVERNMENT PROPERTIES INCOME TRUST

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(amounts in thousands, except per share data)

(unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Rental income	$	62,113	$	62,428	$	124,772	$	122,248
Expenses:
Real estate taxes		7,674		7,166		15,084		13,978
Utility expenses		4,023		4,049		8,594		9,745
Other operating expenses		12,168		10,860		24,378		21,901
Depreciation and amortization		17,299		16,191		34,514		31,618
Acquisition related costs		183		671		189		1,180
General and administrative		3,713		4,111		7,717		7,208
Total expenses		45,060		43,048		90,476		85,630
Operating income		17,053		19,380		34,296		36,618
Interest and other income		—		8		12		58
Interest expense (including net amortization of debt premiums and discounts
and deferred financing fees of $328, $223, $660 and $553, respectively)		(9,455)		(5,158)		(18,757)		(9,685)
Loss on issuance of shares by Select Income REIT		(1,353)		—		(42,124)		—
Loss on impairment of Select Income REIT investment		(203,297)		—		(203,297)		—
Income (loss) from continuing operations before income taxes and equity in earnings of investees		(197,052)		14,230		(229,870)		26,991
Income tax expense		(32)		(101)		(62)		(123)
Equity in earnings of investees		6,094		118		5,778		21
Income (loss) from continuing operations		(190,990)		14,247		(224,154)		26,889
Income (loss) from discontinued operations		(173)		361		(379)		2,909
Net income (loss)		(191,163)		14,608		(224,533)		29,798
Other comprehensive income
Equity in unrealized gain of investees		131		22		189		41
Other comprehensive income		131		22		189		41
Comprehensive income (loss)	$	(191,032)	$	14,630	$	(224,344)	$	29,839
Weighted average common shares outstanding (basic)		70,485		54,659		70,377		54,649
Weighted average common shares outstanding (diluted)		70,485		54,743		70,377		54,734
Per common share amounts:
Income (loss) from continuing operations (basic and diluted)	$	(2.71)	$	0.26	$	(3.19)	$	0.49
Income (loss) from discontinued operations (basic and diluted)	$	—	$	0.01	$	(0.01)	$	0.05
Net income (loss) (basic)	$	(2.71)	$	0.27	$	(3.19)	$	0.55
Net income (loss) (diluted)	$	(2.71)	$	0.27	$	(3.19)	$	0.54

See accompanying notes.

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GOVERNMENT PROPERTIES INCOME TRUST

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

(unaudited)

	Six Months Ended June 30,
	2015		2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(224,533)	$	29,798
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depreciation		19,363		18,392
Net amortization of debt premiums and discounts and deferred financing fees		660		553
Straight line rental income		(2,207)		(2,209)
Amortization of acquired real estate leases		14,617		12,702
Amortization of deferred leasing costs		1,087		964
Other non-cash expenses		1,057		1,008
Increase in carrying value of asset held for sale		—		(2,344)
Equity in earnings of investees		(5,778)		(21)
Loss on issuance of shares by Select Income REIT		42,124		—
Loss on impairment of Select Income REIT investment		203,297		—
Distributions of earnings from Select Income REIT		10,425		—
Change in assets and liabilities:
Restricted cash		(174)		(812)
Deferred leasing costs		(2,123)		(1,690)
Rents receivable		539		1,008
Other assets		2,027		2,016
Accounts payable and accrued expenses		1,491		1,341
Due to related persons		983		174
Cash provided by operating activities		62,855		60,880
CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate acquisitions and deposits		(1,400)		(47,359)
Real estate improvements		(5,386)		(9,704)
Investment in Select Income REIT		(95,821)		—
Investment in Reit Management & Research Inc.		(6,468)		—
Investment in Affiliates Insurance Company		—		(825)
Distributions in excess of earnings from Select Income REIT		11,687		—
Proceeds from sale of properties, net		30,520		4,644
Cash used in investing activities		(66,868)		(53,244)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of mortgage notes payable		(1,203)		(1,072)
Borrowings on unsecured revolving credit facility		100,000		85,500
Repayments on unsecured revolving credit facility		(41,000)		(47,000)
Financing fees		(16)		(627)
Distributions to common shareholders		(60,508)		(47,065)
Cash used in financing activities		(2,727)		(10,264)
Decrease in cash and cash equivalents		(6,740)		(2,628)
Cash and cash equivalents at beginning of period		13,791		7,663
Cash and cash equivalents at end of period	$	7,051	$	5,035
Supplemental cash flow information:
Interest paid	$	17,980	$	8,653
Income taxes paid		78		87
Non-cash investing activities:
Investment in Reit Management & Research Inc. paid in common shares	$	13,836	$	—
Real estate acquisition funded with the assumption of mortgage debt	$	—	$	(97,524)
Non-cash financing activities:
Assumption of mortgage debt	$	—	$	97,524

See accompanying notes.

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GOVERNMENT PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

(unaudited)

Note 1. Basis of Presentation

The accompanying condensed consolidated financial statements of Government Properties Income Trust and its subsidiaries, or the Company, we or us, are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted.  We believe the disclosures made are adequate to make the information presented not misleading.  However, the accompanying condensed consolidated financial statements should be read in conjunction with the financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2014, or our Annual Report.  In the opinion of our management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included.  All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated.  Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.

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

Note 2. Recent Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2015-03,Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. This ASU is effective for interim and annual reporting periods beginning after December 15, 2015 and requires retrospective application.  This ASU is not expected to cause any changes to our condensed consolidated financial statements other than the reclassification of certain debt issuance costsfrom assets to contra liabilities on our condensed consolidated balance sheets.

In May 2014, the FASB issued ASU No. 2014-09, Revenue From Contracts With Customers, which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. This ASU 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 this ASU specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. In July 2015, the FASB approved a one year deferral of the effective date for this ASU to interim and annual reporting periods beginning after December 15, 2017.  We are continuing to evaluate this guidance; however, we do not expect its adoption to have a material impact on our condensed consolidated financial statements, as a substantial portion of our revenue consists of rental income from leasing arrangements, which are specifically excluded from this ASU.

Note 3. Per Common Share Amounts

We calculate basic earnings per common share by dividing net income (loss) 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):

	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
	2015		2014		2015		2014
Weighted average common shares for basic earnings per share		70,485		54,659		70,377		54,649
Effect of dilutive securities: unvested share awards		-		84		-		85
Weighted average common shares for diluted earnings per share		70,485		54,743		70,377		54,734

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GOVERNMENT PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

(unaudited)

Note 4.   Real Estate Properties

As of June 30, 2015, we owned 71 properties (91 buildings), with an undepreciated carrying value of $1,687,057,  excluding one property (one building) classified as discontinued operations with an undepreciated carrying value of $12,260. We generally lease space in our properties on a gross lease or modified gross lease basis pursuant to fixed term operating leases expiring between 2015 and 2030. Certain of our government tenants have the right to terminate their leases before the lease term expires. Our leases generally require us to pay all or some property operating expenses and to provide all or most property management services. During the three months ended June 30, 2015, we entered into 16 leases for 316,123 rentable square feet for a weighted (by rentable square feet) average lease term of 10.9 years and we made commitments for approximately $5,237 of leasing related costs. During the six months ended June 30, 2015, we entered into 23 leases for 399,101 rentable square feet for a weighted (by rentable square feet) average lease term of 10.2 years and we made commitments for approximately $7,483 of leasing related costs. We have estimated unspent leasing related obligations of $9,248 as of June 30, 2015.

Acquisition Activities

In June 2015, we entered into an agreement to acquire an office property (one building) located in Greensburg, PA with 82,889 rentable square feet for a purchase price of $14,300, excluding acquisition costs.  The property is 100% leased to the Commonwealth of Pennsylvania.

In July 2015, we entered into an agreement to acquire an office and warehouse property (one building) located in Braintree, MA with 99,168 rentable square feet.  The purchase price is $11,700, excluding acquisition costs.  This property is 100% leased to the Commonwealth of Massachusetts. 

These pending acquisitions are subject to closing conditions; accordingly, we can provide no assurance that we will acquire these properties or that these acquisitions will not be delayed or that theacquisition terms will not change.

Disposition Activities – Continuing Operations

In February 2015, one of our U.S. Government tenants exercised its option to acquire the office property (one building) it leased from us located in Riverdale, MD with 337,500 rentable square feet.  The sales price was $30,600, excluding closing costs.  We recognized no gain or loss on this sale.

In May 2015, we began marketing for sale an office property (one building) located in Savannah, GA with 35,228 rentable square feet and a net book value of $3,072 as of June 30, 2015.  We have classified this property as held for sale as of June 30, 2015.  The results of operations for this property are included in continuing operations in our condensed consolidated financial statements.  Summarized balance sheet information for the property classified as held for sale is as follows:

	June 30,
	2015
Real estate properties, net	$	3,071
Rents receivable		54
Other assets		36
Assets of property held for sale	$	3,161
Other liabilities	$	11
Liabilities of property held for sale	$	11

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GOVERNMENT PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

(unaudited)

Disposition Activities – Discontinued Operations

In April 2014, we entered into an agreement to sell an office property (one building) located in Falls Church, VA with 164,746 rentable square feet and a net book value of $12,282 at June 30, 2015.  In May 2015, this agreement was terminated.  In July 2015, we entered an agreement to sell this property to a different purchaser.  The contract sales price is$16,500, excluding closing costs.  We currently expect this sale to close before year end 2015.  However, this sale is subject to conditions and we can provide no assurance that the sale of this property will occur, that it will not be delayed or that its terms will not change.  See Note 8 for further information relating to this property.

Results of operations for two properties (two buildings) we sold in February 2014 and September 2014 and one property (one building) held for sale at June 30, 2015, which was held for sale prior to our adoption of ASU 2014-08, are classified as discontinued operations in our condensed consolidated financial statements. Summarized balance sheet and income statement information for the properties classified as discontinued operations is as follows:

Balance Sheets:

	June 30,		December 31,
	2015		2014
Real estate properties, net	$	12,260	$	12,260
Rents receivable		16		782
Other assets		173		123
Assets of discontinued operations	$	12,449	$	13,165
Other liabilities	$	277	$	150
Liabilities of discontinued operations	$	277	$	150

Statements of Operations

	Three Months ended June 30,				Six Months ended June 30,
	2015		2014		2015		2014
Rental income	$	27	$	746	$	58	$	1,486
Real estate taxes		(70)		(124)		(140)		(273)
Utility expenses		(11)		(52)		(78)		(154)
Other operating expenses		(91)		(159)		(162)		(385)
General and administrative		(28)		(50)		(57)		(109)
Increase in carrying value of asset held for sale		—		—		—		2,344
Income (loss) from discontinued operations	$	(173)	$	361	$	(379)	$	2,909

Note 5.   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. Certain of our leases with government tenants provide the tenant the right to terminate before the lease expiration date 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 early terminations to be remote contingencies based on both our historical experience and our assessment of the likelihood of lease cancellation on a separate lease basis.

We increased rental income to record revenue on a straight line basis by $1,544 and $1,101 for the three months ended June 30, 2015 and 2014, respectively, and $2,207 and $2,243 for the six months ended June 30, 2015 and 2014, respectively.  Rents receivable include $17,224 and $15,017 of straight line rent receivables at June 30, 2015 and December 31, 2014, respectively.

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GOVERNMENT PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

(unaudited)

Note 6.   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, 12 state governments and the United Nations combined were responsible for approximately 92.8% and 93.0% of our annualized rental income, excluding properties classified as discontinued operations, as of June 30, 2015 and 2014, respectively. The U.S. Government is our largest tenant by annualized rental income and was responsible for approximately 67.7% and 70.0% of our annualized rental income, excluding properties classified as discontinued operations, as of June 30, 2015 and 2014, respectively.

Geographic Concentration

At June 30, 2015, our 71 properties (91 buildings), excluding one property (one building) classified as discontinued operations, were located in 31 states and the District of Columbia.  Properties located in California, Virginia, the District of Columbia, Georgia, New York, Maryland and Massachusetts were responsible for approximately 11.5%,  10.5%,  10.3%,  9.1%,  8.5%,  7.5% and 5.7% of our annualized rental income as of June 30, 2015, respectively.

Note 7.   Indebtedness

At June 30, 2015 and December 31, 2014, our outstanding indebtedness consisted of the following:

	June 30,		December 31,
	2015		2014
Unsecured revolving credit facility	$	59,000	$	—
Unsecured term loan, due in 2020		300,000		300,000
Unsecured term loan, due in 2022		250,000		250,000
Senior unsecured notes, 3.75% interest rate, including unamortized discounts of $2,298 and $2,577,        respectively, due in 2019		347,702		347,423
Mortgage note payable, 5.55% interest rate, including unamortized premiums of $1,311 and $2,167, respectively, due in 2016(1)		84,311		85,167
Mortgage note payable, 5.73% interest rate, including unamortized premiums of $65 and $177, respectively, due in 2015(1)(2)		46,923		47,418
Mortgage note payable, 6.21% interest rate, due in 2016(1)		23,667		23,833
Mortgage note payable, 5.88% interest rate, due in 2021(1)		14,268		14,374
Mortgage note payable, 7.00% interest rate, including unamortized premiums of $538 and $605, respectively, due in 2019(1)		9,383		9,563
Mortgage note payable, 8.15% interest rate, including unamortized premiums of $343 and $398, respectively, due in 2021(1)		6,849		7,339
	$	1,142,103	$	1,085,117

(1) We assumed these mortgages in connection with our acquisitions 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 are amortizing the fair value premiums, if any, to interest expense over the respective terms of the mortgages to reduce interest expense to the estimated market interest rates as of the date of acquisition.

(2) This mortgage was repaid, at par, in July 2015.

Our $750,000 unsecured revolving credit facility is available for general business purposes, including acquisitions. The maturity date of our revolving credit facility is January 31, 2019 and, subject to the payment of an extension fee and meeting certain other conditions, we have an option to extend the stated maturity date of our revolving credit facility by one year to January 31, 2020. Borrowings under our revolving credit facility bear interest at a rate

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GOVERNMENT PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

(unaudited)

of LIBOR plus a premium, which was 125 basis points at June 30, 2015.  We also pay a facility fee on the total amount of lending commitments under our revolving credit facility, which was 25 basis points per annum at June 30, 2015. Both the interest rate premium and the facility fee are subject to adjustment based upon changes to our credit ratings. As of June 30, 2015, the interest rate payable on borrowings under our revolving credit facility was 1.4%and the weighted average interest rate for borrowings under our revolving credit facility was 1.4% and 1.6%, respectively, for the three and six months ended June 30, 2015 and 1.7% for both the three and six months ended June 30, 2014. As of June 30, 2015 and July 28, 2015, we had $59,000 and $99,000 outstanding under our revolving credit facility, respectively.

Our $300,000 unsecured term loan, which matures on March 31, 2020, is prepayable without penalty at any time. The amount outstanding under our $300,000 term loan bears interest at LIBOR plus a premium, which was 140 basis points at June 30, 2015. The interest rate premium is subject to adjustment based upon changes to our credit ratings. As of June 30, 2015, the interest rate for the amount outstanding under our $300,000 term loan was 1.6%. The weighted average interest rate under our $300,000 term loan was 1.6% for both the three and six months ended June 30, 2015.

Our $250,000 unsecured term loan, which matures on March 31, 2022, is prepayable at any time. If our $250,000 term loan is repaid prior to November 22, 2015, a prepayment premium of 2.0% of the amount repaid will be payable. If our $250,000 term loan is repaid during the period from November 22, 2015 to November 21, 2016, a prepayment premium of 1.0% of the amount repaid will be payable. Subsequent to November 21, 2016, no prepayment premiumwill be payable. The amount outstanding under our $250,000 term loan bears interest at LIBOR plus a premium, which was 180 basis points at June 30, 2015.  The interest rate premium is subject to adjustment based upon changes to our credit ratings. As of June 30, 2015, the interest rate for the amount outstanding under our $250,000 term loan was 2.0%. The weighted average interest rate under our $250,000 term loan was 2.0% for both the three and six months ended June 30, 2015.

Our $750,000 revolving credit facility, our $300,000 term loan and our $250,000 term loan are governed by a credit agreement with a syndicate of institutional lenders that includes a number of features common to all of these credit arrangements. This 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 $350,000 of 3.75% senior unsecured notes due in 2019 are governed by an indenture and a supplement to the indenture, and require semi-annual payments of interest only through maturity.  The outstanding amount of these notes may be prepaid at par (plus accrued and unpaid interest) on or after July 15, 2019 or before that date together with a make whole premium.

Our credit agreement and senior notes indenture and its supplement provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default, including, in the case of our credit agreement, a change of control of us, which includes Reit Management & Research LLC, or RMR LLC, ceasing to act as our business manager and property manager. Our senior notes indenture and itssupplement and our credit agreementalso contain a number of covenants, including covenants that restrict our ability to incur debts or to make distributions under certain circumstances and require us to maintain certain financial ratios.  We believe we were in compliance with the terms and conditions of the respective covenants under oursenior unsecured notesindenture anditssupplement and our credit agreement at June 30, 2015.

At June 30, 2015, six of our properties (eight buildings) with an aggregate net book value of $262,191 secured six mortgage notes that we assumed in connection with the acquisition of such properties. Our mortgage notes are non-recourse and do not contain any material financial covenants.

In July 2015, we repaid, at par, a $47,083 mortgage note which was secured by a property (two buildings) located in Indianapolis, IN. This mortgage was scheduled to mature in October 2015.

9

GOVERNMENT PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

(unaudited)

Note 8.   Fair Value of Assets and Liabilities

Our financial instruments include cash and cash equivalents, restricted cash, rents receivable, mortgage notes payable, accounts payable, senior unsecured notes, an unsecured revolving credit facility, unsecured term loans, amounts due to related persons, other accrued expenses and security deposits. At June 30, 2015 and December 31, 2014, the fair values of our financial instruments approximated their carrying values in our condensed consolidated financial statements due to their short term nature or variable interest rates, except as follows:

	As of June 30, 2015				As of December 31, 2014
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Senior unsecured notes, 3.75% interest rate, due in 2019	$	347,702	$	358,314	$	347,423	$	356,129
Mortgage note payable, 5.55% interest rate, due in 2016(1)		84,311		84,340		85,167		85,171
Mortgage note payable, 5.73% interest rate, due in 2015(1)(2)		46,923		47,264		47,418		48,233
Mortgage note payable, 6.21% interest rate, due in 2016(1)		23,667		24,769		23,833		25,394
Mortgage note payable, 5.88% interest rate, due in 2021(1)		14,268		14,981		14,374		15,249
Mortgage note payable, 7.00% interest rate, due in 2019(1)		9,383		10,025		9,563		10,275
Mortgage note payable, 8.15% interest rate, due in 2021(1)		6,849		7,356		7,339		7,956
	$	533,103	$	547,049	$	535,117	$	548,407

(1) We assumed these mortgages 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 date of acquisition and we are amortizing the fair value premiums, if any, to interest expense over the respective terms of the mortgages to reduce interest expense to the estimated market interest rates as of the date of acquisition.

(2) This mortgage was repaid, at par, in July 2015.

We estimate the fair value of our senior unsecured notes 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 estimate the fair values of our mortgage notes payable by using discounted cash flow analyses and currently prevailing market terms 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.

The table below presents certain of our assets we measured on a non-recurring basis at estimated fair value at June 30, 2015, categorized by the level of input used in the valuation of these assets:

			Quoted Prices in				Significant
	Estimated		Active Markets for		Significant Other		Unobservable
	Fair		Identical Assets		Observable Inputs		Inputs
Description	Value		(Level 1)		(Level 2)		(Level 3)
Investment in SIR (1)	$	514,316	$	514,316	$	—	$	—
	$	514,316	$	514,316	$	—	$	—

10

GOVERNMENT PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

(unaudited)

(1)We own 24,891,421 common shares of Select Income REIT, or SIR. During the three months ended June 30, 2015, we recorded a $203,297 loss on impairment to reduce the carrying value of this investment to its estimated fair value. We estimated fair value using the closing price of SIR’s common shares on the New York Stock Exchange, or the NYSE, on June 30, 2015 (Level 1 input). See Notes 10 and 11 for further information regarding this investment.

Note 9. Shareholders’ Equity

Distributions

On February 26, 2015, we paid a distribution to common shareholders in the amount of $0.43 per share, or $30,252.

On May 26, 2015, we paid a distribution to common shareholders in the amount of $0.43 per share, or $30,256.

On July 13, 2015, we declared a distribution payable to common shareholders of record on July 24, 2015, in the amount of $0.43per share, or $30,566.We expect to pay this distribution on or about August 24, 2015 using cash on hand and borrowings under our revolving credit facility.

Share Issuances

During the three and six months ended June 30, 2015, we issued 12,012and 23,222 respectively, of our common shares to RMR LLC, as part of the business management fee payable by us under our business management agreement with RMR LLC.  See Note 10 for further information regarding and recent amendments to this agreement.

On May 12, 2015, we granted 2,500 of our common shares, valued at $19.75 per share, the closing price of our common shares on the NYSE on that day, to each of our five Trustees as part of their annual compensation.

On June 5, 2015, we issued 700,000 shares as partial payment to acquire 1,541,201 shares of Class A common stock of Reit Management & Research Inc., a Maryland corporation, or RMR Inc.  See Note 10 for further details of this transaction.

Note 10.   Related Person Transactions

We have relationships and historical and continuing transactions with RMR LLC, its parent, RMR Inc., and others related to them, including other companies to which RMR LLC provides management services and which have trustees, directors and officers who are also trustees, directors or officers of us, RMR Inc. or RMR LLC. For further information about these and other such relationships and certain other related person transactions, please refer to our Annual Report and our Current Report on Form 8-K filed with the Securities and Exchange Commission, or the SEC, on June 8, 2015.  

Acquisition of Interest in our Manager:  On June 5, 2015, we and three other real estate investment trusts, or REITs, to which RMR  LLC provides management services – Hospitality Properties Trust, or HPT, SIR, and Senior Housing Properties Trust, or SNH, and collectively with HPT and SIR, the Other REITs – participated in a transaction, or the Up-C Transaction, by which we and the Other REITs each acquired an ownership interest in RMR Inc.

The Up-C Transaction was completed pursuant to a transaction agreement by and among us, our manager, RMR LLC, its then sole member, Reit Management & Research Trust, or RMR Trust, and RMR Inc. and similar transaction agreements that each Other REIT entered into with RMR LLC, RMR Trust and RMR Inc. RMR Trust is owned by our Managing Trustees, Barry and Adam Portnoy. Pursuant to these transactions agreements: we contributed to RMR Inc. 700,000 of ourcommon shares, valued at $13,545 and $3,917  in cash;  HPT contributed to RMR Inc. 1,490,000 of its common shares and $12,622 in cash; SIR contributed to RMR Inc. 880,000 of its common shares and $15,880 in cash;

11

GOVERNMENT PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

(unaudited)

SNH contributed to RMR Inc. 2,345,000 of itscommonshares and $13,967 in cash; RMR Trust contributed to RMR Inc. $11,520 in cash,which RMR Inc. contributed to RMR LLC; RMR LLC issued 1,000,000 of its class B membership units to RMR Inc.; RMR Inc. issued 1,541,201 shares of its class A common stockto us, 5,019,121 shares of its class A common stock to HPT, 3,166,891 shares of its class A common stock to SIR, 5,272,787 shares of its class A common stock to SNH and 1,000,000 shares of its class B-1 common stock and 15,000,000 shares of its class B-2 common stock,to RMR Trust; RMR Trust delivered 15,000,000 of the 30,000,000 class A membership units of RMR LLC which RMR Trust then owned to RMR Inc.; and RMR Inc. delivered to RMR Trust our common shares, the common shares of the Other REITs and the cash which had been contributed by us and the Other REITs to RMR Inc.

The class A common stock and class B-1 common stock of RMR Inc. share ratably as a single class in dividends and other distributions of RMR Inc. when and if declared by the board of directors of RMR Inc.and have the same rights in a liquidation of RMR Inc. The class B-1 common stock of RMR Inc. is convertible into class A common stock of RMR Inc. on a 1:1 basis. The class A common stock of RMR Inc. has one vote per share. The class B-1 common stock of RMR Inc. has 10 votes per share. The class B-2 common stock of RMR Inc. has no economic interest in RMR Inc., but has 10 votes per share and is paired with the class A membership units of RMR LLC owned by RMR Trust. The class A membership units of RMR LLC owned by RMR Trust are required to be redeemed by RMR LLC upon request by RMR Trust for class A common stock of RMR Inc. on a 1:1 basis, or if RMR Inc. elects, cash. Under the governing documents of RMR Inc., upon the redemption of a class A membership unit of RMR LLC, the class B-2 common stock of RMR Inc. “paired” with an equal member of class A membership unitsare cancelled for no additional consideration.

As part of the Up-C Transaction and concurrently with entering the transaction agreements, on June 5, 2015:

· We entered an amended and restated business management agreement with RMR LLC, and an amended and restated property management agreement with RMR LLC. The amendments made by these agreements are described below in this Note under “Amendment and Restatement of Management Agreements with RMR LLC.” Each Other REIT also entered amended and restated business and property management agreements with RMR LLC which made similar amendments to their management agreements with RMR LLC.

· We entered a registration rights agreement with RMR Inc. covering the class A common stock of RMR Inc. that we received in the Up-C Transaction, pursuant to which we received demand and piggyback registration rights, subject to certain limitations. Each Other REIT entered into a similar registration rights agreement with RMR Inc.

· We entered into a lock up and registration rights agreement with RMR Trust and Barry and Adam Portnoy pursuant to which RMR Trust and Barry and Adam Portnoy agreed not to transfer the 700,000common shares RMR Trust received in the Up-C Transaction for a period of 10 years and we granted them certain registration rights, subject to certain limited exceptions. Each Other REIT also entered into a similar lock up and registration rights agreement with RMR Trust and Barry and Adam Portnoy.

As a result of the Up-C Transaction: RMR LLC became a subsidiary of RMR Inc.; RMR Inc. became the managing member of RMR LLC; through our ownership of class A common stock of RMR Inc., we currently have an indirect 5.0% economic interest in RMR LLC; through their ownership of class A common stock of RMR Inc., HPT, SIR and SNH currently have an indirect 16.2%, 10.2% and 17.0%, economic interest in RMR LLC, respectively; and RMR Trust through its ownership of 1,000,000 shares of class B-1 common stock of RMR Inc., 15,000,000 shares of class B-2 common stock of RMR Inc. and 15,000,000 class A membership units of RMR LLC currently directly and indirectly has a 51.6% economic interest in RMR LLC and controls 91.4% of the voting power of outstanding capital stock of RMR Inc.

Pursuant to the transaction agreements, we and each Other REIT agreed to distribute approximately half of the shares ofclass A common stock of RMR Inc. received in the Up-C Transaction to our respective shareholders as a special distribution, and RMR Inc. agreed to facilitate this distribution by filing a registration statement with the SEC to

12

GOVERNMENT PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

(unaudited)

register the shares of class A common stock of RMR Inc. to be distributed and by seeking a listing of those shares on a national stock exchange upon the registration statement being declared effective by the SEC.  The distribution of class A common stock of RMR Inc. that we and the Other REITs have agreed to make to our and the Other REITs’ shareholders will be made only after a registration statement, including a prospectus, is declared effective by the SEC.

Amendment and Restatement of Management Agreements with RMR LLC: As part of the Up-C Transaction, on June 5, 2015, we and RMR LLC entered into an amended and restated business management agreement, or the amended business management agreement, which amended and restated our previous business management agreement with RMR LLC, and an amended and restated property management agreement, or the amended property management agreement, which amended and restated our previous property management agreement with RMR LLC. Our amended business management agreement and amended property management agreement are referred to together in this Note as our amended management agreements. Our amended management agreements were effective as of June 5, 2015.

Our amended management agreements have terms that end on December 31, 2035, and automatically extend on December 31st of each year for an additional year, so that the terms of the agreements thereafter end on the 20th anniversary of the date of the extension. We have the right to terminate each amended management agreement: (i) at any time on 60 days’ written notice for convenience, (ii) immediately upon written notice for cause, as defined therein, (iii) on 60 days’ written notice given within 60 days after the end of any 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 amended management agreements for good reason, as defined therein.

If we terminate one or both of our amended management agreements for convenience, or if RMR LLC terminates one or both of our amended 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 amended management agreement(s) for the remaining term. If we terminate one or both of our amended management agreements for a performance reason, as defined therein, we have agreed to pay RMR LLC the termination fee calculated as described above, but assuming a remaining term of 10 years.We are not required to pay any termination fee if we terminate our amended management agreements for cause or as a result of a change of control of RMR LLC.

Accounting for Investment in RMR Inc.: On June 5, 2015, we acquired 1,541,201 shares of class A common stock, or 9.6%, of RMR Inc. for $17,462.  We have concluded, for accounting purposes, that the consideration paid for this investment in RMR Inc.’s shares of class A common stock represented a discount to the fair value of these shares.  We account for this investment under the cost method of accounting and have recorded this investment at fair value of $39,833 as of June 5, 2015 using Level 3 inputs as defined in the fair value hierarchy under GAAP.  As a result, we have recorded other liabilities of $22,371.  Our investment is included in other assets in our condensed consolidated balance sheet and the carrying value of our investment is $42,384, including transaction costs as of June 30, 2015.  The other liabilities for these securities is included in accounts payable and other liabilities in our condensed consolidated balance sheet and is being amortized on a straight line basis over the 20 year life of the business and property management agreements with RMR LLC as an allocated reduction to business management fees and property management fees, which are included in general and administrative and other operating expenses, respectively, in our condensed consolidated statements of comprehensive income.  Amortization of the other liabilities, included in general and administrative expense and other operating expenses for the three months ended June 30, 2015, totaled $36 and $29, respectively.

RMR LLC Management Fees and Reimbursements: We recognized business management fees of $2,512 and $2,534 for the three months ended June 30, 2015 and 2014, respectively, and $5,073 and $4,935 for the six months ended June 30, 2015 and 2014, respectively. The business management fees we recognized for the 2015 and 2014 periods are included in general and administrative expenses in our condensed consolidated financial statements.In accordance with the terms of our previous business management agreement, we issued 23,222 and 16,318 of our common shares to RMR LLC for the six months ended June 30, 2015 and 2014, respectively, as payment for portions of

13

GOVERNMENT PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

(unaudited)

the base business management fees we recognized for those periods.Our amended business management agreement requires that 100% of the management fee due to RMR LLC be paid by us in cash.

Pursuant to our property management agreement with RMR LLC, the property management fees, including construction supervision fees,we recognized were $1,887 and $1,985 for the three months ended June 30, 2015 and 2014, respectively and $3,902 and $3,939 for the six months ended June 30, 2015 and 2014, respectively. These amounts are included in operating expenses or have been capitalized, as appropriate, in our condensed consolidated financial statements.

Pursuant to our previous and amended management agreements with RMR LLC, we are responsible for paying all of the property level operating costs which costs are generally incorporated into rents charged to our tenants, including certain payroll and related costs incurred by RMR LLC.  The total of those property management related reimbursements paid to RMR LLC for the three months ended June 30, 2015 and 2014 were $2,128 and $2,264 respectively, and $5,233 and $3,936 for the six months ended June 30, 2015 and 2014, respectively, and these amounts are included in property operating expenses in our condensed consolidated financial statements for these periods.  In addition, we have historically awarded share grants to certain RMR LLC employees under our equity compensation plan and we accrue estimated amounts for such share grants based upon historical practices throughout the year.  The amounts accrued for share grants to RMR LLC employees were $57 and $80, for the three months ended June 30, 2015 and 2014, respectively, and $313 and $349 for the six months ended June 30, 2015 and 2014, respectively, and these amounts are included in our general and administrative expenses for these periods.

Leases with RMR LLC: We lease office space to RMR LLC in certain of our properties for its property management offices.  Pursuant to our lease agreements with RMR LLC, we earned rental income from RMR LLC for leased office space of approximately $153 and $14 for the three months ended June 30, 2015 and 2014, respectively, and approximately $167 and $33 for the six months ended June 30, 2015 and 2014, respectively.

SIR:  On February 28, 2015, we entered into a share purchase agreement, or the GOV Purchase Agreement, with Lakewood Capital Partners, LP, or Lakewood, the other persons who are members of a group with Lakewood, or, together with Lakewood, the Lakewood Parties, and, for the purpose of specified sections, SIR, pursuant to which, on March 4, 2015, we acquired 3,418,421 common shares of SIR from Lakewood for a cash purchase price equal to approximately $95,203.  On February 28, 2015, the SIR common shares that we acquired pursuant to the GOV Purchase Agreement represented approximately 3.9% of SIR’s outstanding common shares.  We funded our acquisition of these SIR common shares with cash on hand and borrowings under our revolving credit facility.  After this purchase and as of June 30, 2015, we owned 24,918,421 SIR common shares, or approximately 27.9% of SIR’s total outstanding common shares.

The GOV Purchase Agreement contains (i) standstill provisions, pursuant to which the Lakewood Parties agreed not to take certain actions with respect to our securities, or those of SIR, for a 50-year period and (ii) voting provisions, pursuant to which the Lakewood Parties agreed to cause our securities, or those of SIR, that they or any of their affiliates own as of a record date for a meeting of our or SIR’s shareholders to be present and voted at such meeting in favor of all actions recommended by the board of trustees of such company.

On February 28, 2015, our Managing Trustees, Messrs. Barry and Adam Portnoy, entered into separate share purchase agreements with the Lakewood Parties, with provisions similar to the GOV Purchase Agreement, including the per share purchase price, pursuant to which, on March 4, 2015, Messrs. Barry Portnoy and Adam Portnoy acquired 107,606 and 87,606 SIR common shares, respectively, from Lakewood and, on March 5, 2015, Messrs. Barry Portnoy and Adam Portnoy acquired 2,429 and 2,429 SIR common shares, respectively, from Mr. William H. Lenehan, one of the Lakewood Parties.  Concurrently with entering into the agreements among us, Messrs. Barry Portnoy and Adam Portnoy and the Lakewood Parties, Lakewood withdrew its nomination of Mr. Lenehan for election to SIR’s board of trustees at SIR’s 2015 annual meeting of shareholders.

14

GOVERNMENT PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

(unaudited)

AIC:  As of June 30, 2015, our investment in Affiliates Insurance Company, or AIC, an Indiana insurance company, had a carrying value of $7,022, which amount is included in other assets on our condensed consolidated balance sheet.  We recognized income of $22 and $118 related to our investment in AIC for the three months ended June 30, 2015 and 2014, respectively, and $95 and $21 for the six months ended June 30, 2015 and 2014, respectively.  Our other comprehensive income includes unrealized gains (losses) on securities held for sale which are owned by AIC of ($64) and $22 for the three months ended June 30, 2015 and 2014, respectively, and ($19) and $41 for the six months ended June 30, 2015 and 2014, respectively.

In June 2015, we and the other shareholders of AIC renewed our participation in an insurance program arranged by AIC.  In connection with that renewal, we purchased a three year combined property insurance policy providing $500,000 of coverage annually with the premium to be paid annually and a one year combined policy providing terrorism coverage of $200,000 for our properties which policies were arranged by AIC.  We currently expect to pay aggregate annual premiums, including taxes and fees, of approximately $1,282 in connection with these policies for the policy year ending June 30, 2016, and this amount may be adjusted from time to time as we acquire and dispose of properties that are included in this insurance program.

Note 11.   Equity Investment in Select Income REIT

As described in Notes 8 and 10, as of June 30, 2015, we owned 24,918,421, or approximately 27.9%, of the then outstanding SIR common shares.  SIR is a REIT that is primarily focused on owning and investing in net leased, single tenant properties. 

We account for our investment in SIR under the equity method. Under the equity method, we record our proportionate share of SIR’s net income as equity in earnings of an investee in our condensed consolidated statements of comprehensive income. For the three and six months ended June 30, 2015, we recorded $8,249 and $10,425 of equity in the earnings of SIR, respectively.

During the three and six months ended June 30, 2015, SIR issued 915,853 and 29,368,890 common shares, respectively.  We recognized a loss on issuance of shares by SIR of $1,353 and $42,124, respectively, during the three and six months ended June 30, 2015as a result of the per share issuance price of these SIR common shares being below the average per share carrying value of our SIR common shares.

We periodically evaluate our equity investment in SIR 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 SIR, 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.  In performing our periodic evaluation of other than temporary impairment of our investment in SIR as of June 30, 2015, we determined, based on the length of time and the extent to which the market value of our SIR investment has been below our carrying value, that the decline in fair value is other than temporary.  Accordingly, we recorded a $203,297 loss on impairment to reduce the carrying value of our SIR investment to its estimated fair value of $514,316 as of June 30, 2015.  We estimated fair value using the closing price of SIR common shares on the NYSE on that day.

The cost of our investments in SIR exceeded our proportionate share of SIR’s total shareholders’ equity book value on their dates of acquisition by an aggregate of $166,272. As required under GAAP, we were amortizing this difference to equity in earnings of investees over the average remaining useful lives of the real estate assets and intangible assets and liabilities owned by SIR as of the respective dates of our acquisition.  This amortization decreased our equity in the earnings of SIR by $2,177 and $4,742 for the three and six months ended June 30, 2015, respectively.  Our recording the impairment charge has resulted in the carrying value of our SIR investment to be less than our proportionate share of SIR’s total shareholders’ book equity as of June 30, 2015.  As a result, the previous basis

15

GOVERNMENT PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

(unaudited)

difference was eliminated and, as of June 30, 2015, a basis difference of ($95,089) will be amortized to earnings over the estimated remaining useful lives of the real estate assets and intangible assets and liabilities owned by SIR.

During the three and six months ended June 30, 2015, we received cash distributions from SIR totaling $8,582 and $22,112, respectively.

The following summarized financial data of SIR as reported in SIR’s Quarterly Report on Form 10-Q for the three and six months ended June 30, 2015, or the SIR Quarterly Report, includes the results of operations for periods prior to July 9, 2014 (the date on which we acquired our initial interest in SIR). References in our financial statements to the SIR Quarterly Report are included as references to the source of the data only, and the information in the SIR Quarterly Report is not incorporated by reference into our financial statements.

Condensed Consolidated Balance Sheets:

	June 30,		December 31,
	2015		2014
Real estate properties, net	$	3,883,995	$	1,772,510
Acquired real estate leases, net		503,484		120,700
Cash and cash equivalents		22,709		13,504
Rents receivable, net		82,043		68,385
Other assets, net		129,186		18,132
Total assets	$	4,621,417	$	1,993,231
Revolving credit facility	$	143,000	$	77,000
Term loan		350,000		350,000
Senior notes		1,434,560		-
Mortgage notes payable		287,138		18,816
Assumed real estate lease obligations, net		89,842		26,475
Other liabilities		129,124		40,493
Noncontrolling interest		3,323		-
Shareholders' equity		2,184,430		1,480,447
Total liabilities and shareholders' equity	$	4,621,417	$	1,993,231

16

GOVERNMENT PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

(unaudited)

Condensed Consolidated Statements of Income:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Rental income	$	92,166	$	48,465	$	172,644	$	93,528
Tenant reimbursements and other income		15,048		8,092		28,985		16,057
Total revenues		107,214		56,557		201,629		109,585
Operating expenses		18,820		9,985		36,184		19,964
Depreciation and amortization		32,390		10,495		57,109		19,789
Acquisition related costs		779		136		21,318		374
General and administrative		6,368		2,198		13,160		7,374
Total expenses		58,357		22,814		127,771		47,501
Operating income		48,857		33,743		73,858		62,084
Interest expense		(19,497)		(3,634)		(33,676)		(6,992)
Gain (loss) on early extinguishment of debt		—		—		(6,845)		243
Income before income tax expense and equity in earnings of an investee		29,360		30,109		33,337		55,335
Income tax expense		(195)		(19)		(226)		(90)
Equity in earnings of an investee		23		118		95		21
Net income		29,188		30,208		33,206		55,266
Net income allocated to noncontrolling interest		(48)		-		(89)		-
Net income attributed to SIR	$	29,140	$	30,208	$	33,117	$	55,266
Weighted average common shares outstanding (basic)		88,617		54,136		84,078		51,991
Weighted average common shares outstanding (diluted)		88,631		54,190		84,090		52,071
Basic and diluted net income attributed to SIR per common share	$	0.33	$	0.56	$	0.39	$	1.06

17

GOVERNMENT PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

(unaudited)

Note 12.   Segment Information

We operate in two separate reportable business segments: ownership of properties that are primarily leased to government tenants and our equity method investment in SIR.

	Three months ended June 30, 2015
	Investment		Investment
	in Real Estate		in SIR		Corporate		Consolidated
Rental income	$	62,113	$	—	$	—	$	62,113
Expenses:
Real estate taxes		7,674		—		—		7,674
Utility expenses		4,023		—		—		4,023
Other operating expenses		12,168		—		—		12,168
Depreciation and amortization		17,299		—		—		17,299
Acquisition related costs		183		—		—		183
General and administrative		—		—		3,713		3,713
Total expenses		41,347		—		3,713		45,060
Operating income (loss)		20,766		—		(3,713)		17,053
Interest and other income		—		—		—		—
Interest expense		(2,282)		—		(7,173)		(9,455)
Loss on issuance of shares by SIR		—		(1,353)		—		(1,353)
Loss on impairment of SIR investment		—		(203,297)		—		(203,297)
Income (loss) from continuing operations before income taxes and
equity in earnings of investees		18,484		(204,650)		(10,886)		(197,052)
Income tax expense		—		—		(32)		(32)
Equity in earnings of investees		—		6,072		22		6,094
Income (loss) from continuing operations		18,484		(198,578)		(10,896)		(190,990)
Loss from discontinued operations		(173)		—		—		(173)
Net income (loss)	$	18,311	$	(198,578)	$	(10,896)	$	(191,163)

	Six months ended June 30, 2015
	Investment		Investment
	in Real Estate		in SIR		Corporate		Consolidated
Rental income	$	124,772	$	—	$	—	$	124,772
Expenses:
Real estate taxes		15,084		—		—		15,084
Utility expenses		8,594		—		—		8,594
Other operating expenses		24,378		—		—		24,378
Depreciation and amortization		34,514		—		—		34,514
Acquisition related costs		189		—		—		189
General and administrative		—		—		7,717		7,717
Total expenses		82,759		—		7,717		90,476
Operating income (loss)		42,013		—		(7,717)		34,296
Interest and other income		—		—		12		12
Interest expense		(14,208)		—		(4,549)		(18,757)
Loss on issuance of shares by SIR		—		(42,124)		—		(42,124)
Loss on impairment of SIR investment		—		(203,297)		—		(203,297)
Income (loss) from continuing operations before income taxes and
equity in earnings of investees		27,805		(245,421)		(12,254)		(229,870)
Income tax expense		—		—		(62)		(62)
Equity in earnings of an investee		—		5,683		95		5,778
Income (loss) from continuing operations		27,805		(239,738)		(12,221)		(224,154)
Loss from discontinued operations		(379)		—		—		(379)
Net income (loss)	$	27,426	$	(239,738)	$	(12,221)	$	(224,533)
	As of June 30, 2015
	Investment		Investment
	in Real Estate		in SIR		Corporate		Consolidated
Total Assets	$	1,654,104	$	514,316	$	69,155	$	2,237,575

18

GOVERNMENT PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

(unaudited)

	Three months ended June 30, 2014
	Investment		Investment
	in Real Estate		in SIR		Corporate		Consolidated
Rental income	$	62,428	$	—	$	—	$	62,428
Expenses:
Real estate taxes		7,166		—		—		7,166
Utility expenses		4,049		—		—		4,049
Other operating expenses		10,860		—		—		10,860
Depreciation and amortization		16,191		—		—		16,191
Acquisition related costs		671		—		—		671
General and administrative		—		—		4,111		4,111
Total expenses		38,937		—		4,111		43,048
Operating income (loss)		23,491		—		(4,111)		19,380
Interest and other income		—		—		8		8
Interest expense		(1,848)		—		(3,310)		(5,158)
Income (loss) from continuing operations before income taxes and
equity in earnings of investees		21,643		—		(7,413)		14,230
Income tax expense		—		—		(101)		(101)
Equity in earnings of an investee		—		—		118		118
Income (loss) from continuing operations		21,643		—		(7,396)		14,247
Income from discontinued operations		361		—		—		361
Net income (loss)	$	22,004	$	—	$	(7,396)	$	14,608

	Six months ended June 30, 2014
	Investment		Investment
	in Real Estate		in SIR		Corporate		Consolidated
Rental income	$	122,248	$	—	$	—	$	122,248
Expenses:
Real estate taxes		13,978		—		—		13,978
Utility expenses		9,745		—		—		9,745
Other operating expenses		21,901		—		—		21,901
Depreciation and amortization		31,618		—		—		31,618
Acquisition related costs		1,180		—		—		1,180
General and administrative		—		—		7,208		7,208
Total expenses		78,422		—		7,208		85,630
Operating income (loss)		43,826		—		(7,208)		36,618
Interest and other income		—		—		58		58
Interest expense		(3,175)		—		(6,510)		(9,685)
Income (loss) from continuing operations before income taxes and
equity in earnings of investees		40,651		—		(13,660)		26,991
Income tax expense		—		—		(123)		(123)
Equity in earnings of an investee		—		—		21		21
Income (loss) from continuing operations		40,651		—		(13,762)		26,889
Income from discontinued operations		2,909		—		—		2,909
Net income (loss)	$	43,560		—	$	(13,762)	$	29,798
	As of December 31, 2014
	Investment		Investment
	in Real Estate		in SIR		Corporate		Consolidated
Total Assets	$	1,714,130	$	680,137	$	33,348	$	2,427,615

19

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

The following information should be read in conjunction with our financial statements and accompanying notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2014, or our Annual Report.

OVERVIEW

We are a real estate investment trust, or REIT, organized under Maryland law. As of June 30, 2015, we owned 71 properties (91 buildings), excluding one property (one building) classified as discontinued operations.  Our properties are located in 31 states and the District of Columbia and contain approximately 10.7 million rentable square feet, of which 64.2% was leased to the U.S. Government, 20.2% was leased to 12 state governments, 1.7% was leased to the United Nations, an international intergovernmental organization, 8.2% was leased to various non-governmental organizations and 5.7% was available for lease. The U.S. Government, 12 state governments and the United Nations combined were responsible for 92.8% and 93.0% of our annualized rental income, as calculated below, as of June 30, 2015 and 2014, respectively.

