Office Properties Income Trust

First, there are 14 properties where value has been maximized through leasing efforts or the entitlement process. These are well-located assets with strong tenancy and where current market conditions are expected to yield attractive pricing. Second, there are eight assets we have identified to reduce our exposure to specific markets, such as Washington, D.C. and Seattle. While we are reducing our concentration in Washington, D.C., it will remain our largest market. In Seattle, we are exiting the market entirely, allowing us to focus on locations where we have higher conviction. Third, we are addressing tenant and lease-related risk in six buildings with shorter remaining lease terms. Selling these assets enables OPI to realize value now rather than carry future renewal and releasing risk. And finally, we are exiting four vacant or soon-to-be-vacant buildings that are a drag on cash flow, eliminating annual carry costs of $5 million. Importantly, we are approaching these sales as a value-maximizing process. Each asset is being marketed through a competitive broker process or, where appropriate, an auction format designed to generate competitive tension among buyers. We have made significant progress. In July, OPI sold two properties for approximately $59 million. Additionally, nine properties are under purchase and sale agreement to sell for $50 million, and 12 assets are under letter of intent for $148 million. The remaining nine properties are in various stages of the marketing process. In many cases, Pricing is at or above our internal estimates and third-party appraisals, with buyer interest spanning owner-users, value-add investors, and redevelopment buyers. Looking ahead, we are committed to maximizing shareholder value through three areas of focus, including increasing free cash flow through leasing, occupancy growth, and proactive asset management. optimizing the composition of OPI's office portfolio by continuing to evaluate asset sales and applying any proceeds towards increasing liquidity and reducing leverage, and creating franchise value by maintaining strong tenant relationships and operating OPI's portfolio efficiency. While significant work remains, OPI is in a much stronger position today than it was a year ago, with substantially less debt, greater financial flexibility, and a clear path forward to growing cash flows and creating long-term value for its stakeholders. I will now turn the call over to Brian.

Thank you, Yael. Good morning. During the quarter, we completed our restructuring and incorporated Fresh Start Accounting under GAAP upon emergence. For additional details, including the presentation and reconciliation of our GAAP and non-GAAP measures for the second quarter of 2026, please refer to our earnings presentation and 10-Q filed last evening. The second quarter, normalized FFO was $19 million and adjusted EBIT to RE was $65 million. will be joining us in just a moment.

Components of annualized rental income as of June 30th is broken down as follows.

Cash rents of $307 million, straight line rent adjustments of $23 million, and recurring expense for reimbursements due under OPI's leases of $83 million. Property operating expenses for the quarter were $48.8 million, a decline of 40 basis points compared to the prior year. For the trailing 12 months ended June 30th, property operating expenses were $197.4 million. G&A expenses were $5.5 billion for the quarter. For the full year of 2026, G&A is projected to be $20 to $22 million. Turning to the balance sheet, as of June 30, 2026, OPI had approximately $51 million of unrestricted cash and approximately $53 million of restricted cash. Restricted cash includes $35 million of reserves for professional fees relating to OPI's restructuring, with the remainder related to operating reserves under OPI's various debt agreements. OPI's restructuring eliminated $714 million of debt, and the maturity profile of the company was extended, enhancing our financial flexibility. OPI's capital structure is comprised of approximately 22 million common shares outstanding, and Brian Duffy. The debt stack includes a $425 million fully drawn credit facility bearing interest at 9.15% maturing in January 2027, $300 million of 9% senior secured notes due March 2029, $385 million of 8.38% senior secured notes due December 2029, and others. On an annualized basis, cash interest expense is $154 million before any principal pay down scheduled subsequent to June 30th resulting from asset sales. In addition, non-cash amortization of interest on an annualized basis is currently projected to be $6.1 million. With regards to OPI's $425 million credit facility that matures in January 2027, we are actively working with the bank on options to refinance this debt. The credit facility is currently secured by a high-quality collateral pool of 19 properties with occupancy of 92% and strong cash flows. OPI's 838 Senior Secured Notes require scheduled principal payments. The first $5 million principal repayment was made on July 31st. The next payment of $15 million is due November 1st, followed by another $30 million on February 1st, 2027. We currently expect to make these payments using cash on hand and proceeds from asset sales. In closing, our focus now is on addressing year-term maturities. improving OPI's cash flows and cost of capital, while continuing to serve tenants and creating value for OPI stakeholders. That concludes our prepared remarks. Operating may now end the call.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.