Executive Summary

Q1 2025 showed continued pressure: rental income fell to $113.6M, GAAP net loss was $45.9M (−$0.66/sh), and Normalized FFO dropped to $4.4M ($0.06/sh), reflecting vacancies, asset sales, and higher interest expense .
Leasing execution was a bright spot: 223k sq ft signed at a 13.5% roll‑up and 10.3‑year WALT, but same‑property occupancy slid to 85.4% and same‑property cash NOI margin compressed to 54.9% .
Liquidity remains constrained (cash $63.7M at quarter-end; $73.1M as of Apr 30) and management continues to disclose substantial doubt about going concern; debt maturity risk in 2026 persists .
Guidance: Q2 Normalized FFO outlook of $0.09–$0.11/sh; FY25 CapEx cut to ~$75M (from $80M); Q2 same‑property cash NOI expected down 10–12% YoY; interest expense run‑rate ~$53M/quarter .
Potential stock catalysts: progress on 2026 maturities/debt exchanges, asset sale execution (incl. 20 Mass Ave), and any stabilization in leasing for large single‑tenant assets .

What Went Well and What Went Wrong

What Went Well

Leasing improved pricing and duration: 223k sq ft at a 13.5% roll‑up and 10.3‑year WALT; concessions/capital commitments per sq ft per year declined 22% QoQ .
Disposition execution: 3 properties sold (249k sq ft) for $26.9M; another 3 vacant properties under agreement (376k sq ft) for $28.9M .
Forward outlook stabilized sequentially: Q2 Normalized FFO guided to $0.09–$0.11/sh, driven by lower seasonal OpEx and expected stronger hotel performance .

Management quote: “We remain focused on capitalizing on leasing opportunities and tenant retention... completed 223,000 square feet of new and renewal leasing at a 13.5% roll‑up... ending the quarter with same property portfolio occupancy of 85.4%.” — Yael Duffy, President & COO .

What Went Wrong

Profitability deterioration: Normalized FFO fell to $0.06/sh (vs $0.36 in Q4), missing the prior Q1 guidance by $0.02/sh due to non‑cash interest amortization from debt exchanges .
Occupancy and margins: same‑property occupancy down to 85.4%; same‑property cash NOI fell to $52.9M (−10.5% YoY), margin declined to 54.9% .
Balance sheet pressure: interest expense rose to $53.4M (≈+50% YoY) and leverage/covenant headroom remains tight; management again flagged substantial doubt about going concern .

Financial Results

Metric	Q1 2024	Q4 2024	Q1 2025
Rental income ($USD Millions)	$139.435	$118.238	$113.615
Net (loss) income ($USD Millions)	$(5.184)	$(148.680)	$(45.867)
GAAP EPS (Net loss per share)	$(0.11)	$(2.52)	$(0.66)
FFO ($USD Millions)	$48.183	$(78.679)	$3.231
FFO per share	$0.99	$(1.34)	$0.05
Normalized FFO ($USD Millions)	$38.317	$20.946	$4.350
Normalized FFO per share	$0.79	$0.36	$0.06
NOI ($USD Millions)	$88.248	$71.244	$61.385
Adjusted EBITDAre ($USD Millions)	$73.799	$68.152	$57.768
Same Property Cash Basis NOI ($USD Millions)	$59.115	$60.873	$52.904
Same Property NOI Margin (%)	61.2%	61.9%	58.2%
Same Property Cash Basis NOI Margin (%)	58.8%	59.4%	54.9%

KPIs and operating metrics:

KPI	Q1 2024	Q4 2024	Q1 2025
Portfolio % leased (period end)	85.6%	85.0%	81.3%
Same‑property occupancy	91.4%	89.4%	85.4%
Leasing volume (sq ft)	488k	359k	223k
Roll‑up in GAAP rent (total)	10.2%	24.3%	13.5%
Weighted avg lease term (total, years)	9.3	7.1	10.3

Balance sheet and liquidity:

Metric	Q4 2024	Q1 2025
Cash & cash equivalents ($USD Millions)	$261.318	$63.745
Total debt principal ($USD Millions)	$2,626.524	$2,436.418
Net debt / total gross assets (%)	53.3%	56.3%
Secured debt / total assets (%)	51.2%	54.5%
EBITDAre/Interest (rolling 4Q, x)	1.7x	1.4x
Total assets ($USD Millions)	$3,822.286	$3,569.759
Total liabilities ($USD Millions)	$2,669.482	$2,463.096
Shareholders’ equity ($USD Millions)	$1,152.804	$1,106.663
Available liquidity as of Apr 30, 2025 ($USD Millions)	—	$73.1

Segment/tenant exposure (context):