As of June 30, 2015, we also owned 24,918,421 common shares, or approximately 27.9% of the outstanding common shares, of Select Income REIT, or SIR. SIR is a REIT that is primarily focused on owning and investing in net leased, single tenant properties.  See Notes 10 and 11 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information regarding our investment in SIR. We account for our investment in SIR under the equity method.

Property Operations

As of June 30, 2015, excluding one property (one building) classified as discontinued operations, 94.3% of our rentable square feet was leased, compared to 95.5% of our rentable square feet as of June 30, 2015.  Occupancy data for our properties as of June 30, 2015 and 2014 is as follows (square feet in thousands):

			Comparable
	All Properties(1)		Properties(2)
	June 30,		June 30,
	2015	2014	2015	2014
Total properties	71	71	67	67
Total buildings	91	91	86	86
Total square feet(3)	10,699	10,970	9,969	9,969
Percent leased(4)	94.3%	95.5%	94.0%	95.1%

(1) Based on properties we owned on June 30, 2015 and excludes one property (one building) classified as discontinued operations.

(2) Based on properties we owned on June 30, 2015 and which we owned continuously since January 1, 2014, and excludes one property (one building) classified as discontinued operations.  Our comparable properties increased from 63 properties (79 buildings) at June 30, 2014 as a result of our acquisition of five properties (eight buildings) during the year ended December 31, 2013 and the sale of one property (one building) from continuing operations during the six months ended June 30, 2015.

(3) Total square footage declined due to our sale of a property in February 2015.

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

The average annualized effective rental rate per square foot for our properties for the three and six months endedJune 30, 2015 and 2014 are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Average annualized effective rental rate per square foot(1):
All properties(2)	$	24.79	$	24.79	$	24.60	$	24.63
Comparable properties(3)	$	24.71	$	24.52	$	24.21	$	24.46

(1) Average annualized effective rental rate per square foot represents annualized total rental income during the period specified divided by the average rentable square feet leased during the period specified. Excludes one property (one building) classified as discontinued operations.

(2) Based on properties we owned on June 30, 2015 and excludes one property (one building) classified as discontinued operations.

(3) Based on properties we owned on June 30, 2015 and which we owned continuously since April 1, 2014 and January 1, 2014, respectively, and excludes one property (one building) classified as discontinued operations.

20

During the three and six months ended June 30, 2015 changes in rentable square feet leased and available for lease at our properties, excluding one property (one building) classified as discontinued operations, were as follows:

	Three Months Ended June 30, 2015			Six Months Ended June 30, 2015
		Available			Available
	Leased	for Lease	Total	Leased	for Lease	Total
Beginning of period	10,146,123	553,120	10,699,243	10,473,975	562,768	11,036,743
Changes resulting from:
Acquisition of properties	—	—	—	—	—	—
Disposition of a property	—	—	—	(337,500)	—	(337,500)
Lease expirations	(370,356)	370,356	—	(443,686)	443,686	—
Lease renewals(1)	288,968	(288,968)	—	351,099	(351,099)	—
New leases(1)	27,155	(27,155)	—	48,002	(48,002)	—
Remeasurements(2)	—	121	121	—	121	121
End of period	10,091,890	607,474	10,699,364	10,091,890	607,474	10,699,364

(1) Based on leases entered into during the three and six months ended June 30, 2015, respectively.

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

Leases at our properties, excluding one property (one building) classified as discontinued operations, totaling 370,356 and 443,686 rentable square feet expired during the three and six months ended June 30, 2015, respectively.  During the three and six months ended June 30, 2015 we entered into leases totaling 316,123 and 399,101 rentable square feet, respectively, which includes lease renewals of 288,968 and 351,099 rentable square feet, respectively.  The weighted (by rentable square feet) average rental rates for leases of 274,251 and 282,436 rentable square feet entered into with government tenants during the three and six months ended June 30, 2015increased by 1.7% and 1.1%,respectively,when compared to the weighted (by rentable square feet) average prior rents for the same space. The weighted (by rentable square feet) average rental rates for leases of 41,872 and 116,665 rentable square feet entered into with non-government tenants during the three and six months ended June 30, 2015increased by 3.2% and decreased by 2.5%, respectively, when compared to the weighted (by rentable square feet) average rental rates previously charged for the same space or, in the case of space acquired vacant, market rental rates for similar space in the building at the date of acquisition.

During the three and six months ended June 30, 2015, changes in effective rental rates per square foot achieved for new leases and lease renewals that commenced during the three and six months ended June 30, 2015, when compared to prior effective rental rates per square foot in effect for the same space (and excluding space acquired vacant) were as follows:

	Three Months Ended June 30, 2015					Six Months Ended June 30, 2015
	Old Effective		New Effective			Old Effective		New Effective
	Rent Per		Rent Per		Rentable	Rent Per		Rent Per		Rentable
	Square Foot(1)		Square Foot(1)		Square Feet	Square Foot(1)		Square Foot(1)		Square Feet
New leases	$	21.36	$	21.72	27,155	$	24.47	$	19.50	48,002
Lease renewals	$	19.47	$	19.92	288,968	$	20.43	$	20.58	351,099
Total leasing activity	$	19.62	$	20.06	316,123	$	20.90	$	20.46	399,101

(1) 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 three and six months ended June 30, 2015, commitments made for expenditures, such as tenant improvements and leasing costs, in connection with leasing space at ourproperties were as follows:

	Government		Non-Government
Three Months Ended June 30, 2015	Leases		Leases		Total
Rentable square feet leased during the period		274,251		41,872		316,123
Tenant leasing costs and concession commitments (in 000’s) (1)	$	4,012	$	1,225	$	5,237
Tenant leasing costs and concession commitments per rentable square foot(1)	$	14.63	$	29.26	$	16.57
Weighted (by square feet) average lease term (years)		11.7		6.2		10.9
Total leasing costs and concession commitments per rentable square foot per year(1)	$	1.26	$	4.74	$	1.52

21

		Government		Non-Government
Six Months Ended June 30, 2015		Leases		Leases	Total
Rentable square feet leased during the period		282,436		116,665		399,101
Tenant leasing costs and concession commitments (in 000’s) (1)	$	4,236	$	3,247	$	7,483
Tenant leasing costs and concession commitments per rentable square foot(1)	$	15.00	$	27.83	$	18.75
Weighted (by square feet) average lease term (years)		11.5		7.2		10.2
Total leasing costs and concession commitments per rentable square foot per year(1)	$	1.31	$	3.85	$	1.83

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

During the three and six months ended June 30, 2015 and 2014, amounts capitalized at our properties, excluding properties classified as discontinued operations, for tenant improvements, leasing costs, building improvements and development and redevelopment activities were as follows (dollars in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Tenant improvements(1)	$	1,506	$	1,572	$	2,826	$	3,525
Leasing costs(2)	$	1,786	$	733	$	2,437	$	1,002
Building improvements(3)	$	1,193	$	891	$	1,941	$	2,995
Development, redevelopment and other activities(4)	$	221	$	902	$	221	$	1,001

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

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

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

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

According to Jones Lang LaSalle (JLL):after a slow first quarter of 2015, commercial real estate market fundamentals made a significant rebound by the close of the second quarter, with commercial leasing activity reaching its highest level in two years.  We believe that current government budgetary pressures may cause an increased demand for leased space by government tenants, as opposed to governments acquiring buildings or constructing new buildings. However, these same budgetary pressures could also result in a decrease in government employment, government tenants improving their space utilization or consolidation 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, relocation could become more prevalent if efforts by government tenants to improve their space utilization require significant reconfiguration of currently leased space. Accordingly, we are unable to reasonably project what the financial impact of market conditions or changing government financial circumstances will be on our financial results for future periods.

As of June 30, 2015, excluding one property (one building) classified as discontinued operations, we had leases totaling 871,359 rentable square feet that were scheduled to expire through June 30, 2016. As of July 28, 2015, tenants with leases totaling 190,044 rentable square feet, that are scheduled to expire through June 30, 2016, have notified us that they do not plan to renew their leases upon expiration and we can provide no assurance as to whether additional tenants may or may not renew their leases upon expiration.Based upon current market conditions and tenant negotiations for leases scheduled to expire through June 30, 2016, we expect that the rental rates we are likely to achieve on new or renewed leases for space under expiring leases through June 30, 2016 will, in the aggregate and on a weighted (by annualized revenues) average basis, be slightly higher than the rates currently being paid, thereby generally resulting in higher revenue from the same space. However, we can provide no assurance that the rental rates we expect will occur or that we will not experience material declines in our rental income due to vacancies upon lease expirations. Prevailing market conditions and government tenants' needs at the time we negotiate our leases will generally determine rental rates and demand for leased space in our properties; and market conditions and government tenants' needs are beyond our control. As of June 30, 2015, lease expirations at our properties, excluding one property (one building) classified as discontinued operations, by year are as follows (dollars in thousands):

22

	Number	Expirations			Annualized
	of	of Leased		Cumulative	Rental			Cumulative
	Tenants	Square	Percent	Percent	Income		Percent	Percent
Year(1)	Expiring	Feet(2)	of Total	of Total	Expiring(3)		of Total	of Total
2015	36	472,930	4.7%	4.7%	$	8,745	3.6%	3.6%
2016	42	1,034,356	10.2%	14.9%		35,391	14.7%	18.3%
2017	37	670,504	6.6%	21.5%		13,930	5.8%	24.1%
2018	39	1,160,424	11.5%	33.0%		31,730	13.2%	37.3%
2019	34	1,861,354	18.4%	51.4%		46,416	19.3%	56.6%
2020	27	1,285,260	12.7%	64.1%		30,733	12.8%	69.4%
2021	14	868,670	8.6%	72.7%		16,847	7.0%	76.4%
2022	11	693,583	6.9%	79.6%		14,921	6.2%	82.6%
2023	11	537,910	5.3%	84.9%		12,403	5.1%	87.7%
2024 and thereafter	23	1,506,899	15.1%	100.0%		29,858	12.3%	100.0%
Total	274	10,091,890	100.0%		$	240,974	100.0%
Weighted average remaining lease term (in years)		5.0				4.7

(1) The year of lease expiration is pursuant to current contract terms. Some government tenants have the right to vacate their space before the stated expirations of their leases. As of June 30, 2015, government tenants occupying approximately 8.4% of our rentable square feet and responsible for approximately 7.5% of our annualized rental income as of June 30, 2015 have currently exercisable rights to terminate their leases before the stated terms of their leases expire. Also in 2015,  2016,  2017,  2018,  2019,  2020,  2022 and 2023, early termination rights become exercisable by other tenants who currently occupy an additional approximately 2.3%, 4.9%, 3.2%, 1.2%, 4.7%, 2.9%, 2.1% and 1.4% of our rentable square feet, respectively, and contribute an additional approximately 0.7%, 4.9%, 2.6%, 1.4%, 5.2%, 2.9%, 1.4% and 1.2% of our annualized rental income, respectively, as of June 30, 2015. In addition, as of June 30, 2015, 14 of our government 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 14 tenants occupy approximately 14.5% of our rentable square feet and contribute approximately 15.3% of our annualized rental income as of June 30, 2015.  

(2) Leased square feet is pursuant to leases existing as of June 30, 2015, 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.

(3) Annualized rental income is calculated using the annualized contractual base rents from our tenants pursuant to our lease agreements as of June 30, 2015, plus straight line rent adjustments and estimated recurring expense reimbursements to be paid to us, and excluding lease value amortization.

Acquisition and Disposition Activities (dollar amounts in thousands)

In June 2015, we entered into an agreement to acquire an office property (one building) located in Greensburg, PA with 82,889 rentable square feet for a purchase price of $14,300, excluding acquisition costs.  The property is 100% leased to the Commonwealth of Pennsylvania.Also, in July 2015, we entered into an agreement to acquire an office property (one building) located in Braintree, MA for $11,700, excluding acquisition costs.  This property is 100% leased to the Commonwealth of Massachusetts.  These pending acquisitions are subject to closing conditions; accordingly, we can provide no assurance that we will acquire these properties or that these acquisitions will not be delayed or that the acquisition terms will not change.

In February 2015, one of our U.S. Government tenants exercised its option to acquire the office property (one building) it leased from us located in Riverdale, MD with 337,500 rentable square feet. The sales price was $30,600, excluding closing costs. 

In May 2015, we began marketing for sale an office property (one building) located in Savannah, GA with 35,228 rentable square feet and a net book value of $3,072 as of June 30, 2015. 

In April 2014, we entered into an agreement to sell an office property (one building) located in Falls Church, VA with 164,746 rentable square feet and a net book value of $12,282 at June 30, 2015.  In May 2015, this agreement was terminated.  In July 2015, we entered into an agreement to sell this property to a different purchaser.  The contract sales price is$16,500, excluding closing costs.  The closing of this sale is currently expected to occur before year end 2015.  However, this sale is subject to conditions, and we can provide no assurance that we will sell this property or that this sale will not be delayed or that its terms will not change.

Our strategy related to property acquisitions and dispositions is materially unchanged from that disclosed in our Annual Report. We continue to explore and evaluate for possible acquisition additional properties that are majority leased to government tenants; however, we cannot assure that we will reach any agreement to acquire such properties, or that if we do reach any such agreement, that we will complete any acquisitions. Although we have not identified other properties for disposition, we expect to

23

periodically identify properties for sale based on future changes in market conditions, changes in property performance, our expectation regarding lease renewals or our plans with regard to particular properties. Our plans for particular properties and other strategic considerations may cause us to change our acquisition and disposition strategies, and we may do so at any time and without shareholder approval.

On March 4, 2015, we acquired 3,418,421 SIR common shares for a cash purchase price equal to $95,203, before acquisition related costs.

On June 5, 2015, we acquired 1,541,201 shares of Reit Management & Research Inc., or RMR Inc., for $17,462, excluding transaction costs.As payment for the RMR Inc. shares, we issued 700,000 of our common shares valued at $13,545 and paid the remainder of the purchase price in cash. Through our acquisition of the RMR Inc. shares, we indirectly acquired an economic ownership of 5.0% of our manager, Reit Management & Research LLC, or RMR LLC.  We have agreed to distribute approximately half of the RMR Inc. shares we acquired to our shareholders as a special distribution, and RMR Inc. agreed to facilitate this distribution by filing a registration statement with the Securities and Exchange Commission, or the SEC, to register those shares to be distributed and by seeking a listing of those shares on a national stock exchange.  We will not distribute our RMR Inc. shares until such a registration statement is declared effective by the SEC.

For more information about these transactions, see Notes 9,10, and 11 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which are incorporated herein by reference.

24

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

Three Months Ended June 30, 2015, Compared to Three Months Ended June 30, 2014

									Acquired Properties Results(2)				Disposed Property Results(3)
	Comparable Properties Results(1)								Three Months Ended				Three Months Ended				Consolidated Results
	Three Months Ended June 30,								June 30,				June 30,				Three Months Ended June 30,
						$	%															$	%
	2015		2014			Change	Change		2015		2014		2015		2014		2015		2014			Change	Change
Rental income	$	57,981	$	58,444	$	(463)	(0.8)	%	$	4,132	$	1,517	$	—	$	2,467	$	62,113	$	62,428	$	(315)	(0.5)	%
Operating expenses:
Real estate taxes		7,258		6,675		583	8.7	%		405		140		11		351		7,674		7,166		508	7.1	%
Utility expenses		3,829		3,964		(135)	(3.4)	%		94		42		100		43		4,023		4,049		(26)	(0.6)	%
Other operating expenses		11,404		10,375		1,029	9.9	%		786		149		(22)		336		12,168		10,860		1,308	12.0	%
Total operating expenses		22,491		21,014		1,477	7.0	%		1,285		331		89		730		23,865		22,075		1,790	8.1	%
Net operating income(4)	$	35,490	$	37,430	$	(1,940)	(5.2)	%	$	2,847	$	1,186	$	(89)	$	1,737		38,248		40,353		(2,105)	(5.2)	%
Other expenses:
Depreciation and amortization																		17,299		16,191		1,108	6.8	%
Acquisition related costs																		183		671		(488)	(72.7)	%
General and administrative																		3,713		4,111		(398)	(9.7)	%
Total other expenses																		21,195		20,973		222	1.1	%
Operating income																		17,053		19,380		(2,327)	(12.0)	%
Interest and other income																		—		8		(8)	(100)	%
Interest expense (including net amortization of debt premiums and discounts and deferred financing fees of $328 and $223, respectively)																		(9,455)		(5,158)		(4,297)	83.3	%
Loss on issuance of shares by SIR																		(1,353)		—		(1,353)	nm
Loss on impairment of SIR investment																		(203,297)		—		(203,297)	nm
Income (loss) from continuing operations before income taxes and equity in earnings of investees																		(197,052)		14,230		(211,282)	(1,484.8)	%
Income tax expense																		(32)		(101)		69	nm
Equity in earnings of investees																		6,094		118		5,976	5,064.4	%
Income (loss) from continuing operations																		(190,990)		14,247		(205,237)	(1,440.6)	%
Income (loss) from discontinued operations																		(173)		361		(534)	(147.9)	%
Net income (loss)																	$	(191,163)	$	14,608	$	(205,771)	(1,408.6)	%
Weighted average common shares outstanding (basic)																		70,485		54,659		15,826	29.0	%
Weighted average common shares outstanding (diluted)																		70,485		54,743		15,742	28.8	%
Per common share amounts (basic and diluted):
Income (loss) from continuing operations																	$	(2.71)	$	0.26	$	(2.97)	nm
Income (loss) from discontinued operations																	$	—	$	0.01	$	(0.01)	nm
Net income (loss)																	$	(2.71)	$	0.27	$	(2.98)	nm
Calculation of Funds From Operations and Normalized Funds From Operations(5)
Net income (loss)																	$	(191,163)	$	14,608
Plus: Depreciation and amortization																		17,299		16,191
Plus: FFO attributable to SIR investment																		17,287		—
Less: Equity in earnings from SIR																		(6,072)		—
Funds from operations																		(162,649)		30,799
Plus: Acquisition related costs																		183		671
Plus: Loss on issuance of shares by SIR																		1,353		—
Plus: Loss on impairment of SIR investment																		203,297		—
Plus: Normalized FFO attributable to SIR investment																		17,506		—
Less: FFO attributable to SIR investment																		(17,287)		—
Normalized funds from operations																	$	42,403	$	31,470
Funds from operations per common share (basic and diluted)																	$	(2.31)	$	0.56
Normalized funds from operations per common share (basic)																	$	0.60	$	0.58
Normalized funds from operations per common share (diluted)																	$	0.60	$	0.57

(1) Comparable properties consist of 68 properties (87 buildings) we owned on June 30, 2015 and which we owned continuously since April 1, 2014, and exclude one property (one building) classified as discontinued operations.

(2) Acquired properties consist of three properties (four buildings) we owned on June 30, 2015, and which we acquired during the period from April 1, 2014 to June 30, 2015.

(3) Disposed property consists of one property (one building) we sold during the six months ended June 30, 2015 that was not classified as discontinued operations.

(4) The calculation of net operating income, or NOI, excludes certain components of net income(loss) in order to provide results that are more closely related to our property level results of operations. We calculate NOI, as shown above. We define NOI as income from our rental of real estate less our property operating expenses. NOI excludes amortization of capitalized tenant improvement costs and leasing commissions. We consider NOI to be an appropriate supplemental measure to net income (loss) because it may help both investors and management to understand the operations of our properties. We use NOI to evaluate individual and company wide property level performance, and we believe that NOI provides useful information to investors regarding our results of operations because it reflects only those income and expense items that are incurred at the property level and may facilitate comparisons of our operating performance between periods and with other REITs. NOI does not represent cash generated by operating activities in accordance with U.S. generally accepted accounting principles, or GAAP, and should not be considered as an alternative to net income (loss), operating income or cash flow from operating activities, determined in accordance with GAAP, or as an indicator of our financial performance or liquidity, nor is this measure necessarily indicative of sufficient cash flow to fund all of our needs. This measure should be considered in conjunction with net income (loss), operating income and cash flow from operating activities as presented in our condensed consolidated statements of comprehensive income and condensed consolidated statements of cash flows. Other real estate companies and REITs may calculate NOI differently than we do.

(5) We calculate funds from operations, or FFO and normalized funds from operations, or Normalized FFO as shown above. FFO is calculated on the basis defined by The National Association of Real Estate Investment Trusts, or NAREIT, which is net income (loss), calculated in accordance with GAAP, plus real estate depreciation and amortization and the difference between FFO attributable to an equity investment and equity in earnings (losses) of an equity investeebut excluding impairment charges on real estate assets, carrying value adjustments of real estate assets held for sale, any gain or loss on sale of properties, as well as certain other adjustments currently not applicable to us. Our calculation of Normalized FFO differs from NAREIT's definition of FFO because we include the difference between FFO and 25

Normalized FFO attributable to our equity investment in SIR, we include business management incentive fees, if any, only in the fourth quarter versus the quarter they are recognized as expense in accordance with GAAP and we exclude acquisition related costs, loss on impairment of SIR investment and losses on issuance of shares by SIR. We consider FFO and Normalized FFO to be appropriate measures of operating performance for a REIT, along with net income (loss), operating income and cash flow from operating activities. We believe that FFO and Normalized FFO provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation expense, FFO and Normalized FFO may facilitate a comparison of our operating performance between periods and with other REITs. FFO and Normalized FFO are among the factors considered by our Board of Trustees when determining the amount of distributions to our shareholders. Other factors include, but are not limited to, requirements to maintain our status as a REIT, limitations in ourcredit facility and term loan agreement and public debt covenants, the availability of debt and equity capital, our expectation of our future capital requirements and operating performance, our receipt of distributions from SIR and our expected needs and availability of cash to pay our obligations. FFO and Normalized FFO do not represent cash generated by operating activities in accordance with GAAP and should not be considered as alternatives to net income (loss), operating income or cash flow from operating activities, determined in accordance with GAAP, or as indicators of our financial performance or liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs. These measures should be considered in conjunction with net income (loss), operating income and cash flow from operating activities as presented in our condensed consolidated statements of comprehensive income and condensed consolidated statements of cash flows. Other real estate companies and REITs may calculate FFO and Normalized FFO differently than we do.

We refer to the 68properties (87 buildings) we owned on June 30, 2015 and which we have owned continuously since April 1, 2014, excluding one property (one building) classified as discontinued operations, as comparable properties. We refer to the three properties (four buildings) that we owned as of June 30, 2015, which we acquired during the period from April 1, 2014 to June 30, 2015, as acquired properties. We refer to the property (one building) that we sold during the period from April 1, 2014 to June 30, 2015 that was not classified as discontinued operations, as the disposed property. Our condensed consolidated statements of comprehensive incomefor the three months ended June 30, 2015 include the operating results of three acquired properties (four buildings) for the entire period, as we acquired those three properties (four buildings) prior to March 31, 2015 and excludes the operating results of one disposed property (one building) for the entire period, as that property was sold in February 2015.  Our condensed consolidated statements of comprehensive income for the three months ended June 30, 2014 include the operating results of two acquired properties (three buildings) for less than the entire period, as we acquired those propertiesduring that period, and one disposed property (one building) for the entire period, as we sold that property after that period.

References to changes in the income and expense categories below relate to the comparison of consolidated results for the three month period ended June 30, 2015, compared to the three month period ended June 30, 2014.

Rental income. The decrease in rental income reflects the net effect of acquired and disposed properties and a decrease in rental income for comparable properties. Rental income increased $350 from properties acquired after June 30, 2014 and $2,265 from the properties acquired during the 2014 period. Rental income declined $2,467 from the property sold in February 2015.  Rental income for comparable properties declined $463 due primarily to decreases in occupied space at certain of our properties in the 2015 period. Rental income includes non-cash straight line rent adjustments totaling $1,544 in the 2015 period and $1,101 in the 2014 period, and amortization of acquired leases and assumed lease obligations totaling ($286) in the 2015 period and ($215) in the 2014 period.

Real estate taxes. The increase in real estate taxes reflects the net effect of acquired and disposed properties and an increase in real estate taxes for comparable properties. Real estate taxes increased $42 from properties acquired after June 30, 2014 and $223 from the properties acquired during the 2014 period. Real estate taxes declined $340 for the property sold in February 2015. Real estate taxes for comparable properties increased $583 due primarily to the effect of higher tax assessments at certain of our properties in the 2015 period.

Utility expenses. The decrease in utility expenses reflectsthe net effect of acquired and disposed properties and a decrease in utility expenses for comparable properties. Utility expenses increased $5 from properties acquired after June 30, 2014and $47 from the properties acquired during the 2014 period.  Utility expense increased $57 from the property sold in February 2015. Utility expenses at comparable properties declined $135 due primarily to a decline in usage due to certain tenant vacancies.

Other operating expenses. Other operating expenses consist of property management fees, salaries and benefit costs of property level personnel, repairs and maintenance expense, cleaning expense and other direct costs of operating our properties. The increase in other operating expenses reflects the net effect of acquired and disposed properties and an increase in expenses for comparable properties. Other operating expenses increased $50 from properties acquired after June 30, 2014 and $587 from the properties acquired during the 2014 period.Other operating expenses declined $358 from the property sold in February 2015.  Other operating expenses at comparable properties increased $1,029 primarily as a result of increases in salaries and benefit costs and repair and maintenance costs at certain of our properties, partially offset by decreases in property insurance expense during the 2015 period.

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Depreciation and amortization. The increase in depreciation and amortization reflects the net effect of property acquisitions and dispositions and improvements made to certain of our properties since April 1, 2014. Depreciation and amortization increased $133 from properties acquired after June 30, 2014 and $1,460 from the properties acquired during the 2014 period. Depreciation and amortization declined $752 from the property sold in February 2015. Depreciation and amortization at comparable properties increased$267 due primarily to depreciation and amortization of improvements made to certain of our properties after April 1, 2014, partially offset by certain depreciable leasing related assets becoming fully depreciated in 2014 and 2015.

Acquisition related costs. Acquisition related costs in both the 2015 and 2014 periods include legal and due diligence costs incurred in connection with our property acquisitions and other investment activity.

General and administrative. General and administrative expenses consist of fees pursuant to our business management agreement with RMR LLC, equity compensation expense, legal and accounting fees, Trustees’ fees and expenses, securities listing and transfer agency fees and other costs relating to our status as a publicly traded company. The decrease in general and administrative expenses primarily reflects the decrease in legal fees and other professional service costs during the 2015 period.

Interest and other income.The decrease in interest and other income is primarily the result of a smaller amount of investable cash in the 2015 period compared to the 2014 period.

Interest expense. The increase in interest expense reflects higher average outstanding debt balances and higher weighted average interest rates on those borrowings during the 2015 period compared to the 2014 period.

Loss on issuance of shares by SIR. Loss on issuance of shares by SIR is a result of the issuance of common shares by SIR during the 2015 period at prices below the per share carrying value of our SIR common shares.

Loss on impairment of SIR investment.We recorded a $203,297 loss on impairment in the 2015 period to reduce the carrying value of our SIR investment to its estimated fair value of $514,316as of June 30, 2015.  We estimated fair value using the closing price of SIR common shares on the New York Stock Exchange, or the NYSE,on that day.

Income tax expense. The decrease in income tax expense reflects lower operating income in certain jurisdictions in the 2015 period compared to the 2014 period.

Equity in earnings of investees. Equity in earnings of investees represents our proportionate share of earnings from our investment in Affiliates Insurance Company, or AIC, and in SIR for the 2015 period and amortization of the excess of the cost of our SIR investment over our proportionate share of SIR’s total shareholders’ equity book value as of the dates of acquisition.

Income (loss) from discontinued operations. Income (loss) from discontinued operations reflects operating results for one property (one building) sold during the three months ended September 30, 2014 and one property (one building)included in discontinued operations and held for sale as of June 30, 2015.

Net income (loss).We experienced a net loss in the 2015 period compared to net income in the 2014 period as a result of the changes noted above.

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

Six Months Ended June 30, 2015, Compared to Six Months Ended June 30, 2014

									Acquired Properties Results(2)				Disposed Property Results(3)
	Comparable Properties Results(1)								Six Months Ended				Six Months Ended				Consolidated Results
	Six Months Ended June 30,								June 30,				June 30,				Six Months Ended June 30,
						$	%															$	%
	2015		2014			Change	Change		2015		2014		2015		2014		2015		2014			Change	Change
Rental income	$	114,012	$	115,160	$	(1,148)	(1.0)	%	$	9,227	$	2,161	$	1,533	$	4,927	$	124,772	$	122,248	$	2,524	2.1	%
Operating expenses:
Real estate taxes		14,062		13,084		978	7.5	%		820		192		202		702		15,084		13,978		1,106	7.9	%
Utility expenses		8,315		9,242		(927)	(10.0)	%		181		65		98		438		8,594		9,745		(1,151)	(11.8)	%
Other operating expenses		22,331		20,928		1,403	6.7	%		1,705		244		342		729		24,378		21,901		2,477	11.3	%
Total operating expenses		44,708		43,254		1,454	3.4	%		2,706		501		642		1,869		48,056		45,624		2,432	5.3	%
Net operating income(4)	$	69,304	$	71,906	$	(2,602)	(3.6)	%	$	6,521	$	1,660	$	891	$	3,058		76,716		76,624		92	0.1	%
Other expenses:
Depreciation and amortization																		34,514		31,618		2,896	9.2	%
Acquisition related costs																		189		1,180		(991)	(84.0)	%
General and administrative																		7,717		7,208		509	7.1	%
Total other expenses																		42,420		40,006		2,414	6.0	%
Operating income																		34,296		36,618		(2,322)	(6.3)	%
Interest and other income																		12		58		(46)	(79)	%
Interest expense (including net amortization of debt premiums and discounts and deferred financing fees of $660 and $553, respectively)																		(18,757)		(9,685)		(9,072)	93.7	%
Loss on issuance of shares by SIR																		(42,124)		—		(42,124)	nm
Loss on impairment of SIR investment																		(203,297)		—		(203,297)	nm
Income (loss) from continuing operations before income taxes and equity in earnings of investees																		(229,870)		26,991		(256,861)	(951.7)	%
Income tax expense																		(62)		(123)		61	nm
Equity in earnings of investees																		5,778		21		5,757	nm
Income (loss) from continuing operations																		(224,154)		26,889		(251,043)	(933.6)	%
Income (loss) from discontinued operations																		(379)		2,909		(3,288)	(113.0)	%
Net income (loss)																	$	(224,533)	$	29,798	$	(254,331)	(853.5)	%
Weighted average common shares outstanding (basic)																		70,377		54,649		15,728	28.8	%
Weighted average common shares outstanding (diluted)																		70,377		54,734		15,643	28.6	%
Per common share amounts (basic and diluted):
Income (loss) from continuing operations																	$	(3.19)	$	0.49	$	(3.68)	nm
Income (loss) from discontinued operations																	$	(0.01)	$	0.05	$	(0.06)	nm
Net income (loss) (basic)																	$	(3.19)	$	0.55	$	(3.74)	nm
Net income (loss) (diluted)																	$	(3.19)	$	0.54	$	(3.73)	nm
Calculation of Funds From Operations and Normalized Funds From Operations(5)
Net income (loss)																	$	(224,533)	$	29,798
Plus: Depreciation and amortization																		34,514		31,618
Plus: FFO attributable to SIR investment																		26,181		—
Less: Equity in earnings  from SIR																		(5,683)		—
Less: Increase in carrying value of asset held for sale																		—		(2,344)
Funds from operations																		(169,521)		59,072
Plus: Acquisition related costs																		189		1,180
Plus: Loss on issuance of shares by SIR																		42,124		—
Plus: Loss on impairment of SIR investment																		203,297		—
Plus: Normalized FFO attributable to SIR investment																		33,284		—
Less: FFO attributable to SIR investment																		(26,181)		—
Normalized funds from operations																	$	83,192	$	60,252
Funds from operations per common share (basic and diluted)																	$	(2.41)	$	1.08
Normalized funds from operations per common share (basic and diluted)																	$	1.18	$	1.10

(1) Comparable properties consist of 67 properties (86 buildings) we owned on June 30, 2015 and which we owned continuously since January 1, 2014, and exclude one property (one building) classified as discontinued operations.

(2) Acquired properties consist of four properties (five buildings) we owned on June 30, 2015, and which we acquired during the period from January 1, 2014 to June 30, 2015.

(3) Disposed property consists of one property (one building) we sold during the period from January 1, 2015 to June 30, 2015.

(4) See footnote (4) on page 24 for a definition of NOI.

(5) See footnote (5) on page 24 for a definition of FFO and Normalized FFO.

We refer to the 67 properties (86 buildings) we owned on June 30, 2015 and which we have owned continuously since January 1, 2014, excluding one property (one building) classified as discontinued operations, as comparable properties. We refer to the four properties (five buildings) that we owned as of June 30, 2015, which we acquired during the period from January 1, 2014 to June 30, 2015, as acquired properties. We refer to the property (one building) that we sold during the period from January 1, 2015 to June 30, 2015 that was not classified as discontinued operations, as the disposed property. Our condensed consolidated statements of comprehensive income for the six months ended June 30, 2015 include the operating results of four acquired properties (five buildings) for the entire period, as we acquired those properties prior to January 1, 2015, and one disposed property (one building) for less than the entire period, as that

28

property was sold during the 2015 period. Our condensed consolidated statements of comprehensive income for the six months ended June 30, 2014 include the operating results of three acquired properties (four buildings) for less than the entire period, as we acquired those three properties (four buildings) during that period, and one disposed property (one building) for the entire period, as we sold that property after that period.

References to changes in the income and expense categories below relate to the comparison of consolidated results for the six month period ended June 30, 2015, compared to the six month period ended June 30, 2014.

Rental income. The increase in rental income reflects the net effect of acquired and disposed properties offset by a decrease in rental income for comparable properties. Rental income increased $684 from properties acquired after June 30, 2014 and $6,382 from the properties acquired during the 2014 period. Rental income declined $3,394 from the property sold during the 2015 period. Rental income for comparable properties declined $1,148 due primarily to decreases in occupied space at certain of our properties in the 2015 period. Rental income includes non-cash straight line rent adjustments totaling $2,207 in the 2015 period and $2,243 in the 2014 period, and amortization of acquired leases and assumed lease obligations totaling ($564) in the 2015 period and ($405) in the 2014 period.

Real estate taxes. The increase in real estate taxes reflects the net effect of acquired and disposed properties and an increase in real estate taxes for comparable properties. Real estate taxes increased $80 from properties acquired after June 30, 2014 and $548 from the properties acquired during the 2014 period. Real estate taxes declined $500 from the property sold during the 2015 period. Real estate taxes for comparable properties increased $978 due primarily to the effect of higher tax assessments at certain of our properties in the 2015 period.

Utility expenses. The decrease in utility expenses primarily reflects the net effect of acquired and disposed properties  and a decrease in utility expenses for comparable properties. Utility expenses increased $6 from properties acquired after June 30, 2014 and $110 from the properties acquired during the 2014 period.  Utility expense declined $340 from the property sold during the 2015 period. Utility expenses at comparable properties declined $927 due primarily to colder than normal temperatures experienced in certain parts of the United States during the winter of 2014.

Other operating expenses. The increase in other operating expenses reflects the net effect of acquired and disposed properties and an increase in expenses for comparable properties. Other operating expenses increased $87 from properties acquired after June 30, 2014 and $1,374 from the properties acquired during the 2014 period. Other operating expenses declined $387 from the property sold during the 2015 period. Other operating expenses at comparable properties increased $1,403 primarily as a result of increases in repair and maintenance costs at certain of our properties, partially offset by decreases in property insurance expense during the 2015 period.

Depreciation and amortization. The increase in depreciation and amortization reflects the net effect of property acquisitions and dispositions and improvements made to certain of our properties since January 1, 2014. Depreciation and amortization increased $266 from properties acquired after June 30, 2014 and $3,907 from the property acquired during the 2014 period. Depreciation and amortization declined $1,516 from the property sold during the 2015 period. Depreciation and amortization at comparable properties increased $239, due primarily to depreciation and amortization of improvements made to certain of our properties after January 1, 2014, partially offset by certain depreciable leasing related assets becoming fully depreciated in 2014 and 2015.

Acquisition related costs. Acquisition related costs in both the 2015 and 2014 periods include legal and due diligence costs incurred in connection with our property acquisitions and other investment activity.

General and administrative. The increase in general and administrative expenses primarily reflects the increase in amounts due under our business management agreement as a result of our net property acquisitions since January 1, 2014 and an increase in other professional services during the 2015 period.

Interest and other income. The decrease in interest and other income is primarily the result of a smaller amount of investable cash in the 2015 period compared to the 2014 period.

Interest expense. The increase in interest expense reflects higher average outstanding debt balances and higher weighted average interest rates on those borrowings during the 2015 period compared to the 2014 period.

29

Loss on issuance of shares by SIR. Loss on issuance of shares by SIR is a result of  the issuance of common shares by SIR during the 2015 period at prices below the per share carrying value of our SIR common shares.

Loss on impairment of SIR investment.We recorded a $203,297 loss on impairment in the 2015 period to reduce the carrying value of our SIR investment to its estimated fair value of $514,316as of June 30, 2015.  We estimated fair value using the closing price of SIR common shares on the NYSE on that day.

Income tax expense. The decrease in income tax expense reflects lower operating income in certain jurisdictions in the 2015 period compared to the 2014 period.

Equity in earnings of investees. Equity in earnings of investees represents our proportionate share of earnings from our investment in AICand in SIR for the 2015 period and amortization of the excess of the cost of our SIR investment over our proportionate share of SIR’s total shareholders’ equity book value as of the dates of acquisition.

Income (loss) from discontinued operations. Income (loss) from discontinued operations reflects operating results of one property (one building) sold during the 2014 period, one property (one building) sold during the three months ended September 30, 2014 and one property (one building)included in discontinued operations and held for sale as of June 30, 2015. Income (loss) from discontinued operations includes a $2,344 increase in the carrying value of an asset held for sale in the 2014 period.

Net income (loss). We experienced a net loss in the 2015 period compared to net income in the 2014 period as a result of the changes noted above.

LIQUIDITY AND CAPITAL RESOURCES

Our Operating Liquidity and Resources (dollar amounts in thousands)

Our principal source of funds to meet operating expenses and debt service obligations and pay distributions on our common shares is the operating cash flow we generate from the rental income from our properties and the distributions we receive from our investment in SIR. We believe that our operating cash flow will be sufficient to meet our operating expenses and debt service obligations and pay distributions on our common shares 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 cost increases at our properties;

· 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

· our receipt of distributions from our investment in SIR.

Our future purchases of properties cannot be accurately projected because such purchases depend upon available opportunities which come to our attention and upon our ability to successfully acquire and operate such properties.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 six months ended June 30, 2015 compared to the same period in 2014 were as follows: (i) cash provided by operating activities increased from $60,880 in 2014 to $62,855 in 2015; (ii) cash used in investing activities increased from $53,244 in 2014 to $66,868 in 2015; and (iii) cash used in financing activities decreased from $10,264 in 2014 to $2,727 in 2015.

The increase in cash provided by operating activities for the six month period ended June 30, 2015 as compared to the corresponding prior year period primarily reflects distributions received from our investment in SIR common shares in the 2015 period, partially offset by increased payments for interest on borrowings in the 2015 period.  The increase in cash used in investing activities for the six months period ended June 30, 2015 as compared to the corresponding prior year period was due primarily to our acquisition of approximately 3.4 million SIR common shares and 1.5 million shares of class A common stock of RMR Inc. in the 2015 period. The use of cash in investing activities in the 2015 period was

30

partially offset by cash proceeds from the sale of one property (one building) compared to the acquisition of three properties (four buildings) in the 2014 period and distributions in excess of earnings received from our investment in SIR common shares.  The change in cash used in financing activities for the six months period ended June 30, 2015 as compared to the corresponding prior year period was due primarily to higher net borrowings and increased common share distributions we made in the 2015 period.

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 timing differences between our receipt of rents and our desire or need to make distributions or pay operating or capital expenses, we maintain a $750,000 revolving credit facility.  The maturity date of our revolving credit facility is January 31, 2019 and, subject to the payment of an extension fee and meeting certain other conditions, we have an option to extend the stated maturity date of our revolving credit facility by one year to January 31, 2020. Borrowings under our revolving credit facility bear interest at a rate of LIBOR plus a premium,which was 125 basis points at June 30, 2015.  We also pay a facility fee on the total amount of lending commitments under our revolving credit facility, which was 25 basis points per annum at June 30, 2015. Both the interest rate premium and the facility fee are subject to adjustment based upon changes to our credit ratings. We can borrow and repay and reborrow funds available under our revolving credit facility until maturity, and no principal repayment is due until maturity. As of June 30, 2015, the interest rate payable on borrowings under our revolving credit facility was 1.4%. As of June 30, 2015 and July 28, 2015, we had $59,000 and $99,000, respectively, outstanding and $691,000 and $651,000, respectively, available to borrow under our revolving credit facility.

Our $750,000 revolving credit facility is governed by a credit agreement with a syndicate of institutional lenders, which also governs our two unsecured term loans:

· Our $300,000 unsecured term loan, which matures on March 31, 2020, is prepayable without penalty at any time. The amount outstanding under our $300,000 term loan bears interest at LIBOR plus a premium, which was 140 basis points at June 30, 2015. The interest rate premium is subject to adjustment based upon changes to our credit ratings. As of June 30, 2015, the interest rate for the amount outstanding under our $300,000 term loan was 1.6%.

· Our $250,000 unsecured term loan, which matures on March 31, 2022, is prepayable at any time. If our $250,000 term loan is repaid prior to November 22, 2015, a prepayment premium of 2.0% of the amount repaid would be payable. If our $250,000 term loan is repaid during the period from November 22, 2015 to November 21, 2016, a prepayment premium of 1.0% of the amount repaid would be payable. Subsequent to November 21, 2016, no prepayment premiums would be payable. The amount outstanding under our $250,000 term loan bears interest at LIBOR plus a premium, which was 180 basis points at June 30, 2015. The interest rate premium is subject to adjustment based upon changes to our credit ratings. As of June 30, 2015, the interest rate for the amount outstanding under our $250,000 term loan was 2.0%.

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 $350,000 of 3.75% senior unsecured notes are due 2019 and require semi-annual payment of interest only. Our $183,143 in mortgage debt generally requires monthly payments of principal and interest through maturity. None of our debt obligations require sinking fund payments prior to their maturity dates.  In addition to our debt obligations, as of June 30, 2015, we have estimated unspent leasing related obligations of $9,248.  Our debt maturities (other than our revolving credit facility) are as follows: $47,702 in 2015,$107,933 in 2016,$1,549 in 2017,$1,671 in 2018,$359,440 in 2019 and$564,848 thereafter.

We currently expect to use cash balances, borrowings under our revolving credit facility, net proceeds from our property sales, distributions received from our investment in SIR, assumption 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 maturity date of our revolving credit facility, term loans, or our other debts approach, we intend to explore alternatives for repaying or refinancing such amounts. 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

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facility. We may also elect to place new mortgages on properties we own as a source of financing. Although we cannot provide assurance 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 financings will depend primarily on 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. We intend to conduct our business in a manner which will afford us reasonable access to capital for investment and financing activities, but we cannot provide assurance that we will be able to successfully carry out this intention.

On February 26, 2015, we paid a distribution to common shareholders of $0.43 per share, or approximately  $30,252. On May 26, 2015, we paid a distribution to common shareholders of $0.43 per share, or approximately $30,256. We funded these distributions using cash on hand and borrowings under our revolving credit facility. On July 13, 2015, we declared a distribution payable to common shareholders of record on July 24, 2015 of $0.43 per share, or approximately  $30,566. We expect to pay this distribution on or about August 24, 2015 using cash on hand and borrowings under our revolving credit facility. 

In July 2015, we repaid, at par, a $47,083 mortgage note which was secured by a property (two buildings) located in Indianapolis, IN with cash on hand and borrowings under our revolving credit facility. This mortgage was scheduled to mature in October 2015.

Off Balance Sheet Arrangements

As of June 30, 2015, we had no off balance sheet arrangements that have had or that we expect would be reasonably likely to have a future 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 June 30, 2015 consist of borrowings under our $750,000 unsecured revolving credit facility, our $300,000 unsecured term loan, our $250,000 unsecured term loan, $350,000 of publicly issued senior unsecured notes and six secured mortgage loans that were assumed in connection with certain of our acquisitions. Our publicly issued senior unsecured notes are governed by an indenture.  Our senior notes indenture and its supplement and our credit agreement for our revolving credit facilityand our two term loansprovidesfor 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 manager and property manager. Our senior notes indenture anditssupplement and ourcreditagreement 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, restrict our ability to make distributions under certain circumstances and require us to maintain various financial ratios. Our mortgage loans are non-recourse, subject to certain limited exceptions, and do not contain any material financial covenants. We believe we were in compliance with the terms and conditions of our respective covenants under oursenior notesindenture and its supplementand our credit agreementat June 30, 2015.

Neither our credit agreement nor oursenior unsecured notesindenture and its supplement contain provisions for acceleration which could be triggered by our debt ratings. However, under our credit agreement our highest senior unsecured debt rating is used to determine the fees and interest rates we pay. Accordingly, if that debt rating is downgraded by certain credit rating agencies, our interest expense and related costs under our credit agreement would increase.

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 seniorunsecured notesindenture and its supplement contain cross default provisions to any other debts of more than $25,000.

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Related Person Transactions

We have relationships and historical and continuing transactions with RMR LLC, RMR Inc. and others related to them. We also have relationships and historical and continuing transactions with other companies to which RMR LLC provides management services and which have trustees, directors and officers who are also trustees, directors or officers of us, RMR LLC or RMR Inc. For further information about these and other such relationships and related person transactions, please see Note 10 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference, our Annual Report, our definitive Proxy Statement for our 2015 Annual Meeting of Shareholders, our Current Report on Form 8-K filed with the SEC on June 8, 2015 and our other filings with the SEC. In addition, please see the section captioned “Risk Factors” of our Annual Report for a description of risks that may arise as a result of these related person transactions and relationships. Our filings with the SEC are available at the SEC’s website at www.sec.gov. Copies of certain of our agreements with these related parties are publicly available as exhibits to our public filings with the SEC and accessible at the SEC’s website, www.sec.gov.

