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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.
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.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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