Office Properties Income Trust

Good morning and welcome to the Office Properties Income Trust Second Quarter 2025 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. Please note this event is being recorded. I would now like to turn the conference over to Kevin Barry, Senior Director of Investor Relations. Please go ahead.

Good morning. Thank you for joining us today. With me on the call are OPI's President and Chief Operating Officer, Yael Duffy, and Chief Financial Officer and Treasurer, Brian Dodling. In just a moment, they will provide details about our business and our performance for the second quarter of 2025. I would like to note that the recording and retransmission of today's conference call is prohibited without the prior written consent of the company. Also note that today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. These forward-looking statements are based on OPI's beliefs and expectations as of today, Thursday, July 31st, 2025, and actual results may differ materially from those that we project. The company undertakes no obligation to revise or publicly release the results of any revision to the forward-looking statements made in today's conference call. Additional information concerning factors that could cause those differences is contained in our filings with the Securities and Exchange Commission. which can be accessed from our website, OPIREAP.com. Investors are cautioned not to place undue reliance upon any forward-looking statements. In addition, we will be discussing non-GAAP numbers during this call, including normalized FFO and cash basis net operating income, or cash basis NOI. A reconciliation of these non-GAAP figures to net income are available in OPI's earnings release presentation that we issued last night, which can be found on our website. And finally, we will be providing guidance on this call, including normalized FFO and cash basis NOI. We are not providing reconciliation of these non-GAAP measures as part of our guidance because certain information required for such reconciliation is not available without unreasonable efforts or at all, such as gains and losses or impairment charges related to the disposition of real estate. I will now turn the call over to you.

Thank you, Kevin, and good morning. On today's call, I will begin with an overview of our portfolio before discussing OPI's second quarter leasing and disposition activity. From there, Brian will review our financial results and outlook. As of June 30, 2025, OPI's portfolio included 125 properties totaling 17.3 million square feet with a weighted average remaining lease term of 6.8 years. We ended the quarter with same property occupancy of 85.2%. Approximately 59% of our revenues come from investment-grade rated tenants or their subsidiaries. The U.S. government is our largest tenant, representing 17.1% of our annualized revenue. As we have long telegraphed, OPI's financial performance has materially declined as leasing challenges in the office sector have persisted. Specifically, annualized revenue of $398 million is down $85 million, or nearly 18% compared to a year ago. Interest expense in the second quarter of $53 million is up $14 million, or 37% year over year. We have little room under our debt covenants, which restricts us from refinancing or issuing new debt. Nearly $280 million in debt principal payments are due in 2026, and our total liquidity is $90 million of cash. Despite these ongoing challenges, we continue to lease and operate our properties while simultaneously exploring options to address our financial commitments and reduce costs. To that end, earlier this month, OPI's Board of Trustees made the decision to suspend the quarterly dividend, allowing us to preserve approximately $3 million of cash annually. Turning to leasing activity. In the second quarter, we executed 15 leases totaling 416,000 square feet at a weighted average lease term of 5.4 years and at rental rates that were 6.4% higher than prior rental rates for the same space. Renewals accounted for two-thirds of our activity and secures over $7 million in annualized revenue. Concessions and capital commitments of $3.53 per square foot per year declined 24% quarter over quarter. We have 1.3 million square feet of leases scheduled to expire through 2026, representing $30 million or 7.6% of OPI's annualized rental income. The majority of these expirations are related to single-tenant properties and we expect 742,000 square feet or $11.2 million of annualized revenue will not renew. Today, our leasing pipeline totals 2 million square feet, of which over 60% is attributable to renewal discussions. Any leasing that results in positive net absorption will likely come from our multi-tenant properties where the infrastructure and building amenities to attract new tenants already exist. Turning to dispositions. Earlier this month, we sold one property totaling 56,000 square feet via auction for $2.2 million excluding closing costs. As property valuations continue to decline and the potential buyer pool targeting office acquisitions is limited, dispositions remain challenging. We have found that transaction timelines have significantly lengthened and often require a relaunching of marketing efforts as buyers are unable to transact. Despite these dynamics, we continue to evaluate disposition opportunities that may mitigate occupancy risk and reduce the carrying costs associated with vacant properties. I will now turn the call over to Brian.