We believe that our agreements with related persons are on commercially reasonable terms. We also believe that our relationships with such related persons and their affiliated and related persons and entities benefit us and, in fact, provide us with competitive advantages in operating and growing our business. We may engage in additional transactions with related persons, including businesses to which RMR LLC or its affiliates provide management services.

Item 3. Quantitative and Qualitative Disclosures About Market Risk (dollar amounts in thousands)

We are exposed to risks associated with market changes in interest rates. We manage our exposure to this market risk by monitoring available financing alternatives. Our strategy to manage exposure to changes in interest rates has not materially changed since December 31, 2014. 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.

At June 30, 2015, our outstanding fixed rate debt consisted of the following:

			Annual		Annual			Interest
	Principal		Interest		Interest			Payments
Debt	Balance(1)		Rate(1)		Expense(1)		Maturity	Due
Senior notes	$	350,000	3.75	%	$	13,307	2019	Semi-annually
Mortgage		83,000	5.55	%		4,670	2016	Monthly
Mortgage(2)		46,858	5.73	%		2,722	2015	Monthly
Mortgage		23,667	6.21	%		1,490	2016	Monthly
Mortgage		14,267	5.88	%		851	2021	Monthly
Mortgage		8,845	7.00	%		628	2019	Monthly
Mortgage		6,506	8.15	%		538	2021	Monthly
	$	533,143			$	24,206

(1) The principal balances and interest rates are the amounts determined pursuant to 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 7 and 8 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

(2) This mortgage was repaid, at par, in July 2015.

Our senior notes require semi-annual interest payments through maturity. Our mortgages generally require principal and interest payments through maturity pursuant to amortization schedules. Because these debts bear interest 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 100 basis points higher or lower than shown above, our per annum interest cost would increase or decrease, respectively, by approximately $5,404.

Changes in market interest rates 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 June 30, 2015, and discounted cash flow analysis 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 100 basis point increase in interest rates would decrease the fair value of those obligations by approximately $8,303.

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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.

At June 30, 2015, our floating rate debt consisted of $59,000 outstanding under our $750,000 unsecured revolving credit facility, our $300,000 unsecuredterm loan and our $250,000 unsecured term loan. Our revolving credit facility matures in January 2019, and subject to our meeting certain conditions, including our payment of an extension fee, we have the option to extend the stated maturity by one year toJanuary 2020. No principal repayments are required under our revolving credit facility or our term loansprior to maturity,and repayments under our revolving credit facility may be made, and redrawn subject to conditions, at any time without penalty. Our $300,000 unsecured term loan matures on March 31, 2020. Our $250,000 unsecured term loan matures on March 31, 2022. Amounts outstanding under our unsecured term loans may be repaid at any time, but after they are repaid amounts may not be redrawn. Our $300,000 unsecured term loan may be repaid without penalty at any time. If our $250,000 unsecured term loan is repaid prior to November 22, 2015, a prepayment premium of 2.0% of the amount repaid would be incurred. If our $250,000 term loan is repaid during the period from November 22, 2015 to November 21, 2016, a prepayment premium of 1.0% of the amount repaid would be incurred; subsequent to November 21, 2016, no prepayment premium would be incurred.

Borrowings under our revolving credit facility and term loans are in U.S. dollars and bear interest 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 100 basis point increase in interest rates would have on our annual floating rate interest expense as of June 30, 2015:

	Impact of Changes in Interest Rates
			Outstanding		Total Interest		Annual Earnings
	Interest Rate(1)		Debt		Expense Per Year		Per Share Impact(2)
At June 30, 2015	1.7	%	$	609,000	$	10,497	$	0.15
100 bps increase	2.7	%	$	609,000	$	16,671	$	0.24

(1) Weighted based on the respective interest rates and outstanding borrowings under our revolving credit facility and term loans as of June 30, 2015.  

(2) Based on the weighted average shares outstanding (diluted)  for the three months ended June 30, 2015.

The following table presents the impact a 100 basis point increase in interest rates would have on our annual floating rate interest expense as of June 30, 2015 if we were fully drawn on our revolving credit facility and our term loans remained outstanding:

	Impact of Changes in Interest Rates
			Outstanding		Total Interest		Annual Earnings
	Interest Rate(1)		Debt		Expense Per Year		Per Share Impact(2)
At June 30, 2015	1.6	%	$	1,300,000	$	20,430	$	0.29
100 bps increase	2.6	%	$	1,300,000	$	33,610	$	0.48

(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 June 30, 2015. 

(2) Based on the weighted average shares outstanding  (diluted) for the three months ended June 30, 2015.

The foregoing tables show the impact of an immediate change in floating interest rates as of June 30, 2015. If interest rates were to change 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.

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Item 4.  Controls and Procedures

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

There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

WARNING CONCERNING FORWARD LOOKING STATEMENTS

THIS QUARTERLY REPORT ON FORM 10-Q 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” 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 ACQUISITIONS AND SALES OF PROPERTIES,

· OUR ABILITY TO COMPETE FOR ACQUISITIONS AND TENANCIES EFFECTIVELY,

· THE LIKELIHOOD THAT OUR TENANTS WILL PAY RENT, RENEW LEASES, ENTER INTO NEW LEASES, NOT EXERCISE EARLY TERMINATION OPTIONS PURSUANT TO THEIR LEASES OR BE AFFECTED BY CYCLICAL ECONOMIC CONDITIONS OR GOVERNMENT BUDGET CONSTRAINTS,

· OUR ABILITY TO PAY DISTRIBUTIONS TO OUR SHAREHOLDERS AND THE AMOUNT OF SUCH DISTRIBUTIONS,

· OUR EXPECTATION THAT WE WILL BENEFIT FINANCIALLY FROM OUR OWNERSHIP INTEREST IN SIR,

· OUR POLICIES AND PLANS REGARDING INVESTMENTS AND FINANCINGS,

· 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 THAT ARE MAJORITY LEASED TO GOVERNMENT TENANTS,

· OUR EXPECTATIONS REGARDING DEMAND FOR LEASED SPACE BY THE U.S. GOVERNMENT AND STATE AND LOCAL GOVERNMENTS,

· OUR ABILITY TO RAISE EQUITY OR DEBT CAPITAL,

· OUR ABILITY TO PAY INTEREST ON AND PRINCIPAL OF OUR DEBT,

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· OUR EXPECTATION THAT WE WILL BENEFIT FROM OUR OWNERSHIP OF RMR INC.,

· OUR EXPECTATION THAT WE BENEFIT FROM OUR OWNERSHIP OF AIC AND THE PARTICIPATION IN INSURANCE PROGRAMS ARRANGED BY AIC,

· THE CREDIT QUALITIES OF OUR TENANTS,

· OUR TAX STATUS AS A REIT,

· OUR EXPECTED DISTRIBUTION OF RMR INC. CLASS A COMMON SHARES TO OUR SHAREHOLDERS, 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, FFO, NORMALIZED FFO, NOI, CASH BASIS NOI, CASH FLOWS, LIQUIDITY AND PROSPECTS INCLUDE, BUT ARE NOT LIMITED TO:

· THE IMPACT OF CHANGES IN THE ECONOMY AND THE CAPITAL MARKETS ON US AND OUR TENANTS,

· COMPETITION WITHIN THE REAL ESTATE INDUSTRY, PARTICULARLY WITH RESPECT TO THOSE MARKETS IN WHICH OUR PROPERTIES ARE LOCATED AND WITH RESPECT TO GOVERNMENT LEASED PROPERTIES,

· THE IMPACT OF CHANGES IN THE REAL ESTATE NEEDS AND FINANCIAL CONDITIONS OF THE U.S. GOVERNMENT AND STATE AND LOCAL GOVERNMENTS,

· 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 MANAGING TRUSTEES, RMR LLC, RMR INC., SIR, AIC AND THEIR RELATED PERSONS AND ENTITIES,

· LIMITATIONS IMPOSED ON OUR BUSINESS AND OUR ABILITY TO SATISFY COMPLEX RULES IN ORDER FOR US TO QUALIFY 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:

· CONTINGENCIES IN OUR PENDING AND FUTURE ACQUISITION AND SALE AGREEMENTS MAY NOT BE SATISFIED AND OUR PENDING ACQUISITIONS AND SALES MAY NOT OCCUR, MAY BE DELAYED OR THE TERMS OF SUCH TRANSACTIONS MAY CHANGE,

· WE ARE MARKETING ONE OFFICE BUILDING LOCATED IN SAVANNAH, GA WITH A NET BOOK VALUE OF $3.1 MILLION FOR SALE. WE MAY ELECT NOT TO SELL THIS PROPERTY AND THERE CAN BE NO ASSURANCE THAT WE WILL COMPLETE A SALE OF THIS BUILDING OR THAT ANY SUCH SALE WOULD REALIZE NET PROCEEDS IN AN AMOUNT AT LEAST EQUAL TO OUR BOOK VALUE OF THIS BUILDING,

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· OUR ABILITY TO MAKE PAYMENTS OF PRINCIPAL AND INTEREST ON OUR INDEBTEDNESS AND TO MAKE FUTURE DISTRIBUTIONS TO OUR SHAREHOLDERS DEPENDS UPON A NUMBER OF FACTORS, INCLUDING OUR FUTURE EARNINGS, THE CAPITAL COSTS WE INCUR TO LEASE OUR PROPERTIES AND OUR RECEIPT OF DISTRIBUTIONS FROM SIR.  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 DISTRIBUTIONS TO OUR SHAREHOLDERS DEPENDS IN LARGE PART UPON OUR ABILITY TO BUY PROPERTIES AND LEASE THEM FOR RENTS, LESS PROPERTY OPERATING EXPENSES, THAT EXCEED OUR CAPITAL COSTS. WE MAY BE UNABLE TO IDENTIFY PROPERTIES THAT WE WANT TO ACQUIRE OR TO NEGOTIATE ACCEPTABLE PURCHASE PRICES, ACQUISITION FINANCING OR LEASE TERMS FOR NEW PROPERTIES,

· 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 EXPIRATION 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 BECAUSE OF CHANGING MARKET CONDITIONS OR OTHERWISE,

· CONTINUED AVAILABILITY OF BORROWINGS UNDER OUR UNSECURED REVOLVING CREDIT FACILITY IS SUBJECT TO OUR SATISFYING CERTAIN FINANCIAL COVENANTS AND MEETING OTHER CUSTOMARY CREDIT FACILITY CONDITIONS THAT WE MAY BE UNABLE TO SATISFY,

· ACTUAL COSTS UNDER OUR REVOLVING CREDIT FACILITY AND OTHER FLOATING RATE CREDIT FACILITIES WILL BE HIGHER THAN LIBOR PLUS A PREMIUM BECAUSE OF OTHER FEES AND EXPENSES ASSOCIATED WITH SUCH FACILITIES,

· 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 CERTAIN OTHER CONDITIONS.  HOWEVER, THE APPLICABLE CONDITIONS MAY NOT BE MET,

· WE BELIEVE THAT OUR RELATIONSHIPS WITH OUR RELATED PARTIES, INCLUDING RMR LLC, RMR INC., SIR, AIC AND OTHERS AFFILIATED WITH THEM MAY BENEFIT US AND PROVIDE US WITH COMPETITIVE ADVANTAGES IN OPERATING AND GROWING OUR BUSINESS. IN FACT, THE ADVANTAGES WE BELIEVE WE MAY REALIZE FROM THESE RELATIONSHIPS MAY NOT MATERIALIZE,

· THE MARGINS USED TO DETERMINE THE INTEREST RATE PAYABLE ON OUR REVOLVING CREDIT FACILITY AND TERM LOANS AND THE FACILITY FEE PAYABLE ON OUR 37

REVOLVING CREDIT FACILITY ARE BASED ON OUR CREDIT RATINGS.  FUTURE CHANGES IN OUR CREDIT RATINGS MAY CAUSE THE INTEREST AND FEES WE PAY TO CHANGE,

· SIR MAY REDUCE THE AMOUNT OF ITS DISTRIBUTIONS TO ITS SHAREHOLDERS, INCLUDING US,

· WE MAY BE UNABLE TO SELL OUR SIR COMMON SHARES FOR AN AMOUNT EQUAL TO OUR CARRYING VALUE OF THOSE SHARES AND ANY SUCH SALE MAY BE AT A DISCOUNT TO MARKET PRICE BECAUSE OF THE LARGE SIZE OF OUR SIR HOLDINGS OR OTHERWISE,

· THE PURCHASE PRICE WE PAID FOR THE RMR INC. SHARES AND OUR ECONOMIC OWNERSHIP INTEREST IN RMR LLC ARE STATED IN THIS QUARTERLY REPORT ON FORM 10-Q.   AN IMPLICATION OF THESE STATEMENTS MAY BE THAT THE RMR INC.SHARES WE EXPECT TO DISTRIBUTE TO OUR SHAREHOLDERS WILL HAVE A MARKET VALUE AT LEAST EQUAL TO THE VALUE WE PAID FOR THE RMR INC. SHARES.  IN FACT, THE VALUE OF THE RMR INC. SHARES MAY BE DIFFERENT FROM THE PRICE WE PAID FOR THE RMR INC. SHARES.  THE MARKET VALUE OF THE RMR INC. SHARES WILL DEPEND UPON VARIOUS FACTORS, INCLUDING SOME THAT ARE BEYOND OUR CONTROL, SUCH AS MARKET CONDITIONS GENERALLY AT THE TIME THE RMR INC. SHARES ARE AVAILABLE FOR TRADING.  THERE CAN BE NO ASSURANCE PROVIDED REGARDING THE PRICE AT WHICH THE RMR INC. SHARES WILL TRADE IF AND WHEN THEY ARE DISTRIBUTED AND LISTED ON A NATIONAL STOCK EXCHANGE,

· WE CURRENTLY EXPECT TO DISTRIBUTE APPROXIMATELY HALF OF THE RMR INC. SHARES WE ACQUIRED (EXCLUDING SHARES WE MAY RECEIVE AS A SHAREHOLDER OF SIR, WHICH WE CURRENTLY INTEND TO RETAIN) TO OUR SHAREHOLDERS.THE PROCESS OF PREPARING A REGISTRATION STATEMENT FOR THE DISTRIBUTION OF THE RMR INC. SHARES REQUIRES EXTENSIVE LEGAL AND ACCOUNTING SERVICES.  AFTER A REGISTRATION STATEMENT IS FILED BY RMR INC. WITH THE SEC, IT WILL BE SUBJECT TO REVIEW BY SEC STAFF, WHICH MAY TAKE CONSIDERABLE TIME.  THE LISTING OF THE RMR INC. SHARES ON A NATIONAL STOCK EXCHANGE WILL ALSO BE SUBJECT TO THE SATISFACTION OF THE LISTING REQUIREMENTS AND APPROVAL OF THE APPLICABLE STOCK EXCHANGE.  WE CAN PROVIDE NO ASSURANCE WHEN OR IF THE REGISTRATION STATEMENT WILL BE DECLARED EFFECTIVE BY THE SEC, THAT THE RMR INC. SHARES WILL BE APPROVED FOR LISTING ON A NATIONAL STOCK EXCHANGE OR WHEN THE DISTRIBUTION OF THE RMR INC. SHARES WILL OCCUR, IF EVER, AND

· THE BUSINESS MANAGEMENT AND PROPERTY MANAGEMENT AGREEMENTS BETWEEN US AND RMR LLC HAVE BEEN AMENDED AND EXTENDED FOR 20 YEAR TERMS. THE AMENDED MANAGEMENT AGREEMENTS INCLUDE TERMS WHICH PERMIT EARLY TERMINATION AND EXTENSIONS IN CERTAIN CIRCUMSTANCES.  ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THESE AGREEMENTS WILL REMAIN IN EFFECT FOR 20 YEARS OR FOR SHORTER OR LONGER TERMS.

THESE RESULTS COULD OCCUR DUE TO MANY DIFFERENT CIRCUMSTANCES, SOME OF WHICH ARE BEYOND OUR CONTROL, SUCH AS CHANGES IN GOVERNMENT TENANTS’ NEEDS FOR LEASED SPACE, ACTS OF TERRORISM, NATURAL DISASTERS OR CHANGES IN CAPITAL MARKETS OR THE ECONOMY GENERALLY.

THE INFORMATION CONTAINED ELSEWHERE IN THIS QUARTERLY REPORT ON FORM 10-Q AND IN OUR ANNUAL REPORT OR IN OUR OTHER FILINGS WITH THE 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.

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YOU SHOULD NOT PLACE UNDUE RELIANCE UPON OUR FORWARD LOOKING STATEMENTS.

EXCEPT AS REQUIRED BY LAW, WE DO NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.

STATEMENT CONCERNING LIMITED LIABILITY

THE AMENDED AND RESTATED DECLARATION OF TRUST ESTABLISHING GOVERNMENT 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 GOVERNMENT PROPERTIES INCOME TRUST SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, GOVERNMENT PROPERTIES INCOME TRUST.  ALL PERSONS DEALING WITH GOVERNMENT PROPERTIES INCOME TRUST IN ANY WAY SHALL LOOK ONLY TO THE ASSETS OF GOVERNMENT PROPERTIES INCOME TRUST FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

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Part II.   Other Information

Item 1A. Risk Factors.

Our business faces many risks, a number of which are described under the caption “Risk Factors” in our Annual Report and below. The risks so described may not be the only risks we face. Additional risks of which we are not yet aware, or that we currently believe are immaterial, may also materially and adversely impact our business operations or financial results. If any of the events or circumstances described in the risk factors contained in our Annual Report or described below occurs, our business, financial condition or results of operations could be adversely impacted and the trading price of our securities could decline. Investors and prospective investors should consider the risks described in our Annual Report and below and the information contained under the heading “Warning Concerning Forward Looking Statements” and elsewhere in this Quarterly Report on Form 10-Q before deciding whether to invest in our securities.

Our bylaws designate the Circuit Court for Baltimore City, Maryland or, if that court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore Division, as the sole and exclusive forum for certain types of 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 or agents.

Our bylaws currently provide that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or if that court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore Division, will be the sole and exclusive forum for: (i) any derivative action or proceeding brought on our behalf; (ii) any action asserting a claim for breach of a duty owed by any Trustee, officer, manager, agent or employee of ours to us or our shareholders; (iii) any action asserting a claim against us or any Trustee, officer, manager, agent or employee of ours arising pursuant to the Maryland General Corporation Law, our declaration of trust or bylaws brought by or on behalf of a shareholder; or (iv) 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. This choice of forum provision 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 or agents, which may discourage lawsuits against us and our Trustees, officers, manager or agents. 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 this provision of our bylaws, as they may be amended from time to time. This provision of our bylaws does not abrogate or supersede other provisions of our bylaws dealing with certain disputes affecting us.

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

On April 8, May 7 and June 5, 2015 we issued 3,830, 3,780 and 4,402 of our common shares, respectively, to RMR LLC in payment of a portion of the management fee due to RMR pursuant to our business management agreement with RMR LLC. We issued these shares pursuant to an exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended or the Securities Act.

On June 5, 2015, we issued 700,000 of our common shares to RMR Inc. as payment, along with cash, for 1,541,201 shares of class A common stock of RMR Inc.  We issued these shares pursuant to an exemption from registration contained in Section 4(a)(2) of the Securities Act.

Item 5.Other Information

On July 31, 2015, our Board of Trustees approved amended and restated bylaws, effective that same date.

The amended and restated bylaws amend the share ownership requirements for shareholders seeking to nominate individuals for election to the Board of Trustees or propose other business to be considered by shareholders at an annual meeting of shareholders. Pursuant to the amended and restated bylaws, the proponent shareholder(s) must have each continuously owned (as defined in the amended and restated bylaws) our shares of beneficial interest entitled to vote in the election of Trustees or on a proposal of other business, for at least three years prior to each of the date of the giving of the notice of the proposed nomination or proposal of other business, the record date for determining the shareholders entitled to vote at the meeting and the time of the annual meeting, with the aggregate shares owned by such shareholder(s) as of each such date and during such three year period representing at least 1% of our shares of beneficial

40

interest. Our bylaws previously required that a proponent shareholder own at least $2,000 in market value or 1% of our shares of beneficial interest entitled to vote at the meeting on such election or proposal of other business for at least one year from the date such shareholder gave notice of the proposed nomination or proposal of other business. The amended and restated bylaws also clarify that shareholders presenting a proposal that seeks to remove one or more of our Trustees for cause (as now defined in the bylaws) must meet all of the requirements in the amended and restated bylaws for a nomination of an individual for election to the Board of Trustees at an annual meeting of shareholders or a proposal of other business.

The amended and restated bylaws also amend the provisions regarding arbitration procedures for disputes to, among other things, add a provision allowing for an award or decision rendered pursuant to arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association, or AAA, to be appealed pursuant to the AAA appeals process, and shall not be considered final until after the time for filing a notice of appeal pursuant to the AAA appellate rules has expired, and otherwise until the appellate process has been completed.

The amended and restated bylaws add a provision which provides that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore Division, will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a duty owed by any of our Trustees, officers, managers, agents or employees to us or our shareholders, (iii) any action asserting a claim against us or any of our Trustees, officers, managers, agents or employees arising pursuant to the Maryland General Corporation Law or our declaration of trust or the amended and restated bylaws, including any disputes, claims or controversies brought by or on behalf of any of our shareholders or (iv) any action asserting a claim against us or any of our Trustees, officers, managers, agents or employees governed by the internal affairs doctrine of the State of Maryland. This provision further provides that any person or entity purchasing or otherwise acquiring any interest in our shares of beneficial interest is deemed to have notice of and consented to this provision. This provision of our amended and restated bylaws does not abrogate or supersede other provisions of our amended and restated bylaws which may require the resolution of such disputes by arbitration.

The amended and restated bylaws also include certain conforming and administrative changes, including, among other things, revisions to the descriptions of the powers and duties of our officers.

The foregoing description of the amended and restated bylaws is not complete and is qualified in its entirety by reference to the full text of the amended and restated bylaws, a copy of which is filed as Exhibit 3.2 to this Quarterly Report on Form 10-Q, and is incorporated by reference herein. In addition, a marked copy of the amended and restated bylaws indicating changes made to our bylaws as they existed immediately prior to the adoption of these amended and restated bylaws is attached as Exhibit 3.3.

Item 6. Exhibits

Exhibit Number	Description
3.1	Composite Copy of Amended and Restated Declaration of Trust, dated September 8, 2009, as amended to date. (Incorporated by reference to the Company’s Current Report on Form 8-K dated July 28, 2014.)
3.2	Composite Copy of Amended and Restated Bylaws of the Company, as amended to date.(Filed herewith.)
3.3	Composite Copy of Amended and Restated Bylaws of the Company, as amended to date. (marked copy) (Filed herewith.)
4.1	Form of Common Share Certificate. (Incorporated by reference to Amendment No. 2 to the Company’s Registration Statement on Form S-11/A, File No. 333-157455.)

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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.)
10.1	Transaction Agreement, dated as of June 5, 2015, among the Company, Reit Management & Research LLC, Reit Management & Research Trust and Reit Management & Research Inc. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 5, 2015.)
10.2	Second Amended and Restated Business Management Agreement, dated as of June 5, 2015, between the Company and Reit Management & Research LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 5, 2015.)
10.3	Second Amended and Restated Property Management Agreement, dated as of June 5, 2015, between the Company and Reit Management & Research LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 5, 2015.)
10.4	Registration Rights and Lock-Up Agreement, dated as of June 5, 2015, among the Company, 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.)
10.5	Registration Rights Agreement, dated as of June 5, 2015, between the Company and Reit Management & Research Inc. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 5, 2015.)
10.6	Summary of Trustee Compensation. (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 12, 2015.)
12.1	Computation of Ratio of Earnings to Fixed Charges. (Filed herewith.)
31.1	Rule 13a-14(a) Certification. (Filed herewith.)
31.2	Rule 13a-14(a) Certification. (Filed herewith.)
31.3	Rule 13a-14(a) Certification. (Filed herewith.)
31.4	Rule 13a-14(a) Certification. (Filed herewith.)
32.1	Section 1350 Certification. (Furnished herewith.)
101.1	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) related notes to these financial statements, tagged as blocks of text and in detail. (Filed herewith.)

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SIGNATURES

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

GOVERNMENT PROPERTIES INCOME TRUST
By:	/s/ David M. Blackman
	David M. Blackman President and Chief Operating Officer Dated: July 31, 2015
By:	/s/ Mark L. Kleifges
	Mark L. Kleifges Treasurer and Chief Financial Officer (principal financial and accounting officer) Dated: July 31, 2015

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EX-3.2

Exhibit 3.2

GOVERNMENT PROPERTIES INCOME TRUST

AMENDED AND RESTATED BYLAWS

As Amended and Restated July 31, 2015

TABLE OF CONTENTS

ARTICLE I  OFFICES	1
Section 1.1  Principal Office	1
Section 1.2  Additional Offices	1
ARTICLE II  MEETINGS OF SHAREHOLDERS	1
Section 2.1  Place	1
Section 2.2  Annual Meeting	1
Section 2.3  Special Meetings	1
Section 2.4  Notice of Regular or Special Meetings	1
Section 2.5  Notice of Adjourned Meetings	2
Section 2.6  Meeting Business	2
Section 2.7  Organization of Shareholder Meetings	2
Section 2.8  Quorum	3
Section 2.9  Voting	3
Section 2.10  Proxies	4
Section 2.11  Record Date	4
Section 2.12  Voting of Shares by Certain Holders	4
Section 2.13  Inspectors	4
Section 2.14  Nominations and Other Proposals to be Considered at Meetings of Shareholders	4
Section 2.14.1  Annual Meetings of Shareholders.	5
Section 2.14.2  Shareholder Nominations or Other Proposals Causing Covenant Breaches or Defaults	9
Section 2.14.3  Shareholder Nominations or Other Proposals Requiring Governmental Action	10
Section 2.14.4  Special Meetings of Shareholders	10
Section 2.14.5  General	11
Section 2.15  No Shareholder Actions by Written Consent	12
Section 2.16  Voting by Ballot	13
Section 2.17  Proposals of Business Which Are Not Proper Matters For Action By Shareholders	13
ARTICLE III  TRUSTEES	13
Section 3.1  General Powers; Qualifications; Trustees Holding Over	13
Section 3.2  Independent Trustees and Managing Trustees	13
Section 3.3  Number and Tenure	14
Section 3.4  Annual and Regular Meetings	14
Section 3.5  Special Meetings	14
Section 3.6  Notice	14
Section 3.7  Quorum	15
Section 3.8  Voting	15
Section 3.9  Telephone Meetings	15
Section 3.10  Action by Written Consent of Trustees	15
Section 3.11  Waiver of Notice	15
Section 3.12  Vacancies	15
Section 3.13  Compensation	16
Section 3.14  Surety Bonds	16

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Section 3.15  Reliance	16
Section 3.16  Interested Trustee Transactions	16
Section 3.17  Certain Rights of Trustees, Officers, Employees and Agents	16
Section 3.18  Emergency Provisions	16
Section 3.19  Removal for Cause	17
ARTICLE IV  COMMITTEES	17
Section 4.1  Number; Tenure and Qualifications	17
Section 4.2  Powers	17
Section 4.3  Meetings	17
Section 4.4  Telephone Meetings	18
Section 4.5  Action by Written Consent of Committees	18
Section 4.6  Vacancies	18
ARTICLE V  OFFICERS	18
Section 5.1  General Provisions	18
Section 5.2  Removal and Resignation	18
Section 5.3  Vacancies	18
Section 5.4  President	19
Section 5.5  Chief Operating Officer	19
Section 5.6  Chief Financial Officer	19
Section 5.7  Vice Presidents	19
Section 5.8  Secretary	19
Section 5.9  Treasurer	19
Section 5.10  Assistant Secretaries and Assistant Treasurers	19
ARTICLE VI  CONTRACTS, LOANS, CHECKS AND DEPOSITS	20
Section 6.1  Contracts	20
Section 6.2  Checks and Drafts	20
Section 6.3  Deposits	20
ARTICLE VII  SHARES	20
Section 7.1  Certificates	20
Section 7.2  Transfers	20
Section 7.3  Lost Certificates	21
Section 7.4  Closing of Transfer Books or Fixing of Record Date	21
Section 7.5  Share Ledger	21
Section 7.6  Fractional Shares; Issuance of Units	21
ARTICLE VIII  INDEMNIFICATION AND ADVANCEMENT OF EXPENSES	22
Section 8.1  Indemnification and Advancement of Expenses	22
ARTICLE IX  REGULATORY COMPLIANCE AND DISCLOSURE	23
Section 9.1  Actions Requiring Regulatory Compliance Implicating the Trust	23
Section 9.2  Compliance With Law	24
Section 9.3  Limitation on Voting Shares or Proxies	24
Section 9.4  Representations, Warranties and Covenants Made to Governmental or Regulatory Bodies	24
Section 9.5  Board of Trustees’ Determinations	24
ARTICLE X  FISCAL YEAR	24
Section 10.1  Fiscal Year	24

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ARTICLE XI  DIVIDENDS AND OTHER DISTRIBUTIONS	24
Section 11.1  Dividends and Other Distributions	24
ARTICLE XII  SEAL	25
Section 12.1  Seal	25
Section 12.2  Affixing Seal	25
ARTICLE XIII  WAIVER OF NOTICE	25
Section 13.1  Waiver of Notice	25
ARTICLE XIV  AMENDMENT OF BYLAWS	25
Section 14.1  Amendment of Bylaws	25
ARTICLE XV  MISCELLANEOUS	25
Section 15.1  References to Declaration of Trust	25
Section 15.2  Costs and Expenses	25
Section 15.3  Ratification	26
Section 15.4  Ambiguity	26
Section 15.5  Inspection of Bylaws	26
Section 15.6  Election to be Subject to Part of Title 3, Subtitle 8	26
Section 15.7  Control Share Acquisition Act	26
ARTICLE XVI  ARBITRATION PROCEDURES FOR DISPUTES	27
Section 16.1  Procedures for Arbitration of Disputes	27
Section 16.2  Arbitrators	27
Section 16.3  Place of Arbitration	28
Section 16.4  Discovery	28
Section 16.5  Awards	28
Section 16.6  Costs and Expenses	28
Section 16.7  Appeals	28
Section 16.8  Final and Binding	28
Section 16.9  Beneficiaries	29
ARTICLE XVII  EXCLUSIVE FORUM FOR CERTAIN DISPUTES	29

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GOVERNMENT PROPERTIES INCOME TRUST

AMENDED AND RESTATED BYLAWS

These AMENDED AND RESTATED BYLAWS (the “Bylaws”) are made as of the date set forth above by the Board of Trustees.

ARTICLE I

OFFICES

Section 1.1 Principal Office.  The principal office of the Trust shall be located at such place or places as the Board of Trustees may designate.

Section 1.2 Additional Offices.  The Trust may have additional offices at such places as the Board of Trustees may from time to time determine or the business of the Trust may require.

ARTICLE II

MEETINGS OF SHAREHOLDERS

Section 2.1 Place.  All meetings of shareholders shall be held at the principal office of the Trust or at such other place as is designated by the Board of Trustees or the president.

Section 2.2 Annual Meeting.  An annual meeting of the shareholders for the election of Trustees and the transaction of any business within the powers of the Trust shall be held at such times as the Trustees may designate.  Failure to hold an annual meeting does not invalidate the Trust’s existence or affect any otherwise valid acts of the Trust.

Section 2.3 Special Meetings.  Special meetings of shareholders may be called only by a majority of the Trustees then in office.  If there shall be no Trustees, the officers of the Trust shall promptly call a special meeting of the shareholders entitled to vote for the election of successor Trustees for the purpose of electing Trustees.

Section 2.4 Notice of Regular or Special Meetings.  Notice given in writing or by electronic transmission specifying the place, day and hour of any regular or special meeting, the purposes of the meeting, to the extent required by law to be provided, and all other matters required by law shall be given to each shareholder of record entitled to vote, sent to his or her address appearing on the books of the Trust or theretofore given by him or her to the Trust for the purpose of notice, by presenting it to such shareholder personally, by leaving it at the shareholder’s residence or usual place of business or by any other means permitted by Maryland law.  If mailed, such notice shall be deemed to be given once deposited in the U.S. mail addressed to the shareholder at his or her post office address as it appears on the records of the Trust, with postage thereon prepaid.  If transmitted electronically, such notice shall be deemed to be given when transmitted to the shareholder by an electronic transmission to any address or number of the shareholder at which the shareholder receives electronic transmissions.  It shall be the duty of the secretary to give notice of each meeting of the shareholders.  The Trust may give

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a single notice to all shareholders who share an address, which single notice shall be effective to any shareholder at such address, unless a shareholder objects to receiving such single notice or revokes a prior consent to receiving such single notice.  Failure to give notice of any meeting to one or more shareholders, or any irregularity in such notice, shall not affect the validity of any meeting fixed in accordance with this ARTICLE II or the validity of any proceedings at any such meeting.

Section 2.5 Notice of Adjourned Meetings.  It shall not be necessary to give notice of the time and place of any adjourned meeting or of the business to be transacted thereat other than by announcement at the meeting at which such adjournment is taken.

Section 2.6 Meeting Business.  Except as otherwise expressly set forth elsewhere in these Bylaws, no business shall be transacted at an annual or special meeting of shareholders except as specifically designated in the notice or otherwise properly brought before the meeting of shareholders by or at the direction of the Board of Trustees.

Section 2.7 Organization of Shareholder Meetings.  Every meeting of shareholders shall be conducted by an individual appointed by the Board of Trustees to be chairperson of the meeting or, in the absence of such appointment or the absence of the appointed individual, by one of the following officers present at the meeting in the following order: the chairman of the board, if there be one, the president, the vice presidents in their order of seniority, the secretary, or, in the absence of such officers, a chairperson chosen by the shareholders by the vote of holders of shares of beneficial interest representing a majority of the votes cast on such appointment by shareholders present in person or represented by proxy.  The secretary, an assistant secretary or a person appointed by the Trustees or, in the absence of such appointment, a person appointed by the chairperson of the meeting shall act as secretary of the meeting and record the minutes of the meeting.  If the secretary presides as chairperson at a meeting of the shareholders, then the secretary shall not also act as secretary of the meeting and record the minutes of the meeting.  The order of business and all other matters of procedure at any meeting of shareholders shall be determined by the chairperson of the meeting.  The chairperson of the meeting may prescribe such rules, regulations and procedures and take such action as, in the discretion of such chairperson, are appropriate for the proper conduct of the meeting, including, without limitation: (a) restricting admission to the time set for the commencement of the meeting; (b) limiting attendance at the meeting to shareholders of record of the Trust, their duly authorized proxies or other such persons as the chairperson of the meeting may determine; (c) limiting participation at the meeting on any matter to shareholders of record of the Trust entitled to vote on such matter, their duly authorized proxies or other such persons as the chairperson of the meeting may determine; (d) limiting the time allotted to questions or comments by participants; (e) determining when and for how long the polls should be opened and when the polls should be closed; (f) maintaining order and security at the meeting; (g) removing any shareholder or other person who refuses to comply with meeting procedures, rules or guidelines as set forth by the chairperson of the meeting; (h) concluding a meeting or recessing or adjourning the meeting to a later date and time and at a place announced at the meeting; and (i) complying with any state and local laws and regulations concerning safety and security.  Without limiting the generality of the powers of the chairperson of the meeting pursuant to the foregoing provisions, the chairperson may adjourn any meeting of shareholders for any reason deemed necessary by the chairperson, including, without limitation, if (i) no

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quorum is present for the transaction of the business, (ii) the Board of Trustees or the chairperson of the meeting determines that adjournment is necessary or appropriate to enable the shareholders to consider fully information that the Board of Trustees or the chairperson of the meeting determines has not been made sufficiently or timely available to shareholders or (iii) the Board of Trustees or the chairperson of the meeting determines that adjournment is otherwise in the best interests of the Trust.  Unless otherwise determined by the chairperson of the meeting, meetings of shareholders shall not be required to be held in accordance with the general rules of parliamentary procedure or any otherwise established rules of order.

Section 2.8 Quorum.  At any meeting of shareholders, the presence in person or by proxy of shareholders entitled to cast a majority of all the votes entitled to be cast at such meeting shall constitute a quorum; but this section shall not affect any requirement under any statute or the Declaration of Trust for the vote necessary for the adoption of any measure.  If, however, such quorum shall not be present at any meeting of the shareholders, the chairperson of the meeting shall have the power to adjourn the meeting from time to time without the Trust having to set a new record date or provide any additional notice of such meeting, subject to any obligation of the Trust to give notice pursuant to Section 2.5.  At such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified.  The shareholders present, either in person or by proxy, at a meeting of shareholders which has been duly called and convened and at which a quorum was established may continue to transact business until adjournment, notwithstanding the withdrawal of enough votes to leave less than a quorum then being present at the meeting.

Section 2.9 Voting.

(a) With regard to the election of a Trustee, and except as may be mandated by applicable law or the listing requirements of the principal exchange on which the Trust’s common shares of beneficial interest are listed: (i) a plurality of all the votes cast at a meeting of shareholders duly called and at which a quorum is present shall be sufficient to elect a Trustee in an uncontested election; and (ii) a majority of all the votes entitled to be cast in the election of Trustees at a meeting of shareholders duly called and at which a quorum is present shall be required to elect a Trustee in a contested election (which, for purposes of these Bylaws, is an election at which the number of nominees exceeds the number of Trustees to be elected at the meeting).  Each share may be voted for as many individuals as there are Trustees to be elected and for whose election the share is entitled to be voted.

(b) With regard to any other matter which may properly come before a meeting of shareholders duly called and at which a quorum is present, and except as may be mandated by applicable law, by the listing requirements of the principal exchange on which the Trust’s common shares of beneficial interest are listed or by a specific provision of the Declaration of Trust, the vote required for approval shall be the affirmative vote of seventy-five percent (75%) of the votes entitled to be cast for each such matter unless such matter has been previously approved by the Board of Trustees, in which case the vote required for approval shall be a majority of the votes cast at a meeting of shareholders duly called and at which a quorum is present.

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Section 2.10 Proxies.  A shareholder may cast the votes entitled to be cast by him or her either in person or by proxy executed by the shareholder or by his or her duly authorized agent in any manner permitted by law.  Such proxy shall be filed with such officer of the Trust or third party agent as the Board of Trustees shall have designated for such purpose for verification at or prior to such meeting.  Any proxy relating to the Trust’s shares of beneficial interest shall be valid until the expiration date therein or, if no expiration is so indicated, for such period as is permitted pursuant to Maryland law.  At a meeting of shareholders, all questions concerning the qualification of voters, the validity of proxies, and the acceptance or rejection of votes, shall be decided by or on behalf of the chairperson of the meeting, subject to Section 2.13.

Section 2.11 Record Date.  The Board of Trustees may fix the date for determination of shareholders entitled to notice of and to vote at a meeting of shareholders.  If no date is fixed for the determination of the shareholders entitled to vote at any meeting of shareholders, only persons in whose names shares entitled to vote are recorded on the share records of the Trust on the later of: (i) the close of business on the day on which notice of such meeting of shareholders is first mailed by the Trust or (ii) the thirtieth (30th) day before the date of such meeting shall be entitled to vote at such meeting.

Section 2.12 Voting of Shares by Certain Holders.  Shares of beneficial interest of the Trust registered in the name of a corporation, partnership, trust or other entity, if entitled to be voted, may be voted by the president or a vice president, a general partner, managing member or trustee thereof, as the case may be, or a proxy appointed by any of the foregoing individuals, unless some other person who has been appointed to vote such shares pursuant to a bylaw or a resolution of the governing body of such corporation or other entity or pursuant to an agreement of the partners of the partnership presents a certified copy of such bylaw, resolution or agreement, in which case such person may vote such shares.  Any trustee or other fiduciary may vote shares registered in his or her name as such fiduciary, either in person or by proxy.

Section 2.13 Inspectors.

(a) Before or at any meeting of shareholders, the chairperson of the meeting may appoint one or more persons as inspectors for such meeting.  Such inspectors, if any, shall (i) ascertain and report the number of shares of beneficial interest represented at the meeting, in person or by proxy, and the validity and effect of proxies, (ii) receive and tabulate all votes, ballots or consents, (iii) report such tabulation to the chairperson of the meeting and (iv) perform such other acts as are proper to conduct the election or voting at the meeting.

(b) Each report of an inspector shall be in writing and signed by him or her.  The report of the inspector or inspectors on the number of shares represented at the meeting and the results of the voting shall be prima facie evidence thereof.

Section 2.14 Nominations and Other Proposals to be Considered at Meetings of Shareholders.  Nominations of individuals for election to the Board of Trustees and the proposal of other business to be considered by the shareholders at meetings of shareholders may be properly brought before the meeting only as set forth in this Section 2.14.  Nothing in this Section 2.14 shall be deemed to affect any right of a shareholder to request inclusion of a proposal in, or the right of the Trust to omit a proposal from, any proxy statement filed by the

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Trust with the U.S. Securities and Exchange Commission (the “SEC”) pursuant to Rule 14a-8 (or any successor provision) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  All judgments and determinations made by the Board of Trustees or the chairperson of the meeting, as applicable, under this Section 2.14 (including, without limitation, judgments and determinations as to the propriety of a proposed nomination or a proposal of other business for consideration by shareholders) shall be final and binding unless determined to have been made in bad faith.

Section 2.14.1 Annual Meetings of Shareholders.

(a) Any shareholder of the Trust may recommend to the Nominating and Governance Committee of the Board of Trustees an individual as a nominee for election to the Board of Trustees.  Such recommendation shall be made by written notice to the Chair of such committee and the Secretary of the Trust, which notice should contain or be accompanied by the information and documents with respect to such recommended nominee and shareholder that such shareholder believes to be relevant or helpful to the Nominating and Governance Committee’s deliberations.  In considering such recommendation, the Nominating and Governance Committee may request additional information concerning the recommended nominee or the shareholder(s) making the recommendation.  The Nominating and Governance Committee of the Board of Trustees will consider any such recommendation in its discretion.  Any shareholder seeking to make a nomination of an individual for election to the Board of Trustees at an annual meeting must make such nomination in accordance with Section 2.14.1(b)(ii).

(b) Nominations of individuals for election to the Board of Trustees and the proposal of other business to be considered by the shareholders at an annual meeting of shareholders may be properly brought before the meeting (i) pursuant to the Trust’s notice of meeting or otherwise properly brought before the meeting by or at the direction of the Board of Trustees or (ii) by any one or more shareholders of the Trust who (A) have each continuously owned (as defined below) shares of beneficial interest of the Trust entitled to vote in the election of Trustees or on a proposal of other business, for at least three years prior to each of the date of the giving of the notice provided for in Section 2.14.1(c), the record date for determining the shareholders entitled to vote at the meeting and the time of the annual meeting (including any adjournment or postponement thereof), with the aggregate shares owned by such shareholder(s) as of each of such dates and during such three year period representing at least one percent (1%) of the Trust’s shares of beneficial interest, (B) holds, or hold, a certificate or certificates evidencing the aggregate number of shares of beneficial interest of the Trust referenced in subclause (A) of this Section 2.14.1(b)(ii) as of the time of giving the notice provided for in Section 2.14.1(c), the record date for determining the shareholders entitled to vote at the meeting and the time of the annual meeting (including any adjournment or postponement thereof), (C) is, or are, entitled to make such nomination or propose such other business and to vote at the meeting on such election or proposal of other business, and (D) complies, or comply, with the notice procedures set forth in this Section 2.14 as to such nomination or proposal of other business.  For purposes of this Section 2.14.1(b), a shareholder shall be deemed to “own” or have “owned” only those outstanding shares of the Trust’s shares of beneficial interest to which the shareholder possesses both the full voting and investment rights pertaining to the shares and the full economic interest in (including the opportunity for profit from and risk of loss on) such

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shares; provided that the number of shares calculated in accordance with the foregoing shall not include any shares (x) sold by such shareholder or any of its affiliates in any transaction that has not been settled or closed or (y) borrowed by such shareholder or any of its affiliates for any purposes or purchased by such shareholder or any of its affiliates pursuant to an agreement to resell.  Without limiting the foregoing, to the extent not excluded by the immediately preceding sentence, a shareholder’s “short position” as defined in Rule 14e-4 under the Exchange Act shall be deducted from the shares otherwise “owned.” A shareholder shall “own” shares held in the name of a nominee or other intermediary so long as the shareholder retains the right to instruct how the shares are voted with respect to the election of trustees or the proposal of other business and possesses the full economic interest in the shares.  For purposes of this Section 2.14.1(b), the term “affiliate” or “affiliates” shall have the meaning ascribed thereto under the General Rules and Regulations under the Exchange Act.  Whether outstanding shares of the Trust’s shares of beneficial interest are “owned” for purposes of this Section 2.14.1(b) shall be determined by the Board of Trustees.

(c) For nominations for election to the Board of Trustees or other business to be properly brought before an annual meeting by one or more shareholders pursuant to this Section 2.14.1, such shareholder(s) shall have given timely notice thereof in writing to the secretary of the Trust in accordance with this Section 2.14 and such other business shall otherwise be a proper matter for action by shareholders.  To be timely, the notice of such shareholder(s) shall set forth all information required under this Section 2.14 and shall be delivered to the secretary at the principal executive offices of the Trust not later than 5:00 p.m. (Eastern Time) on the one-hundred twentieth (120th) day nor earlier than the one-hundred fiftieth (150th) day prior to the first (1st)  anniversary of the date of the proxy statement for the preceding year’s annual meeting; provided, however, that if the annual meeting is called for a date that is more than thirty (30) days earlier or later than the first (1st) anniversary of the date of the preceding year’s annual meeting, notice by such shareholder(s) to be timely shall be so delivered not later than 5:00 p.m. (Eastern Time) on the tenth (10th) day following the earlier of the day on which (i) notice of the date of the annual meeting is mailed or otherwise made available or (ii) public announcement of the date of the annual meeting is first made by the Trust.  Neither the postponement or adjournment of an annual meeting, nor the public announcement of such postponement or adjournment, shall commence a new time period for the giving of a notice of one or more shareholders as described above.

