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Mar 31, 2020
OPI Q1 2020 Earnings Report
Office Properties Income Trust experienced a decrease in net income and Normalized FFO, but maintained a strong tenant base and liquidity position.
Key Takeaways
Office Properties Income Trust (OPI) reported a net income of $10.8 million, or $0.23 per diluted share, and Normalized FFO of $67.6 million, or $1.40 per diluted share, for the quarter ended March 31, 2020. The company completed 589,000 square feet of leasing and sold six properties for $85.4 million. OPI believes the near term impact to the company will not be material due to the strength of its tenant base and liquidity.
Net income for Q1 2020 was $10.8 million, or $0.23 per diluted share.
Normalized FFO for Q1 2020 was $67.6 million, or $1.40 per diluted share.
CAD for Q1 2020 was $47.4 million, or $0.98 per diluted share.
Completed 589,000 square feet of leasing in Q1 2020 for a 4.1% roll-up in rents.
OPI
OPI
Forward Guidance
OPI anticipates that leasing activity for the second quarter of 2020 may slow, but also believes that overall tenant retention levels may increase due to the COVID-19 pandemic. OPI believes it will benefit from its investment grade tenants and the diversity of its tenant base.
Positive Outlook
- Strong tenant base with approximately 62.2% of annualized rental income paid by investment grade tenants.
- More than half of annualized rental income comes from tenants in essential industries.
- Minimal exposure to at risk industries.
- Liquidity and low leverage provide safety for business.
- Well positioned to opportunistically deploy capital during 2020.
Challenges Ahead
- Leasing activity for the second quarter of 2020 may slow.
- Tenants may be significantly adversely impacted by the COVID-19 pandemic.
- Government leases provide tenants with certain rights to terminate their lease early.
- Budgetary and other fiscal pressures may result in some governmental tenants terminating their leases early or not renewing their leases.
- Increased remote work arrangements may decline leasing demand for office space.