U.S. Government largest tenant: 2.4M sq ft, ~$68M annualized rent (16.8%) .
Investment grade tenant revenue exposure ~59.9% .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Normalized FFO per share	Q1 2025	$0.08–$0.10	Actual $0.06	Missed vs guidance
Normalized FFO per share	Q2 2025	—	$0.09–$0.11	Initiated/Updated
Same‑property cash basis NOI YoY	Q2 2025	—	−10% to −12%	New outlook (down)
Interest expense run‑rate	Q2 2025	~$52M (Q1 outlook)	~$53M ($41M cash + $12M non‑cash)	Slightly higher
Recurring G&A	Q2 2025	—	~$5M	Set
FY25 CapEx	FY 2025	~$80M (Bldg $18M, Leasing $62M)	~$75M (Bldg $17M, Leasing $58M)	Lowered
Quarterly dividend	Ongoing	$0.01/sh	$0.01/sh (declared Apr 10)	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024, Q4 2024)	Current Period (Q1 2025)	Trend
Liquidity & going concern	Management disclosed substantial doubt; liquidity $146M; aggressive exchanges; tight covenants	Cash $63.7M; $73.1M liquidity at Apr 30; substantial doubt reaffirmed	Worsening liquidity
Interest expense & leverage	Interest run‑rate rising; leverage metrics deteriorating modestly	Interest expense $53.4M (+50% YoY); EBITDAre/Interest 1.4x; Net debt/Assets 56.3%	Higher burden
Government (GSA) exposure	Soft‑term exposure; possible lease terminations; agency‑specific risk	GSA ~2.4M sq ft; $68M rent; 432k sq ft/$14.9M in soft term; monitoring efficiency measures	Ongoing risk
Leasing momentum	Q3: 987k sq ft, 10.2‑yr WALT, roll‑ups; Q4: 359k sq ft, 7.1‑yr WALT, 24.3% roll‑up	Q1: 223k sq ft, 10.3‑yr WALT, 13.5% roll‑up; concessions down 22% QoQ	Smaller volume; quality improved
Dispositions	Under agreement to sell 17 properties for $119M (Q3); 6 properties for $55M (Q4)	Sold 3 properties for $26.9M; 3 more under agreement for $28.9M; no active marketing beyond these	Continuing but selective
Asset specific: 20 Mass Ave (hotel)	Converted to hotel management; marketing for sale; buyer likely hotel investor	Expected stronger hotel seasonality to aid Q2 NOI; sale remains a liquidity lever	Execution pending
CapEx discipline	FY24 high leasing CapEx; FY25 initial $80M plan	FY25 CapEx reduced to ~$75M; mix: $17M building, $58M leasing	Tightening spend

Management Commentary

“Annualized revenue was down $93 million or 19% to $405 million compared to a year ago. Interest expense increased $17.9 million to $53.4 million... We have little room under our debt covenants, which restricts us from refinancing or issuing new debt.” — Yael Duffy .
“For the first quarter, we reported normalized FFO of $4.4 million or $0.06 per share, which came in $0.02 below our guidance range as a result of noncash amortization included in interest expense related to our debt exchanges.” — Brian Donley .
“We continue to evaluate options to address these maturities with our financial adviser... OPI's upcoming maturities consist of approximately $120 million due in March 2026... and $134 million due June 2026.” — Brian Donley .
“We remain focused on capitalizing on leasing opportunities and tenant retention... completed the sale of three properties... have agreements in place to sell three more properties...” — Yael Duffy (press release/presentation) .

Q&A Highlights

Q1 2025 call did not include a Q&A segment; remarks concluded after guidance and outlook .
Prior Q&A (Q3 2024) emphasized asset sale pricing vs carrying value (often materially below CV for vacant/soon‑vacant assets), buyer profiles (owner‑users vs teardown), and leasing pipeline depth but early‑stage status .
Tone: Persistent caution around dispositions and debt solutions; constructive but constrained dialogue with noteholders highlighted in prior calls .

Estimates Context

S&P Global consensus coverage was unavailable for GAAP EPS and revenue for Q1 2025; management’s own guidance is the primary reference point for expectations this quarter (Q1 Normalized FFO guided $0.08–$0.10/sh vs actual $0.06/sh) .
Given limited sell‑side estimates, investors should anchor near‑term revisions on company guidance: Q2 Normalized FFO $0.09–$0.11/sh; Q2 same‑property cash NOI −10% to −12% YoY; FY25 CapEx ~$75M .

Key Takeaways for Investors

Liquidity risk is the central equity narrative: covenant constraints and 2026 maturities require progress on exchanges or asset monetization; absent that, equity optionality shrinks despite sequentially better Q2 FFO outlook .
Operating headwinds remain: occupancy declines and NOI margin compression reflect difficult office demand, especially for large single‑tenant assets; leasing is pricing positively but smaller volumes limit offset .
Watch GSA exposure: 432k sq ft/$14.9M in soft‑term leases introduces headline risk; any agency‑specific moves could worsen cash flows and covenant headroom .
CapEx reduced: FY25 cut to ~$75M provides cash conservation; monitor whether lower leasing capital impairs pipeline conversion and future NOI .
Disposition execution is a swing factor: proceeds and timing (incl. 20 Mass Ave) are pivotal for meeting 2026 amortization and unsecured maturities; sale pricing vs carry and covenant impacts must be tracked .
Near‑term trading: stock likely reacts to discrete financing steps (exchange participation rates), asset sale announcements, and any signs of stabilization in D.C./single‑tenant markets; Q2 seasonality offers a temporary FFO lift .
Medium‑term thesis: outcome depends on balance‑sheet solutions; if maturities are managed, embedded lease roll‑ups and stabilized multi‑tenant demand could rebuild NOI, but sector backdrop and asset quality remain constraining .

Appendix: Additional Relevant Press Releases (Q1 timeframe)

Quarterly dividend declared $0.01/sh (record Apr 22; paid ~May 15) .
Private exchange offers: waiver of minimum participation condition; final results $14.4M new 8% notes vs $21.0M tendered legacy notes (partial take‑up) .
Conference call schedule release (Apr 2) and result announcement (Apr 30) .

OFFICE PROPERTIES INCOME TRUST (OPI)·Q1 2025 Earnings Summary