A notice of one or more shareholders pursuant to this Section 2.14.1(c) shall set forth:

(i) separately as to each individual whom such shareholder(s) propose to nominate for election or reelection as a Trustee (a “Proposed Nominee”), (1) the name, age, business address, residence address and educational background of such Proposed Nominee, (2) a statement of whether such Proposed Nominee is proposed for nomination as an Independent Trustee or a Managing Trustee (each as defined in Section 3.2) and a description of such Proposed Nominee’s qualifications to be an Independent Trustee or Managing Trustee, as the case may be, and such Proposed Nominee’s qualifications to be a Trustee pursuant to the criteria set forth in Section 3.1, (3) the class, series and number of any shares of beneficial interest of the Trust that are, directly or indirectly, beneficially owned or owned of record by such Proposed Nominee, (4) a description of the material terms of each Derivative Transaction that such Proposed Nominee directly or indirectly, has an interest in, including, without limitation, the

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counterparties to each Derivative Transaction, the class or series and number or amount of securities of the Trust to which each Derivative Transaction relates or provides exposure, and whether or not (x) such Derivative Transaction conveys any voting rights directly or indirectly, to such Proposed Nominee, (y) such Derivative Transaction is required to be, or is capable of being, settled through delivery of securities of the Trust and (z) such Proposed Nominee and/or, to their knowledge, the counterparty to such Derivative Transaction has entered into other transactions that hedge or mitigate the economic effect of such Derivative Transaction, (5) a description of all direct and indirect compensation and other agreements, arrangements and understandings or any other relationships, between or among any shareholder making the nomination, or any of its respective affiliates and associates, or others acting in concert therewith, on the one hand, and such Proposed Nominee, or his or her respective affiliates and associates, on the other hand, and (6) all other information relating to such Proposed Nominee that is required to be disclosed in solicitations of proxies for election of Trustees in an election contest (even if an election contest is not involved), or is otherwise required, in each case, pursuant to Section 14 (or any successor provision) of the Exchange Act, and the rules and regulations promulgated thereunder;

(ii) as to any other business that such shareholder(s) propose to bring before the meeting, (1) a description of such business, (2) the reasons for proposing such business at the meeting and any material interest in such business of such shareholder(s) or any Shareholder Associated Person (as defined in Section 2.14.1(g)), including any anticipated benefit to such shareholder(s) or any Shareholder Associated Person therefrom, (3) a description of all agreements, arrangements and understandings between such shareholder(s) and Shareholder Associated Person amongst themselves or with any other person or persons (including their names) in connection with the proposal of such business by such shareholder(s) and (4) a representation that such shareholder(s) intend to appear in person or by proxy at the meeting to bring the business before the meeting;

(iii) separately as to each shareholder giving the notice and any Shareholder Associated Person, (1) the class, series and number of all shares of beneficial interest of the Trust that are owned of record by such shareholder or by such Shareholder Associated Person, if any, and (2) the class, series and number of, and the nominee holder for, any shares of beneficial interests of the Trust that are, directly or indirectly, beneficially owned but not owned of record by such shareholder or by such Shareholder Associated Person, if any;

(iv) separately as to each shareholder giving the notice and any Shareholder Associated Person, (1) a description of all purchases and sales of securities of the Trust by such shareholder or Shareholder Associated Person during the previous six (6) month period, including the date of the transactions, the class, series and number of securities involved in the transactions and the consideration involved, (2) a description of the material terms of each Derivative Transaction that such shareholder or Shareholder Associated Person, directly or indirectly, has an interest in, including, without limitation, the counterparties to each Derivative Transaction, the class or series and number or amount of securities of the Trust to which each Derivative Transaction relates or provides exposure, and whether or not (x) such Derivative Transaction conveys any voting rights, directly or indirectly, to such shareholder or Shareholder Associated Person, (y) such Derivative Transaction is required to be, or is capable of being, settled through delivery of securities of the Trust and (z) such shareholder or Shareholder

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Associated Person and/or, to their knowledge, the counterparty to such Derivative Transaction has entered into other transactions that hedge or mitigate the economic effect of such Derivative Transaction, (3) a description of the material terms of any performance related fees (other than an asset based fee) to which such shareholder or Shareholder Associated Person is entitled based on any increase or decrease in the value of shares of beneficial interest of the Trust or instrument or arrangement of the type contemplated within the definition of Derivative Transaction, and (4) any rights to dividends or other distributions on the shares of beneficial interest of the Trust that are beneficially owned by such shareholder or Shareholder Associated Person that are separated or separable from the underlying shares of beneficial interest of the Trust;

(v) separately as to each shareholder giving the notice and any Shareholder Associated Person with a material interest described in clause (ii)(2) above, an ownership interest described in clause (iii) above or a transaction or right described in clause (iv) above, (1) the name and address of such shareholder and Shareholder Associated Person, and (2) all information relating to such shareholder and Shareholder Associated Person that is required to be disclosed in connection with the solicitation of proxies for election of Trustees in an election contest (even if an election contest is not involved), or is otherwise required, in each case, pursuant to Section 14 (or any successor provision) of the Exchange Act and the rules and regulations promulgated thereunder; and

(vi) to the extent known by the shareholder(s) giving the notice, the name and address of any other person who beneficially owns or owns of record any shares of beneficial interest of the Trust and who supports the nominee for election or reelection as a Trustee or the proposal of other business.

(d) A notice of one or more shareholders making a nomination or proposing other business pursuant to Section 2.14.1(b)(ii) shall be accompanied by (i) a copy of the share certificate(s) referenced in subclause (B) of Section 2.14.1(b)(ii) above; (ii) if any such shareholder was not a shareholder of record of the shares referenced in subclause (A) of Section 2.14.1(b)(ii) above continuously for the three-year period referenced therein, reasonable evidence of such shareholder’s continuous beneficial ownership of such shares during such three-year period, such reasonable evidence may include, but shall not be limited to, (A) a copy of a report of the shareholder on Schedule 13D or Schedule 13G under the Exchange Act filed on or prior to the beginning of the three-year period and all amendments thereto, (B) a copy of a statement required to be filed pursuant to Section 16 of the Exchange Act (or any successor provisions) by a person who is a Trustee of the Trust or who is directly or indirectly the beneficial owner of more than ten percent (10%) of the shares of beneficial interest of the Trust filed on or prior to the beginning of the three-year period and all amendments thereto, or (C) a written verification of such beneficial ownership from a person who was the “record” holder of such shares, including any participant of the Depositary Trust Company, if applicable; and (iii) with respect to nominations, a signed statement of each Proposed Nominee (1) certifying that the information, including share ownership and duration, contained in the notice regarding such Proposed Nominee and any affiliate or associate of such person is true and complete, and complies with this Section 2.14.1 in all material respects, and (2) consenting to being named as a nominee and to serving as a Trustee if elected.

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(e) Any shareholder(s) providing notice of a proposed nomination or other business to be considered at an annual meeting of shareholders shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.14 is true and correct as of the record date for such annual meeting and as of a date that is ten (10) business days prior to such annual meeting, and any such update shall be delivered to the secretary at the principal executive offices of the Trust not later than the close of business on the fifth (5th) business day after the record date (in the case of an update or supplement required to be made as of the record date), and not later than the close of business on the eighth (8th) business day prior to the date of the annual meeting (in the case of an update or supplement required to be made as of ten (10) business days prior to the meeting).

(f) Notwithstanding anything in the second sentence of Section 2.14.1(c) to the contrary, if the number of Trustees to be elected to the Board of Trustees is increased and there is no public announcement of such action at least one-hundred thirty (130) days prior to the first (1st) anniversary of the date of the proxy statement for the preceding year’s annual meeting, the notice required by this Section 2.14.1 also shall be considered timely, but only with respect to nominees for any new positions created by such increase, if such notice is delivered to the secretary at the principal executive offices of the Trust not later than 5:00 p.m. (Eastern Time) on the tenth (10th) day immediately following the day on which such public announcement is first made by the Trust.

(g) For purposes of this Section 2.14, (i) “Shareholder Associated Person” of any shareholder shall mean (A) any person acting in concert with, such shareholder, (B) any direct or indirect beneficial owner of shares of beneficial interest of the Trust beneficially owned or owned of record by such shareholder and (C) any person controlling, controlled by or under common control with such shareholder or a Shareholder Associated Person; and (ii) “Derivative Transaction” by a person shall mean any (A) transaction in, or arrangement, agreement or understanding with respect to, any option, warrant, convertible security, stock appreciation right or similar right with an exercise, conversion or exchange privilege, or settlement payment or mechanism related to, any security of the Trust, or similar instrument with a value derived in whole or in part from the value of a security of the Trust, in any such case whether or not it is subject to settlement in a security of the Trust or otherwise or (B) any transaction, arrangement, agreement or understanding which included or includes an opportunity for such person, directly or indirectly, to profit or share in any profit derived from any increase or decrease in the value of any security of the Trust, to mitigate any loss or manage any risk associated with any increase or decrease in the value of any security of the Trust or to increase or decrease the number of securities of the Trust which such person was, is or will be entitled to vote, in any such case whether or not it is subject to settlement in a security of the Trust or otherwise.

Section 2.14.2 Shareholder Nominations or Other Proposals Causing Covenant Breaches or Defaults. At the same time as the submission of any shareholder nomination or proposal of other business to be considered at a shareholders meeting that, if approved and implemented by the Trust, would cause the Trust or any subsidiary (as defined in Section 2.14.5(c)) of the Trust to be in breach of any covenant or otherwise cause a default (in any case, with or without notice or lapse of time) in any existing debt instrument or agreement of the Trust or any subsidiary of the Trust or other material contract or agreement of the Trust or any

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subsidiary of the Trust, the notice provided pursuant to Section 2.14.1(c) shall disclose: (a) whether the lender or contracting party has agreed to waive the breach of covenant or default, and, if so, shall include reasonable evidence thereof, or (b) in reasonable detail, the plan of the proponent shareholder(s) for the repayment of the indebtedness to the lender or curing the contractual breach or default and satisfying any resulting damage claim, specifically identifying the actions to be taken and the source of funds for any such repayment, and such notice shall be accompanied by a copy of any commitment letter(s) or agreement(s) for the financing of such plan.

Section 2.14.3 Shareholder Nominations or Other Proposals Requiring Governmental Action. If (a) any shareholder nomination or proposal of other business to be considered at a shareholders meeting could not be considered or, if approved, implemented by the Trust without the Trust, any subsidiary of the Trust, any proponent shareholder, any Proposed Nominee of such shareholder, any Shareholder Associated Person of any such shareholder, the holder of proxies or their respective affiliates or associates filing with or otherwise notifying or obtaining the consent, approval or other action of any federal, state, municipal or other governmental or regulatory body (a “Governmental Action”) or (b) any proponent shareholder’s ownership of shares of beneficial interest of the Trust or any solicitation of proxies or votes or holding or exercising proxies by such shareholder, any Proposed Nominee of such shareholder, any Shareholder Associated Person of such shareholder, or their respective affiliates or associates would require Governmental Action, then, in the notice provided pursuant to Section 2.14.1(c) the proponent shareholder(s) shall disclose (x) whether such Governmental Action has been given or obtained, and, if so, such notice shall be accompanied by reasonable evidence thereof, or (y) in reasonable detail, the plan of such shareholder(s) for making or obtaining the Governmental Action.

Section 2.14.4 Special Meetings of Shareholders. As set forth in Section 2.6, only business brought before the meeting pursuant to the Trust’s notice of meeting or otherwise properly brought before the meeting by or at the direction of the Board of Trustees may be considered at a special meeting of shareholders.  Nominations of individuals for election to the Board of Trustees only may be made at a special meeting of shareholders at which Trustees are to be elected: (a) pursuant to the Trust’s notice of meeting; (b) otherwise properly brought before the meeting by or at the direction of the Board of Trustees; or (c) provided that the Board of Trustees has determined that Trustees shall be elected at such special meeting or if there are no Trustees and the special meeting is called by the officers of the Trust for the election of successor Trustees, by any shareholder of the Trust who is a shareholder of record both at the time of giving of notice provided for in this Section 2.14.4 through and including the time of the special meeting, who is entitled to vote at the meeting on such election and who has complied with the notice procedures and other requirements set forth in this Section 2.14.4.  If the Trust calls a special meeting of shareholders for the purpose of electing one or more Trustees, any one or more shareholder(s) of the Trust may nominate an individual or individuals (as the case may be) for election as a Trustee, if (i) the shareholder(s) satisfy the ownership, holding and certificate requirements set forth in Section 2.14(b)(ii), (ii) the shareholder(s)’ notice contains or is accompanied by the information and documents required by Section 2.14 for a notice provided pursuant to Section 2.14.1(c) and (iii) the shareholder(s) have given timely notice thereof in writing to the secretary of the Trust at the principal executive offices of the Trust, with all references in such Sections to the annual meeting and to the notice given under such Sections

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changed to be references to the special meeting and the notice given under this Section 2.14.4.  To be timely, a shareholder’s notice shall be delivered to the secretary of the Trust at the principal executive offices of the Trust not earlier than the one-hundred fiftieth (150th) day prior to such special meeting and not later than 5:00 p.m. (Eastern Time) on the later of (i) the one-hundred twentieth (120th) day prior to such special meeting or (ii) the tenth (10th) day following the day on which public announcement is first made of the date of the special meeting and of any nominee proposed by the Trustees to be elected at such meeting.  Neither the postponement or adjournment of a special meeting, nor the public announcement of such postponement or adjournment, shall commence a new time period for the giving of a shareholder’s notice as described above.

Section 2.14.5 General.

(a) If information submitted pursuant to this Section 2.14 by any shareholder proposing a nominee for election as a Trustee or any proposal for other business at a meeting of shareholders shall be deemed by the Board of Trustees incomplete or inaccurate, any authorized officer or the Board of Trustees or any committee thereof may treat such information as not having been provided in accordance with this Section 2.14.  Any notice submitted by a shareholder pursuant to this Section 2.14 that is deemed by the Board of Trustees inaccurate, incomplete or otherwise fails to satisfy completely any provision of this Section 2.14 shall be deemed defective and shall thereby render all proposals and nominations set forth in such notice defective.  Upon written request by the secretary of the Trust or the Board of Trustees or any committee thereof (which may be made from time to time), any shareholder proposing a nominee for election as a Trustee or any proposal for other business at a meeting of shareholders shall provide, within three (3) business days after such request (or such other period as may be specified in such request), (i) written verification, satisfactory to the secretary or any other authorized officer or the Board of Trustees or any committee thereof, in his, her or its discretion, to demonstrate the accuracy of any information submitted by the shareholder pursuant to this Section 2.14, (ii) written responses to information reasonably requested by the secretary, the Board of Trustees or any committee thereof and (iii) a written update, to a current date, of any information submitted by the shareholder pursuant to this Section 2.14 as of an earlier date.  If a shareholder fails to provide such written verification, information or update within such period, the secretary or any other authorized officer or the Board of Trustees may treat the information which was previously provided and to which the verification, request or update relates as not having been provided in accordance with this Section 2.14.  It is the responsibility of a shareholder who wishes to make a nomination or other proposal to comply with the requirements of Section 2.14; nothing in this Section 2.14.5(a) or otherwise shall create any duty of the Trust, the Board of Trustees or any committee thereof nor any officer of the Trust to inform a shareholder that the information submitted pursuant to this Section 2.14 by or on behalf of such shareholder is incomplete or inaccurate or not otherwise in accordance with this Section 2.14 nor require the Trust, the Board of Trustees, any committee of the Board of Trustees or any officer of the Trust to request clarification or updating of information provided by any shareholder, but the Board of Trustees, a committee thereof or the secretary acting on behalf of the Board of Trustees or a committee, may do so in its, his or her discretion.

(b) Only such individuals who are nominated in accordance with this Section2.14 shall be eligible for election by shareholders as Trustees and only such business

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shall be conducted at a meeting of shareholders as shall have been properly brought before the meeting in accordance with this Section 2.14.  The chairperson of the meeting and the Board of Trustees shall each have the power to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with this Section 2.14 and, if any proposed nomination or other business is determined not to be in compliance with this Section 2.14, to declare that such defective nomination or proposal be disregarded.

(c) For purposes of this Section 2.14: (i) “public announcement” shall mean disclosure in (A) a press release reported by the Dow Jones News Service, Associated Press, Business Wire, PR Newswire or any other widely circulated news or wire service or (B) a document publicly filed by the Trust with the SEC; (ii) “subsidiary” shall include, with respect to a person, any corporation, partnership, joint venture or other entity of which such person (A) owns, directly or indirectly, ten percent (10%) or more of the outstanding voting securities or other interests or (B) has a person designated by such person serving on, or a right, contractual or otherwise, to designate a person, so to serve on, the board of directors (or analogous governing body); and (iii) a person shall be deemed to “beneficially own” or “have beneficially owned” any shares of beneficial interest of the Trust not owned directly by such person if that person or a group of which such person is a member would be the beneficial owner of such shares under Rule 13d-3 and Rule 13d-5 of the Exchange Act.

(d) Notwithstanding the foregoing provisions of this Section 2.14, a shareholder shall also comply with all applicable legal requirements, including, without limitation, applicable requirements of state law and the Exchange Act and the rules and regulations thereunder, with respect to the matters set forth in this Section 2.14.  Nothing in this Section 2.14 shall be deemed to require that a shareholder nomination of an individual for election to the Board of Trustees or a shareholder proposal relating to other business be included in the Trust’s proxy statement, except as may be required by law.

(e) The Board of Trustees may from time to time require any individual nominated to serve as a Trustee to agree in writing with regard to matters of business ethics and confidentiality while such nominee serves as a Trustee, such agreement to be on the terms and in a form (the “Agreement”) determined satisfactory by the Board of Trustees, as amended and supplemented from time to time in the discretion of the Board of Trustees.  The terms of the Agreement may be substantially similar to the Code of Business Conduct and Ethics of the Trust or any similar code promulgated by the Trust (the “Code of Business Conduct”) or may differ from or supplement the Code of Business Conduct.

(f) Determinations required or permitted to be made under this Section 2.14 by the Board of Trustees may be delegated by the Board of Trustees to a committee of the Board of Trustees, subject to applicable law.

Section 2.15 No Shareholder Actions by Written Consent. Shareholders shall not be authorized or permitted to take any action required or permitted to be taken at a meeting of shareholders by written consent, and may take such action only at a shareholders meeting of the Trust.

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Section 2.16 Voting by Ballot. Voting on any question or in any election may be by voice vote unless the chairperson of the meeting or any shareholder shall demand that voting be by ballot.

Section 2.17 Proposals of Business Which Are Not Proper Matters For Action By Shareholders. Notwithstanding anything in these Bylaws to the contrary, subject to applicable law, any shareholder proposal for business the subject matter or effect of which would be within the exclusive purview of the Board of Trustees or would reasonably likely, if considered by the shareholders or approved or implemented by the Trust, result in an impairment of the limited liability status for the Trust’s shareholders, shall be deemed not to be a matter upon which the shareholders are entitled to vote.  The Board of Trustees in its discretion shall be entitled to determine whether a shareholder proposal for business is not a matter upon which the shareholders are entitled to vote pursuant to this Section 2.17, and its decision shall be final and binding unless determined by a court of competent jurisdiction to have been made in bad faith.

ARTICLE III

TRUSTEES

Section 3.1 General Powers; Qualifications; Trustees Holding Over. The business and affairs of the Trust shall be managed under the direction of its Board of Trustees.  A Trustee shall be an individual at least twenty-one (21) years of age who is not under legal disability.  To qualify for nomination or election as a Trustee, an individual, at the time of nomination and election, shall, without limitation, (a) have substantial expertise or experience relevant to the business of the Trust and its subsidiaries (as determined by the Board of Trustees), (b) not have been convicted of a felony, (c) meet the qualifications of an Independent Trustee or a Managing Trustee, each as defined in Section 3.2, as the case may be, depending upon the position for which such individual may be nominated and elected, and (d) have been nominated for election to the Board of Trustees in accordance with Section 2.14.  In case of failure to elect Trustees at an annual meeting of the shareholders, the incumbent Trustees shall hold over and continue to direct the management of the business and affairs of the Trust until they may resign or until their successors are elected and qualify.

Section 3.2 Independent Trustees and Managing Trustees. A majority of the Trustees holding office shall at all times be Independent Trustees; provided, however, that upon a failure to comply with this requirement as a result of the creation of a temporary vacancy which shall be filled by an Independent Trustee, whether as a result of enlargement of the Board of Trustees or the resignation, removal or death of a Trustee who is an Independent Trustee, such requirement shall not be applicable.  An “Independent Trustee” is one who is not an employee of the Manager (as defined in the Declaration of Trust), who is not involved in the Trust’s day to day activities and who meets the qualifications of an independent director (not including the specific independence requirements applicable only to members of the Audit Committee of the Board of Trustees) under the applicable rules of each securities exchange upon which shares of beneficial interest of the Trust are listed for trading and the SEC, as those requirements may be amended from time to time.  If the number of Trustees, at any time, is set at less than five (5), at least one (1) Trustee shall be a Managing Trustee.  So long as the number of Trustees shall be five (5) or greater, at least two (2) Trustees shall be Managing Trustees.  “Managing Trustees” shall mean

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Trustees who have been employees, officers or directors of the Manager or involved in the day to day activities of the Trust for at least one year prior to their election.  If at any time the Board of Trustees shall not be comprised of a majority of Independent Trustees, the Board of Trustees shall take such actions as will cure such condition; provided that the fact that the Board of Trustees does not have a majority of Independent Trustees or has not taken such action at any time or from time to time shall not affect the validity of any action taken by the Board of Trustees.  If at any time the Board of Trustees shall not be comprised of a number of Managing Trustees as is required under this Section 3.2, the Board of Trustees shall take such actions as will cure such condition; provided that the fact that the Board of Trustees does not have the requisite number of Managing Trustees or has not taken such action at any time or from time to time shall not affect the validity of any action taken by the Board of Trustees.

Section 3.3 Number and Tenure. The number of Trustees constituting the entire Board of Trustees may be increased or decreased from time to time only by a vote of the Trustees; provided however that the tenure of office of a Trustee shall not be affected by any decrease in the number of Trustees.  The number of Trustees shall be five (5) until increased or decreased by the Board of Trustees.

Section 3.4 Annual and Regular Meetings. An annual meeting of the Trustees shall be held immediately after the annual meeting of shareholders, no notice other than this Bylaw being necessary.  The time and place of the annual meeting of the Trustees may be changed by the Board of Trustees.  The Trustees may provide, by resolution, the time and place, either within or without the State of Maryland, for the holding of regular meetings of the Trustees without other notice than such resolution.  If any such regular meeting is not so provided for, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Trustees.

Section 3.5 Special Meetings. Special meetings of the Trustees may be called at any time by any Managing Trustee, the president or pursuant to the request of any two (2) Trustees then in office.  The person or persons authorized to call special meetings of the Trustees may fix any place, either within or without the State of Maryland, as the place for holding any special meeting of the Trustees called by them.

Section 3.6 Notice. Notice of any special meeting shall be given by written notice delivered personally or by electronic mail, telephoned, facsimile transmitted, overnight couriered (with proof of delivery) or mailed to each Trustee at his or her business or residence address.  Personally delivered, telephoned, facsimile transmitted or electronically mailed notices shall be given at least twenty-four (24) hours prior to the meeting.  Notice by mail shall be deposited in the U.S. mail at least seventy-two (72) hours prior to the meeting.  If mailed, such notice shall be deemed to be given when deposited in the U.S. mail properly addressed, with postage thereon prepaid.  Electronic mail notice shall be deemed to be given upon transmission of the message to the electronic mail address given to the Trust by the Trustee.  Telephone notice shall be deemed given when the Trustee is personally given such notice in a telephone call to which he is a party.  Facsimile transmission notice shall be deemed given upon completion of the transmission of the message to the number given to the Trust by the Trustee and receipt of a completed answer back indicating receipt.  If sent by overnight courier, such notice shall be deemed given when delivered to the courier.  Neither the business to be transacted at, nor the purpose of, any annual,

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regular or special meeting of the Trustees need be stated in the notice, unless specifically required by statute or these Bylaws.

Section 3.7 Quorum. A majority of the Trustees shall constitute a quorum for transaction of business at any meeting of the Trustees, provided that, if less than a majority of such Trustees are present at a meeting, a majority of the Trustees present may adjourn the meeting from time to time without further notice, and provided further that if, pursuant to the Declaration of Trust or these Bylaws, the vote of a majority of a particular group of Trustees is required for action, a quorum for that action shall also include a majority of such group.  The Trustees present at a meeting of the Board of Trustees which has been duly called and convened and at which a quorum was established may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of such number of Trustees as would otherwise result in less than a quorum then being present at the meeting.

Section 3.8 Voting. The action of the majority of the Trustees present at a meeting at which a quorum is or was present shall be the action of the Trustees, unless the concurrence of a greater proportion is required for such action by specific provision of an applicable statute, the Declaration of Trust or these Bylaws.  If enough Trustees have withdrawn from a meeting to leave fewer than are required to establish a quorum, but the meeting is not adjourned, the action of the majority of that number of Trustees necessary to constitute a quorum at such meeting shall be the action of the Board of Trustees, unless the concurrence of a greater proportion is required for such action by applicable law, the Declaration of Trust or these Bylaws.

Section 3.9 Telephone Meetings. Trustees may participate in a meeting by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time.  Participation in a meeting by these means shall constitute presence in person at the meeting.  Such meeting shall be deemed to have been held at a place designated by the Trustees at the meeting.

Section 3.10 Action by Written Consent of Trustees. Unless specifically otherwise provided in the Declaration of Trust, any action required or permitted to be taken at any meeting of the Trustees may be taken without a meeting, if a majority of the Trustees shall individually or collectively consent in writing or by electronic transmission to such action.  Such written or electronic consent or consents shall be filed with the records of the Trust and shall have the same force and effect as the affirmative vote of such Trustees at a duly held meeting of the Trustees at which a quorum was present.

Section 3.11 Waiver of Notice.  The actions taken at any meeting of the Trustees, however called and noticed or wherever held, shall be as valid as though taken at a meeting duly held after regular call and notice if a quorum is present and if, either before or after the meeting, each of the Trustees not present waives notice, consents to the holding of such meeting or approves the minutes thereof.

Section 3.12 Vacancies. If for any reason any or all the Trustees cease to be Trustees, such event shall not terminate the Trust or affect these Bylaws or the powers of the remaining Trustees hereunder (even if fewer than three Trustees remain).  Any vacancy on the Board of Trustees may be filled only by a majority of the remaining Trustees, even if the remaining

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Trustees do not constitute a quorum.  Any Trustee elected to fill a vacancy, whether occurring due to an increase in size of the Board of Trustees or by the death, resignation or removal of any Trustee, shall hold office for the remainder of the full term of the class of Trustees in which the vacancy occurred or was created and until a successor is elected and qualifies.

Section 3.13 Compensation. The Trustees shall be entitled to receive such reasonable compensation for their services as Trustees as the Trustees may determine from time to time.  Trustees may be reimbursed for expenses of attendance, if any, at each annual, regular or special meeting of the Trustees or of any committee thereof; and for their expenses, if any, in connection with each property visit and any other service or activity performed or engaged in as Trustees.  The Trustees shall be entitled to receive remuneration for services rendered to the Trust in any other capacity, and such services may include, without limitation, services as an officer of the Trust, services as an employee of the Manager, legal, accounting or other professional services, or services as a broker, transfer agent or underwriter, whether performed by a Trustee or any person affiliated with a Trustee.

Section 3.14 Surety Bonds. Unless specifically required by law, no Trustee shall be obligated to give any bond or surety or other security for the performance of any of his or her duties.

Section 3.15 Reliance. Each Trustee, officer, employee and agent of the Trust shall, in the performance of his or her duties with respect to the Trust, be entitled to rely on any information, opinion, report or statement, including any financial statement or other financial data, prepared or presented by an officer or employee of the Trust or by the Manager, accountants, appraisers or other experts or consultants selected by the Board of Trustees or officers of the Trust, regardless of whether such counsel or expert may also be a Trustee.

Section 3.16 Interested Trustee Transactions. Section 2-419 of the Maryland General Corporation Law (the “MGCL”) (or any successor statute) shall be available for and apply to any contract or other transaction between the Trust and any of its Trustees or between the Trust and any other trust, corporation, firm or other entity in which any of its Trustees is a trustee or director or has a material financial interest.

Section 3.17 Certain Rights of Trustees, Officers, Employees and Agents. A Trustee shall have no responsibility to devote his or her full time to the affairs of the Trust.  Any Trustee or officer, employee or agent of the Trust, in his or her personal capacity or in a capacity as an affiliate, employee or agent of any other person, or otherwise, may have business interests and engage in business activities similar or in addition to those of or relating to the Trust.

Section 3.18 Emergency Provisions. Notwithstanding any other provision in the Declaration of Trust or these Bylaws, this Section 3.18 shall apply during the existence of any catastrophe, or other similar emergency condition, as a result of which a quorum of the Board of Trustees under ARTICLE III cannot readily be obtained (an “Emergency”).  During any Emergency, unless otherwise provided by the Board of Trustees, (a) a meeting of the Board of Trustees may be called by any Managing Trustee or officer of the Trust by any means feasible under the circumstances and (b) notice of any meeting of the Board of Trustees during such an Emergency may be given less than twenty-four (24) hours prior to the meeting to as many

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Trustees and by such means as it may be feasible at the time, including publication, television or radio.

Section 3.19 Removal for Cause. A shareholder(s) proposing to remove one or more Trustees for cause shall meet all requirements in these Bylaws for a nomination of an individual for election to the Board of Trustees at an annual meeting of shareholders or a proposal of other business to be properly brought by such shareholder(s) at a meeting of the shareholders as set forth in Section 2.14.1.  For purposes of the provisions in the Declaration of Trust regarding the removal of a Trustee, “cause” shall mean, with respect to any particular Trustee, conviction of a felony or a final judgment of a court of competent jurisdiction holding that such Trustee caused demonstrable, material harm to the Trust through bad faith or active and deliberate dishonesty.

ARTICLE IV

COMMITTEES

Section 4.1 Number; Tenure and Qualifications. The Board of Trustees shall appoint an Audit Committee, a Compensation Committee and a Nominating and Governance Committee.  Each of these committees shall be composed of three or more Trustees, to serve at the pleasure of the Board of Trustees.  The Board of Trustees may also appoint other committees from time to time composed of one or more members, at least one of which shall be a Trustee, to serve at the pleasure of the Board of Trustees.  The Board of Trustees shall adopt a charter with respect to the Audit Committee, the Compensation Committee and the Nominating and Governance Committee, which charter shall specify the purposes, the criteria for membership and the responsibility and duties and may specify other matters with respect to each committee.  The Board of Trustees may also adopt a charter with respect to other committees.

Section 4.2 Powers. The Trustees may delegate any of the powers of the Trustees to committees appointed under Section 4.1 and composed solely of Trustees, except as prohibited by law.  If a charter has been adopted with respect to a committee composed solely of Trustees, the charter shall constitute a delegation by the Trustees of the powers of the Board of Trustees necessary to carry out the purposes, responsibilities and duties of a committee provided in the charter or reasonably related to those purposes, responsibilities and duties, to the extent permitted by law.

Section 4.3 Meetings. Notice of committee meetings shall be given in the same manner as notice for special meetings of the Board of Trustees.  One-third (1/3), but not less than one, of the members of any committee shall be present in person at any meeting of a committee in order to constitute a quorum for the transaction of business at a meeting, and the act of a majority present at a meeting at the time of a vote if a quorum is then present shall be the act of a committee.  The Board of Trustees or, if authorized by the Board in a committee charter or otherwise, the committee members may designate a chairman of any committee, and the chairman or, in the absence of a chairman, a majority of any committee may fix the time and place of its meetings unless the Board shall otherwise provide.  In the absence or disqualification of any member of any committee, the members thereof present at any meeting and not disqualified from voting, whether or not they constitute a quorum, may unanimously appoint another Trustee to act at the meeting in the place of absent or disqualified members.

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Section 4.4 Telephone Meetings. Members of a committee may participate in a meeting by means of a conference telephone or similar communications equipment and participation in a meeting by these means shall constitute presence in person at the meeting.

Section 4.5 Action by Written Consent of Committees. Any action required or permitted to be taken at any meeting of a committee of the Trustees may be taken without a meeting, if a consent in writing or by electronic transmission to such action is signed by a majority of the committee and such written or electronic consent is filed with the minutes of proceedings of such committee.

Section 4.6 Vacancies. Subject to the provisions hereof, the Board of Trustees shall have the power at any time to change the membership of any committee, to fill all vacancies, to designate alternate members to replace any absent or disqualified member or to dissolve any such committee.

ARTICLE V

OFFICERS

Section 5.1 General Provisions. The officers of the Trust shall include a president, a secretary and a treasurer.  In addition, the Board of Trustees may from time to time elect such other officers with such titles, powers and duties as set forth herein or as the Board of Trustees shall deem necessary or desirable, including a chairman of the board, a vice chairman of the board, a chief executive officer, a chief operating officer, a chief financial officer, one or more vice presidents, one or more assistant secretaries and one or more assistant treasurers.  The officers of the Trust shall be elected annually by the Board of Trustees.  Each officer shall hold office until his or her successor is elected and qualifies or until his or her death, resignation or removal in the manner hereinafter provided.  Any two (2) or more offices, except that of president and vice president, may be held by the same person.  In their discretion, the Trustees may leave unfilled any office except that of president, treasurer and secretary.  Election of an officer or agent shall not of itself create contract rights between the Trust and such officer or agent.

Section 5.2 Removal and Resignation. Any officer or agent of the Trust may be removed, with or without cause, by the Board of Trustees if in its judgment the best interests of the Trust would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed.  Any officer of the Trust may resign at any time by delivering his or her resignation to the Board of Trustees, the president or the secretary.  Any resignation shall take effect immediately upon its receipt or at such later time specified in the resignation.  The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation.  Such resignation shall be without prejudice to the contract rights, if any, of the Trust.

Section 5.3 Vacancies. A vacancy in any office may be filled by the Board of Trustees for the balance of the term.

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Section 5.4 President. Except as the Board of Trustees may otherwise provide, the president shall have the duties usually vested in a president.  The president shall have such other duties as may be assigned to the president by the Board of Trustees from time to time.  The president may execute any deed, mortgage, bond, lease, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Board of Trustees or by these Bylaws to some other officer or agent of the Trust or shall be required by law to be otherwise executed.

Section 5.5 Chief Operating Officer. If elected, except as the Board of Trustees may otherwise provide, the chief operating officer shall have the duties usually vested in a chief operating officer.  The chief operating officer shall have such other duties as may be assigned to the chief operating officer by the president or the Board of Trustees from time to time.

Section 5.6 Chief Financial Officer. If elected, except as the Board of Trustees may otherwise provide, the chief financial officer shall have the duties usually vested in a chief financial officer.  The chief financial officer shall have such other duties as may be assigned to the chief financial officer by the president or the Board of Trustees from time to time.

Section 5.7 Vice Presidents. In the absence or disability of the president, the vice president, if any (or if there is more than one, the vice presidents in the order designated or, in the absence of any designation, then in the order of their election), shall perform the duties and exercise the powers of the president.  The vice president(s) shall have such other duties as may be assigned to such vice president by the president or the Board of Trustees from time to time.  The Board of Trustees may designate one or more vice presidents as executive vice president, senior vice president or vice presidents for particular areas of responsibility.

Section 5.8 Secretary. Except as the Board of Trustees may otherwise provide, the secretary (or his or her designee) shall (a) keep the minutes of the proceedings of the shareholders, the Board of Trustees and committees of the Board of Trustees in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be custodian of the Trust records and of the seal of the Trust, if any; and (d) maintain a share register, showing the ownership and transfers of ownership of all shares of beneficial interest of the Trust, unless a transfer agent is employed to maintain and does maintain such a share register.  The secretary shall have such other duties as may be assigned to the secretary by the president or the Board of Trustees from time to time.

Section 5.9 Treasurer. Except as the Board of Trustees may otherwise provide, the treasurer shall (a) have general charge of the financial affairs of the Trust; (b) have or oversee in accordance with Section 6.3 the custody of the funds, securities and other valuable documents of the Trust; (c) maintain or oversee the maintenance of proper financial books and records of the Trust; and (d) have the duties usually vested in a treasurer.  The treasurer shall have such other duties as may be assigned to the treasurer by the president or the Board of Trustees from time to time.

Section 5.10 Assistant Secretaries and Assistant Treasurers. The assistant secretaries and assistant treasurers, in general, shall perform such duties as shall be assigned to them by the

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secretary or treasurer, respectively, or by the president or the Board of Trustees from time to time.

ARTICLE VI

CONTRACTS, LOANS, CHECKS AND DEPOSITS

Section 6.1 Contracts. The Board of Trustees may authorize any Trustee, officer or agent (including the Manager or any officer of the Manager) to execute and deliver any instrument in the name of and on behalf of the Trust and such authority may be general or confined to specific instances.  Any agreement, deed, mortgage, lease or other document shall be valid and binding upon the Trust when duly authorized or ratified by action of the Board of Trustees and executed by an authorized person.

Section 6.2 Checks and Drafts. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Trust shall be signed by such officer or agent of the Trust in such manner as the Board of Trustees, the president, the treasurer or any other officer designated by the Board of Trustees may determine.

Section 6.3 Deposits. All funds of the Trust not otherwise employed shall be deposited or invested from time to time to the credit of the Trust as the Board of Trustees, the president, the treasurer or any other officer designated by the Board of Trustees may determine.

ARTICLE VII

SHARES

Section 7.1 Certificates. Ownership of shares of any class of shares of beneficial interest of the Trust shall be evidenced by certificates, or at the election of a shareholder in book entry form.  Unless otherwise determined by the Board of Trustees, any such certificates shall be signed by the president or a vice president and countersigned by the secretary or an assistant secretary or the treasurer or an assistant treasurer and may be sealed with the seal, if any, of the Trust.  The signatures may be either manual or facsimile.  Certificates shall be consecutively numbered and if the Trust shall from time to time issue several classes of shares, each class may have its own number series.  A certificate is valid and may be issued whether or not an officer who signed it is still an officer when it is issued.

Section 7.2 Transfers.

(a) Shares of beneficial interest of the Trust shall be transferable in the manner provided by applicable law, the Declaration of Trust and these Bylaws.  Certificates shall be treated as negotiable and title thereto and to the shares they represent shall be transferred by delivery thereof to the same extent as those of a Maryland stock corporation.

(b) The Trust shall be entitled to treat the holder of record of any share or shares as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person,

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whether or not it shall have express or other notice thereof, except as otherwise expressly provided in these Bylaws or by the laws of the State of Maryland.

Section 7.3 Lost Certificates. For shares evidenced by certificates, any officer designated by the Trustees may direct a new certificate to be issued in place of any certificate previously issued by the Trust alleged to have been lost, stolen or destroyed upon the making of an affidavit of that fact by the person claiming the certificate to be lost, stolen or destroyed.  When authorizing the issuance of a new certificate, an officer designated by the Trustees may, in such officer’s discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or the owner’s legal representative to advertise the same in such manner as he shall require and/or to give bond, with sufficient surety, to the Trust to indemnify it against any loss or claim which may arise as a result of the issuance of a new certificate.

Section 7.4 Closing of Transfer Books or Fixing of Record Date.

(a) The Trustees may set, in advance, a record date for the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or determining shareholders entitled to receive payment of any dividend or the allotment of any other rights, or in order to make a determination of shareholders for any other proper purpose.

(b) In lieu of fixing a record date, the Trustees may provide that the share transfer books shall be closed for a stated period but not longer than twenty (20) days.  If the share transfer books are closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten (10) days before the date of such meeting.

(c) If no record date is fixed and the share transfer books are not closed for the determination of shareholders, (i) the record date for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the day on which the notice of meeting is mailed or the thirtieth (30th) day before the meeting, whichever is the closer date to the meeting; and (ii) the record date for the determination of shareholders entitled to receive payment of a dividend or an allotment of any other rights shall be the close of business on the day on which the resolution of the Trustees, declaring the dividend or allotment of rights, is adopted.

(d) When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof unless the Board of Trustees shall set a new record date with respect thereto.

Section 7.5 Share Ledger. The Trust shall maintain at its principal office or at the office of its counsel, accountants or transfer agent a share ledger containing the name and address of each shareholder and the number of shares of each class of shares of beneficial interest of the Trust held by such shareholder.

Section 7.6 Fractional Shares; Issuance of Units.  The Trustees may issue fractional shares or provide for the issuance of scrip, all on such terms and under such conditions as they may determine.  Notwithstanding any other provision of the Declaration of Trust or these

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Bylaws, the Trustees may issue units consisting of different securities of the Trust.  Any security issued in a unit shall have the same characteristics as any identical securities issued by the Trust, except that the Trustees may provide that for a specified period securities of the Trust issued in such unit may be transferred on the books of the Trust only in such unit.

ARTICLE VIII

INDEMNIFICATION AND ADVANCEMENT OF EXPENSES

Section 8.1 Indemnification and Advancement of Expenses.

(a) To the maximum extent permitted by Maryland law in effect from time to time, the Trust shall indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, shall pay or reimburse reasonable expenses in advance of final disposition of a proceeding to (i) any individual who is a present or former Trustee or officer of the Trust and who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity or (ii) any individual who, while a Trustee or officer of the Trust and at the request of the Trust, serves or has served as a Trustee, director, officer or partner of another real estate investment trust, corporation, partnership, joint venture, trust, employee benefit plan or other enterprise and who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity.  The rights to indemnification and advance of expenses provided by the Declaration of Trust of the Trust and these Bylaws shall vest immediately upon election of a Trustee or officer.  The Trust may, with the approval of its Board of Trustees, provide such indemnification and advance for expenses to an individual who served a predecessor of the Trust in any of the capacities described in (a)(i) or (ii) above and to any shareholder, employee or agent of the Trust or a predecessor of the Trust.

(b) Notwithstanding anything in these Bylaws to the contrary, except with respect to proceedings to enforce rights to indemnification, the Trust shall indemnify any person referenced in Section 8.1(a)(i) or (ii) above in connection with any proceeding initiated by such person against the Trust only if such proceeding was authorized by the Board of Trustees.

(c) The indemnification and payment or reimbursement of expenses provided in these Bylaws shall not be deemed exclusive of or limit in any way other rights to which any person seeking indemnification or payment or reimbursement of expenses may be or may become entitled under any bylaw, regulation, insurance, agreement or otherwise.

(d) Neither the amendment nor repeal of this ARTICLE VIII, nor the adoption or amendment of any other provision of the Bylaws or Declaration of Trust of the Trust inconsistent with this ARTICLE VIII, shall apply to or affect in any respect the applicability of the preceding paragraph with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption.

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ARTICLE IX

REGULATORY COMPLIANCE AND DISCLOSURE

Section 9.1 Actions Requiring Regulatory Compliance Implicating the Trust. If any shareholder (whether individually or constituting a group, as determined by the Board of Trustees), by virtue of such shareholder’s ownership interest in the Trust or actions taken by the shareholder affecting the Trust, triggers the application of any requirement or regulation of any federal, state, municipal or other governmental or regulatory body on the Trust or any subsidiary (for purposes of this ARTICLE IX, as defined in Section 2.14.5(c)) of the Trust or any of their respective businesses, assets or operations, including, without limitation, any obligations to make or obtain a Governmental Action (as defined in Section 2.14.3), such shareholder shall promptly take all actions necessary and fully cooperate with the Trust to ensure that such requirements or regulations are satisfied without restricting, imposing additional obligations on or in any way limiting the business, assets, operations or prospects of the Trust or any subsidiary of the Trust.  If the shareholder fails or is otherwise unable to promptly take such actions so to cause satisfaction of such requirements or regulations, the shareholder shall promptly divest a sufficient number of shares of beneficial interest of the Trust necessary to cause the application of such requirement or regulation to not apply to the Trust or any subsidiary of the Trust.  If the shareholder fails to cause such satisfaction or divest itself of such sufficient number of shares of beneficial interest of the Trust by not later than the tenth (10th) day after triggering such requirement or regulation referred to in this Section 9.1, then any shares of beneficial interest of the Trust beneficially owned by such shareholder at and in excess of the level triggering the application of such requirement or regulation shall, to the fullest extent permitted by law, be deemed to constitute shares held in violation of the ownership limitations set forth in ARTICLE VII of the Declaration of Trust of the Trust and be subject to the provisions of ARTICLE VII of the Declaration of Trust of the Trust and any actions triggering the application of such a requirement or regulation may be deemed by the Trust to be of no force or effect.  Moreover, if the shareholder who triggers the application of any regulation or requirement fails to satisfy the requirements or regulations or to take curative actions within such ten (10) day period, the Trust may take all other actions which the Board of Trustees deems appropriate to require compliance or to preserve the value of the Trust’s assets; and the Trust may charge the offending shareholder for the Trust’s costs and expenses as well as any damages which may result to the Trust.

As an example and not as a limitation, at the time these Bylaws are being amended and restated, the Trust holds a controlling ownership position in a company formed and licensed as an insurance company in the State of Indiana.  The laws of the State of Indiana have certain regulatory requirements for any person who seeks to control (as defined under Indiana law) a company which itself controls an insurance company domiciled in the State of Indiana, including by exercising proxies representing ten percent (10%) or more of the Trust’s voting securities.  Accordingly, if a shareholder seeks to exercise proxies for a matter to be voted upon at a meeting of the Trust’s shareholders without having obtained any applicable approvals from the Indiana insurance regulatory authorities, such proxies representing ten percent (10%) or more of the Trust’s voting securities will, subject to Section 9.3, be void and of no further force or effect.

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Section 9.2 Compliance With Law. Shareholders shall comply with all applicable requirements of federal and state laws, including all rules and regulations promulgated thereunder, in connection with such shareholder’s ownership interest in the Trust and all other laws which apply to the Trust or any subsidiary of the Trust or their respective businesses, assets or operations and which require action or inaction on the part of the shareholder.

Section 9.3 Limitation on Voting Shares or Proxies. Without limiting the provisions of Section 9.1, if a shareholder (whether individually or constituting a group, as determined by the Board of Trustees), by virtue of such shareholder’s ownership interest in the Trust or its receipt or exercise of proxies to vote shares owned by other shareholders, would not be permitted to vote the shareholder’s shares of beneficial interest of the Trust or proxies for shares of beneficial interest of the Trust in excess of a certain amount pursuant to applicable law (including by way of example, applicable state insurance regulations) but the Board of Trustees determines that the excess shares or shares represented by the excess proxies are necessary to obtain a quorum, then such shareholder shall not be entitled to vote any such excess shares or proxies, and instead such excess shares or proxies may, to the fullest extent permitted by law, be voted by the Manager (or by another person designated by the Trustees) in proportion to the total shares otherwise voted on such matter.

Section 9.4 Representations, Warranties and Covenants Made to Governmental or Regulatory Bodies. To the fullest extent permitted by law, any representation, warranty or covenant made by a shareholder with any governmental or regulatory body in connection with such shareholder’s interest in the Trust or any subsidiary of the Trust shall be deemed to be simultaneously made to, for the benefit of and enforceable by, the Trust and any applicable subsidiary of the Trust.

Section 9.5 Board of Trustees’ Determinations. The Board of Trustees shall be empowered to make all determinations regarding the interpretation, application, enforcement and compliance with any matters referred to or contemplated by this ARTICLE IX.

ARTICLE X

FISCAL YEAR

Section 10.1 Fiscal Year. The fiscal year of the Trust shall be the calendar year.

ARTICLE XI

DIVIDENDS AND OTHER DISTRIBUTIONS

Section 11.1 Dividends and Other Distributions. Dividends and other distributions upon the shares of beneficial interest of the Trust may be authorized and declared by the Trustees.  Dividends and other distributions may be paid in cash, property or shares of beneficial interest of the Trust.

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ARTICLE XII

SEAL

Section 12.1 Seal. The Trustees may authorize the adoption of a seal by the Trust.  The Trustees may authorize one or more duplicate seals.

Section 12.2 Affixing Seal. Whenever the Trust is permitted or required to affix its seal to a document, it shall be sufficient to meet the requirements of any law, rule or regulation relating to a seal to place the word “(SEAL)” adjacent to the signature of the person authorized to execute the document on behalf of the Trust.

ARTICLE XIII

WAIVER OF NOTICE

Section 13.1 Waiver of Notice. Whenever any notice is required to be given pursuant to the Declaration of Trust, these Bylaws or applicable law, a waiver thereof in writing, signed by the person or persons entitled to such notice, or a waiver by electronic transmission by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice.  Neither the business to be transacted at nor the purpose of any meeting need be set forth in the waiver of notice or waiver by electronic transmission, unless specifically required by statute.  The attendance of any person at any meeting shall constitute a waiver of notice of such meeting, except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

ARTICLE XIV

AMENDMENT OF BYLAWS

Section 14.1 Amendment of Bylaws.  Except for any change for which these Bylaws requires approval by more than a majority vote of the Trustees, these Bylaws may be amended or repealed or new or additional Bylaws may be adopted only by the vote or written consent of a majority of the Trustees as specified in Section 3.10.

ARTICLE XV

MISCELLANEOUS

Section 15.1 References to Declaration of Trust.  All references to the Declaration of Trust shall include any amendments and supplements thereto.

Section 15.2 Costs and Expenses. In addition to, and as further clarification of each shareholder’s obligation to indemnify and hold the Trust harmless pursuant to Section 8.6 of the Declaration of Trust, to the fullest extent permitted by law, each shareholder will be liable to the Trust (and any subsidiaries or affiliates thereof) for, and indemnify and hold harmless the Trust (and any subsidiaries or affiliates thereof) from and against, all costs, expenses, penalties, fines

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or other amounts, including, without limitation, reasonable attorneys’ and other professional fees, whether third party or internal, arising from such shareholder’s breach of or failure to fully comply with any covenant, condition or provision of these Bylaws or the Declaration of Trust (including Section 2.14 of these Bylaws) or any action by or against the Trust (or any subsidiaries or affiliates thereof) in which such shareholder is not the prevailing party, and shall pay such amounts to such indemnitee on demand, together with interest on such amounts, which interest will accrue at the lesser of eighteen percent (18%) per annum and the maximum amount permitted by law, from the date such costs or the like are incurred until the receipt of payment.

Section 15.3 Ratification. The Board of Trustees or the shareholders may ratify and make binding on the Trust any action or inaction by the Trust or its officers to the extent that the Board of Trustees or the shareholders could have originally authorized the matter.  Moreover, any action or inaction questioned in any shareholder’s derivative proceeding or any other proceeding on the ground of lack of authority, defective or irregular execution, adverse interest of a Trustee, officer or shareholder, non-disclosure, miscomputation, the application of improper principles or practices of accounting, or otherwise, may be ratified, before or after judgment, by the Board of Trustees or by the shareholders and, if so ratified, shall have the same force and effect as if the questioned action or inaction had been originally duly authorized, and such ratification shall be binding upon the Trust and its shareholders and shall constitute a bar to any claim or execution of any judgment in respect of such questioned action or inaction

Section 15.4 Ambiguity. In the case of an ambiguity in the application of any provision of these Bylaws or any definition contained in these Bylaws, the Board of Trustees shall have the sole power to determine the application of such provisions with respect to any situation based on the facts known to it and such determination shall be final and binding unless determined by a court of competent jurisdiction to have been made in bad faith.

Section 15.5 Inspection of Bylaws. The Trustees shall keep at the principal office for the transaction of business of the Trust the original or a copy of the Bylaws as amended or otherwise altered to date, certified by the secretary, which shall be open to inspection by the shareholders at all reasonable times during office hours.

Section 15.6 Election to be Subject to Part of Title 3, Subtitle 8. Notwithstanding any other provision contained in the Declaration of Trust or these Bylaws, the Trust hereby elects to be subject to Section 3-804(b) and (c) of Title 3, Subtitle 8 of the MGCL.  This Section 15.6 only may be repealed, in whole or in part, by a subsequent amendment to these Bylaws.

Section 15.7 Control Share Acquisition Act. Notwithstanding any other provision contained in the Declaration of Trust or these Bylaws, Title 3, Subtitle 7 of the MGCL  shall not apply to any acquisition by any person of shares of beneficial interest of the Trust.  This section may be repealed, in whole or in part, at any time, whether before or after an acquisition of control shares and, upon such repeal, may, to the extent provided by any successor Bylaw or amendment hereto, apply to any prior or subsequent control share acquisition.

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ARTICLE XVI

ARBITRATION PROCEDURES FOR DISPUTES

Section 16.1 Procedures for Arbitration of Disputes. Any disputes, claims or controversies brought by or on behalf of any shareholder of the Trust (which, for purposes of this ARTICLE XVI, shall mean any shareholder of record or any beneficial owner of shares of beneficial interest of the Trust, or any former shareholder of record or beneficial owner of shares of beneficial interest of the Trust), 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 of the Trust against the Trust or any Trustee, officer, manager (including Reit Management & Research LLC or its successor), 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 (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 ARTICLE XVI.  For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against Trustees, officers or managers of the Trust and class actions by shareholders against those individuals or entities and the Trust.  For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party.

Section 16.2 Arbitrators. 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 each 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

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AAA in accordance with a listing, striking and ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

Section 16.3 Place of Arbitration. The place of arbitration shall be Boston, Massachusetts unless otherwise agreed by the parties.

Section 16.4 Discovery. 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.

Section 16.5 Awards. In rendering an award or decision (an “Award”), the arbitrators shall be required to follow the laws of the State of Maryland.  Any arbitration proceedings or Award 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 16.7, 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 such Award may provide.

Section 16.6 Costs and Expenses. Except as otherwise set forth in the Declaration of Trust or these Bylaws, including Section 15.2 of these Bylaws, or as otherwise agreed by the parties thereto, each party 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 the Trust’s Award to the claimant or the claimant’s attorneys.  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.

Section 16.7 Appeals. Any Award, including but not limited to any interim Award, may be appealed pursuant to the AAA’s Optional Appellate Arbitration Rules (“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 16.6 shall apply to any appeal pursuant to this Section 16.7 and the appeal tribunal shall not render an Award that would include shifting of any costs or expenses (including attorneys’ fees) of any party.

Section 16.8 Final and Binding. Following the expiration of the time for filing the notice of appeal, or the conclusion of the appeal process set forth in Section 16.7, 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

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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, except for actions seeking interim or other provisional relief in aid of arbitration proceedings in any court of competent jurisdiction.

Section 16.9 Beneficiaries. This ARTICLE XVI is intended to benefit and be enforceable by the shareholders, Trustees, officers, managers (including Reit Management & Research LLC or its successor), agents or employees of the Trust and the Trust and shall be binding on the shareholders of the Trust and the Trust, as applicable, 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.

ARTICLE XVII

EXCLUSIVE FORUM FOR CERTAIN DISPUTES

The Circuit Court for Baltimore City, Maryland, or, if that court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore Division, shall be the sole and exclusive forum for (1) any derivative action or proceeding brought on behalf of the Trust, (2) any action asserting a claim of breach of a fiduciary duty owed by any trustee, officer, manager, agent or employee of the Trust to the Trust or the Trust’s shareholders, (3) any action asserting a claim against the Trust or any trustee, officer, manager, agent or employee of the Trust arising pursuant to Maryland law or the Declaration of Trust or these Bylaws, including any disputes, claims or controversies brought by or on behalf of any shareholder of the Trust (which, for purposes of this ARTICLE XVII, shall mean any shareholder of record or any beneficial owner of any class or series of shares of beneficial interest of the Trust, or any former holder of record or beneficial owner of any class or series of shares of beneficial interest of the Trust), 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 of the Trust 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, including this ARTICLE XVII, or (4) any action asserting a claim against the Trust or any trustee, officer, manager, agent or employee of the Trust governed by the internal affairs doctrine of the State of Maryland.  Failure to enforce the foregoing provisions would cause the Trust irreparable harm and the Trust shall be entitled to equitable relief, including injunctive relief and specific performance, to enforce the foregoing provisions.  Any person or entity purchasing or otherwise acquiring any interest in shares of beneficial interest of the Trust shall be deemed to have notice of and consented to the provisions of this ARTICLE XVII. This ARTICLE XVII shall not abrogate or supersede any other provision of these Bylaws which may require the resolution of such disputes by arbitration.

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EX-3.3

Exhibit 3.3

GOVERNMENT PROPERTIES INCOME TRUST

AMENDED AND RESTATED BYLAWS

As Amended and Restated March 27July 31,  20142015

TABLE OF CONTENTS

ARTICLE I  OFFICES	1
Section 1.1  Principal Office	1
Section 1.2  Additional Offices	1
ARTICLE II  MEETINGS OF SHAREHOLDERS	1
Section 2.1  Place	1
Section 2.2  Annual Meeting	1
Section 2.3  Special Meetings	1
Section 2.4  Notice of Regular or Special Meetings	1
Section 2.5  Notice of Adjourned Meetings	2
Section 2.6.  Scope of MeetingsMeeting Business	2
Section 2.7  Organization of Shareholder Meetings	2
Section 2.8  Quorum	3
Section 2.9  Voting	3
Section 2.10  Proxies	34
Section 2.11  Record Date	4
Section 2.12  Voting of Shares by Certain Holders	4
Section 2.13  Inspectors	4
Section 2.14  Nominations and Other Proposals to be Considered at Meetings of Shareholders	4
Section 2.14.1  Annual Meetings of Shareholders.	45
Section 2.14.2  Shareholder Nominations or Other Proposals Causing Covenant Breaches or Defaults	910
Section 2.14.3  Shareholder Nominations or Other Proposals Requiring Governmental Action	910
Section 2.14.4  Special Meetings of Shareholders	911
Section 2.14.5  General	1011
Section 2.15  No Shareholder Actions by Written Consent	1213
Section 2.16  Voting by Ballot	1213
Section 2.17  Proposals of Business Which Are Not Proper Matters For Action By Shareholders	1213
ARTICLE III  TRUSTEES	1213
Section 3.1  General Powers; Qualifications; Trustees Holding Over	1213
Section 3.2  Independent Trustees and Managing Trustees	1314
Section 3.3  Number and Tenure	1314
Section 3.4  Annual and Regular Meetings	1314
Section 3.5  Special Meetings	1315
Section 3.6  Notice	1315
Section 3.7  Quorum	1415
Section 3.8  Voting	1415
Section 3.9  Telephone Meetings	1416
Section 3.10  Action by Written Consent of Trustees	1416
Section 3.11  Waiver of Notice	1516
Section 3.12  Vacancies	1516
Section 3.13  Compensation	1516
Section 3.14  Surety Bonds	1516

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Section 3.15  Reliance	1516
Section 3.16  Interested Trustee Transactions	1517
Section 3.17  Certain Rights of Trustees, Officers, Employees and Agents	1517
Section 3.18  Emergency Provisions	1617
Section 3.19  Removal for Cause	17
ARTICLE IV  COMMITTEES	1617
Section 4.1  Number; Tenure and Qualifications	1617
Section 4.2  Powers	1618
Section 4.3  Meetings	1618
Section 4.4  Telephone Meetings	1718
Section 4.5  Action by Written Consent of Committees	1718
Section 4.6  Vacancies	1718
ARTICLE V  OFFICERS	1719
Section 5.1  General Provisions	1719
Section 5.2  Removal and Resignation	1719
Section 5.3  Vacancies	1819
Section 5.4  President	1819
Section 5.5  Chief Operating Officer	19
Section 5.6  Chief Financial Officer	1920
Section 5.5.5.7Vice Presidents	1820
Section 5.6.5.8Secretary	1820
Section 5.7.5.9Treasurer	1820
Section 5.8.5.10Assistant Secretaries and Assistant Treasurers	1820
ARTICLE VI  CONTRACTS, LOANS, CHECKS AND DEPOSITS	1821
Section 6.1  Contracts	1821
Section 6.2  Checks and Drafts	1921
Section 6.3  Deposits	1921
ARTICLE VII  SHARES	1921
Section 7.1  Certificates	1921
Section 7.2  Transfers	1921
Section 7.3  Lost Certificates	1922
Section 7.4  Closing of Transfer Books or Fixing of Record Date	1922
Section 7.5  Share Ledger	2022
Section 7.6  Fractional Shares; Issuance of Units	2022
ARTICLE VIII  INDEMNIFICATION AND ADVANCEMENT OF EXPENSES	2023
Section 8.1  Indemnification and Advancement of Expenses	2023
ARTICLE IX  REGULATORY COMPLIANCE AND DISCLOSURE	2124
Section 9.1  Actions Requiring Regulatory Compliance Implicating the Trust	2124
Section 9.2  Compliance With Law	2225
Section 9.3  Limitation on Voting Shares or Proxies	2225
Section 9.4  Representations, Warranties and Covenants Made to Governmental or Regulatory Bodies	2225
Section 9.5  Board of Trustees’ Determinations	2325
ARTICLE X  ARBITRATION PROCEDURES FOR DISPUTES	23
Section 10.1.  Procedures for Arbitration of Disputes	23
Section 10.2.  Arbitrators	23

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Section 10.3.  Place of Arbitration	23
Section 10.4.  Discovery	24
Section 10.5.  Awards	24
Section 10.6.  Costs and Expenses	24
Section 10.7.  Final and Binding	24
Section 10.8.  Beneficiaries	24
ARTICLE XIX  FISCAL YEAR	2425
Section 11.1.10.1  Fiscal Year	2425
ARTICLE XIIXI  DIVIDENDS AND OTHER DISTRIBUTIONS	2525
Section 12.1.11.1  Dividends and Other Distributions	2525
ARTICLE XIIIXII  SEAL	2526
Section 13.1.12.1Seal	2526
Section 13.2.12.2Affixing Seal	2526
ARTICLE XIVXIII  WAIVER OF NOTICE	2526
Section 14.1.13.1  Waiver of Notice	2526
ARTICLE XVXIV  AMENDMENT OF BYLAWS	2526
Section 15.1.14.1  Amendment of Bylaws	2526
ARTICLE XVIXV  MISCELLANEOUS	2526
Section 16.1.15.1References to Declaration of Trust	2526
Section 16.2.15.2Costs and Expenses	2526
Section 16.3.15.3Ratification	2627
Section 16.4.15.4Ambiguity	2627
Section 16.5.15.5Inspection of Bylaws	2627
Section 16.6.15.6Election to be Subject to Part of Title 3, Subtitle 8	2627
Section 16.7.15.7Control Share Acquisition Act	2627
ARTICLE XVI  ARBITRATION PROCEDURES FOR DISPUTES	2728
Section 16.1  Procedures for Arbitration of Disputes	2728
Section 16.2  Arbitrators	2728
Section 16.3  Place of Arbitration	2829
Section 16.4  Discovery	2829
Section 16.5  Awards	2829
Section 16.6  Costs and Expenses	2829
Section 16.7  Appeals	2829
Section 16.8  Final and Binding	2830
Section 16.9  Beneficiaries	2930
ARTICLE XVII  EXCLUSIVE FORUM FOR CERTAIN DISPUTES	2930

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GOVERNMENT PROPERTIES INCOME TRUST

AMENDED AND RESTATED BYLAWS

These AMENDED AND RESTATED BYLAWS (the “Bylaws”) are made as of the date set forth above by the Board ofTrustees (as defined below).

ARTICLE I

OFFICES

Section 1.1Principal Office.  The principal office of the Trust shall be located at such place or places as the Board of Trustees may designate.

Section 1.2Additional Offices.  The Trust may have additional offices at such places as the Board of Trustees may from time to time determine or the business of the Trust may require.

ARTICLE II

MEETINGS OF SHAREHOLDERS

Section 2.1Place.  All meetings of shareholders shall be held at the principal office of the Trust or at such other place as is designated by the Board of Trustees or the president.

Section 2.2Annual Meeting.  An annual meeting of the shareholders for the election of Trustees and the transaction of any business within the powers of the Trust shall be held at such times as the Trustees may designate.  Failure to hold an annual meeting does not invalidate the Trust’s existence or affect any otherwise valid acts of the Trust.

Section 2.3Special Meetings.  Special meetings of shareholders may be called only by a majority of the Trustees then in office.  If there shall be no Trustees, the officers of the Trust shall promptly call a special meeting of the shareholders entitled to vote for the election of successor Trustees for the purpose of electing Trustees.

Section 2.4Notice of Regular or Special Meetings.  Notice given in writing or by electronic transmission specifying the place, day and hour of any regular or special meeting, the purposes of the meeting, to the extent required by law to be provided, and all other matters required by law shall be given to each shareholder of record entitled to vote, by mail, postage prepaid, sent to his or her address appearing on the books of the Trust or theretofore given by him or her to the Trust for the purpose of notice, by presenting it to such shareholder personally, by leaving it at the shareholder’s residence or usual place of business or by any other means permitted by Maryland law.  If mailed, such notice shall be deemed to be given once deposited in the U.S. mail addressed to the shareholder at his or her post office address as it appears on the records of the Trust, with postage thereon prepaid.  If transmitted electronically, such notice shall be deemed to be given when transmitted to the shareholder by an electronic transmission to any address or number of the shareholder at which the shareholder receives electronic transmissions.  It shall be the duty of the secretary to give notice of each meeting of the shareholders.  The Trust

may give a single notice to all shareholders who share an address, which single notice shall be effective to any shareholder at such address, unless a shareholder objects to receiving such single notice or revokes a prior consent to receiving such single notice.  Failure to give notice of any meeting to one or more shareholders, or any irregularity in such notice, shall not affect the validity of any meeting fixed in accordance with this ARTICLE II or the validity of any proceedings at any such meeting.

Section 2.5Notice of Adjourned Meetings.  It shall not be necessary to give notice of the time and place of any adjourned meeting or of the business to be transacted thereat other than by announcement at the meeting at which such adjournment is taken.

Section 2.6Scope of MeetingsMeeting Business.  Except as otherwise expressly set forth elsewhere in these Bylaws, no business shall be transacted at an annual or special meeting of shareholders except as specifically designated in the notice or otherwise properly brought before the meeting of shareholders by or at the direction of the Board of Trustees.

Section 2.7Organization of Shareholder Meetings.  Every meeting of shareholders shall be conducted by an individual appointed by the Board of Trustees to be chairperson of the meeting or, in the absence of such appointment or the absence of the appointed individual, by the chairman of the board or, in the case of a vacancy in the office or absence of the chairman of the board, by one of the following officers present at the meeting in the following order: the vice chairman of the board, if there be one, the president, the vice presidents in their order of seniority, the secretary,or, in the absence of such officers, a chairperson chosen by the shareholders by the vote of holders of shares of beneficial interest representing a majority of the votes cast on such appointment by shareholders present in person or represented by proxy.  The secretary, an assistant secretary or a person appointed by the Trustees or, in the absence of such appointment, a person appointed by the chairperson of the meeting shall act as secretary of the meeting and record the minutes of the meeting.  If the secretary presides as chairperson at a meeting of the shareholders, then the secretary shall not also act as secretary of the meeting and record the minutes of the meeting.  The order of business and all other matters of procedure at any meeting of shareholders shall be determined by the chairperson of the meeting.  The chairperson of the meeting may prescribe such rules, regulations and procedures and take such action as, in the discretion of such chairperson, are appropriate for the proper conduct of the meeting, including, without limitation: (a) restricting admission to the time set for the commencement of the meeting; (b) limiting attendance at the meeting to shareholders of record of the Trust, their duly authorized proxies or other such persons as the chairperson of the meeting may determine; (c) limiting participation at the meeting on any matter to shareholders of record of the Trust entitled to vote on such matter, their duly authorized proxies or other such persons as the chairperson of the meeting may determine; (d) limiting the time allotted to questions or comments by participants; (e) determining when and for how long the polls should be opened and when the polls should be closed; (f) maintaining order and security at the meeting; (g) removing any shareholder or other person who refuses to comply with meeting procedures, rules or guidelines as set forth by the chairperson of the meeting; (h) concluding a meeting or recessing or adjourning the meeting to a later date and time and at a place announced at the meeting; and (i) complying with any state and local laws and regulations concerning safety and security.  Without limiting the generality of the powers of the chairperson of the meeting pursuant to the foregoing provisions, the chairperson may adjourn any meeting of shareholders

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for any reason deemed necessary by the chairperson, including, without limitation, if (i) no quorum is present for the transaction of the business, (ii) the Board of Trustees or the chairperson of the meeting determines that adjournment is necessary or appropriate to enable the shareholders to consider fully information that the Board of Trustees or the chairperson of the meeting determines has not been made sufficiently or timely available to shareholders or (iii) the Board of Trustees or the chairperson of the meeting determines that adjournment is otherwise in the best interests of the Trust.  Unless otherwise determined by the chairperson of the meeting, meetings of shareholders shall not be required to be held in accordance with the general rules of parliamentary procedure or any otherwise established rules of order.

Section 2.8Quorum.  At any meeting of shareholders, the presence in person or by proxy of shareholders entitled to cast a majority of all the votes entitled to be cast at such meeting shall constitute a quorum; but this section shall not affect any requirement under any statute or the Declaration of Trust for the vote necessary for the adoption of any measure.  If, however, such quorum shall not be present at any meeting of the shareholders, the chairperson of the meeting shall have the power to adjourn the meeting from time to time without the Trust having to set a new record date or provide any additional notice of such meeting, subject to any obligation of the Trust to give notice pursuant to Section 2.5.  At such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified.  The shareholders present, either in person or by proxy, at a meeting of shareholders which has been duly called and convened and at which a quorum was established may continue to transact business until adjournment, notwithstanding the withdrawal of enough votes to leave less than a quorum then being present at the meeting.

Section 2.9Voting. 

(a)With regard to theelection of a Trustee, and except as may be mandated by applicable law or the listing requirements of the principal exchange on which the Trust’s common shares of beneficial interestare listed: (i) a plurality of all the votes cast at a meeting of shareholders duly called and at which a quorum is present shall be sufficient to elect a Trustee in an uncontested election; and (ii) a majority of all the votes entitled to be cast in the election of Trustees at a meeting of shareholders duly called and at which a quorum is present shall be required to elect a Trustee in a contested election (which, for purposes of these Bylaws, is an election at which the number of nominees exceeds the number of Trustees to be elected at the meeting).  Each share may be voted for as many individuals as there are Trustees to be elected and for whose election the share is entitled to be voted.

(b)With regard to any other matter which may properly come before a meeting of shareholders duly called and at which a quorum is present, and except as may be mandated by applicable law, by the listing requirements of the principal exchange on which the Trust’s common shares of beneficial interestare listed or by a specific provision of the Declaration of Trust, the vote required for approval shall be the affirmative vote of seventy-five percent (75%)of the votes entitled to be cast for each such matter unless such matter has been previously approved by the Board of Trustees, in which case the vote required for approval shall be a majority of the votes cast at a meeting of shareholders duly called and at which a quorum is present.

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Section 2.10Proxies.  A shareholder may cast the votes entitled to be cast by him or her either in person or by proxy executed by the shareholder or by his or her duly authorized agent in any manner permitted by law.  Such proxy shall be filed with such officer of the Trust or third party agent as the Board of Trustees shall have designated for such purpose for verification at or prior to such meeting.  Any proxy relating to the Trust’s shares of beneficial interest shall be valid until the expiration date therein or, if no expiration is so indicated, for such period as is permitted pursuant to Maryland law.  At a meeting of shareholders, all questions concerning the qualification of voters, the validity of proxies, and the acceptance or rejection of votes, shall be decided by or on behalf of the chairperson of the meeting, subject to Section 2.13.

Section 2.11Record Date.  The Board of Trustees may fix the date for determination of shareholders entitled to notice of and to vote at a meeting of shareholders.  If no date is fixed for the determination of the shareholders entitled to vote at any meeting of shareholders, only persons in whose names shares entitled to vote are recorded on the share records of the Trust on the later of: (i) the close of business on the day on which notice of such meeting of shareholders is first mailed by the Trust or (ii) the thirtieth (30th) day before the date of such meeting shall be entitled to vote at such meeting.

Section 2.12Voting of Shares by Certain Holders.  Shares of beneficial interest ofthe Trust registered in the name of a corporation, partnership, trust or other entity, if entitled to be voted, may be voted by the president or a vice president, a general partner, managing memberor trustee thereof, as the case may be, or a proxy appointed by any of the foregoing individuals, unless some other person who has been appointed to vote such shares pursuant to a bylaw or a resolution of the governing body of such corporation or other entity or pursuant to an agreement of the partners of the partnership presents a certified copy of such bylaw, resolution or agreement, in which case such person may vote such shares.  Any trustee or other fiduciary may vote shares registered in his or her name as such fiduciary, either in person or by proxy.

Section 2.13Inspectors. 

(a)Before or at any meeting of shareholders, the chairperson of the meeting may appoint one or more persons as inspectors for such meeting.  Such inspectors, if any, shall (i) ascertain and report the number of shares of beneficial interest represented at the meeting, in person or by proxy,and the validity and effect of proxies, (ii) receive and tabulate all votes, ballots or consents, (iii) report such tabulation to the chairperson of the meeting and (iv) perform such other acts as are proper to conduct the election or voting at the meeting.

(b)Each report of an inspector shall be in writing and signed by him or her or by a majority of them if there is more than one inspector acting at such meeting. If there is more than one inspector, the report of a majority shall be the report of the inspectors.  The report of the inspector or inspectors on the number of shares represented at the meeting and the results of the voting shall be prima facie evidence thereof.

Section 2.14Nominations and Other Proposals to be Considered at Meetings of Shareholders.  Nominations of individuals for election to the Board of Trustees and the proposal of other business to be considered by the shareholders at meetings of shareholders may be properly brought before the meeting only as set forth in this Section 2.14. Nothing in this

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Section 2.14 shall be deemed to affect any right of a shareholder to request inclusion of a proposal in, or the right of the Trust to omit a proposal from, any proxy statement filed by the Trust with the U.S. Securities and Exchange Commission (the “SEC”) pursuant to Rule 14a-8 (or any successor provision) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  All judgments and determinations made by the Board of Trustees or the chairperson of the meeting, as applicable, under this Section 2.14 (including, without limitation, judgments and determinations as to the propriety of a proposed nomination or a proposal of other business for consideration by shareholders) shall be final and binding unless determined to have been made in bad faith.

Section 2.14.1  Annual Meetings of Shareholders. 

(a)AAnyshareholder of the Trust may recommend to the Nominating and Governance Committee of the Board of Trustees an individual as a nominee for election to the Board of Trustees.  Such recommendation shall be made by written notice to the Chair of such committee and the Secretary of the Trust, which notice should contain or be accompanied by the information and documents with respect to such recommended nominee and shareholder that such shareholder believes to be relevant or helpful to the Nominating and Governance Committee’s deliberations.  In considering such recommendation, the Nominating and Governance Committee may request additional information concerning the recommended nominee or the shareholdershareholder(s)making the recommendation.  The Nominating and Governance Committee of the Board of Trustees will consider any such recommendation in its discretion. AAnyshareholder seeking to make a nomination of an individual for election to the Board of Trustees at an annual meeting must make such nomination in accordance with Section 2.14.1(b)(ii).

(b)Nominations of individuals for election to the Board of Trustees and the proposal of other business to be considered by the shareholders at an annual meeting of shareholders may be properly brought before the meeting (i) pursuant to the Trust’s notice of meeting or otherwise properly brought before the meeting by or at the direction of the Board of Trustees or (ii) by a shareholderany one or more shareholdersof the Trust who (A) hashave eachcontinuously beneficially owned at least $2,000 in market value, or 1%, of the Trust’s sharesowned (as defined below) shares of beneficial interest of the Trust entitled to vote in the election of Trustees or on a proposal of other business, for at least three years prior to each of the date of the giving of the notice provided for in Section 2.14.1(c), the record date for determining the shareholdersentitled to vote at the meeting on such election or proposal for other business for at least one year from the date such shareholder gives the notice provided for in this Section 2.14.1, and continuously beneficially owns such shares through and includingandthe time of the annual meeting (including any adjournment or postponement thereof), with the aggregate shares owned by such shareholder(s) as of each of such dates and during such three year period representing at least one percent (1%) of the Trust’s shares of beneficial interest,(B) holds, or hold,a certificate or certificates forevidencingthe aggregate number ofshares of beneficial interest ofthe Trust referenced in subclause (A) of this Section 2.14.1(b)(ii) atas ofthe time of giving the notice provided for in this Section 2.14.1 through and including(c), the record date for determining the shareholders entitled to vote at the meeting andthe time of the annual meeting (including any adjournment or postponement thereof), (C) is, or are,entitled to make such nomination or propose such otherbusiness and to vote at the meeting on such election or

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proposal for suchof otherbusiness, and (D) complies, or comply,with the notice procedures set forth in this Section 2.14 as to such nomination or proposal of otherbusiness. For purposes of this Section 2.14.1(b)(ii) shall be the exclusive means for,a shareholder to make nominations or propose other business before an annual meeting of shareholders, except to the extent of matters which are required to be presented to shareholders by applicable law and which have been properly presented in accordance with the requirements of such law. For purposes of determining compliance with the requirement in subclause (A) of Section 2.14.1(b)(ii), the market value of the Trust’s shares held by the applicable shareholder shall be determined by multiplying the number of shares such shareholder continuously held for that one-year period by the highest selling price of the Trust shares as reported on the principal exchange on which the Trust’s common shares are listed for trading during the sixty (60) calendar days before the date such notice was submitted.shall be deemed to “own” or have “owned” only those outstanding shares of the Trust’s shares of beneficial interest to which the shareholder possesses both the full voting and investment rights pertaining to the shares and the full economic interest in (including the opportunity for profit from and risk of loss on) such shares; provided that the number of shares calculated in accordance with the foregoing shall not include any shares (x) sold by such shareholder or any of its affiliates in any transaction that has not been settled or closed or (y) borrowed by such shareholder or any of its affiliates for any purposes or purchased by such shareholder or any of its affiliates pursuant to an agreement to resell.  Without limiting the foregoing, to the extent not excluded by the immediately preceding sentence, a shareholder’s “short position” as defined in Rule 14e-4 under the Exchange Act shall be deducted from the shares otherwise “owned.” A shareholder shall “own” shares held in the name of a nominee or other intermediary so long as the shareholder retains the right to instruct how the shares are voted with respect to the election of trustees or the proposal of other business and possesses the full economic interest in the shares.  For purposes of this Section 2.14.1(b), the term “affiliate” or “affiliates” shall have the meaning ascribed thereto under the General Rules and Regulations under the Exchange Act.  Whether outstanding shares of the Trust’s shares of beneficial interest are “owned” for purposes of this Section 2.14.1(b) shall be determined by the Board of Trustees.

(c)For nominations for election to the Board of Trustees or other business to be properly brought before an annual meeting by a shareholderone or more shareholderspursuant to this Section 2.14.1, such shareholdershareholder(s)shall have given timely notice thereof in writing to the secretary of the Trust in accordance with this Section 2.14 and such other business shall otherwise be a proper matter for action by shareholders.  To be timely, the notice of such shareholdershareholder(s)shall set forth all information required under this Section 2.14 and shall be delivered to the secretary at the principal executive offices of the Trust not later than 5:00 p.m. (Eastern Time) on the one-hundred twentieth (120th)day nor earlier than the one-hundred fiftieth (150th)day prior to the first (1st)anniversary of the date of the proxy statement for the preceding year’s annual meeting; provided, however, that in the event thatifthe annual meeting is called for a date that is more than thirty (30) days earlier or later than the first (1st)anniversary of the date of the preceding year’s annual meeting, notice by the shareholder to besuch shareholder(s) to betimely shall be so delivered not later than 5:00 p.m. (Eastern Time) on the tenth (10th) day following the earlier of the day on which (i) notice of the date of the annual meeting is mailed or otherwise made available or (ii) public announcement of the date of the annual meeting is first made by the Trust.  Neither the postponement or adjournment of an annual meeting, nor the public announcement of such postponement or adjournment, shall

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commence a new time period for the giving of a notice of a shareholderone or more shareholdersas described above.

A notice of a shareholderone or more shareholderspursuant to this Section 2.14.1(c)shall set forth:

(i)separately as to each individual whom such shareholder proposesshareholder(s) proposeto nominate for election or reelection as a Trustee (a “Proposed Nominee”), (1) the name, age, business address, residence address and educational background of such Proposed Nominee, (2) a statement of whether such Proposed Nominee is proposed for nomination as an Independent Trustee (as defined in Section 3.2) or a Managing Trustee (eachas defined in Section 3.2) and a description of such Proposed Nominee’s qualifications to be an Independent Trustee or Managing Trustee, as the case may be, and such Proposed Nominee’s qualifications to be a Trustee pursuant to the criteria set forth in Section 3.1, (3) the class, series and number of any shares of beneficial interest of the Trust that are, directly or indirectly, beneficially owned or owned of record by such Proposed Nominee, (4) a description of the material terms of each Derivative Transaction that such Proposed Nominee directly or indirectly, has an interest in, including, without limitation, the counterparties to each Derivative Transaction, the class or series and number or amount of securities of the Trust to which each Derivative Transaction relates or provides exposure, and whether or not (x) such Derivative Transaction conveys any voting rights directly or indirectly, to such Proposed Nominee, (y) such Derivative Transaction is required to be, or is capable of being, settled through delivery of securities of the Trust and (z) such Proposed Nominee and/or, to their knowledge, the counterparty to such Derivative Transaction has entered into other transactions that hedge or mitigate the economic effect of such Derivative Transaction, (5) a description of all direct and indirect compensation and other agreements, arrangements and understandings or any other relationships, between or among theanyshareholder making the nomination, or any of its respective affiliates and associates, or others acting in concert therewith, on the one hand, and such Proposed Nominee, or his or her respective affiliates and associates, on the other hand, and (6) all other information relating to such Proposed Nominee that is required to be disclosed in solicitations of proxies for election of Trustees in an election contest (even if an election contest is not involved), or is otherwise required, in each case, pursuant to Section 14 (or any successor provision) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder;

(ii)as to any other business that the shareholder proposessuch shareholder(s) proposeto bring before the meeting, (1) a description of such business, (2) the reasons for proposing such business at the meeting and any material interest in such business of such shareholdershareholder(s)or any Shareholder Associated Person (as defined in Section 2.14.1(g)), including any anticipated benefit to such shareholdershareholder(s)or any Shareholder Associated Person therefrom, (3) a description of all agreements, arrangements and understandings between such shareholdershareholder(s)and Shareholder Associated Person amongst themselves or with any other person or persons (including their names) in connection with the proposal of such business by such shareholdershareholder(s)and (4) a representation that such shareholder intendsshareholder(s) intendto appear in person or by proxy at the meeting to bring the business before the meeting;

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(iii)separately as to theeachshareholder giving the notice and any Shareholder Associated Person, (1) the class, series and number of all shares of beneficial interest ofthe Trust that are owned of record by such shareholder or by such Shareholder Associated Person, if any, and (2) the class, series and number of, and the nominee holder for, any shares of beneficial interestinterestsof the Trust that are owned, directly or indirectly, beneficially ownedbut not ownedof record by such shareholder or by such Shareholder Associated Person, if any;

(iv)separately as to theeachshareholder giving the notice and any Shareholder Associated Person, (1) a description of all purchases and sales of securities of the Trust by such shareholder or Shareholder Associated Person during the previous six (6) month period, including the date of the transactions, the class, series and number of securities involved in the transactions and the consideration involved, (2) a description of the material terms of each Derivative Transaction that such shareholder or any Shareholder Associated Person,directly or indirectly, has an interest in, including, without limitation, the counterparties to each Derivative Transaction, the class or series and number or amount of securities of the Trust to which each Derivative Transaction relates or provides exposure, and whether or not (x) such Derivative Transaction conveys any voting rights,directly or indirectly, to such shareholder or Shareholder Associated Person, (y) such Derivative Transaction is required to be, or is capable of being, settled through delivery of securities of the Trust and (z) such shareholder or Shareholder Associated Person and/or, to their knowledge, the counterparty to such Derivative Transaction has entered into other transactions that hedge or mitigate the economic effect of such Derivative Transaction, (3) a description of the material terms of any performance related fees (other than an asset based fee) to which such shareholder or Shareholder Associated Person is entitled based on any increase or decrease in the value of shares of beneficial interest ofthe Trust or instrument or arrangement of the type contemplated within the definition of Derivative Transaction, and (4) any rights to dividends or other distributions on the shares of beneficial interest ofthe Trust ownedthat arebeneficially ownedby such shareholder or Shareholder Associated Person that are separated or separable from the underlying shares of beneficial interest ofthe Trust;

(v)separately as to theeachshareholder giving the notice and any Shareholder Associated Person with a material interest described in clause (ii)(2) above, an ownership interest described in clause (iii) above or a transaction or right described in clause (iv) above, (1) the name and address of such shareholder and Shareholder Associated Person, and (2) all information relating to such shareholder and Shareholder Associated Person that is required to be disclosed in connection with the solicitation of proxies for election of Trustees in an election contest (even if an election contest is not involved), or is otherwise required, in each case, pursuant to Section 14 (or any successor provision) of the Exchange Act and the rules and regulations promulgated thereunder; and

(vi)to the extent known by the shareholdershareholder(s)giving the notice, the name and address of any other person who owns, beneficially ownsor ownsof record, any shares of beneficial interest of the Trust and who supports the nominee for election or reelection as a Trustee or the proposal of other business.

(d)A notice of a shareholderone or more shareholdersmaking a nomination or proposing other business pursuant to Section 2.14.1(b)(ii) shall be accompanied by (i) a copy

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of the share certificate(s) referenced in subclause (B) of Section 2.14.1(b)(ii) above; (ii) if anysuch shareholder was not a shareholder of record of the shares referenced in subclause (A) of Section 2.14.1(b)(ii) above continuously for the one-yearthree-yearperiod referenced therein, reasonable evidence of such shareholder’s continuous beneficial ownership of such shares during such one-yearthree-yearperiod, such reasonable evidence may include, but shall not be limited to, (A) a copy of a report of the shareholder on Schedule 13D or Schedule 13G under the Exchange Act filed on or prior to the beginning of the one-yearthree-yearperiod and all amendments thereto, (B) a copy of a statement required to be filed pursuant to Section 16 of the Exchange Act (or any successor provisions) by a person who is a Trustee of the Trust or who is directly or indirectly the beneficial owner of more than ten percent (10%) of the shares of beneficial interest ofthe Trust filed on or prior to the beginning of the one-yearthree-yearperiod and all amendments thereto, or (C) a written verification of such beneficial ownership from a person who was the “record” holder of such shares, including any participant of the Depositary Trust Company, if applicable; and (iii) with respect to nominations, a signed statement of each Proposed Nominee (1) certifying that the information, including share ownership and duration, contained in the notice regarding such Proposed Nominee and any affiliate or associate of such person is true and complete, and complies with this Section 2.14.1 in all material respects, and (2) consenting to being named as a nominee and to serving as a Trustee if elected.

(e)A shareholderAny shareholder(s)providing notice of a proposed nomination or other business to be considered at an annual meeting of shareholders shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.14 is true and correct as of the record date for such annual meeting and as of a date that is ten (10) business days prior to such annual meeting, and any such update shall be delivered to the secretary at the principal executive offices of the Trust not later than the close of business on the fifth (5th) business day after the record date (in the case of an update or supplement required to be made as of the record date), and not later than the close of business on the eighth (8th) business day prior to the date of the annual meeting (in the case of an update or supplement required to be made as of ten (10) business days prior to the meeting).

(f)Notwithstanding anything in the second sentence of Section 2.14.1(c) to the contrary, in the event thatifthe number of Trustees to be elected to the Board of Trustees is increased and there is no public announcement of such action at least one-hundred thirty (130)days prior to the first (1st)anniversary of the date of the proxy statement for the preceding year’s annual meeting, a shareholder’sthenotice required by this Section 2.14.1 also shall be considered timely, but only with respect to nominees for any new positions created by such increase, if thesuchnotice is delivered to the secretary at the principal executive offices of the Trust not later than 5:00 p.m. (Eastern Time) on the tenth (10th) day immediately following the day on which such public announcement is first made by the Trust.

(g)For purposes of this Section 2.14, (i) “Shareholder Associated Person” of any shareholder shall mean (A) any person acting in concert with, such shareholder, (B) any direct or indirect beneficial owner of shares of beneficial interest of the Trust beneficially owned orowned of record or beneficially by such shareholder and (C) any person controlling, controlled by or under common control with such shareholder or a Shareholder Associated Person; and (ii) “Derivative Transaction” by a person shall mean any (A) transaction in, or

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arrangement, agreement or understanding with respect to, any option, warrant, convertible security, stock appreciation right or similar right with an exercise, conversion or exchange privilege, or settlement payment or mechanism related to, any security of the Trust, or similar instrument with a value derived in whole or in part from the value of a security of the Trust, in any such case whether or not it is subject to settlement in a security of the Trust or otherwise or (B) any transaction, arrangement, agreement or understanding which included or includes an opportunity for such person, directly or indirectly, to profit or share in any profit derived from any increase or decrease in the value of any security of the Trust, to mitigate any loss or manage any risk associated with any increase or decrease in the value of any security of the Trust or to increase or decrease the number of securities of the Trust which such person was, is or will be entitled to vote, in any such case whether or not it is subject to settlement in a security of the Trust or otherwise.

Section 2.14.2  Shareholder Nominations or Other Proposals Causing Covenant Breaches or Defaults.  At the same time as the submission of any shareholder nomination or proposal of other business to be considered at a shareholders meeting that, if approved and implemented by the Trust, would cause the Trust or any subsidiary (as defined in Section 2.14.5(c)) of the Trust to be in breach of any covenant or otherwise cause a default (in any case, with or without notice or lapse of time) in any existing debt instrument or agreement of the Trust or any subsidiary of the Trust or other material contract or agreement of the Trust or any subsidiary of the Trust, the notice provided pursuant to Section 2.14.1(c) shall disclose: (a) whether the lender or contracting party has agreed to waive the breach of covenant or default, and, if so, shall include reasonable evidence thereof, or (b) in reasonable detail, anytheplan of such shareholder for thethe proponent shareholder(s) for therepayment of the indebtedness to the lender or curing the contractual breach or default and satisfying any resulting damage claim, specifically identifying the actions to be taken and the source of funds for any such repayment, and such notice shall be accompanied by a copy of any commitment letter(s) or agreement(s) for the financing of such plan.

Section 2.14.3  Shareholder Nominations or Other Proposals Requiring Governmental Action.  If (a) submission of any shareholder nomination or proposal of other business to be considered at a shareholders meeting that could not be considered or, if approved, implemented by the Trust without the Trust, any subsidiary of the Trust, theanyproponent shareholder, any Proposed Nominee of such shareholder, any Shareholder Associated Person of anysuch shareholder, the holder of proxies or their respective affiliates or associates filing with or otherwise notifying or obtaining the consent, approval or other action of any federal, state, municipal or other governmental or regulatory body (a “Governmental Action”) or (b) suchany proponentshareholder’s ownership of shares of beneficial interest ofthe Trust or any solicitation of proxies or votes or holding or exercising proxies by such shareholder, any Proposed Nominee of such shareholder, any Shareholder Associated Person of such shareholder, or their respective affiliates or associates would require Governmental Action, then, in the notice provided pursuant to Section 2.14.1(c) the proponent shareholdershareholder(s)shall disclose (x) whether such Governmental Action has been given or obtained, and, if so, such notice shall be accompanied by reasonable evidence thereof, or (y) in reasonable detail, anytheplan of such shareholdershareholder(s)for making or obtaining the Governmental Action.

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Section 2.14.4  Special Meetings of Shareholders.  As set forth in Section 2.6, only business brought before the meeting pursuant to the Trust’s notice of meeting shall be conductedor otherwise properly brought before the meeting by or at the direction of the Board of Trustees may be consideredat a special meeting of shareholders.  Nominations of individuals for election to the Board of Trustees only may be made at a special meeting of shareholders at which Trustees are to be elected: (a) pursuant to the Trust’s notice of meeting; (b) otherwise properly brought before the meeting by or at the direction of the Board of Trustees; or (c) provided that the Board of Trustees has determined that Trustees shall be elected at such special meeting or if there are no Trustees and the special meeting is called by the officers of the Trust for the election of successor Trustees, by any shareholder of the Trust who is a shareholder of record both at the time of giving of notice provided for in this Section 2.14.4 through and including the time of the special meeting, who is entitled to vote at the meeting on such election and who has complied with the notice procedures and other requirements set forth in this Section 2.14.4. In the eventIfthe Trust calls a special meeting of shareholders for the purpose of electing one or more Trustees to the Board of Trustees, any shareholder, any one or more shareholder(s) of the Trustmay nominate an individual or individuals (as the case may be) for election as a Trustee as specified in the Trust’s notice of meeting, if (i) the shareholder satisfiesshareholder(s) satisfythe ownership, holding and certificate requirements set forth in Section 2.14.12.14(b)(ii), (ii) the shareholder’sshareholder(s)’notice contains or is accompanied by the information and documents required by Section 2.14 for a notice provided pursuant to Section 2.14.1(c)and (iii) the shareholder hasshareholder(s) havegiven timely notice thereof in writing to the secretary of the Trust at the principal executive offices of the Trust, with all references in such Sections to the annual meeting and to the notice given under such Sections changed to be references to the special meeting and the notice given under this Section 2.14.4.  To be timely, a shareholder’s notice shall be delivered to the secretary of the Trust at the principal executive offices of the Trust not earlier than the one-hundred fiftieth (150th)day prior to such special meeting and not later than 5:00 p.m. (Eastern Time) on the later of (i) the one-hundred twentieth (120th)day prior to such special meeting or (ii) the tenth (10th) day following the day on which public announcement is first made of the date of the special meeting and of any nominee proposed by the Trustees to be elected at such meeting.  Neither the postponement or adjournment of a special meeting, nor the public announcement of such postponement or adjournment, shall commence a new time period for the giving of a shareholder’s notice as described above.

Section 2.14.5  General. 

(a)If information submitted pursuant to this Section 2.14 by any shareholder proposing a nominee for election as a Trustee or any proposal for other business at a meeting of shareholders shall be deemed by the Board of Trustees incomplete or inaccurate, any authorized officer or the Board of Trustees or any committee thereof may treat such information as not having been provided in accordance with this Section 2.14.  Any notice submitted by a shareholder pursuant to this Section 2.14 that is deemed by the Board of Trustees inaccurate, incomplete or otherwise fails to satisfy completely any provision of this Section 2.14 shall be deemed defective and shall thereby render all proposals and nominations set forth in such notice defective.  Upon written request by the secretary of the Trust or the Board of Trustees or any committee thereof (which may be made from time to time), any shareholder proposing a nominee for election as a Trustee or any proposal for other business at a meeting of shareholders shall provide, within three (3) business days after such request (or such other period as may be

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specified in such request), (i) written verification, satisfactory to the secretary or any other authorized officer or the Board of Trustees or any committee thereof, in his, her or its discretion, to demonstrate the accuracy of any information submitted by the shareholder pursuant to this Section 2.14, (ii) written responses to information reasonably requested by the secretary, the Board of Trustees or any committee thereof and (iii) a written update, to a current date, of any information submitted by the shareholder pursuant to this Section 2.14 as of an earlier date.  If a shareholder fails to provide such written verification, information or update within such period, the secretary or any other authorized officer or the Board of Trustees may treat the information which was previously provided and to which the verification, request or update relates as not having been provided in accordance with this Section 2.14.  It is the responsibility of a shareholder who wishes to make a nomination or other proposal to comply with the requirements of Section 2.14; nothing in this Section 2.14.5(a) or otherwise shall create any duty of the Trust, the Board of Trustees or any committee thereof nor any officer of the Trust to inform a shareholder that the information submitted pursuant to this Section 2.14 by or on behalf of such shareholder is incomplete or inaccurate or not otherwise in accordance with this Section 2.14 nor require the Trust, the Board of Trustees, any committee of the Board of Trustees or any officer of the Trust to request clarification or updating of information provided by any shareholder, but the Board of Trustees, a committee thereof or the secretary acting on behalf of the Board of Trustees or a committee, may do so in its, his or her discretion.

(b)Only such individuals who are nominated in accordance with this Section 2.14 shall be eligible for election by shareholders as Trustees and only such business shall be conducted at a meeting of shareholders as shall have been properly brought before the meeting in accordance with this Section 2.14.  The chairperson of the meeting and the Board of Trustees shall each have the power to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with this Section 2.14 and, if any proposed nomination or other business is determined not to be in compliance with this Section 2.14, to declare that such defective nomination or proposal be disregarded.

(c)For purposes of this Section 2.14: (i) “public announcement” shall mean disclosure in (A) a press release reported by the Dow Jones News Service, Associated Press, Business Wire, PR Newswire or any other widely circulated news or wire service or (B) a document publicly filed by the Trust with the U.S. Securities and Exchange Commission (the “SEC”) pursuant to the Exchange ActSEC; (ii) “subsidiary” shall include, with respect to a person, any corporation, partnership, joint venture or other entity of which such person (A) owns, directly or indirectly, ten percent (10%) or more of the outstanding voting securities or other interests or (B) has a person designated by such person serving on, or a right, contractual or otherwise, to designate a person, so to serve on, the board of directors (or analogous governing body); and (iii) a person shall be deemed to “beneficially own” or “have beneficially owned”any shares of beneficial interest of the Trust not owned directly by such person if that person or a group of which such person is a member would be the beneficial owner of such shares under Rule 13d-3 and Rule 13d-5 of the Exchange Act.

(d)Notwithstanding the foregoing provisions of this Section 2.14, a shareholder shall also comply with all applicable legal requirements, including, without limitation, applicable requirements of state law and the Exchange Act and the rules and

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regulations thereunder, with respect to the matters set forth in this Section 2.14.  Nothing in this Section 2.14 shall be deemed to require that a shareholder nomination of an individual for election to the Board of Trustees or a shareholder proposal relating to other business be included in the Trust’s proxy statement, except as may be required by law.

(e)The Board of Trustees may from time to time require any individual nominated to serve as a Trustee to agree in writing with regard to matters of business ethics and confidentiality while such nominee serves as a Trustee, such agreement to be on the terms and in a form (the “Agreement”) determined satisfactory by the Board of Trustees, as amended and supplemented from time to time in the discretion of the Board of Trustees.  The terms of the Agreement may be substantially similar to the Code of Business Conduct and Ethics of the Trust or any similar code promulgated by the Trust (the “Code of Business Conduct”) or may differ from or supplement the Code of Business Conduct.

(f)Determinations required or permitted to be made under this Section 2.14 by the Board of Trustees may be delegated by the Board of Trustees to a committee of the Board of Trustees, subject to applicable law.

Section 2.15No Shareholder Actions by Written Consent.  Shareholders shall not be authorized or permitted to take any action required or permitted to be taken at a meeting of shareholders by written consent, and may take such action only at a shareholders meeting of the Trust.

Section 2.16Voting by Ballot.  Voting on any question or in any election may be by voice vote unless the chairperson of the meeting or any shareholder shall demand that voting be by ballot.

Section 2.17Proposals of Business Which Are Not Proper Matters For Action By Shareholders.  Notwithstanding anything in these Bylaws to the contrary, subject to applicable law, any shareholder proposal for business the subject matter or effect of which would be within the exclusive purview of the Board of Trustees or would reasonably likely, if considered by the shareholders or approved or implemented by the Trust, result in an impairment of the limited liability status for the Trust’s shareholders, shall be deemed not to be a matter upon which the shareholders are entitled to vote.  The Board of Trustees in its discretion shall be entitled to determine whether a shareholder proposal for business is not a matter upon which the shareholders are entitled to vote pursuant to this Section 2.17, and its decision shall be final and binding unless determined by a court of competent jurisdiction to have been made in bad faith.

ARTICLE III

TRUSTEES

Section 3.1General Powers; Qualifications; Trustees Holding Over.  The business and affairs of the Trust shall be managed under the direction of its Board of Trustees.  A Trustee shall be an individual at least twenty-one (21) years of age who is not under legal disability.  To qualify for nomination or election as a Trustee, an individual, at the time of nomination and election, shall, without limitation, (a) have substantial expertise or experience relevant to the

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business of the Trust and its subsidiaries (as determined by the Board of Trustees), (b) not have been convicted of a felony, (c) meet the qualifications of an Independent Trustee or a Managing Trustee, each as defined in Section 3.2, as the case may be, depending upon the position for which such individual may be nominated and elected,and (d) have been nominated for election to the Board of Trustees in accordance with Section 2.14.  In case of failure to elect Trustees at an annual meeting of the shareholders, the incumbent Trustees shall hold over and continue to direct the management of the business and affairs of the Trust until they may resign or until their successors are elected and qualify.

Section 3.2Independent Trustees and Managing Trustees.  A majority of the Trustees holding office shall at all times be Independent Trustees; provided, however, that upon a failure to comply with this requirement as a result of the creation of a temporary vacancy which shall be filled by an Independent Trustee, whether as a result of enlargement of the Board of Trustees or the resignation, removal or death of a Trustee who is an Independent Trustee, such requirement shall not be applicable.  An “Independent Trustee” is one who is not an employee of the Manager (as defined in the Declaration of Trust), who is not involved in the Trust’s day to day activities and who meets the qualifications of an independent director (not including the specific independence requirements applicable only to members of the Audit Committee of the Board of Trustees) under the applicable rules of each securities exchange upon which shares of beneficial interest ofthe Trust are listed for trading and the SEC, as those requirements may be amended from time to time.  If the number of Trustees, at any time, is set at less than five (5), at least one (1) Trustee shall be a Managing Trustee.  So long as the number of Trustees shall be five (5) or greater, at least two (2) Trustees shall be Managing Trustees.  “Managing Trustees” shall mean Trustees who are not Independent Trustees and who have been employees, officers or directors of the Manager or involved in the day to day activities of the Trust for at least one year prior to their election.  If at any time the Board of Trustees shall not be comprised of a majority of Independent Trustees, the Board of Trustees shall take such actions as will cure such condition; provided that the fact that the Board of Trustees does not have a majority of Independent Trustees or has not taken such action at any time or from time to time shall not affect the validity of any action taken by the Board of Trustees.  If at any time the Board of Trustees shall not be comprised of a number of Managing Trustees as is required under this Section 3.2, the Board of Trustees shall take such actions as will cure such condition; provided that the fact that the Board of Trustees does not have the requisite number of Managing Trustees or has not taken such action at any time or from time to time shall not affect the validity of any action taken by the Board of Trustees.

Section 3.3Number and Tenure.  The number of Trustees constituting the entire Board of Trustees may be increased or decreased from time to time only by a vote of the Trustees; provided however that the tenure of office of a Trustee shall not be affected by any decrease in the number of Trustees.  The number of Trustees shall be five (5) until increased or decreased by the Board of Trustees.

Section 3.4Annual and Regular Meetings.  An annual meeting of the Trustees shall be held immediately after the annual meeting of shareholders, no notice other than this Bylaw being necessary.  The time and place of the annual meeting of the Trustees may be changed by the Board of Trustees.  The Trustees may provide, by resolution, the time and place, either within or without the State of Maryland, for the holding of regular meetings of the Trustees without other

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notice than such resolution. In the eventIfany such regular meeting is not so provided for, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Trustees.

Section 3.5Special Meetings.  Special meetings of the Trustees may be called at any time by any Managing Trustee, the president or pursuant to the request of any two (2) Trustees then in office.  The person or persons authorized to call special meetings of the Trustees may fix any place, either within or without the State of Maryland, as the place for holding any special meeting of the Trustees called by them.

Section 3.6Notice.  Notice of any special meeting shall be given by written notice delivered personally or by electronic mail, telephoned, facsimile transmitted, overnight couriered (with proof of delivery) or mailed to each Trustee at his or her business or residence address.  Personally delivered, telephoned, facsimile transmitted or electronically mailed notices shall be given at least twenty-four (24) hours prior to the meeting.  Notice by mail shall be deposited in the U.S. mail at least seventy-two (72) hours prior to the meeting.  If mailed, such notice shall be deemed to be given when deposited in the U.S. mail properly addressed, with postage thereon prepaid.  Electronic mail notice shall be deemed to be given upon transmission of the message to the electronic mail address given to the Trust by the Trustee.  Telephone notice shall be deemed given when the Trustee is personally given such notice in a telephone call to which he is a party.  Facsimile transmission notice shall be deemed given upon completion of the transmission of the message to the number given to the Trust by the Trustee and receipt of a completed answer back indicating receipt.  If sent by overnight courier, such notice shall be deemed given when delivered to the courier.  Neither the business to be transacted at, nor the purpose of, any annual, regular or special meeting of the Trustees need be stated in the notice, unless specifically required by statute or these Bylaws.

Section 3.7Quorum.  A majority of the Trustees shall constitute a quorum for transaction of business at any meeting of the Trustees, provided that, if less than a majority of such Trustees are present at a meeting, a majority of the Trustees present may adjourn the meeting from time to time without further notice, and provided further that if, pursuant to the Declaration of Trust or these Bylaws, the vote of a majority of a particular group of Trustees is required for action, a quorum for that action shall also include a majority of such group.  The Trustees present at a meeting of the Board of Trustees which has been duly called and convened and at which a quorum was established may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of such number of Trustees as resultswould otherwise resultin less than a quorum then being present at the meeting.

Section 3.8Voting.  The action of the majority of the Trustees present at a meeting at which a quorum is or was present shall be the action of the Trustees, unless the concurrence of a greater proportion is required for such action by specific provision of an applicable statute, the Declaration of Trust or these Bylaws.  If enough Trustees have withdrawn from a meeting to leave fewer than are required to establish a quorum, but the meeting is not adjourned, the action of the majority of that number of Trustees necessary to constitute a quorum at such meeting shall be the action of the Board of Trustees, unless the concurrence of a greater proportion is required for such action by applicable law, the Declaration of Trust or these Bylaws.

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Section 3.9Telephone Meetings.  Trustees may participate in a meeting by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time.  Participation in a meeting by these means shall constitute presence in person at the meeting.  Such meeting shall be deemed to have been held at a place designated by the Trustees at the meeting.

Section 3.10Action by Written Consent of Trustees.  Unless specifically otherwise provided in the Declaration of Trust, any action required or permitted to be taken at any meeting of the Trustees may be taken without a meeting, if a majority of the Trustees shall individually or collectively consent in writing or by electronic transmission to such action.  Such written or electronic consent or consents shall be filed with the records of the Trust and shall have the same force and effect as the affirmative vote of such Trustees at a duly held meeting of the Trustees at which a quorum was present.

Section 3.11Waiver of Notice.  The actions taken at any meeting of the Trustees, however called and noticed or wherever held, shall be as valid as though taken at a meeting duly held after regular call and notice if a quorum is present and if, either before or after the meeting, each of the Trustees not present waives notice, consents to the holding of such meeting or approves the minutes thereof.

Section 3.12Vacancies.  If for any reason any or all the Trustees cease to be Trustees, such event shall not terminate the Trust or affect these Bylaws or the powers of the remaining Trustees hereunder (even if fewer than three Trustees remain).  Any vacancy on the Board of Trustees may be filled only by a majority of the remaining Trustees, even if the remaining Trustees do not constitute a quorum.  Any Trustee elected to fill a vacancy, whether occurring due to an increase in size of the Board of Trustees or by the death, resignation or removal of any Trustee, shall hold office for the remainder of the full term of the class of Trustees in which the vacancy occurred or was created and until a successor is elected and qualifies.

Section 3.13Compensation.  The Trustees shall be entitled to receive such reasonable compensation for their services as Trustees as the Trustees may determine from time to time.  Trustees may be reimbursed for expenses of attendance, if any, at each annual, regular or special meeting of the Trustees or of any committee thereof; and for their expenses, if any, in connection with each property visit and any other service or activity performed or engaged in as Trustees.  The Trustees shall be entitled to receive remuneration for services rendered to the Trust in any other capacity, and such services may include, without limitation, services as an officer of the Trust, services as an employee of the Manager, legal, accounting or other professional services, or services as a broker, transfer agent or underwriter, whether performed by a Trustee or any person affiliated with a Trustee.

Section 3.14Surety Bonds.  Unless specifically required by law, no Trustee shall be obligated to give any bond or surety or other security for the performance of any of his or her duties.

Section 3.15Reliance.  Each Trustee, officer, employee and agent of the Trust shall, in the performance of his or her duties with respect to the Trust, be entitled to rely on any information, opinion, report or statement, including any financial statement or other financial

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data, prepared or presented by an officer or employee of the Trust or by the Manager, accountants, appraisers or other experts or consultants selected by the Board of Trustees or officers of the Trust, regardless of whether such counsel or expert may also be a Trustee.

Section 3.16Interested Trustee Transactions.  Section 2-419 of the Maryland General Corporation Law (the “MGCL”) (or any successor statute)shall be available for and apply to any contract or other transaction between the Trust and any of its Trustees or between the Trust and any other trust, corporation, firm or other entity in which any of its Trustees is a trustee or director or has a material financial interest.

Section 3.17Certain Rights of Trustees, Officers, Employees and Agents.  A Trustee shall have no responsibility to devote his or her full time to the affairs of the Trust.  Any Trustee or officer, employee or agent of the Trust, in his or her personal capacity or in a capacity as an affiliate, employee or agent of any other person, or otherwise, may have business interests and engage in business activities similar or in addition to those of or relating to the Trust.

Section 3.18Emergency Provisions.  Notwithstanding any other provision in the Declaration of Trust or these Bylaws, this Section 3.18 shall apply during the existence of any catastrophe, or other similar emergency condition, as a result of which a quorum of the Board of Trustees under ARTICLE III cannot readily be obtained (an “Emergency”).  During any Emergency, unless otherwise provided by the Board of Trustees, (a) a meeting of the Board of Trustees may be called by any Managing Trustee or officer of the Trust by any means feasible under the circumstances and (b) notice of any meeting of the Board of Trustees during such an Emergency may be given less than twenty-four (24) hours prior to the meeting to as many Trustees and by such means as it may be feasible at the time, including publication, television or radio.

Section 3.19Removal for Cause.  A shareholder(s) proposing to remove one or more Trustees for cause shall meet all requirements in these Bylaws for a nomination of an individual for election to the Board of Trustees at an annual meeting of shareholders or a proposal of other business to be properly brought by such shareholder(s) at a meeting of the shareholders as set forth in Section 2.14.1.  For purposes of the provisions in the Declaration of Trust regarding the removal of a Trustee, “cause” shall mean, with respect to any particular Trustee, conviction of a felony or a final judgment of a court of competent jurisdiction holding that such Trustee caused demonstrable, material harm to the Trust through bad faith or active and deliberate dishonesty.

ARTICLE IV

COMMITTEES

Section 4.1Number; Tenure and Qualifications.  The Board of Trustees shall appoint an Audit Committee, a Compensation Committee and a Nominating and Governance Committee.  Each of these committees shall be composed of three or more Trustees, to serve at the pleasure of the Board of Trustees.  The Board of Trustees may also appoint other committees from time to time composed of one or more members, at least one of which shall be a Trustee, to serve at the pleasure of the Board of Trustees.  The Board of Trustees shall adopt a charter with respect to the Audit Committee, the Compensation Committee and the Nominating and Governance

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Committee, which charter shall specify the purposes, the criteria for membership and the responsibility and duties and may specify other matters with respect to each committee.  The Board of Trustees may also adopt a charter with respect to other committees.

Section 4.2Powers.  The Trustees may delegate any of the powers of the Trustees to committees appointed under Section 4.1 and composed solely of Trustees, except as prohibited by law. In the event thatIfa charter has been adopted with respect to a committee composed solely of Trustees, the charter shall constitute a delegation by the Trustees of the powers of the Board of Trustees necessary to carry out the purposes, responsibilities and duties of a committee provided in the charter or reasonably related to those purposes, responsibilities and duties, to the extent permitted by law.

Section 4.3Meetings.  Notice of committee meetings shall be given in the same manner as notice for special meetings of the Board of Trustees.  One-third (1/3), but not less than one, of the members of any committee shall be present in person at any meeting of a committee in order to constitute a quorum for the transaction of business at a meeting, and the act of a majority present at a meeting at the time of a vote if a quorum is then present shall be the act of a committee.  The Board of Trustees or, if authorized by the Board in a committee charter or otherwise, the committee members may designate a chairman of any committee, and the chairman or, in the absence of a chairman, a majority of any committee may fix the time and place of its meetings unless the Board shall otherwise provide.  In the absence or disqualification of any member of any committee, the members thereof present at any meeting and not disqualified from voting, whether or not they constitute a quorum, may unanimously appoint another Trustee to act at the meeting in the place of absent or disqualified members.

Each committee shall keep minutes of its proceedings and shall periodically report its activities to the full Board of Trustees and, except as otherwise provided by law or under the rules of the S.E.C. and applicable stock exchanges on which the Trust’s shares are listed, any action by any committee shall be subject to revision and alteration by the Board of Trustees, provided that no rights of third persons shall be affected by any such revision or alteration.

Section 4.5Section 4.4Telephone Meetings.  Members of a committee may participate in a meeting by means of a conference telephone or similar communications equipment and participation in a meeting by these means shall constitute presence in person at the meeting.

Section 4.6Section 4.5Action by Written Consent of Committees.  Any action required or permitted to be taken at any meeting of a committee of the Trustees may be taken without a meeting, if a consent in writing or by electronic transmission to such action is signed by a majority of the committee and such written or electronic consent is filed with the minutes of proceedings of such committee.

Section 4.7Section 4.6Vacancies.  Subject to the provisions hereof, the Board of Trustees shall have the power at any time to change the membership of any committee, to fill all vacancies, to designate alternate members to replace any absent or disqualified member or to dissolve any such committee.

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ARTICLE V

OFFICERS

Section 5.1General Provisions.  The officers of the Trust shall include a president, a secretary and a treasurer. TheIn addition, the Board ofTrustees may from time to time appointelectsuch other officers with such titles,powers and duties as theyset forth herein or as the Board of Trusteesshall deem necessary or desirable, including a chairman of the board, a vice chairman of the board, a chief executive officer, a chief operating officer, a chief financial officer, one or more vice presidents, one or more assistant secretaries and one or more assistant treasurers.  The officers of the Trust shall be elected annually by the Trustees at the first meeting of the Trustees held after each annual meeting of shareholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as may be convenientBoard of Trustees.  Each officer shall hold office until his or her successor is elected and qualifies or until his or her death, resignation or removal in the manner hereinafter provided.  Any two (2) or more offices, except that of president and vice president, may be held by the same person.  In their discretion, the Trustees may leave unfilled any office except that of president, treasurerand secretary.  Election of an officer or agent shall not of itself create contract rights between the Trust and such officer or agent.

Section 5.2Removal and Resignation.  Any officer or agent of the Trust may be removed, with or without cause,by the Board ofTrustees if in theiritsjudgment the best interests of the Trust would be served thereby, but thesuchremoval shall be without prejudice to the contract rights, if any, of the person so removed.  Any officer of the Trust may resign at any time by giving notice in writing or by electronic transmission ofdeliveringhis or her resignation to the Board ofTrustees, the chairman of the board, the president or the secretary.  Any resignation shall take effect at any time specified therein or, if the time when it shall become effective is not specified therein, immediately upon its receipt or at such later time specified in the resignation.  The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation. ASuchresignation shall be without prejudice to the contract rights, if any, of the Trust.

Section 5.3Vacancies.  A vacancy in any office may be filled by the Board ofTrustees for the balance of the term.

Section 5.4President.  Except as the Board of Trustees may otherwise provide, the president shall have the duties usually vested in a president.  The president shall have such other duties as may be assigned to the president by the Board of Trustees from time to time.  The president may execute any deed, mortgage, bond, lease, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Board ofTrustees or by these Bylaws to some other officer or agent of the Trust or shall be required by law to be otherwise executed, and in general shall perform all duties incident to the office of president and such other duties as may be prescribed by the Trustees.

Section 5.5Chief Operating Officer.  If elected, except as the Board of Trustees may otherwise provide, the chief operating officer shall have the duties usually vested in a chief

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operating officer.  The chief operating officer shall have such other duties as may be assigned to the chief operating officer by the president or the Board of Trustees from time to time.

Section 5.6Chief Financial Officer.  If elected, except as the Board of Trustees may otherwise provide, the chief financial officer shall have the duties usually vested in a chief financial officer.  The chief financial officer shall have such other duties as may be assigned to the chief financial officer by the president or the Board of Trustees from time to time.

Section 5.5Section 5.7Vice Presidents.  In the absence or unavailabilitydisabilityof the president, the vice president, if any(or in the eventifthere beismore than one, thevice president, any vice president)presidents in the order designated or, in the absence of any designation, then in the order of their election),shall perform the duties of the president and when so acting shall have alland exercisethe powers of the president; and.  The vice president(s)shall performhavesuch other duties as from time to time may be assigned to him or hersuch vice presidentby the president or the Board ofTrustees from time to time.  The Board ofTrustees may designate one or more vice presidents as executive vice presidentspresident, senior vice presidents or aspresident orvice presidents for particular areas of responsibility.

Section 5.6Section 5.8Secretary.  TheExcept as the Board of Trustees may otherwise provide, thesecretary (or his or her designee) shall (a) keep the minutes of the proceedings of the shareholders, the Board ofTrustees and committees of the Board ofTrustees in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be custodian of the Trust records and of the seal of the Trust, if any; and(d) maintain a share register, showing the ownership and transfers of ownership of all shares of beneficial interest ofthe Trust, unless a transfer agent is employed to maintain and does maintain such a share register; and (e) in general perform.  The secretary shall havesuch other duties as from time to time may be assigned to the secretary by the president or the Board ofTrustees from time to time.

Section 5.7Section 5.9Treasurer.  TheExcept as the Board of Trustees may otherwise provide, thetreasurer shall have(a) have general charge of the financial affairs of the Trust; (b) have or oversee in accordance with Section 6.3the custody of the funds and,securities and other valuable documentsof the Trust and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Trust and shall deposit all moneys and other valuable effects in the name and to the credit of the Trust in such depositories as may be authorized by the Trustees; (c) maintain or oversee the maintenance of proper financial books and records of the Trust; and (d) have the duties usually vested in a treasurer.  The treasurer shall also have such other responsibilitiesdutiesas may be assigned to him or herthe treasurerby the president or the Board ofTrustees from time to time.

Section 5.8Section 5.10Assistant Secretaries and Assistant Treasurers.  The assistant secretaries and assistant treasurers, in general, shall perform such duties as shall be assigned to them by the secretary or treasurer, respectively, or by the president or the Board ofTrustees from time to time.

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ARTICLE VI

CONTRACTS, LOANS, CHECKS AND DEPOSITS

Section 6.1Contracts.  The Board of Trustees may authorize any Trustee, officer or agent (including the Manager or any officer of the Manager) to enter into any contract or to execute and deliver any instrument in the name of and on behalf of the Trust and such authority may be general or confined to specific instances.  Any agreement, deed, mortgage, lease or other document executed by an authorized Trustee, officer or agent shall be valid and binding upon the Trust when dulyauthorized or ratified by action of the Board ofTrustees and executed by an authorized person.

Section 6.2Checks and Drafts.  All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Trust shall be signed by such officer or agent of the Trust in such manner as shall from time to time be determined by the treasurerthe Board of Trustees, the president or,the treasurer or any other officer designated by the Board ofTrustees may determine.

Section 6.3Deposits.  All funds of the Trust not otherwise employed shall be deposited or investedfrom time to time to the credit of the Trust in such banks, trust companies or other depositories as the treasureras the Board of Trustees, the president or,the treasurer or any other officer designated by the Board ofTrustees may designatedetermine.

ARTICLE VII

SHARES

Section 7.1Certificates.  Ownership of shares of any class of shares of beneficial ownershipinterestof the Trust shall be evidenced by certificates, or at the election of a shareholder in book entry form.  Unless otherwise determined by the Board of Trustees, any such certificates shall be signed by the president or a vice president and countersigned by the secretary or an assistant secretary or the treasurer or an assistant treasurer and may be sealed with the seal, if any, of the Trust.  The signatures may be either manual or facsimile.  Certificates shall be consecutively numbered and if the Trust shall from time to time issue several classes of shares, each class may have its own number series.  A certificate is valid and may be issued whether or not an officer who signed it is still an officer when it is issued.

Section 7.2Transfers. 

(a)Shares of beneficial interest ofthe Trust shall be transferable in the manner provided by applicable law, the Declaration of Trust and these Bylaws.  Certificates shall be treated as negotiable and title thereto and to the shares they represent shall be transferred by delivery thereof to the same extent as those of a Maryland stock corporation.

(b)The Trust shall be entitled to treat the holder of record of any share or shares as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person,

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whether or not it shall have express or other notice thereof, except as otherwise expressly provided in these Bylaws or by the laws of the State of Maryland.

Section 7.3Lost Certificates.  For shares evidenced by certificates, any officer designated by the Trustees may direct a new certificate to be issued in place of any certificate previously issued by the Trust alleged to have been lost, stolen or destroyed upon the making of an affidavit of that fact by the person claiming the certificate to be lost, stolen or destroyed.  When authorizing the issuance of a new certificate, an officer designated by the Trustees may, in such officer’s discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or the owner’s legal representative to advertise the same in such manner as he shall require and/or to give bond, with sufficient surety, to the Trust to indemnify it against any loss or claim which may arise as a result of the issuance of a new certificate.

Section 7.4Closing of Transfer Books or Fixing of Record Date. 

(a)The Trustees may set, in advance, a record date for the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or determining shareholders entitled to receive payment of any dividend or the allotment of any other rights, or in order to make a determination of shareholders for any other proper purpose.

(b)In lieu of fixing a record date, the Trustees may provide that the share transfer books shall be closed for a stated period but not longer than twenty (20) days.  If the share transfer books are closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten (10) days before the date of such meeting.

(c)If no record date is fixed and the share transfer books are not closed for the determination of shareholders, (i) the record date for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the day on which the notice of meeting is mailed or the thirtieth (30th) day before the meeting, whichever is the closer date to the meeting; and (ii) the record date for the determination of shareholders entitled to receive payment of a dividend or an allotment of any other rights shall be the close of business on the day on which the resolution of the Trustees, declaring the dividend or allotment of rights, is adopted.

(d)When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof unless the Board of Trustees shall set a new record date with respect thereto.

Section 7.5Share Ledger.  The Trust shall maintain at its principal office or at the office of its counsel, accountants or transfer agent a share ledger containing the name and address of each shareholder and the number of shares of each class of shares of beneficial interest of the Trustheld by such shareholder.

Section 7.6Fractional Shares; Issuance of Units.  The Trustees may issue fractional shares or provide for the issuance of scrip, all on such terms and under such conditions as they may determine.  Notwithstanding any other provision of the Declaration of Trust or these

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Bylaws, the Trustees may issue units consisting of different securities of the Trust.  Any security issued in a unit shall have the same characteristics as any identical securities issued by the Trust, except that the Trustees may provide that for a specified period securities of the Trust issued in such unit may be transferred on the books of the Trust only in such unit.

ARTICLE VIII

INDEMNIFICATION AND ADVANCEMENT OF EXPENSES

Section 8.1Indemnification and Advancement of Expenses. 

(a)To the maximum extent permitted by Maryland law in effect from time to time, the Trust shall indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, shall pay or reimburse reasonable expenses in advance of final disposition of a proceeding to (i) any individual who is a present or former Trustee or officer of the Trust and who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity or (ii) any individual who, while a Trustee or officer of the Trust and at the request of the Trust, serves or has served as a Trustee, director, officer or partner of another real estate investment trust, corporation, partnership, joint venture, trust, employee benefit plan or other enterprise and who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity.  The rights to indemnification and advance of expenses provided by the Declaration of Trust of the Trust and these Bylaws shall vest immediately upon election of a Trustee or officer.  The Trust may, with the approval of its Board of Trustees, provide such indemnification and advance for expenses to an individual who served a predecessor of the Trust in any of the capacities described in (a)(i) or (ii) above and to any shareholder, employee or agent of the Trust or a predecessor of the Trust.

(b)Notwithstanding anything in these Bylaws to the contrary, except with respect to proceedings to enforce rights to indemnification, the Trust shall indemnify any person referenced in Section 8.1(a)(i) or (ii) above in connection with any proceeding initiated by such person against the Trust only if such proceeding was authorized by the Board of Trustees.

(c)The indemnification and payment or reimbursement of expenses provided in these Bylaws shall not be deemed exclusive of or limit in any way other rights to which any person seeking indemnification or payment or reimbursement of expenses may be or may become entitled under any bylaw, regulation, insurance, agreement or otherwise.

(d)Neither the amendment nor repeal of this ArticleARTICLE VIII, nor the adoption or amendment of any other provision of the Bylaws or Declaration of Trust of the Trust inconsistent with this ARTICLE VIII, shall apply to or affect in any respect the applicability of the preceding paragraph with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption.

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ARTICLE IX

REGULATORY COMPLIANCE AND DISCLOSURE

Section 9.1Actions Requiring Regulatory Compliance Implicating the Trust.  If any shareholder (whether individually or constituting a group, as determined by the Board of Trustees), by virtue of such shareholder’s ownership interest in the Trust or actions taken by the shareholder affecting the Trust, triggers the application of any requirement or regulation of any federal, state, municipal or other governmental or regulatory body on the Trust or any subsidiary (for purposes of this ARTICLE IX, as defined in Section 2.14.5(c)) of the Trust or any of their respective businesses, assets or operations, including, without limitation, any obligations to make or obtain a Governmental Action (as defined in Section 2.14.3), such shareholder shall promptly take all actions necessary and fully cooperate with the Trust to ensure that such requirements or regulations are satisfied without restricting, imposing additional obligations on or in any way limiting the business, assets, operations or prospects of the Trust or any subsidiary of the Trust.  If the shareholder fails or is otherwise unable to promptly take such actions so to cause satisfaction of such requirements or regulations, the shareholder shall promptly divest a sufficient number of shares of beneficial interest ofthe Trust necessary to cause the application of such requirement or regulation to not apply to the Trust or any subsidiary of the Trust.  If the shareholder fails to cause such satisfaction or divest itself of such sufficient number of shares of beneficial interest ofthe Trust by not later than the tenth (10th) day after triggering such requirement or regulation referred to in this Section 9.1, then any shares of beneficial interest ofthe Trust beneficially owned by such shareholder at and in excess of the level triggering the application of such requirement or regulation shall, to the fullest extent permitted by law, be deemed to constitute shares held in violation of the ownership limitations set forth in ArticleARTICLEVII of the Declaration of Trust of the Trust and be subject to the provisions of ArticleARTICLEVII of the Declaration of Trust of the Trust and any actions triggering the application of such a requirement or regulation may be deemed by the Trust to be of no force or effect.  Moreover, if the shareholder who triggers the application of any regulation or requirement fails to satisfy the requirements or regulations or to take curative actions within such ten (10) day period, the Trust may take all other actions which the Board of Trustees deems appropriate to require compliance or to preserve the value of the Trust’s assets; and the Trust may charge the offending shareholder for the Trust’s costs and expenses as well as any damages which may result to the Trust.

As an example and not as a limitation, at the time these Bylaws are being adoptedamended and restated, the Trust holds a controlling ownership position in a company formed and licensed as an insurance company in the State of Indiana.  The laws of the State of Indiana have certain regulatory requirements for any person who seeks to control (as defined under Indiana law) a company which itself controls an insurance company domiciled in the State of Indiana, including by exercising proxies representing ten percent (10%) or more of the Trust’s voting securities.  Accordingly, if a shareholder seeks to exercise proxies for a matter to be voted upon at a meeting of the Trust’s shareholders without having obtained any applicable approvals from the Indiana insurance regulatory authorities, such proxies representing ten percent (10%) or more of the Trust’s voting securities will, subject to Section 9.3, be void and of no further force or effect.

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Section 9.2Compliance With Law.  Shareholders shall comply with all applicable requirements of federal and state laws, including all rules and regulations promulgated thereunder, in connection with such shareholder’s ownership interest in the Trust and all other laws which apply to the Trust or any subsidiary of the Trust or their respective businesses, assets or operations and which require action or inaction on the part of the shareholder.

Section 9.3Limitation on Voting Shares or Proxies.  Without limiting the provisions of Section 9.1, if a shareholder (whether individually or constituting a group, as determined by the Board of Trustees), by virtue of such shareholder’s ownership interest in the Trust or its receipt or exercise of proxies to vote shares owned by other shareholders, would not be permitted to vote the shareholder’s shares of beneficial interest ofthe Trust or proxies for shares of beneficial interest ofthe Trust in excess of a certain amount pursuant to applicable law (including by way of example, applicable state insurance regulations) but the Board of Trustees determines that the excess shares or shares represented by the excess proxies are necessary to obtain a quorum, then such shareholder shall not be entitled to vote any such excess shares or proxies, and instead such excess shares or proxies may, to the fullest extent permitted by law, be voted by the Manager (or by another person designated by the Trustees) in proportion to the total shares otherwise voted on such matter.

Section 9.4Representations, Warranties and Covenants Made to Governmental or Regulatory Bodies.  To the fullest extent permitted by law, any representation, warranty or covenant made by a shareholder with any governmental or regulatory body in connection with such shareholder’s interest in the Trust or any subsidiary of the Trust shall be deemed to be simultaneously made to, for the benefit of and enforceable by, the Trust and any applicable subsidiary of the Trust.

Section 9.5Board of Trustees’ Determinations.  The Board of Trustees shall be empowered to make all determinations regarding the interpretation, application, enforcement and compliance with any matters referred to or contemplated by this ARTICLE IX.

ARTICLE X

FISCAL YEAR

Section 10.1Fiscal Year.  The fiscal year of the Trust shall be the calendar year.

ARTICLE XI

DIVIDENDS AND OTHER DISTRIBUTIONS

Section 11.1Dividends and Other Distributions.  Dividends and other distributions upon the shares of beneficial interest of the Trust may be authorized and declared by the Trustees.  Dividends and other distributions may be paid in cash, property or shares of beneficial interest of the Trust.

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ARTICLE XII

SEAL

Section 12.1Seal.  The Trustees may authorize the adoption of a seal by the Trust.  The Trustees may authorize one or more duplicate seals.

Section 12.2Affixing Seal.  Whenever the Trust is permitted or required to affix its seal to a document, it shall be sufficient to meet the requirements of any law, rule or regulation relating to a seal to place the word “(SEAL)” adjacent to the signature of the person authorized to execute the document on behalf of the Trust.

ARTICLE XIII

WAIVER OF NOTICE

Section 13.1Waiver of Notice.  Whenever any notice is required to be given pursuant to the Declaration of Trust, these Bylaws or applicable law, a waiver thereof in writing, signed by the person or persons entitled to such notice, or a waiver by electronic transmission by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice.  Neither the business to be transacted at nor the purpose of any meeting need be set forth in the waiver of notice or waiver by electronic transmission, unless specifically required by statute.  The attendance of any person at any meeting shall constitute a waiver of notice of such meeting, except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

ARTICLE XIV

AMENDMENT OF BYLAWS

Section 14.1Amendment of Bylaws.  Except for any change for which these Bylaws requires approval by more than a majority vote of the Trustees, these Bylaws may be amended or repealed or new or additional Bylaws may be adopted only by the vote or written consent of a majority of the Trustees as specified in Section 3.10.

ARTICLE XV

MISCELLANEOUS

Section 15.1References to Declaration of Trust.  All references to the Declaration of Trust shall include any amendments and supplements thereto.

Section 15.2Costs and Expenses.  In addition to, and as further clarification of each shareholder’s obligation to indemnify and hold the Trust harmless pursuant to Section 8.6 of the Declaration of Trust, to the fullest extent permitted by law, each shareholder will be liable to the Trust (and any subsidiaries or affiliates thereof) for, and indemnify and hold harmless the Trust (and any subsidiaries or affiliates thereof) from and against, all costs, expenses, penalties, fines

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or other amounts, including, without limitation, reasonable attorneys’ and other professional fees, whether third party or internal, arising from such shareholder’s breach of or failure to fully comply with any covenant, condition or provision of these Bylaws or the Declaration of Trust (including Section 2.14 of these Bylaws) or any action by or against the Trust (or any subsidiaries or affiliates thereof) in which such shareholder is not the prevailing party, and shall pay such amounts to such indemnitee on demand, together with interest on such amounts, which interest will accrue at the lesser of eighteen percent (18%) per annum and the maximum amount permitted by law, from the date such costs or the like are incurred until the receipt of payment.

Section 15.3Ratification.  The Board of Trustees or the shareholders may ratify and make binding on the Trust any action or inaction by the Trust or its officers to the extent that the Board of Trustees or the shareholders could have originally authorized the matter.  Moreover, any action or inaction questioned in any shareholder’s derivative proceeding or any other proceeding on the ground of lack of authority, defective or irregular execution, adverse interest of a Trustee, officer or shareholder, non-disclosure, miscomputation, the application of improper principles or practices of accounting, or otherwise, may be ratified, before or after judgment, by the Board of Trustees or by the shareholders and, if so ratified, shall have the same force and effect as if the questioned action or inaction had been originally duly authorized, and such ratification shall be binding upon the Trust and its shareholders and shall constitute a bar to any claim or execution of any judgment in respect of such questioned action or inaction

Section 15.4Ambiguity.  In the case of an ambiguity in the application of any provision of these Bylaws or any definition contained in these Bylaws, the Board of Trustees shall have the sole power to determine the application of such provisions with respect to any situation based on the facts known to it and such determination shall be final and binding unless determined by a court of competent jurisdiction to have been made in bad faith.

Section 15.5Inspection of Bylaws.  The Trustees shall keep at the principal office for the transaction of business of the Trust the original or a copy of the Bylaws as amended or otherwise altered to date, certified by the secretary, which shall be open to inspection by the shareholders at all reasonable times during office hours.

Section 15.6Election to be Subject to Part of Title 3, Subtitle 8.  Notwithstanding any other provision contained in the Declaration of Trust or these Bylaws, the Trust hereby elects to be subject to Section 3-804(b) and (c) of Title 3, Subtitle 8 of the MGCL.  This Section 15.6 only may be repealed, in whole or in part, by a subsequent amendment to these Bylaws.

Section 15.7Control Share Acquisition Act.  Notwithstanding any other provision contained in the Declaration of Trust or these Bylaws, Title 3, Subtitle 7 of the MGCL  shall not apply to any acquisition by any person of shares of beneficial interest of the Trust.  This section may be repealed, in whole or in part, at any time, whether before or after an acquisition of control shares and, upon such repeal, may, to the extent provided by any successor Bylaw or amendment hereto, apply to any prior or subsequent control share acquisition.

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ARTICLE XARTICLE XVI

ARBITRATION PROCEDURES FOR DISPUTES

Section 10.1Section 16.1Procedures for Arbitration of Disputes.  Any disputes, claims or controversies brought by or on behalf of any shareholder of the Trust (which, for purposes of this ARTICLE XXVI, shall mean any shareholder of record or any beneficial owner of shares of beneficial interest ofthe Trust, or any former shareholder of record or beneficial owner of shares of beneficial interest ofthe Trust), 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 ofthe Trust or shareholders of the Trust against the Trust or any Trustee, officer, manager (including Reit Management & Research LLC or its successor), agent or employee of the Trust, including anydisputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of the Declaration of Trust or these Bylaws (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 (the “AAA”) then in effect, except as those Rules may be modified in this ARTICLE XXVI.  For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against Trustees, officers or managers of the Trust and class actions by shareholders against those individuals or entities and the Trust.  For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party.

Section 10.2Section 16.2Arbitrators.  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. SuchThearbitrators may be affiliated or interested persons of suchtheparties.  If either party fails to timely select an arbitrator, the other party to the Dispute shall select the second arbitrator who shall be neutral and impartial and shall not be affiliated with or an interested person of either party. 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 each select, by the vote of a majority of the claimants or the respondents, as the case may be, one (1)arbitrator. Suchwithin fifteen (15) days after receipt of the demand for arbitration.  Thearbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be.  If either a claimant (orall claimants) or a respondent (or all respondents fail) fail(s)to timely select an arbitrator then suchthe party (or parties) who has selected anarbitrator (whomay request AAA to provide a list of three (3) proposed arbitrators in accordance with the Rules (each of whomshall be neutral, impartial and unaffiliated with any party) shall be appointed by the partiesand 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

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third (3rd)arbitrator has not been appointed within the time limit specified herein, then the AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by the AAA in accordance with a listing, striking and ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

Section 10.3Section 16.3Place of Arbitration.  The place of arbitration shall be Boston, Massachusetts unless otherwise agreed by the parties.

Section 10.4Section 16.4Discovery.  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.

Section 10.5Section 16.5Awards.  In rendering an award or decision (thean“Award”), the arbitrators shall be required to follow the laws of the State of Maryland.  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. TheAnAward shall be in writing and may, but shall not be required to, briefly state the findings of fact and conclusions of law on which it is based.  Any monetary awardAwardshall be made and payable in U.S. dollars free of any tax, deduction or offset. TheSubject to Section 16.7, eachparty against which theanAward assesses a monetary obligation shall pay that obligation on or before the thirtieth (30th) day following the date of thesuchAward or such other date as thesuchAward may provide.

Section 10.6Section 16.6Costs and Expenses.  Except as otherwise set forth in the Declaration of Trust or these Bylaws, including Section 16.215.2of these Bylaws, or as otherwise agreed by the parties thereto, each party involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an awardAwardthat would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of the Trust’s awardAwardto the claimant or the claimant’s attorneys.  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.

Section 16.7Appeals.  Any Award, including but not limited to any interim Award, may be appealed pursuant to the AAA’s Optional Appellate Arbitration Rules (“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 16.6 shall apply to any appeal pursuant to this Section 16.7 and the appeal tribunal shall not render an Award that would include shifting of any costs or expenses (including attorneys’ fees) of any party.

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Section 10.7Section 16.8Final and Binding.  AnFollowing the expiration of the time for filing the notice of appeal, or the conclusion of the appeal process set forth in Section 16.7, anAward shall be final and binding upon the parties thereto and shall be the sole and exclusive remedy between suchthoseparties relating to the Dispute, including any claims, counterclaims, issues or accounting presented to the arbitrators.  Judgment upon theanAward 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 andAward,except for actions seeking interim or other provisional relief in aid of arbitration proceedings in any court of competent jurisdiction.

Section 10.8Section 16.9Beneficiaries.  This ARTICLE XXVIis intended to benefit and be enforceable by the shareholders, Trustees, officers, managers (including Reit Management & Research LLC or its successor), agents or employees of the Trust and the Trust and shall be binding on the shareholders of the Trust and the Trust, as applicable, and shall 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.

ARTICLE XVII
FISCAL YEAR

Section 1.1.  Fiscal Year. The fiscal year of the Trust shall be the calendar year.

ARTICLE XVII

EXCLUSIVE FORUM FOR CERTAIN DISPUTES

The Circuit Court for Baltimore City, Maryland, or, if that court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore Division, shall be the sole and exclusive forum for (1) any derivative action or proceeding brought on behalf of the Trust, (2) any action asserting a claim of breach of a fiduciary duty owed by any trustee, officer, manager, agent or employee of the Trust to the Trust or the Trust’s shareholders, (3) any action asserting a claim against the Trust or any trustee, officer, manager, agent or employee of the Trust arising pursuant to Maryland law or the Declaration of Trust or these Bylaws, including any disputes, claims or controversies brought by or on behalf of any shareholder of the Trust (which, for purposes of this ARTICLE XVII, shall mean any shareholder of record or any beneficial owner of any class or series of shares of beneficial interest of the Trust, or any former holder of record or beneficial owner of any class or series of shares of beneficial interest of the Trust), 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 of the Trust 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, including this ARTICLE XVII, or (4) any action asserting a claim against the Trust or any trustee, officer, manager, agent or employee of the Trust governed by the internal affairs doctrine of the State of Maryland.  Failure to enforce the foregoing provisions would cause the Trust

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irreparable harm and the Trust shall be entitled to equitable relief, including injunctive relief and specific performance, to enforce the foregoing provisions.  Any person or entity purchasing or otherwise acquiring any interest in shares of beneficial interest of the Trust shall be deemed to have notice of and consented to the provisions of this ARTICLE XVII.ThisARTICLE XVII shall not abrogate or supersede any other provision of these Bylaws whichmay require the resolution of such disputes by arbitration.

DIVIDENDS AND OTHER DISTRIBUTIONS

Section 1.2.  Dividends and Other Distributions. Dividends and other distributions upon the shares of beneficial interest of the Trust may be authorized and declared by the Trustees. Dividends and other distributions may be paid in cash, property or shares of the Trust.

ARTICLE II
SEAL

Section 2.1.  Seal. The Trustees may authorize the adoption of a seal by the Trust. The Trustees may authorize one or more duplicate seals.

Section 2.2.  Affixing Seal. Whenever the Trust is permitted or required to affix its seal to a document, it shall be sufficient to meet the requirements of any law, rule or regulation relating to a seal to place the word “(SEAL)” adjacent to the signature of the person authorized to execute the document on behalf of the Trust.

ARTICLE III
WAIVER OF NOTICE

Section 3.1.  Waiver of Notice. Whenever any notice is required to be given pursuant to the Declaration of Trust, these Bylaws or applicable law, a waiver thereof in writing, signed by the person or persons entitled to such notice, or a waiver by electronic transmission by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at nor the purpose of any meeting need be set forth in the waiver of notice or waiver by electronic transmission, unless specifically required by statute. The attendance of any person at any meeting shall constitute a waiver of notice of such meeting, except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

ARTICLE IV
AMENDMENT OF BYLAWS

Section 4.1.  Amendment of Bylaws. Except for any change for which these Bylaws requires approval by more than a majority vote of the Trustees, these Bylaws may be amended or repealed or new or additional Bylaws may be adopted only by the vote or by written consent of a majority of the Trustees as specified in Section 3.10.

ARTICLE V
MISCELLANEOUS

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Section 5.1.  References to Declaration of Trust. All references to the Declaration of Trust shall include any amendments and supplements thereto.

Section 5.2.  Costs and Expenses. In addition to, and as further clarification of each shareholder’s obligation to indemnify and hold the Trust harmless from and against all costs, expenses, penalties, fines or other amounts, including, without limitation, reasonable attorneys’ and other professional fees, whether third party or internal, arising from such shareholder’s breach of or failure to fully comply with any covenant, condition or provision of the Declaration of Trust or these Bylaws (including Section 2.14 of these Bylaws) or any action by or against the Trust in which such shareholder is not the prevailing party, pursuant to Section 8.6 of the Declaration of Trust, to the fullest extent permitted by law, each shareholder will be liable to the Trust (and any subsidiaries or affiliates thereof) for, and indemnify and hold harmless the Trust (and any subsidiaries or affiliates thereof) from and against, all costs, expenses, penalties, fines or other amounts, including, without limitation, reasonable attorneys’ and other professional fees, whether third party or internal, arising from such shareholder’s breach of or failure to fully comply with any covenant, condition or provision of these Bylaws or the Declaration of Trust (including Section 2.14 of these Bylaws) or any action by or against the Trust (or any subsidiaries or affiliates thereof) in which such shareholder is not the prevailing party, and shall pay such amounts to such indemnitee on demand, together with interest on such amounts, which interest will accrue at the lesser of 18% per annum and the maximum amount permitted by law, from the date such costs or the like are incurred until the receipt of payment.

Section 5.3.  Ratification. The Board of Trustees or the shareholders may ratify and make binding on the Trust any action or inaction by the Trust or its officers to the extent that the Board of Trustees or the shareholders could have originally authorized the matter. Moreover, any action or inaction questioned in any shareholder’s derivative proceeding or any other proceeding on the ground of lack of authority, defective or irregular execution, adverse interest of a Trustee, officer or shareholder, non-disclosure, miscomputation, the application of improper principles or practices of accounting, or otherwise, may be ratified, before or after judgment, by the Board of Trustees or by the shareholders and, if so ratified, shall have the same force and effect as if the questioned action or inaction had been originally duly authorized, and such ratification shall be binding upon the Trust and its shareholders and shall constitute a bar to any claim or execution of any judgment in respect of such questioned action or inaction.

Section 5.4.  Ambiguity. In the case of an ambiguity in the application of any provision of these Bylaws or any definition contained in these Bylaws, the Board of Trustees shall have the sole power to determine the application of such provisions with respect to any situation based on the facts known to it and such determination shall be final and binding unless determined by a court of competent jurisdiction to have been made in bad faith.

Section 5.5.  Inspection of Bylaws. The Trustees shall keep at the principal office for the transaction of business of the Trust the original or a copy of the Bylaws as amended or otherwise altered to date, certified by the secretary, which shall be open to inspection by the shareholders at all reasonable times during office hours.

Section 5.6.  Election to be Subject to Part of Title 3, Subtitle 8. Notwithstanding any other provision contained in the Declaration of Trust or these Bylaws, the Trust hereby elects to

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be subject to Section 3-804(b) and (c) of Title 3, Subtitle 8 of the Maryland General Corporation Law (the “MGCL”) (or any successor statute). This Section 16.6 only may be repealed, in whole or in part, by a subsequent amendment to these Bylaws.

Section 5.7.  Control Share Acquisition Act. Notwithstanding any other provision contained in the Declaration of Trust or these Bylaws, Title 3, Subtitle 7 of the MGCL (or any successor statute) shall not apply to any acquisition by any person of shares of beneficial interest of the Trust. This section may be repealed, in whole or in part, at any time, whether before or after an acquisition of control shares and, upon such repeal, may, to the extent provided by any successor Bylaw or amendment hereto, apply to any prior or subsequent control share acquisition.

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EX-12.1

Exhibit 12.1

GOVERNMENT PROPERTIES INCOME TRUST

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

(IN THOUSANDS, EXCEPT RATIO AMOUNTS)

	Six Months Ended
	June 30,			Year Ended December 31,
	2015			2014		2013		2012		2011		2010
Income (loss) from continuing operations (including gain on sale of properties, if any) before income tax expense and equity in earnings (losses) of investees	$	(229,870)		$	42,243	$	55,308	$	48,903	$	42,255	$	24,018
Distributions of earnings from equity investees		10,425			17,046		—		—		—		—
Fixed charges		18,757			28,048		16,831		16,892		12,057		7,351
Adjusted Earnings	$	(200,688)		$	87,337	$	72,139	$	65,795	$	54,312	$	31,369
Fixed Charges:
Interest on indebtedness and amortization of deferred finance costs and debt discounts	$	18,757		$	28,048	$	16,831	$	16,892	$	12,057	$	7,351
Ratio of earnings to fixed charges		-10.7x	(1)		3.1x		4.3x		3.9x		4.5x		4.3x

(1)The deficiency for this period was approximately $219.4 million

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 Quarterly Report on Form 10-Q of Government Properties Income Trust;

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

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

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

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

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

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

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

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

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

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

Date:July 31, 2015	/s/ David M. Blackman
	David M. Blackman President and Chief Operating Officer

EX-31.2

EXHIBIT 31.2

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

I, Mark L. Kleifges, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date:July 31, 2015	/s/ Mark L. Kleifges
	Mark L. Kleifges Treasurer and Chief Financial Officer

EX-31.3

EXHIBIT 31.3

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

I, Barry M. Portnoy, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Government 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:July31, 2015	/s/ Barry M. Portnoy
	Barry M. Portnoy Managing Trustee

EX-31.4

EXHIBIT 31.4

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

I, Adam D. Portnoy, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date:July 31, 2015	/s/ Adam D. Portnoy
	Adam D. Portnoy Managing Trustee

EX-32.1

EXHIBIT 32.1

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

In connection with the filing by Government Properties Income Trust (the “Company”) of the Quarterly Report on Form10-Q for the period ended June 30, 2015 (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/ Barry M. Portnoy	/s/ Adam D. Portnoy
Barry M. Portnoy Managing Trustee	Adam D. Portnoy Managing Trustee
/s/ David M. Blackman	/s/ Mark L. Kleifges
David M. Blackman President and Chief Operating Officer	Mark L. Kleifges Treasurer and Chief Financial Officer

Date:    July 31, 2015

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Revenue Recognition (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Revenue Recognition
Increase in rental income to record revenue on straight line basis	$ 1,544	$ 1,101	$ 2,207	$ 2,243
Straight line rent receivables (liabilities)	$ 17,224		$ 17,224		$ 15,017

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Per Common Share Amounts

6 Months Ended

Jun. 30, 2015

Per Common Share Amounts

Per Common Share Amounts

Note 3. Per Common Share Amounts

We calculate basic earnings per common share by dividing net income (loss) 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):

	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
	2015		2014		2015		2014
Weighted average common shares for basic earnings per share		70,485		54,659		70,377		54,649
Effect of dilutive securities: unvested share awards		-		84		-		85
Weighted average common shares for diluted earnings per share		70,485		54,743		70,377		54,734

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Fair Value of Assets and Liabilities (Details 2) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2015	Dec. 31, 2014
Fair Value of Assets and Liabilities
Equity investment in Select Income REIT	$ 514,316	$ 514,316	$ 680,137
Number of shares held in related party equity method investment	24,891,421	24,891,421
Loss on impairment of Select Income REIT investment	$ 203,297	$ 203,297
Nonrecurring | Fair Value
Fair Value of Assets and Liabilities
Equity investment in Select Income REIT	514,316	514,316
Nonrecurring | Level 1 inputs
Fair Value of Assets and Liabilities
Equity investment in Select Income REIT	$ 514,316	$ 514,316

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Fair Value of Assets and Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Fair Value of Financial Instruments
Mortgage notes payable, including premiums	$ 185,401	$ 187,694
Senior Notes	347,702	347,423
Senior Unsecured Note 3.75 Percent Due In 2019
Fair Value of Financial Instruments
Senior Notes	$ 347,702	$ 347,423
Interest rate (as a percent)	3.75%	3.75%
Mortgage note payable, 5.55% interest rate, due in 2016
Fair Value of Financial Instruments
Mortgage notes payable, including premiums	$ 84,311	$ 85,167
Interest rate (as a percent)	5.55%	5.55%
5.73% Mortgage notes due in 2015
Fair Value of Financial Instruments
Mortgage notes payable, including premiums	$ 46,923	$ 47,418
Interest rate (as a percent)	5.73%	5.73%
6.21% Mortgage notes due in 2016
Fair Value of Financial Instruments
Mortgage notes payable, including premiums	$ 23,667	$ 23,833
Interest rate (as a percent)	6.21%	6.21%
Mortgage note payable, 5.88% interest rate, due in 2021
Fair Value of Financial Instruments
Mortgage notes payable, including premiums	$ 14,268	$ 14,374
Interest rate (as a percent)	5.88%	5.88%
7% Mortgage notes due in 2019
Fair Value of Financial Instruments
Mortgage notes payable, including premiums	$ 9,383	$ 9,563
Interest rate (as a percent)	7.00%	7.00%
8.15% Mortgage notes due in 2021
Fair Value of Financial Instruments
Mortgage notes payable, including premiums	$ 6,849	$ 7,339
Interest rate (as a percent)	8.15%	8.15%
Carrying Amount
Fair Value of Financial Instruments
Mortgage notes payable, including premiums	$ 533,103	$ 535,117
Carrying Amount | Senior Unsecured Note 3.75 Percent Due In 2019
Fair Value of Financial Instruments
Senior Notes	347,702	347,423
Carrying Amount | Mortgage note payable, 5.55% interest rate, due in 2016
Fair Value of Financial Instruments
Mortgage notes payable, including premiums	84,311	85,167
Carrying Amount | 5.73% Mortgage notes due in 2015
Fair Value of Financial Instruments
Mortgage notes payable, including premiums	46,923	47,418
Carrying Amount | 6.21% Mortgage notes due in 2016
Fair Value of Financial Instruments
Mortgage notes payable, including premiums	23,667	23,833
Carrying Amount | Mortgage note payable, 5.88% interest rate, due in 2021
Fair Value of Financial Instruments
Mortgage notes payable, including premiums	14,268	14,374
Carrying Amount | 7% Mortgage notes due in 2019
Fair Value of Financial Instruments
Mortgage notes payable, including premiums	9,383	9,563
Carrying Amount | 8.15% Mortgage notes due in 2021
Fair Value of Financial Instruments
Mortgage notes payable, including premiums	6,849	7,339
Fair Value
Fair Value of Financial Instruments
Mortgage notes payable, including premiums	547,049	548,407
Fair Value | Senior Unsecured Note 3.75 Percent Due In 2019
Fair Value of Financial Instruments
Senior Notes	358,314	356,129
Fair Value | Mortgage note payable, 5.55% interest rate, due in 2016
Fair Value of Financial Instruments
Mortgage notes payable, including premiums	84,340	85,171
Fair Value | 5.73% Mortgage notes due in 2015
Fair Value of Financial Instruments
Mortgage notes payable, including premiums	47,264	48,233
Fair Value | 6.21% Mortgage notes due in 2016
Fair Value of Financial Instruments
Mortgage notes payable, including premiums	24,769	25,394
Fair Value | Mortgage note payable, 5.88% interest rate, due in 2021
Fair Value of Financial Instruments
Mortgage notes payable, including premiums	14,981	15,249
Fair Value | 7% Mortgage notes due in 2019
Fair Value of Financial Instruments
Mortgage notes payable, including premiums	10,025	10,275
Fair Value | 8.15% Mortgage notes due in 2021
Fair Value of Financial Instruments
Mortgage notes payable, including premiums	$ 7,356	$ 7,956

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Shareholders' Equity (Details) $ / shares in Units, $ in Thousands						3 Months Ended	6 Months Ended
	Jul. 13, 2015 USD ($) $ / shares	Jun. 05, 2015 shares	May. 26, 2015 USD ($) $ / shares	May. 12, 2015 trustee $ / shares shares	Feb. 26, 2015 USD ($) $ / shares	Jun. 30, 2015 shares	Jun. 30, 2015 shares
Distributions
Cash distribution to common shareholders (in dollars per share) | $ / shares			$ 0.43		$ 0.43
Distribution paid to common shareholders | $	$ 30,566		$ 30,256		$ 30,252
Distribution payable to common shareholders (in dollars per share) | $ / shares	$ 0.43
Number of shares issued						12,012	23,222
Share Issuances
Shares granted for equity compensation plan				2,500
Closing share price of the entity's common shares (in dollars per share) | $ / shares				$ 19.75
Number of trustees | trustee				5
Number of shares issued as partial payment to acquire Class A common stock of RMR Inc		700,000
Number of shares aquired		1,541,201

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Related Party Transactions (Details) - Real Estate [Domain] $ / shares in Units, $ in Thousands					1 Months Ended	3 Months Ended		6 Months Ended
	Jun. 05, 2015 USD ($) trust shares	Jun. 04, 2015 shares	Mar. 05, 2015 shares	Mar. 04, 2015 USD ($) shares	Jun. 30, 2015 USD ($) $ / shares	Jun. 30, 2015 USD ($) Vote $ / shares shares	Jun. 30, 2014 USD ($) shares	Jun. 30, 2015 USD ($) $ / shares shares	Jun. 30, 2014 USD ($)	Feb. 28, 2015	Dec. 31, 2014 USD ($) $ / shares
Related Party Transaction
Number of shares aquired | shares	1,541,201
Number of shares issued | shares						12,012		23,222
Par value of SIR common shares of beneficial interest acquired pursuant to stock purchase agreement (in dollars per share) | $ / shares					$ 0.01	$ 0.01		$ 0.01			$ 0.01
Investment at carrying value					$ 514,316	$ 514,316		$ 514,316			$ 680,137
Recognized income (loss) related to investment						6,094	$ 118	5,778	$ 21
Equity in unrealized gain of investees						131	22	189	41
Up C Transaction
Related Party Transaction
Indirect economic interest in RMR LLC as a percent	5.00%
Up C Transaction | RMR LLC
Related Party Transaction
Additional consideration needed to cancel RMR Inc B-2 common stock						$ 0
Up C Transaction | RMR Trust
Related Party Transaction
Direct and indirect economic interest in RMR LLC as a percent	51.60%
Voting power of outstanding capital stock of RMR Inc	91.40%
Up C Transaction | RMR Inc | Class A common shares
Related Party Transaction
Shares issued in connection with acquisition | shares	1,541,201
Up C Transaction | HPT
Related Party Transaction
Indirect economic interest in RMR LLC as a percent	16.20%
Up C Transaction | SIR
Related Party Transaction
Indirect economic interest in RMR LLC as a percent	10.20%
Up C Transaction | SNH
Related Party Transaction
Indirect economic interest in RMR LLC as a percent	17.00%
RMR Inc | Up C Transaction
Related Party Transaction
Aggregate consideration paid	$ 3,917
Equity conversion ratio of RMR Inc class B-1 common stock						1
Equity conversion ratio of RMR LLC class A membership units						1
Percentage of interest acquired	9.60%
Amount of investment acquired	$ 17,462
Fair value of investment	39,833
Initial other liabilities	22,371
Investment at carrying value, including transaction costs	$ 42,384
Number of other companies to whom management services were provided by related party | trust	3
RMR Inc | Up C Transaction | Common Shares
Related Party Transaction
Shares issued in connection with acquisition | shares	700,000
Shares issued in connection with acquisition, value	$ 13,545
RMR Inc | Up C Transaction | Class A common shares
Related Party Transaction
Number of votes per equity interest | Vote						1
Number of shares aquired | shares	1,541,201
RMR Inc | Up C Transaction | Class B1 common shares
Related Party Transaction
Number of votes per equity interest | Vote						10
RMR Inc | Up C Transaction | Class B2 common shares
Related Party Transaction
Number of votes per equity interest | Vote						10
Economic interest in RMR Inc as a percent						0.00%
RMR Inc | Up C Transaction | RMR LLC
Related Party Transaction
Aggregate consideration paid	$ 11,520
RMR Inc | Up C Transaction | RMR LLC | Class B member units
Related Party Transaction
Shares issued in connection with acquisition | shares	1,000,000
RMR Inc | Up C Transaction | RMR Trust
Related Party Transaction
Aggregate consideration paid	$ 11,520
RMR Inc | Up C Transaction | HPT
Related Party Transaction
Aggregate consideration paid	$ 12,622
RMR Inc | Up C Transaction | HPT | Common Shares
Related Party Transaction
Shares issued in connection with acquisition | shares	1,490,000
RMR Inc | Up C Transaction | SIR
Related Party Transaction
Aggregate consideration paid	$ 15,880
RMR Inc | Up C Transaction | SIR | Common Shares
Related Party Transaction
Shares issued in connection with acquisition | shares	880,000
RMR Inc | Up C Transaction | SNH
Related Party Transaction
Aggregate consideration paid	$ 13,967
RMR Inc | Up C Transaction | SNH | Common Shares
Related Party Transaction
Shares issued in connection with acquisition | shares	2,345,000
RMR LLC
Related Party Transaction
Business management fees						$ 2,512	$ 2,534	5,073	4,935
Number of shares issued | shares						23,222,000	16,318,000
Property management and construction supervision fees						$ 1,887	$ 1,985	3,902	3,939
Rental income earned						$ 153	14	$ 167	33
Base business management fee payable in cash (as a percent)					100.00%	100.00%		100.00%
Property management and construction supervision fees paid						$ 2,128	2,264	$ 5,233	3,936
Related party employee equity compensation plan accrual						$ 57	80	$ 313	349
RMR LLC | Up C Transaction
Related Party Transaction
Number of business days notice for termination of property management agreement for convenience by the related party						60 days
Number of business days notice for termination of property management agreement for performance by the related party						60 days
Window for providing notice of termination of property management agreement for performance by the related party						60 days
Window for providing notice of termination of property management agreement for change of control by the related party						12 months
Termination fee remaining term assumption						10 years
RMR LLC | Up C Transaction | RMR Trust | Class A member units
Related Party Transaction
Business acquisition related pary equity interests delivered | shares	15,000,000	30,000,000
RMR LLC | RMR Inc | Up C Transaction
Related Party Transaction
Straight line discount amortization period	20 years
RMR LLC | RMR Inc | Up C Transaction | General and Administrative Expense
Related Party Transaction
Amortization of other liabilities to reduce business management fees						$ 36
RMR LLC | RMR Inc | Up C Transaction | Operating Expense
Related Party Transaction
Amortization of other liabilities to reduce property management fees						$ 29
RMR Trust | Up C Transaction | RMR Inc | Class B1 common shares
Related Party Transaction
Shares issued in connection with acquisition | shares	1,000,000
RMR Trust | Up C Transaction | RMR Inc | Class B2 common shares
Related Party Transaction
Shares issued in connection with acquisition | shares	15,000,000
RMR Trust | RMR Inc | Up C Transaction | Class B1 common shares
Related Party Transaction
Shares issued in connection with acquisition | shares	1,000,000
RMR Trust | RMR Inc | Up C Transaction | Class B2 common shares
Related Party Transaction
Shares issued in connection with acquisition | shares	15,000,000
RMR Trust | RMR Inc | Up C Transaction | Class A member units
Related Party Transaction
Shares issued in connection with acquisition | shares	15,000,000
HPT | Up C Transaction | RMR Inc | Class A common shares
Related Party Transaction
Shares issued in connection with acquisition | shares	5,019,121
SIR
Related Party Transaction
SIR Common shares of beneficial interest acquired pursuant to stock purchase agreement | shares						24,918,421
Percentage of interest					27.90%	27.90%		27.90%		3.90%
Period of standstill provision pursuant to which the counterparty agreed not to make unsolicited proposals to acquire entities as specified						50 years
SIR | Up C Transaction | RMR Inc | Class A common shares
Related Party Transaction
Shares issued in connection with acquisition | shares	3,166,891
SIR | Lakewood Capital Partners LP
Related Party Transaction
Cash purchase price				$ 95,203
Number shares purchased under shareholder agreement | shares				3,418,421
SIR | Barry Portnoy | Lakewood Capital Partners LP
Related Party Transaction
Number shares purchased under shareholder agreement | shares			2,429	107,606
SIR | Adam Portnoy | Lakewood Capital Partners LP
Related Party Transaction
Number shares purchased under shareholder agreement | shares			2,429	87,606
SNH | Up C Transaction | RMR Inc | Class A common shares
Related Party Transaction
Shares issued in connection with acquisition | shares	5,272,787
AIC
Related Party Transaction
Coverage of purchased property insurance					$ 500,000
Coverage of purchased property terror insurance					200,000
Premium for property insurance					1,282
Investment at carrying value					$ 7,022	$ 7,022		$ 7,022
Recognized income (loss) related to investment						22	118	95	21
Equity in unrealized gain of investees						$ (64)	$ 22	$ (19)	$ 41
Combined property insurance policy					3 years
Combined property terror insurance policy					1 year

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2015

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Note 2. Recent Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2015-03,Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. This ASU is effective for interim and annual reporting periods beginning after December 15, 2015 and requires retrospective application.  This ASU is not expected to cause any changes to our condensed consolidated financial statements other than the reclassification of certain debt issuance costs from assets to contra liabilities on our condensed consolidated balance sheets.

In May 2014, the FASB issued ASU No. 2014-09, Revenue From Contracts With Customers, which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. This ASU 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 this ASU specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. In July 2015, the FASB approved a one year deferral of the effective date for this ASU to interim and annual reporting periods beginning after December 15, 2017.  We are continuing to evaluate this guidance; however, we do not expect its adoption to have a material impact on our condensed consolidated financial statements, as a substantial portion of our revenue consists of rental income from leasing arrangements, which are specifically excluded from this ASU.

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Equity Investment in Select Income REIT (Details) - Subsequent Event Type [Domain] - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014	Dec. 31, 2013
Equity Investment in Select Income REIT
Investment at carrying value	$ 514,316		$ 514,316		$ 680,137
Costs related to acquisition	183	$ 671	189	$ 1,180
Income (Loss) from Equity Method Investments	6,094	118	5,778	21
Loss on issuance of shares by SIR	(1,353)		(42,124)
Loss on impairment of SIR investment	(203,297)		(203,297)
Gain (Loss) on Disposition of Stock in Subsidiary or Equity Method Investee	(1,353)		(42,124)
Proceeds from Equity Method Investment, Dividends or Distributions			10,425
Equity Method Investment Summarized Balance Sheet Information Abstract
Real estate properties, net	1,445,242		1,445,242		1,462,689
Acquired real estate leases, net	133,837		133,837		150,080
Cash and cash equivalents	7,051	5,035	7,051	5,035	13,791	$ 7,663
Rents receivable, net	40,161		40,161		36,239
Other assets, net	54,827		54,827		12,205
Total assets	2,237,575	2,427,615	2,237,575	2,427,615	2,427,615
Revolving credit facility	59,000		59,000
Term loan	550,000		550,000		550,000
Senior notes	347,702		347,702		347,423
Mortgage notes payable, including premiums	185,401		185,401		187,694
Assumed real estate lease obligations, net	14,297		14,297		15,924
Other Liabilities	50,500		50,500		26,471
Shareholders' equity	1,027,243		1,027,243		1,297,449
Total liabilities and shareholders' equity	2,237,575		2,237,575		2,427,615
Income Statements:
Total revenues	62,113	62,428	124,772	122,248
Depreciation and amortization	17,299	16,191	34,514	31,618
Acquisition related costs	183	671	189	1,180
General and administrative	3,713	4,111	7,717	7,208
Total expenses	45,060	43,048	90,476	85,630
Operating income	17,053	19,380	34,296	36,618
Interest expense	(9,455)	(5,158)	(18,757)	(9,685)
(Loss) income from continuing operations before income tax expense and equity in earnings of investees	(197,052)	14,230	(229,870)	26,991
Income tax expense	32	101	62	123
Equity in earnings (losses) of investees	$ 6,094	$ 118	$ 5,778	$ 21
Weighted average common shares outstanding (basic) (in shares)	70,485,000	54,659,000	70,377,000	54,649,000
Weighted average common shares outstanding (diluted) (in shares)	70,485,000	54,743,000	70,377,000	54,734,000
Net income per common share (in dollars per share)	$ (2.71)	$ 0.27	$ (3.19)	$ 0.55
SIR
Equity Investment in Select Income REIT
Equity investments, common shares owned	24,918,421		24,918,421
Equity Method Investment, Ownership Percentage	27.90%		27.90%
Amortization of the difference between carrying value and share of underlying equity	$ 2,177		$ 4,742
Income (Loss) from Equity Method Investments	8,249		10,425
The amount of investment in exceed the underlying equity of the investee	166,272		166,272
Difference in basis to be amortized over remaining period	95,089		95,089
Proceeds from Equity Method Investment, Dividends or Distributions	8,582		22,112
Income Statements:
Equity in earnings (losses) of investees	8,249		10,425
SIR | SIR
Equity Investment in Select Income REIT
Costs related to acquisition	779	$ 136	21,318	$ 374
Income (Loss) from Equity Method Investments	$ 23	118	$ 95	21
Number of common shares issued during period	915,853		29,368,890
Loss on issuance of shares by SIR	$ 1,353		$ 42,124
Loss on impairment of SIR investment	203,297
Fair value of investment	514,316		514,316
Gain (Loss) on Disposition of Stock in Subsidiary or Equity Method Investee	1,353		42,124
Equity Method Investment Summarized Balance Sheet Information Abstract
Real estate properties, net	3,883,995		3,883,995		1,772,510
Acquired real estate leases, net	503,484		503,484		120,700
Cash and cash equivalents	22,709		22,709		13,504
Rents receivable, net	82,043		82,043		68,385
Other assets, net	129,186		129,186		18,132
Total assets	4,621,417		4,621,417		1,993,231
Revolving credit facility	143,000		143,000		77,000
Term loan	350,000		350,000		350,000
Senior notes	1,434,560		1,434,560
Mortgage notes payable, including premiums	287,138		287,138		18,816
Assumed real estate lease obligations, net	89,842		89,842		26,475
Other Liabilities	129,124		129,124		40,493
Noncontrolling interest	3,323		3,323
Shareholders' equity	2,184,430		2,184,430		1,480,447
Total liabilities and shareholders' equity	4,621,417		4,621,417		$ 1,993,231
Income Statements:
Rental income	92,166	48,465	172,644	93,528
Tenant Reimbursements And Other Real Estate Revenue	15,048	8,092	28,985	16,057
Total revenues	107,214	56,557	201,629	109,585
Operating expenses	18,820	9,985	36,184	19,964
Depreciation and amortization	32,390	10,495	57,109	19,789
Acquisition related costs	779	136	21,318	374
General and administrative	6,368	2,198	13,160	7,374
Total expenses	58,357	22,814	127,771	47,501
Operating income	48,857	33,743	73,858	62,084
Interest expense	(19,497)	(3,634)	(33,676)	(6,992)
Gain (Loss) on early extinguishment of Debt			(6,845)	243
(Loss) income from continuing operations before income tax expense and equity in earnings of investees	29,360	30,109	33,337	55,335
Income tax expense	(195)	(19)	(226)	(90)
Equity in earnings (losses) of investees	23	118	95	21
Net income	29,188	30,208	33,206	55,266
Net loss allocated to noncontrolling interest	(48)		(89)
Net Income (Loss) Attributable to Parent	$ 29,140	$ 30,208	$ 33,117	$ 55,266
Weighted average common shares outstanding (basic) (in shares)	88,617,000	54,136,000	84,078,000	51,991,000
Weighted average common shares outstanding (diluted) (in shares)	88,631,000	54,190,000	84,090,000	52,071,000
Basic and diluted net income attributed to SIR per common share	$ 0.33	$ 0.56	$ 0.39	$ 1.06

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Real estate properties:
Land	$ 253,058	$ 254,008
Buildings and improvements	1,430,653	1,428,472
Total real estate properties, gross	1,683,711	1,682,480
Accumulated depreciation	(238,469)	(219,791)
Total real estate properties, net	1,445,242	1,462,689
Equity investment in Select Income REIT	514,316	680,137
Assets of discontinued operations	12,449	13,165
Assets of property held for sale	3,161	32,797
Acquired real estate leases, net	133,837	150,080
Cash and cash equivalents	7,051	13,791
Restricted cash	2,454	2,280
Rents receivable, net	40,161	36,239
Deferred leasing costs, net	12,750	11,450
Deferred financing costs, net	11,327	12,782
Other assets, net	54,827	12,205
Total assets	2,237,575	2,427,615
LIABILITIES AND SHAREHOLDERS' EQUITY
Unsecured revolving credit facility	59,000
Unsecured term loans	550,000	550,000
Senior unsecured notes, net of discount	347,702	347,423
Mortgage notes payable, including premiums	185,401	187,694
Liabilities of discontinued operations	277	150
Liabilities of property held for sale	11	343
Accounts payable and accrued expenses	50,500	26,471
Due to related persons	3,144	2,161
Assumed real estate lease obligations, net	14,297	15,924
Total liabilities	$ 1,210,332	$ 1,130,166
Commitments and contingencies
Shareholders' equity:
Common shares of beneficial interest, $.01 par value: 100,000,000 shares authorized, 71,084,349 and 70,349,227 shares issued and outstanding, respectively	$ 711	$ 703
Additional paid in capital	1,472,270	1,457,631
Cumulative net income	23,914	248,447
Cumulative other comprehensive income	225	37
Cumulative common distributions	(469,877)	(409,369)
Total shareholders' equity	1,027,243	1,297,449
Total liabilities and shareholders' equity	$ 2,237,575	$ 2,427,615

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) shares in Thousands, $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ (224,533)	$ 29,798
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depreciation	19,363	18,392
Net amortization of debt premiums and discount and deferred financing fees	660	553
Straight line rental income	(2,207)	(2,209)
Amortization of acquired real estate leases	14,617	12,702
Amortization of deferred leasing costs	1,087	964
Other non-cash expenses	1,057	1,008
Increase in carrying value of asset held for sale		(2,344)
Equity in earnings of investees	(5,778)	(21)
Loss on issuance of shares by Select Income REIT	42,124
Loss on impairment of Select Income REIT investment	203,297
Distributions of earnings from equity investees	10,425
Change in assets and liabilities:
Restricted cash	(174)	(812)
Deferred leasing costs	(2,123)	(1,690)
Rents receivable	539	1,008
Other assets	2,027	2,016
Accounts payable and accrued expenses	1,491	1,341
Due to related persons	983	174
Cash provided by operating activities	62,855	60,880
CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate acquisitions and deposits	(1,400)	(47,359)
Real estate improvements	(5,386)	(9,704)
Investment in Select Income REIT	(95,821)
Investment in Reit Management & Research Inc.	(6,468)
Investment in Affiliates Insurance Company		(825)
Distributions in excess of earnings from equity investees	11,687
Proceeds from sale of properties, net	30,520	4,644
Cash used in investing activities	(66,868)	(53,244)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of mortgage notes payable	(1,203)	(1,072)
Borrowings on unsecured revolving credit facility	100,000	85,500
Repayments on unsecured revolving credit facility	(41,000)	(47,000)
Financing fees	(16)	(627)
Distributions to common shareholders	(60,508)	(47,065)
Cash provided by (used in) financing activities	(2,727)	(10,264)
Decrease in cash and cash equivalents	(6,740)	(2,628)
Cash and cash equivalents at beginning of period	13,791	7,663
Cash and cash equivalents at end of period	7,051	5,035
Supplemental cash flow information:
Interest paid	17,980	8,653
Income taxes paid	$ 78	87
Non-cash investing activities:
Investment in Reit Management & Research Inc. paid in common shares	13,836
Real estate acquisition funded with the assumption of mortgage debt		(97,524)
Non-cash financing activities:
Assumption of mortgage debt		$ 97,524

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Per Common Share Amounts (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Per Common Share Amounts
Weighted average common shares outstanding (basic) (in shares)	70,485	54,659	70,377	54,649
Effect of dilutive securities: unvested share awards		84		85
Weighted average common shares outstanding (diluted) (in shares)	70,485	54,743	70,377	54,734

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Real Estate Properties (Details 2) - Real Estate [Domain] - Geographical [Domain] $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015 USD ($) item	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($) property item	Jun. 30, 2014 USD ($)	Dec. 31, 2014 USD ($)
Real estate properties
Number of Buildings | item	91		91
Net book value	$ 1,445,242		$ 1,445,242		$ 1,462,689
Balance Sheets:
Real estate properties	3,071		3,071
Rents receivable	54		54
Other assets	36		36
Assets of Disposal Group, Including Discontinued Operation, Total	12,449		12,449		13,165
Other liabilities	11		11
Liabilities of Disposal Group, Including Discontinued Operation, Total	277		277		150
Statement of Operations:
Income (loss) from discontinued operations	(173)	$ 361	(379)	$ 2,909
Discontinued Operations
Balance Sheets:
Real estate properties	12,260		12,260		12,260
Rents receivable	16		16		782
Other assets	173		173		123
Assets of Disposal Group, Including Discontinued Operation, Total	12,449		12,449		13,165
Other liabilities	277		277		150
Liabilities of Disposal Group, Including Discontinued Operation, Total	277		277		$ 150
Discontinued operations
Statement of Operations:
Rental income	27	746	58	1,486
Real estate taxes	(70)	(124)	(140)	(273)
Utility expenses	(11)	(52)	(78)	(154)
Other operating expenses	(91)	(159)	(162)	(385)
General and administrative	(28)	(50)	(57)	(109)
Increase in carrying value of asset held for sale				2,344
Income (loss) from discontinued operations	$ (173)	$ 361	$ (379)	$ 2,909
One building | Discontinued Operations
Real estate properties
Number of properties sold | property			1
Number of Buildings | item	1		1
Two buildings | Discontinued operations
Real estate properties
Number of properties sold | property			2
Number of Buildings | item	2		2

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Basis of Presentation

6 Months Ended

Jun. 30, 2015

Basis of Presentation

Basis of Presentation

Note 1.  Basis of Presentation

The accompanying condensed consolidated financial statements of Government Properties Income Trust and its subsidiaries, or the Company, we or us, are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted.  We believe the disclosures made are adequate to make the information presented not misleading.  However, the accompanying condensed consolidated financial statements should be read in conjunction with the financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2014, or our Annual Report.  In the opinion of our management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included.  All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated.  Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.

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

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2015	Dec. 31, 2014
CONDENSED CONSOLIDATED BALANCE SHEETS
Common shares of beneficial interest, par value (in dollars per share)	$ 0.01	$ 0.01
Common shares of beneficial interest, shares authorized	100,000,000	100,000,000
Common shares of beneficial interest, shares issued	71,084,349	70,349,227
Common shares of beneficial interest, shares outstanding	71,084,349	70,349,227

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Real Estate Properties (Tables)

6 Months Ended

Jun. 30, 2015

Real Estate Properties

Summarized balance sheet information for properties classified as held for sale

	June 30,
	2015
Real estate properties, net	$	3,071
Rents receivable		54
Other assets		36
Assets of property held for sale	$	3,161
Other liabilities	$	11
Liabilities of property held for sale	$	11

Summarized balance sheet and income statement information for properties classified as discontinued operations

Balance Sheets:

	June 30,		December 31,
	2015		2014
Real estate properties, net	$	12,260	$	12,260
Rents receivable		16		782
Other assets		173		123
Assets of discontinued operations	$	12,449	$	13,165
Other liabilities	$	277	$	150
Liabilities of discontinued operations	$	277	$	150

Statements of Operations

	Three Months ended June 30,				Six Months ended June 30,
	2015		2014		2015		2014
Rental income	$	27	$	746	$	58	$	1,486
Real estate taxes		(70)		(124)		(140)		(273)
Utility expenses		(11)		(52)		(78)		(154)
Other operating expenses		(91)		(159)		(162)		(385)
General and administrative		(28)		(50)		(57)		(109)
Increase in carrying value of asset held for sale		—		—		—		2,344
Income (loss) from discontinued operations	$	(173)	$	361	$	(379)	$	2,909

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Jul. 28, 2015
Document and Entity Information
Entity Registrant Name	Government Properties Income Trust
Entity Central Index Key	0001456772
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		71,084,349
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2

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Indebtedness (Tables)

6 Months Ended

Jun. 30, 2015

Indebtedness

Composition of outstanding indebtedness

	June 30,		December 31,
	2015		2014
Unsecured revolving credit facility	$	59,000	$	—
Unsecured term loan, due in 2020		300,000		300,000
Unsecured term loan, due in 2022		250,000		250,000
Senior unsecured notes, 3.75% interest rate, including unamortized discounts of $2,298 and $2,577,        respectively, due in 2019		347,702		347,423
Mortgage note payable, 5.55% interest rate, including unamortized premiums of $1,311 and $2,167, respectively, due in 2016(1)		84,311		85,167
Mortgage note payable, 5.73% interest rate, including unamortized premiums of $65 and $177, respectively, due in 2015(1)(2)		46,923		47,418
Mortgage note payable, 6.21% interest rate, due in 2016(1)		23,667		23,833
Mortgage note payable, 5.88% interest rate, due in 2021(1)		14,268		14,374
Mortgage note payable, 7.00% interest rate, including unamortized premiums of $538 and $605, respectively, due in 2019(1)		9,383		9,563
Mortgage note payable, 8.15% interest rate, including unamortized premiums of $343 and $398, respectively, due in 2021(1)		6,849		7,339
	$	1,142,103	$	1,085,117

(1) We assumed these mortgages in connection with our acquisitions 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 are amortizing the fair value premiums, if any, to interest expense over the respective terms of the mortgages to reduce interest expense to the estimated market interest rates as of the date of acquisition.

(2) This mortgage was repaid, at par, in July 2015.

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Rental income	$ 62,113	$ 62,428	$ 124,772	$ 122,248
Expenses:
Real estate taxes	7,674	7,166	15,084	13,978
Utility expenses	4,023	4,049	8,594	9,745
Other operating expenses	12,168	10,860	24,378	21,901
Depreciation and amortization	17,299	16,191	34,514	31,618
Acquisition related costs	183	671	189	1,180
General and administrative	3,713	4,111	7,717	7,208
Total expenses	45,060	43,048	90,476	85,630
Operating income	17,053	19,380	34,296	36,618
Interest and other income		8	12	58
Interest expense (including net amortization of debt premiums and discounts and deferred financing fees of $328, $223, $660 and $553, respectively	(9,455)	(5,158)	(18,757)	(9,685)
Loss on issuance of shares by Select Income REIT	(1,353)		(42,124)
Loss on impairment of Select Income REIT investment	(203,297)		(203,297)
Income from continuing operations before income tax expense and equity in earnings (losses) of investees	(197,052)	14,230	(229,870)	26,991
Income tax expense	(32)	(101)	(62)	(123)
Equity in earnings (losses) of investees	6,094	118	5,778	21
Income(loss) from continuing operations	(190,990)	14,247	(224,154)	26,889
Income (loss) from discontinued operations	(173)	361	(379)	2,909
Net income (loss)	(191,163)	14,608	(224,533)	29,798
Other comprehensive income:
Equity in unrealized gain of investees	131	22	189	41
Other comprehensive income	131	22	189	41
Comprehensive income (loss)	$ (191,032)	$ 14,630	$ (224,344)	$ 29,839
Weighted average common shares outstanding (basic) (in shares)	70,485	54,659	70,377	54,649
Weighted average common shares outstanding (diluted) (in shares)	70,485	54,743	70,377	54,734
Per common share amounts (basic and diluted):
Income from continuing operations (in dollars per share)	$ (2.71)	$ 0.26	$ (3.19)	$ 0.49
Income from discontinued operations (in dollars per share)		0.01	(0.01)	0.05
Net income (loss), (basic) (in dollars per share)	(2.71)	0.27	(3.19)	0.55
Net income (loss), (diluted) (in dollars per share)	$ (2.71)	$ 0.27	$ (3.19)	$ 0.54

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Indebtedness

6 Months Ended

Jun. 30, 2015

Indebtedness

Indebtedness

Note 7.   Indebtedness

At June 30, 2015 and December 31, 2014, our outstanding indebtedness consisted of the following:

	June 30,		December 31,
	2015		2014
Unsecured revolving credit facility	$	59,000	$	—
Unsecured term loan, due in 2020		300,000		300,000
Unsecured term loan, due in 2022		250,000		250,000
Senior unsecured notes, 3.75% interest rate, including unamortized discounts of $2,298 and $2,577,        respectively, due in 2019		347,702		347,423
Mortgage note payable, 5.55% interest rate, including unamortized premiums of $1,311 and $2,167, respectively, due in 2016(1)		84,311		85,167
Mortgage note payable, 5.73% interest rate, including unamortized premiums of $65 and $177, respectively, due in 2015(1)(2)		46,923		47,418
Mortgage note payable, 6.21% interest rate, due in 2016(1)		23,667		23,833
Mortgage note payable, 5.88% interest rate, due in 2021(1)		14,268		14,374
Mortgage note payable, 7.00% interest rate, including unamortized premiums of $538 and $605, respectively, due in 2019(1)		9,383		9,563
Mortgage note payable, 8.15% interest rate, including unamortized premiums of $343 and $398, respectively, due in 2021(1)		6,849		7,339
	$	1,142,103	$	1,085,117

(1) We assumed these mortgages in connection with our acquisitions 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 are amortizing the fair value premiums, if any, to interest expense over the respective terms of the mortgages to reduce interest expense to the estimated market interest rates as of the date of acquisition.

(2) This mortgage was repaid, at par, in July 2015.

Our $750,000 unsecured revolving credit facility is available for general business purposes, including acquisitions. The maturity date of our revolving credit facility is January 31, 2019 and, subject to the payment of an extension fee and meeting certain other conditions, we have an option to extend the stated maturity date of our revolving credit facility by one year to January 31, 2020. Borrowings under our revolving credit facility bear interest at a rate of LIBOR plus a premium, which was 125 basis points at June 30, 2015.  We also pay a facility fee on the total amount of lending commitments under our revolving credit facility, which was 25 basis points per annum at June 30, 2015. Both the interest rate premium and the facility fee are subject to adjustment based upon changes to our credit ratings. As of June 30, 2015, the interest rate payable on borrowings under our revolving credit facility was 1.4% and the weighted average interest rate for borrowings under our revolving credit facility was 1.4% and 1.6%, respectively, for the three and six months ended June 30, 2015 and 1.7% for both the three and six months ended June 30, 2014. As of June 30, 2015 and July 28, 2015, we had $59,000 and $99,000 outstanding under our revolving credit facility, respectively.

Our $300,000 unsecured term loan, which matures on March 31, 2020, is prepayable without penalty at any time. The amount outstanding under our $300,000 term loan bears interest at LIBOR plus a premium, which was 140 basis points at June 30, 2015. The interest rate premium is subject to adjustment based upon changes to our credit ratings. As of June 30, 2015, the interest rate for the amount outstanding under our $300,000 term loan was 1.6%. The weighted average interest rate under our $300,000 term loan was 1.6% for both the three and six months ended June 30, 2015.

Our $250,000 unsecured term loan, which matures on March 31, 2022, is prepayable at any time. If our $250,000 term loan is repaid prior to November 22, 2015, a prepayment premium of 2.0% of the amount repaid will be payable. If our $250,000 term loan is repaid during the period from November 22, 2015 to November 21, 2016, a prepayment premium of 1.0% of the amount repaid will be payable. Subsequent to November 21, 2016, no prepayment premium will be payable. The amount outstanding under our $250,000 term loan bears interest at LIBOR plus a premium, which was 180 basis points at June 30, 2015.  The interest rate premium is subject to adjustment based upon changes to our credit ratings. As of June 30, 2015, the interest rate for the amount outstanding under our $250,000 term loan was2.0%. The weighted average interest rate under our $250,000 term loan was 2.0% for both the three and six months ended June 30, 2015.

Our $750,000 revolving credit facility, our $300,000 term loan and our $250,000 term loan are governed by a credit agreement with a syndicate of institutional lenders that includes a number of features common to all of these credit arrangements. This 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 $350,000 of 3.75% senior unsecured notes due in 2019 are governed by an indenture and a supplement to the indenture, and require semi-annual payments of interest only through maturity.  The outstanding amount of these notes may be prepaid at par (plus accrued and unpaid interest) on or after July 15, 2019 or before that date together with a make whole premium.

Our credit agreement and senior notes indenture and its supplement provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default, including, in the case of our credit agreement, a change of control of us, which includes Reit Management & Research LLC, or RMR LLC, ceasing to act as our business manager and property manager. Our senior notes indenture and itssupplement and our credit agreementalso contain a number of covenants, including covenants that restrict our ability to incur debts or to make distributions under certain circumstances and require us to maintain certain financial ratios.  We believe we were in compliance with the terms and conditions of the respective covenants under oursenior unsecured notesindenture anditssupplement and our credit agreement at June 30, 2015.

At June 30, 2015,  six of our properties (eight buildings) with an aggregate net book value of $262,191 secured six mortgage notes that we assumed in connection with the acquisition of such properties. Our mortgage notes are non-recourse and do not contain any material financial covenants.

In July 2015, we repaid, at par, a $47,083 mortgage note which was secured by a property (two buildings) located in Indianapolis, IN. This mortgage was scheduled to mature in October 2015.

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Concentration

6 Months Ended

Jun. 30, 2015

Concentration

Concentration

Note 6.   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, 12 state governments and the United Nations combined were responsible for approximately 92.8% and 93.0% of our annualized rental income, excluding properties classified as discontinued operations, as of June 30, 2015 and 2014, respectively. The U.S. Government is our largest tenant by annualized rental income and was responsible for approximately 67.7% and 70.0% of our annualized rental income, excluding properties classified as discontinued operations, as of June 30, 2015 and 2014, respectively.

Geographic Concentration

At June 30, 2015, our 71 properties (91 buildings), excluding one property (one building) classified as discontinued operations, were located in 31 states and the District of Columbia.  Properties located in California,  Virginia,  the District of Columbia,  Georgia,  New York,  Marylandand Massachusetts were responsible for approximately 11.5%,  10.5%,  10.3%,  9.1%,  8.5%,  7.5% and 5.7% of our annualized rental income as of June 30, 2015, respectively.

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Real Estate Properties (Details) $ in Thousands	1 Months Ended		3 Months Ended	6 Months Ended
	Jul. 31, 2015 USD ($) ft² building	Feb. 28, 2015 USD ($) ft² item	Jun. 30, 2015 USD ($) ft² property item	Jun. 30, 2015 USD ($) ft² property item	Jun. 30, 2014 USD ($)	May. 31, 2015 USD ($) ft² building	Dec. 31, 2014 USD ($)	Apr. 30, 2014 USD ($) ft² item
Real estate properties
Number of properties owned | property			71	71
Number of buildings | item			91	91
Total real estate properties, gross			$ 1,683,711	$ 1,683,711			$ 1,682,480
Number of leases entered | property			16	23
Weighted average lease term			10 years 10 months 24 days	10 years 2 months 12 days
Expenditures committed on leases			$ 5,237	$ 7,483
Committed but unspent tenant related obligations estimated			$ 9,248	$ 9,248
Square Feet | ft²			316,123	399,101
Net book value			$ 1,445,242	$ 1,445,242			1,462,689
Increase in carrying value of assets held for sale					$ 2,344
Balance Sheet:
Real estate properties, net			3,071	3,071
Rents receivable			54	54
Other assets			36	36
Assets of property held for sale			3,161	3,161			32,797
Other liabilities			11	11
Liabilities of property held for sale			11	11			343
Continuing operations
Real estate properties
Total real estate properties, gross			$ 1,687,057	$ 1,687,057
Discontinued operations
Real estate properties
Number of properties owned | property			1	1
Number of buildings | item			1	1
Total real estate properties, gross			$ 12,260	$ 12,260
Greensburg, PA | One building | Office | Commonwealth Of Pennsylvania
Real estate properties
Number of buildings | building	1
Square Feet | ft²	82,889
Purchase Price	$ 14,300,000
Percentage of property leased	100.00%
Braintree, MA | One building | Office and Office Warehouse Property | Commonwealth of Massachusetts
Real estate properties
Number of buildings | building	1
Purchase Price	$ 11,700
Percentage of property leased	100.00%
Rentable square feet of properties | ft²	99,168
Disposal Group, Not Discontinued Operations | Savannah, GA | Office
Real estate properties
Number of buildings | building						1
Disposal Group, Not Discontinued Operations | Savannah, GA | One building | Office
Real estate properties
Rentable square feet of properties | ft²						35,228
Net book value						$ 3,072
Disposal Group, Not Discontinued Operations | Riverdale, MD | Office | U.S. Government | One building
Real estate properties
Number of buildings | item		1
Rentable square feet of properties | ft²		337,500
Option purchase price		$ 30,600
Gain (loss) on sale of properties		$ 0
Discontinued Operations
Balance Sheet:
Real estate properties, net			12,260	12,260			12,260
Rents receivable			16	16			782
Other assets			173	173			123
Other liabilities			$ 277	$ 277			$ 150
Discontinued Operations | One building
Real estate properties
Number of buildings | item			1	1
Discontinued Operations | Falls Church, VA | Office | One building
Real estate properties
Number of buildings | item								1
Rentable square feet of properties | ft²								164,746
Net book value			$ 12,282	$ 12,282
Real Estate Aggregate Sales Price								$ 16,500

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Fair Value of Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2015

Fair Value of Assets and Liabilities

Schedule of fair value and carrying value of financial instruments

	As of June 30, 2015				As of December 31, 2014
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Senior unsecured notes, 3.75% interest rate, due in 2019	$	347,702	$	358,314	$	347,423	$	356,129
Mortgage note payable, 5.55% interest rate, due in 2016(1)		84,311		84,340		85,167		85,171
Mortgage note payable, 5.73% interest rate, due in 2015(1)(2)		46,923		47,264		47,418		48,233
Mortgage note payable, 6.21% interest rate, due in 2016(1)		23,667		24,769		23,833		25,394
Mortgage note payable, 5.88% interest rate, due in 2021(1)		14,268		14,981		14,374		15,249
Mortgage note payable, 7.00% interest rate, due in 2019(1)		9,383		10,025		9,563		10,275
Mortgage note payable, 8.15% interest rate, due in 2021(1)		6,849		7,356		7,339		7,956
	$	533,103	$	547,049	$	535,117	$	548,407

(1) We assumed these mortgages 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 date of acquisition and we are amortizing the fair value premiums, if any, to interest expense over the respective terms of the mortgages to reduce interest expense to the estimated market interest rates as of the date of acquisition.

(2) This mortgage was repaid, at par, in July 2015.

Schedule of assets measured on a non-recurring basis at fair value, categorized by the level of inputs used in the valuation assets

			Quoted Prices in				Significant
	Estimated		Active Markets for		Significant Other		Unobservable
	Fair		Identical Assets		Observable Inputs		Inputs
Description	Value		(Level 1)		(Level 2)		(Level 3)
Investment in SIR (1)	$	514,316	$	514,316	$	—	$	—
	$	514,316	$	514,316	$	—	$	—

(1)We own 24,891,421 common shares of Select Income REIT, or SIR. During the three months ended June 30, 2015, we recorded a $203,297 loss on impairment to reduce the carrying value of this investment to its estimated fair value. We estimated fair value using the closing price of SIR’s common shares on the New York Stock Exchange, or the NYSE, on June 30, 2015 (Level 1 input). See Notes 10 and 11 for further information regarding this investment.

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Related Party Transactions

6 Months Ended

Jun. 30, 2015

Related Party Transactions

Related Party Transactions

Note 10.   Related Person Transactions

We have relationships and historical and continuing transactions with RMR LLC, its parent, RMR Inc., and others related to them, including other companies to which RMR LLC provides management services and which have trustees, directors and officers who are also trustees, directors or officers of us, RMR Inc. or RMR LLC. For further information about these and other such relationships and certain other related person transactions, please refer to our Annual Report and our Current Report on Form 8-K filed with the Securities and Exchange Commission, or the SEC, on June 8, 2015.  

Acquisition of Interest in our Manager:  On June 5, 2015, we and three other real estate investment trusts, or REITs, to which RMR  LLC provides management services – Hospitality Properties Trust, or HPT, SIR, and Senior Housing Properties Trust, or SNH, and collectively with HPT and SIR, the Other REITs – participated in a transaction, or the Up-C Transaction, by which we and the Other REITs each acquired an ownership interest in RMR Inc.

The Up-C Transaction was completed pursuant to a transaction agreement by and among us, our manager, RMR LLC, its then sole member, Reit Management & Research Trust, or RMR Trust, and RMR Inc. and similar transaction agreements that each Other REIT entered into with RMR LLC, RMR Trust and RMR Inc. RMR Trust is owned by our Managing Trustees, Barry and Adam Portnoy. Pursuant to these transactions agreements: we contributed to RMR Inc. 700,000 of ourcommon shares, valued at $13,545 and $3,917in cash;  HPT contributed to RMR Inc. 1,490,000 of its common shares and $12,622 in cash; SIR contributed to RMR Inc. 880,000 of its common shares and $15,880 in cash; SNH contributed to RMR Inc. 2,345,000 of itscommonshares and $13,967 in cash; RMR Trust contributed to RMR Inc. $11,520 in cash,which RMR Inc. contributed to RMR LLC; RMR LLC issued1,000,000 of its class B membership units to RMR Inc.; RMR Inc. issued 1,541,201 shares of its class A common stockto us,5,019,121 shares of its class A common stock to HPT, 3,166,891 shares of its class A common stock to SIR,5,272,787 shares of its class A common stock to SNH and 1,000,000 shares of its class B-1 common stock and 15,000,000 shares of its class B-2 common stock,to RMR Trust; RMR Trust delivered 15,000,000of the 30,000,000class A membership units of RMR LLC which RMR Trust then owned to RMR Inc.; and RMR Inc. delivered to RMR Trust our common shares, the common shares of the Other REITs and the cash which had been contributed by us and the Other REITs to RMR Inc.

The class A common stock and class B-1 common stock of RMR Inc. share ratably as a single class in dividends and other distributions of RMR Inc. when and if declared by the board of directors of RMR Inc.and have the same rights in a liquidation of RMR Inc. The class B-1 common stock of RMR Inc. is convertible into class A common stock of RMR Inc. on a 1:1 basis. The class A common stock of RMR Inc. hasone vote per share. The class B-1 common stock of RMR Inc. has10 votes per share. The class B-2 common stock of RMR Inc. hasno economic interest in RMR Inc., but has10 votes per share and is paired with the class A membership units of RMR LLC owned by RMR Trust. The class A membership units of RMR LLC owned by RMR Trust are required to be redeemed by RMR LLC upon request by RMR Trust for class A common stock of RMR Inc. on a 1:1 basis, or if RMR Inc. elects, cash. Under the governing documents of RMR Inc., upon the redemption of a class A membership unit of RMR LLC, the class B-2 common stock of RMR Inc. “paired” with an equal member of class A membership unitsare cancelled for no additional consideration.

As part of the Up-C Transaction and concurrently with entering the transaction agreements, on June 5, 2015:

· We entered an amended and restated business management agreement with RMR LLC, and an amended and restated property management agreement with RMR LLC. The amendments made by these agreements are described below in this Note under “Amendment and Restatement of Management Agreements with RMR LLC.” Each Other REIT also entered amended and restated business and property management agreements with RMR LLC which made similar amendments to their management agreements with RMR LLC.

· We entered a registration rights agreement with RMR Inc. covering the class A common stock of RMR Inc. that we received in the Up-C Transaction, pursuant to which we received demand and piggyback registration rights, subject to certain limitations. Each Other REIT entered into a similar registration rights agreement with RMR Inc.

· We entered into a lock up and registration rights agreement with RMR Trust and Barry and Adam Portnoy pursuant to which RMR Trust and Barry and Adam Portnoy agreed not to transfer the 700,000common shares RMR Trust received in the Up-C Transaction for a period of 10 years and we granted them certain registration rights, subject to certain limited exceptions. Each Other REIT also entered into a similar lock up and registration rights agreement with RMR Trust and Barry and Adam Portnoy.

As a result of the Up-C Transaction: RMR LLC became a subsidiary of RMR Inc.; RMR Inc. became the managing member of RMR LLC; through our ownership of class A common stock of RMR Inc., we currently have an indirect 5.0% economic interest in RMR LLC; through their ownership of class A common stock of RMR Inc., HPT, SIR and SNH currently have an indirect 16.2%,10.2%and 17.0%, economic interest in RMR LLC, respectively; and RMR Trust through its ownership of 1,000,000 shares of class B-1 common stock of RMR Inc., 15,000,000 shares of class B-2 common stock of RMR Inc. and 15,000,000class A membership units of RMR LLC currently directly and indirectly has a 51.6% economic interest in RMR LLC and controls 91.4% of the voting power of outstanding capital stock of RMR Inc.

Pursuant to the transaction agreements, we and each Other REIT agreed to distribute approximately half of the shares ofclass A common stock of RMR Inc. received in the Up-C Transaction to our respective shareholders as a special distribution, and RMR Inc. agreed to facilitate this distribution by filing a registration statement with the SEC to register the shares of class A common stock of RMR Inc. to be distributed and by seeking a listing of those shares on a national stock exchange upon the registration statement being declared effective by the SEC.  The distribution of class A common stock of RMR Inc. that we and the Other REITs have agreed to make to our and the Other REITs’ shareholders will be made only after a registration statement, including a prospectus, is declared effective by the SEC.

Amendment and Restatement of Management Agreements with RMR LLC: As part of the Up-C Transaction, on June 5, 2015, we and RMR LLC entered into an amended and restated business management agreement, or the amended business management agreement, which amended and restated our previous business management agreement with RMR LLC, and an amended and restated property management agreement, or the amended property management agreement, which amended and restated our previous property management agreement with RMR LLC. Our amended business management agreement and amended property management agreement are referred to together in this Note as our amended management agreements. Our amended management agreements were effective as of June 5, 2015.

Our amended management agreements have terms that end on December 31, 2035, and automatically extend on December 31st of each year for an additional year, so that the terms of the agreements thereafter end on the 20th anniversary of the date of the extension. We have the right to terminate each amended management agreement: (i) at any time on 60 days’ written notice for convenience, (ii) immediately upon written notice for cause, as defined therein, (iii) on 60 days’ written notice given within 60 days after the end of any 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 amended management agreements for good reason, as defined therein.

If we terminate one or both of our amended management agreements for convenience, or if RMR LLC terminates one or both of our amended 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 amended management agreement(s) for the remaining term. If we terminate one or both of our amended management agreements for a performance reason, as defined therein, we have agreed to pay RMR LLC the termination fee calculated as described above, but assuming a remaining term of 10 years.We are not required to pay any termination fee if we terminate our amended management agreements for cause or as a result of a change of control of RMR LLC.

Accounting for Investment in RMR Inc.: On June 5, 2015, we acquired 1,541,201 shares of class A common stock, or 9.6%, of RMR Inc. for $17,462.  We have concluded, for accounting purposes, that the consideration paid for this investment in RMR Inc.’s shares of class A common stock represented a discount to the fair value of these shares.  We account for this investment under the cost method of accounting and have recorded this investment at fair value of $39,833 as of June 5, 2015 using Level 3 inputs as defined in the fair value hierarchy under GAAP.  As a result, we have recorded other liabilities of $22,371.  Our investment is included in other assets in our condensed consolidated balance sheet and the carrying value of our investment is $42,384, including transaction costs as of June 30, 2015.  The other liabilities for these securities is included in accounts payable and other liabilities in our condensed consolidated balance sheet and is being amortized on a straight line basis over the 20 year life of the business and property management agreements with RMR LLC as an allocated reduction to business management fees and property management fees, which are included in general and administrative and other operating expenses, respectively, in our condensed consolidated statements of comprehensive income.  Amortization of the other liabilities, included in general and administrative expense and other operating expenses for the three months ended June 30, 2015, totaled $36 and $29, respectively.

RMR LLC Management Fees and Reimbursements: We recognized business management fees of $2,512 and $2,534for the three months ended June 30, 2015 and 2014, respectively, and $5,073 and $4,935 for the six months ended June 30, 2015 and 2014, respectively. The business management fees we recognized for the 2015 and 2014 periods are included in general and administrative expenses in our condensed consolidated financial statements.In accordance with the terms of our previous business management agreement, we issued 23,222 and 16,318of our common shares to RMR LLC for the six months ended June 30, 2015 and 2014, respectively, as payment for portions of the base business management fees we recognized for those periods.Our amended business management agreement requires that 100% of the management fee due to RMR LLC be paid by us in cash.

Pursuant to our property management agreement with RMR LLC, the property management fees, including construction supervision fees,we recognized were $1,887and $1,985 for the three months ended June 30, 2015 and 2014, respectively and $3,902 and $3,939 for the six months ended June 30, 2015 and 2014, respectively. These amounts are included in operating expenses or have been capitalized, as appropriate, in our condensed consolidated financial statements.

Pursuant to our previous and amended management agreements with RMR LLC, we are responsible for paying all of the property level operating costs which costs are generally incorporated into rents charged to our tenants, including certain payroll and related costs incurred by RMR LLC.  The total of those property management related reimbursements paid to RMR LLC for the three months ended June 30, 2015 and 2014 were $2,128 and $2,264 respectively, and $5,233 and $3,936 for the six months ended June 30, 2015 and 2014, respectively, and these amounts are included in property operating expenses in our condensed consolidated financial statements for these periods.  In addition, we have historically awarded share grants to certain RMR LLC employees under our equity compensation plan and we accrue estimated amounts for such share grants based upon historical practices throughout the year.  The amounts accrued for share grants to RMR LLC employees were $57 and $80, for the three months ended June 30, 2015 and 2014, respectively, and $313 and $349 for the six months ended June 30, 2015 and 2014, respectively, and these amounts are included in our general and administrative expenses for these periods.

Leases with RMR LLC: We lease office space to RMR LLC in certain of our properties for its property management offices.  Pursuant to our lease agreements with RMR LLC, we earned rental income from RMR LLC for leased office space of approximately $153 and $14 for the three months ended June 30, 2015 and 2014, respectively, and approximately $167 and $33 for the six months ended June 30, 2015 and 2014, respectively.

SIR:  On February 28, 2015, we entered into a share purchase agreement, or the GOV Purchase Agreement, with Lakewood Capital Partners, LP, or Lakewood, the other persons who are members of a group with Lakewood, or, together with Lakewood, the Lakewood Parties, and, for the purpose of specified sections, SIR, pursuant to which, on March 4, 2015, we acquired 3,418,421 common shares of SIR from Lakewood for a cash purchase price equal to approximately $95,203.  On February 28, 2015, the SIR common shares that we acquired pursuant to the GOV Purchase Agreement represented approximately 3.9% of SIR’s outstanding common shares.  We funded our acquisition of these SIR common shares with cash on hand and borrowings under our revolving credit facility.  After this purchase and as of June 30, 2015, we owned 24,918,421 SIR common shares, or approximately 27.9% of SIR’s total outstanding common shares.

The GOV Purchase Agreement contains (i) standstill provisions, pursuant to which the Lakewood Parties agreed not to take certain actions with respect to our securities, or those of SIR, for a 50-year period and (ii) voting provisions, pursuant to which the Lakewood Parties agreed to cause our securities, or those of SIR, that they or any of their affiliates own as of a record date for a meeting of our or SIR’s shareholders to be present and voted at such meeting in favor of all actions recommended by the board of trustees of such company.

On February 28, 2015, our Managing Trustees, Messrs. Barry and Adam Portnoy, entered into separate share purchase agreements with the Lakewood Parties, with provisions similar to the GOV Purchase Agreement, including the per share purchase price, pursuant to which, on March 4, 2015, Messrs. Barry Portnoy and Adam Portnoy acquired 107,606 and 87,606 SIR common shares, respectively, from Lakewood and, on March 5, 2015, Messrs. Barry Portnoy and Adam Portnoy acquired 2,429 and 2,429 SIR common shares, respectively, from Mr. William H. Lenehan, one of the Lakewood Parties.  Concurrently with entering into the agreements among us, Messrs. Barry Portnoy and Adam Portnoy and the Lakewood Parties, Lakewood withdrew its nomination of Mr. Lenehan for election to SIR’s board of trustees at SIR’s 2015 annual meeting of shareholders.

AIC:  As of June 30, 2015, our investment in Affiliates Insurance Company, or AIC, an Indiana insurance company, had a carrying value of $7,022, which amount is included in other assets on our condensed consolidated balance sheet.  We recognized income of $22 and $118 related to our investment in AIC for the three months ended June 30, 2015 and 2014, respectively, and $95 and $21 for the six months ended June 30, 2015 and 2014, respectively.  Our other comprehensive income includes unrealized gains (losses) on securities held for sale which are owned by AIC of ($64) and $22 for the three months ended June 30, 2015 and 2014, respectively, and ($19) and $41 for the six months ended June 30, 2015 and 2014, respectively.

In June 2015, we and the other shareholders of AIC renewed our participation in an insurance program arranged by AIC.  In connection with that renewal, we purchased a three year combined property insurance policy providing $500,000 of coverage annually with the premium to be paid annually and a one year combined policy providing terrorism coverage of $200,000 for our properties which policies were arranged by AIC.  We currently expect to pay aggregate annual premiums, including taxes and fees, of approximately $1,282 in connection with these policies for the policy year ending June 30, 2016, and this amount may be adjusted from time to time as we acquire and dispose of properties that are included in this insurance program.

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Fair Value of Assets and Liabilities

6 Months Ended

Jun. 30, 2015

Fair Value of Assets and Liabilities

Fair Value of Assets and Liabilities

Note 8.   Fair Value of Assets and Liabilities

Our financial instruments include cash and cash equivalents, restricted cash, rents receivable, mortgage notes payable, accounts payable, senior unsecured notes, an unsecured revolving credit facility, unsecured term loans, amounts due to related persons, other accrued expenses and security deposits. At June 30, 2015 and December 31, 2014, the fair values of our financial instruments approximated their carrying values in our condensed consolidated financial statements due to their short term nature or variable interest rates, except as follows:

	As of June 30, 2015				As of December 31, 2014
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Senior unsecured notes, 3.75% interest rate, due in 2019	$	347,702	$	358,314	$	347,423	$	356,129
Mortgage note payable, 5.55% interest rate, due in 2016(1)		84,311		84,340		85,167		85,171
Mortgage note payable, 5.73% interest rate, due in 2015(1)(2)		46,923		47,264		47,418		48,233
Mortgage note payable, 6.21% interest rate, due in 2016(1)		23,667		24,769		23,833		25,394
Mortgage note payable, 5.88% interest rate, due in 2021(1)		14,268		14,981		14,374		15,249
Mortgage note payable, 7.00% interest rate, due in 2019(1)		9,383		10,025		9,563		10,275
Mortgage note payable, 8.15% interest rate, due in 2021(1)		6,849		7,356		7,339		7,956
	$	533,103	$	547,049	$	535,117	$	548,407

(1) We assumed these mortgages 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 date of acquisition and we are amortizing the fair value premiums, if any, to interest expense over the respective terms of the mortgages to reduce interest expense to the estimated market interest rates as of the date of acquisition.

(2) This mortgage was repaid, at par, in July 2015.

We estimate the fair value of our senior unsecured notes 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 estimate the fair values of our mortgage notes payable by using discounted cash flow analyses and currently prevailing market terms 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.

The table below presents certain of our assets we measured on a non-recurring basis at estimated fair value at June 30, 2015, categorized by the level of input used in the valuation of these assets:

			Quoted Prices in				Significant
	Estimated		Active Markets for		Significant Other		Unobservable
	Fair		Identical Assets		Observable Inputs		Inputs
Description	Value		(Level 1)		(Level 2)		(Level 3)
Investment in SIR (1)	$	514,316	$	514,316	$	—	$	—
	$	514,316	$	514,316	$	—	$	—

(1)We own 24,891,421 common shares of Select Income REIT, or SIR. During the three months ended June 30, 2015, we recorded a $203,297 loss on impairment to reduce the carrying value of this investment to its estimated fair value. We estimated fair value using the closing price of SIR’s common shares on the New York Stock Exchange, or the NYSE, on June 30, 2015 (Level 1 input). See Notes 10 and 11 for further information regarding this investment.

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Shareholders' Equity

6 Months Ended

Jun. 30, 2015

Shareholders' Equity

Shareholders' Equity

Note 9.   Shareholders’ Equity

Distributions

On February 26, 2015, we paid a distribution to common shareholders in the amount of $0.43 per share, or $30,252.

On May 26, 2015, we paid a distribution to common shareholders in the amount of $0.43 per share, or $30,256.

On July 13, 2015, we declared a distribution payable to common shareholders of record on July 24, 2015, in the amount of $0.43per share, or $30,566. We expect to pay this distribution on or about August 24, 2015 using cash on hand and borrowings under our revolving credit facility.

Share Issuances

During the three and six months ended June 30, 2015, we issued 12,012and 23,222 respectively, of our common shares to RMR LLC, as part of the business management fee payable by us under our business management agreement with RMR LLC.  See Note 10 for further information regarding and recent amendments to this agreement.

On May 12, 2015, we granted 2,500 of our common shares, valued at $19.75 per share, the closing price of our common shares on the NYSE on that day, to each of our five Trustees as part of their annual compensation.

On June 5, 2015, we issued 700,000 shares as partial payment to acquire 1,541,201 shares of Class A common stock of Reit Management & Research Inc., a Maryland corporation, or RMR Inc.  See Note 10 for further details of this transaction.

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Equity Investment in Select Income REIT

6 Months Ended

Jun. 30, 2015

Equity Investment in Select Income REIT.

Equity Investment in Select Income REIT

Note 11.   Equity Investment in Select Income REIT

As described in Notes 8 and 10, as of June 30, 2015, we owned 24,918,421, or approximately 27.9%, of the then outstanding SIR common shares.  SIR is a REIT that is primarily focused on owning and investing in net leased, single tenant properties. 

We account for our investment in SIR under the equity method. Under the equity method, we record our proportionate share of SIR’s net income as equity in earnings of an investee in our condensed consolidated statements of comprehensive income. For the three and six months ended June 30, 2015, we recorded $8,249 and $10,425 of equity in the earnings of SIR, respectively.

During the three and six months ended June 30, 2015, SIR issued 915,853 and 29,368,890 common shares, respectively.  We recognized a loss on issuance of shares by SIR of $1,353 and $42,124, respectively, during the three and six months ended June 30, 2015 as a result of the per share issuance price of these SIR common shares being below the average per share carrying value of our SIR common shares.

We periodically evaluate our equity investment in SIR 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 SIR, 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.  In performing our periodic evaluation of other than temporary impairment of our investment in SIR as of June 30, 2015, we determined, based on the length of time and the extent to which the market value of our SIR investment has been below our carrying value, that the decline in fair value is other than temporary.  Accordingly, we recorded a $203,297 loss on impairment to reduce the carrying value of our SIR investment to its estimated fair value of $514,316 as of June 30, 2015.  We estimated fair value using the closing price of SIR common shares on the NYSE on that day.

The cost of our investments in SIR exceeded our proportionate share of SIR’s total shareholders’ equity book value on their dates of acquisition by an aggregate of $166,272. As required under GAAP, we were amortizing this difference to equity in earnings of investees over the average remaining useful lives of the real estate assets and intangible assets and liabilities owned by SIR as of the respective dates of our acquisition.  This amortization decreased our equity in the earnings of SIR by $2,177 and $4,742 for the three and six months ended June 30, 2015, respectively.  Our recording the impairment charge has resulted in the carrying value of our SIR investment to be less than our proportionate share of SIR’s total shareholders’ book equity as of June 30, 2015.  As a result, the previous basis difference was eliminated and, as of June 30, 2015, a basis difference of ($95,089) will be amortized to earnings over the estimated remaining useful lives of the real estate assets and intangible assets and liabilities owned by SIR.

During the three and six months ended June 30, 2015, we received cash distributions from SIR totaling $8,582and $22,112, respectively.

The following summarized financial data of SIR as reported in SIR’s Quarterly Report on Form 10-Q for the three and six months ended June 30, 2015, or the SIR Quarterly Report, includes the results of operations for periods prior to July 9, 2014 (the date on which we acquired our initial interest in SIR). References in our financial statements to the SIR Quarterly Report are included as references to the source of the data only, and the information in the SIR Quarterly Report is not incorporated by reference into our financial statements.

Condensed Consolidated Balance Sheets:

	June 30,		December 31,
	2015		2014
Real estate properties, net	$	3,883,995	$	1,772,510
Acquired real estate leases, net		503,484		120,700
Cash and cash equivalents		22,709		13,504
Rents receivable, net		82,043		68,385
Other assets, net		129,186		18,132
Total assets	$	4,621,417	$	1,993,231
Revolving credit facility	$	143,000	$	77,000
Term loan		350,000		350,000
Senior notes		1,434,560		-
Mortgage notes payable		287,138		18,816
Assumed real estate lease obligations, net		89,842		26,475
Other liabilities		129,124		40,493
Noncontrolling interest		3,323		-
Shareholders' equity		2,184,430		1,480,447
Total liabilities and shareholders' equity	$	4,621,417	$	1,993,231

Condensed Consolidated Statements of Income:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Rental income	$	92,166	$	48,465	$	172,644	$	93,528
Tenant reimbursements and other income		15,048		8,092		28,985		16,057
Total revenues		107,214		56,557		201,629		109,585
Operating expenses		18,820		9,985		36,184		19,964
Depreciation and amortization		32,390		10,495		57,109		19,789
Acquisition related costs		779		136		21,318		374
General and administrative		6,368		2,198		13,160		7,374
Total expenses		58,357		22,814		127,771		47,501
Operating income		48,857		33,743		73,858		62,084
Interest expense		(19,497)		(3,634)		(33,676)		(6,992)
Gain (loss) on early extinguishment of debt		—		—		(6,845)		243
Income before income tax expense and equity in earnings of an investee		29,360		30,109		33,337		55,335
Income tax expense		(195)		(19)		(226)		(90)
Equity in earnings of an investee		23		118		95		21
Net income		29,188		30,208		33,206		55,266
Net income allocated to noncontrolling interest		(48)		-		(89)		-
Net income attributed to SIR	$	29,140	$	30,208	$	33,117	$	55,266
Weighted average common shares outstanding (basic)		88,617		54,136		84,078		51,991
Weighted average common shares outstanding (diluted)		88,631		54,190		84,090		52,071
Basic and diluted net income attributed to SIR per common share	$	0.33	$	0.56	$	0.39	$	1.06

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2015

Segment Information

Schedule of ownership of properties that are primarily leased to government tenants and our equity method investment in SIR

	Three months ended June 30, 2015
	Investment		Investment
	in Real Estate		in SIR		Corporate		Consolidated
Rental income	$	62,113	$	—	$	—	$	62,113
Expenses:
Real estate taxes		7,674		—		—		7,674
Utility expenses		4,023		—		—		4,023
Other operating expenses		12,168		—		—		12,168
Depreciation and amortization		17,299		—		—		17,299
Acquisition related costs		183		—		—		183
General and administrative		—		—		3,713		3,713
Total expenses		41,347		—		3,713		45,060
Operating income (loss)		20,766		—		(3,713)		17,053
Interest and other income		—		—		—		—
Interest expense		(2,282)		—		(7,173)		(9,455)
Loss on issuance of shares by SIR		—		(1,353)		—		(1,353)
Loss on impairment of SIR investment		—		(203,297)		—		(203,297)
Income (loss) from continuing operations before income taxes and
equity in earnings of investees		18,484		(204,650)		(10,886)		(197,052)
Income tax expense		—		—		(32)		(32)
Equity in earnings of investees		—		6,072		22		6,094
Income (loss) from continuing operations		18,484		(198,578)		(10,896)		(190,990)
Loss from discontinued operations		(173)		—		—		(173)
Net income (loss)	$	18,311	$	(198,578)	$	(10,896)	$	(191,163)

	Six months ended June 30, 2015
	Investment		Investment
	in Real Estate		in SIR		Corporate		Consolidated
Rental income	$	124,772	$	—	$	—	$	124,772
Expenses:
Real estate taxes		15,084		—		—		15,084
Utility expenses		8,594		—		—		8,594
Other operating expenses		24,378		—		—		24,378
Depreciation and amortization		34,514		—		—		34,514
Acquisition related costs		189		—		—		189
General and administrative		—		—		7,717		7,717
Total expenses		82,759		—		7,717		90,476
Operating income (loss)		42,013		—		(7,717)		34,296
Interest and other income		—		—		12		12
Interest expense		(14,208)		—		(4,549)		(18,757)
Loss on issuance of shares by SIR		—		(42,124)		—		(42,124)
Loss on impairment of SIR investment		—		(203,297)		—		(203,297)
Income (loss) from continuing operations before income taxes and
equity in earnings of investees		27,805		(245,421)		(12,254)		(229,870)
Income tax expense		—		—		(62)		(62)
Equity in earnings of an investee		—		5,683		95		5,778
Income (loss) from continuing operations		27,805		(239,738)		(12,221)		(224,154)
Loss from discontinued operations		(379)		—		—		(379)
Net income (loss)	$	27,426	$	(239,738)	$	(12,221)	$	(224,533)
	As of June 30, 2015
	Investment		Investment
	in Real Estate		in SIR		Corporate		Consolidated
Total Assets	$	1,654,104	$	514,316	$	69,155	$	2,237,575

	Three months ended June 30, 2014
	Investment		Investment
	in Real Estate		in SIR		Corporate		Consolidated
Rental income	$	62,428	$	—	$	—	$	62,428
Expenses:
Real estate taxes		7,166		—		—		7,166
Utility expenses		4,049		—		—		4,049
Other operating expenses		10,860		—		—		10,860
Depreciation and amortization		16,191		—		—		16,191
Acquisition related costs		671		—		—		671
General and administrative		—		—		4,111		4,111
Total expenses		38,937		—		4,111		43,048
Operating income (loss)		23,491		—		(4,111)		19,380
Interest and other income		—		—		8		8
Interest expense		(1,848)		—		(3,310)		(5,158)
Income (loss) from continuing operations before income taxes and
equity in earnings of investees		21,643		—		(7,413)		14,230
Income tax expense		—		—		(101)		(101)
Equity in earnings of an investee		—		—		118		118
Income (loss) from continuing operations		21,643		—		(7,396)		14,247
Income from discontinued operations		361		—		—		361
Net income (loss)	$	22,004	$	—	$	(7,396)	$	14,608

	Six months ended June 30, 2014
	Investment		Investment
	in Real Estate		in SIR		Corporate		Consolidated
Rental income	$	122,248	$	—	$	—	$	122,248
Expenses:
Real estate taxes		13,978		—		—		13,978
Utility expenses		9,745		—		—		9,745
Other operating expenses		21,901		—		—		21,901
Depreciation and amortization		31,618		—		—		31,618
Acquisition related costs		1,180		—		—		1,180
General and administrative		—		—		7,208		7,208
Total expenses		78,422		—		7,208		85,630
Operating income (loss)		43,826		—		(7,208)		36,618
Interest and other income		—		—		58		58
Interest expense		(3,175)		—		(6,510)		(9,685)
Income (loss) from continuing operations before income taxes and
equity in earnings of investees		40,651		—		(13,660)		26,991
Income tax expense		—		—		(123)		(123)
Equity in earnings of an investee		—		—		21		21
Income (loss) from continuing operations		40,651		—		(13,762)		26,889
Income from discontinued operations		2,909		—		—		2,909
Net income (loss)	$	43,560		—	$	(13,762)	$	29,798
	As of December 31, 2014
	Investment		Investment
	in Real Estate		in SIR		Corporate		Consolidated
Total Assets	$	1,714,130	$	680,137	$	33,348	$	2,427,615

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Concentration (Details)	6 Months Ended
	Jun. 30, 2015 state property item	Jun. 30, 2014
Concentration
Number of properties owned | property	71
Number of buildings	91
Number of states in which acquired properties located | state	31
Number of state governments	12
Annualized rental income, excluding properties classified as discontinued operations | California
Concentration
Annualized Rental income percent	0.115
Annualized rental income, excluding properties classified as discontinued operations | Virginia
Concentration
Annualized Rental income percent	0.105
Annualized rental income, excluding properties classified as discontinued operations | District of Columbia
Concentration
Annualized Rental income percent	0.103
Annualized rental income, excluding properties classified as discontinued operations | Georgia
Concentration
Annualized Rental income percent	0.091
Annualized rental income, excluding properties classified as discontinued operations | New York
Concentration
Annualized Rental income percent	0.085
Annualized rental income, excluding properties classified as discontinued operations | Maryland
Concentration
Annualized Rental income percent	0.075
Annualized rental income, excluding properties classified as discontinued operations | Massachusetts
Concentration
Annualized Rental income percent	0.057
Annualized rental income, excluding properties classified as discontinued operations | Tenant concentration | U.S. Government, state governments and the United Nations
Concentration
Concentration risk, percentage	92.80%	93.00%
Annualized rental income, excluding properties classified as discontinued operations | Tenant concentration | U.S. Government
Concentration
Concentration risk, percentage	67.70%	70.00%
Discontinued operations
Concentration
Number of properties owned | property	1
Number of buildings	1

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Mar. 31, 2014	Jun. 30, 2015	Jun. 30, 2014
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Amortization of debt premiums and discounts and deferred financing fees	$ 328	$ 223	$ 660	$ 553

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Revenue Recognition

6 Months Ended

Jun. 30, 2015

Revenue Recognition

Revenue Recognition

Note 5.   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. Certain of our leases with government tenants provide the tenant the right to terminate before the lease expiration date 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 early terminations to be remote contingencies based on both our historical experience and our assessment of the likelihood of lease cancellation on a separate lease basis.

We increased rental income to record revenue on a straight line basis by $1,544 and $1,101 for the three months ended June 30, 2015 and 2014, respectively, and $2,207 and $2,243 for the six months ended June 30, 2015 and 2014, respectively.  Rents receivable include $17,224 and $15,017 of straight line rent receivables at June 30, 2015 and December 31, 2014, respectively.

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Indebtedness (Details) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended			6 Months Ended
	Jul. 31, 2015 USD ($) building	Jun. 30, 2015 USD ($) property item $ / shares	Mar. 31, 2015 USD ($)	Mar. 31, 2014	Jun. 30, 2015 USD ($) property item loan $ / shares	Jun. 30, 2014	Jul. 28, 2015 USD ($)	Dec. 31, 2014 USD ($) $ / shares
Indebtedness
Unsecured revolving credit facility		$ 59,000			$ 59,000
Unsecured term loans		550,000			550,000			$ 550,000
Senior Notes		347,702			347,702			347,423
Mortgage notes payable, including premiums		185,401			185,401			187,694
Total		1,142,103			1,142,103			$ 1,085,117
Maximum borrowing capacity on debt instruments may be increased under certain conditions		$ 2,500,000			$ 2,500,000
Common Stock, Par or Stated Value Per Share | $ / shares		$ 0.01			$ 0.01			$ 0.01
Number of assumed secured mortgage loans | loan					6
Aggregate net book value of secured properties		$ 262,191			$ 262,191
Number of properties secured by mortgage notes | property		6			6
Number of buildings secured by mortgage notes	2	8			8
Mortgage note repaid	$ 47,083
Unsecured revolving credit facility
Indebtedness
Unsecured revolving credit facility		$ 59,000			$ 59,000
Interest rate (as a percent)		1.40%			1.40%
Maximum borrowing capacity on revolving credit facility		$ 750,000			$ 750,000
Revolving credit facility, interest rate basis					LIBOR
Option to extend the maturity date subject to certain conditions and the payment of a fee					1 year
Interest rate premium (as a percent)					1.25%
Facility fee (as a percent)					0.25%
The weighted average annual interest rate (as a percent)		1.40%		1.70%	1.60%	1.70%
Subsequent event | Unsecured revolving credit facility
Indebtedness
Unsecured revolving credit facility							$ 99,000
Unsecured term loan, due in 2020
Indebtedness
Face amount		$ 300,000			$ 300,000
Unsecured term loans		$ 300,000			$ 300,000			$ 300,000
Interest rate (as a percent)		1.60%			1.60%
Term loan, interest rate basis		LIBOR
Interest rate premium (as a percent)					1.40%
The weighted average annual interest rate (as a percent)			1.60%		1.60%
Unsecured term loan, due in 2022
Indebtedness
Face amount		$ 250,000			$ 250,000
Unsecured term loans		$ 250,000			$ 250,000			250,000
Interest rate (as a percent)		2.00%			2.00%
Term loan, interest rate basis		LIBOR
Interest rate premium (as a percent)					1.80%
The weighted average annual interest rate (as a percent)			2.00%		2.00%
Loan prepayment premium prior to November 22, 2015 (as a percent)					2.00%
Loan prepayment premium prior to November 21, 2016 (as a percent)					1.00%
Senior Unsecured Note 3.75 Percent Due In 2019
Indebtedness
Face amount		$ 350			$ 350
Senior Notes		$ 347,702			$ 347,702			$ 347,423
Interest rate (as a percent)		3.75%			3.75%			3.75%
Unamortized fair value discount included in mortgage notes		$ 2,298			$ 2,298			$ 2,577
Mortgage note payable, 5.55% interest rate, due in 2016
Indebtedness
Mortgage notes payable, including premiums		$ 84,311			$ 84,311			$ 85,167
Interest rate (as a percent)		5.55%			5.55%			5.55%
Unamortized fair value premium included in mortgage notes		$ 1,311			$ 1,311			$ 2,167
5.73% Mortgage notes due in 2015
Indebtedness
Mortgage notes payable, including premiums		$ 46,923			$ 46,923			$ 47,418
Interest rate (as a percent)		5.73%			5.73%			5.73%
Unamortized fair value premium included in mortgage notes		$ 65			$ 65			$ 177
6.21% Mortgage notes due in 2016
Indebtedness
Mortgage notes payable, including premiums		$ 23,667			$ 23,667			$ 23,833
Interest rate (as a percent)		6.21%			6.21%			6.21%
Mortgage note payable, 5.88% interest rate, due in 2021
Indebtedness
Mortgage notes payable, including premiums		$ 14,268			$ 14,268			$ 14,374
Interest rate (as a percent)		5.88%			5.88%			5.88%
7% Mortgage notes due in 2019
Indebtedness
Mortgage notes payable, including premiums		$ 9,383			$ 9,383			$ 9,563
Interest rate (as a percent)		7.00%			7.00%			7.00%
Unamortized fair value premium included in mortgage notes			$ 538					$ 605
8.15% Mortgage notes due in 2021
Indebtedness
Mortgage notes payable, including premiums		$ 6,849			$ 6,849			$ 7,339
Interest rate (as a percent)		8.15%			8.15%			8.15%
Unamortized fair value premium included in mortgage notes		$ 343			$ 343			$ 398

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Equity Investment in Select Income REIT (Tables) - SIR

6 Months Ended

Jun. 30, 2015

Schedule Of Summarized Balance Sheet Information Of Equity Method Investee Table Text Block

	June 30,		December 31,
	2015		2014
Real estate properties, net	$	3,883,995	$	1,772,510
Acquired real estate leases, net		503,484		120,700
Cash and cash equivalents		22,709		13,504
Rents receivable, net		82,043		68,385
Other assets, net		129,186		18,132
Total assets	$	4,621,417	$	1,993,231
Revolving credit facility	$	143,000	$	77,000
Term loan		350,000		350,000
Senior notes		1,434,560		-
Mortgage notes payable		287,138		18,816
Assumed real estate lease obligations, net		89,842		26,475
Other liabilities		129,124		40,493
Noncontrolling interest		3,323		-
Shareholders' equity		2,184,430		1,480,447
Total liabilities and shareholders' equity	$	4,621,417	$	1,993,231

Schedule Of Summarized Income Statement Information Of Equity Method Investee Table Text Block

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Rental income	$	92,166	$	48,465	$	172,644	$	93,528
Tenant reimbursements and other income		15,048		8,092		28,985		16,057
Total revenues		107,214		56,557		201,629		109,585
Operating expenses		18,820		9,985		36,184		19,964
Depreciation and amortization		32,390		10,495		57,109		19,789
Acquisition related costs		779		136		21,318		374
General and administrative		6,368		2,198		13,160		7,374
Total expenses		58,357		22,814		127,771		47,501
Operating income		48,857		33,743		73,858		62,084
Interest expense		(19,497)		(3,634)		(33,676)		(6,992)
Gain (loss) on early extinguishment of debt		—		—		(6,845)		243
Income before income tax expense and equity in earnings of an investee		29,360		30,109		33,337		55,335
Income tax expense		(195)		(19)		(226)		(90)
Equity in earnings of an investee		23		118		95		21
Net income		29,188		30,208		33,206		55,266
Net income allocated to noncontrolling interest		(48)		-		(89)		-
Net income attributed to SIR	$	29,140	$	30,208	$	33,117	$	55,266
Weighted average common shares outstanding (basic)		88,617		54,136		84,078		51,991
Weighted average common shares outstanding (diluted)		88,631		54,190		84,090		52,071
Basic and diluted net income attributed to SIR per common share	$	0.33	$	0.56	$	0.39	$	1.06