Audit Information |
12 Months Ended |
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Dec. 31, 2024 | |
| Auditor Information [Abstract] | |
| Auditor Name | Deloitte & Touche LLP |
| Auditor Location | Boston, Massachusetts |
| Auditor Firm ID | 34 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Dec. 31, 2024 |
Dec. 31, 2023 |
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| Statement of Financial Position [Abstract] | ||
| Common shares of beneficial interest, par value (in dollars per share) | $ 0.01 | $ 0.01 |
| Common shares of beneficial interest, shares authorized (in shares) | 200,000,000 | 200,000,000 |
| Common shares of beneficial interest, shares issued (in shares) | 69,824,743 | 48,755,415 |
| Common shares of beneficial interest, shares outstanding (in shares) | 69,824,743 | 48,755,415 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | |
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Dec. 31, 2024 |
Dec. 31, 2023 |
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| Income Statement [Abstract] | ||
| Net amortization of debt premiums, discounts and issuance costs | $ 13,463 | $ 9,209 |
Business |
12 Months Ended |
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Dec. 31, 2024 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Business | Business Office Properties Income Trust and its consolidated subsidiaries, or OPI, we, us or our, is a real estate investment trust, or REIT, formed in 2009 under Maryland law. As of December 31, 2024, our wholly owned properties were comprised of 128 properties containing approximately 17,763,000 rentable square feet and we had a noncontrolling ownership interest of 51% in an unconsolidated joint venture that owned two properties totaling approximately 346,000 rentable square feet. Going Concern Our portfolio has been adversely affected by shifts in office space utilization, including increased remote work arrangements and tenants consolidating their real estate footprint. Demand for office space continues to face headwinds and declining rents and increasing costs to relet space when tenants can be identified continue to impact the market. In addition, there are limited debt or equity financing alternatives available to us to refinance our debt and financing sources we have utilized have increased our cost of capital. The duration and ultimate impact of these factors on our properties and our business remains uncertain and subject to change; however, these conditions continue to have a significant negative impact on our results of operations, financial position and cash flows. As of February 13, 2025, our total available liquidity was comprised of $113,000 of cash and, in addition to long-term debt, our near-term obligations include outstanding lease obligations of $81,865 and principal debt repayments of $26,000 in 2025 and $291,488 in 2026. Given the limited alternatives available to us to obtain debt or equity to refinance our maturing debt, the illiquid nature of our real estate assets and our ability to incur additional debt while maintaining compliance with the financial covenants in our existing debt agreements, we continue to work with our financial advisor, Moelis & Company LLC, to evaluate strategies to address our upcoming debt obligations, including through asset sales, future debt exchanges or equity issuances. However, we are not able to conclude that it is probable that these strategies will allow us to satisfy our upcoming debt obligations and maturities. If we are unable to consummate transactions allowing us to refinance our maturing debt, our Board of Trustees may consider a reorganization in a bankruptcy court. As a result of the foregoing, we have concluded that there is substantial doubt about our ability to continue as a going concern. The accompanying consolidated financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business, and do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.
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Summary of Significant Accounting Policies |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation. These consolidated financial statements include the accounts of us and our subsidiaries, all of which are wholly owned directly or indirectly by us. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Real Estate Properties. We record our properties at cost and provide depreciation on real estate investments on a straight line basis over estimated useful lives generally ranging from 7 to 40 years. In some circumstances, we engage independent real estate appraisal firms to provide market information and evaluations which are relevant to our purchase price allocations and determinations of useful lives; however, we are ultimately responsible for the purchase price allocations and determinations of useful lives. We allocate the purchase prices of our properties to land, buildings and improvements based on determinations of the relative fair values of these assets assuming the properties are vacant. We determine the fair value of each property using methods similar to those used by independent appraisers, which may involve estimated cash flows that are based on a number of factors, including capitalization rates and discount rates, among others. We allocate a portion of the purchase price of our properties to above market and below market leases based on the present value (using an interest rate which reflects the risks associated with acquired in place leases at the time each property was acquired by us) of the difference, if any, between (i) the contractual amounts to be paid pursuant to the acquired in place leases and (ii) our estimates of fair market lease rates for the corresponding leases, measured over a period equal to the terms of the respective leases. We allocate a portion of the purchase price to acquired in place leases and tenant relationships based upon market estimates to lease up the property based on the leases in place at the time of purchase. We allocate this aggregate value between acquired in place lease values and tenant relationships based on our evaluation of the specific characteristics of each tenant’s lease. However, we have not separated the value of tenant relationships from the value of acquired in place leases because such value and related amortization expense is immaterial to the accompanying consolidated financial statements. In making these allocations, we consider factors such as estimated carrying costs during the expected lease up periods, including real estate taxes, insurance and other operating income and expenses and costs, such as leasing commissions, legal and other related expenses, to execute similar leases in current market conditions at the time a property was acquired by us. If the value of tenant relationships becomes material in the future, we may separately allocate those amounts and amortize the allocated amounts over the estimated life of the relationships. For transactions that qualify as business combinations, we allocate the excess, if any, of the consideration over the fair value of the assets acquired to goodwill. We amortize capitalized above market lease values (included in acquired real estate leases, net in our consolidated balance sheets) and below market lease values (presented as assumed real estate lease obligations, net in our consolidated balance sheets) as a reduction or increase, respectively, to rental income over the terms of the associated leases. Such amortization resulted in net increases to rental income of $402 and $252 during the years ended December 31, 2024 and 2023, respectively. We amortize the value of acquired in place leases (included in acquired real estate leases, net in our consolidated balance sheets), exclusive of the value of above market and below market acquired in place leases, over the terms of the associated leases. Such amortization, which is included in depreciation and amortization expense, amounted to $65,039 and $93,057 during the years ended December 31, 2024 and 2023, respectively. If a lease is terminated prior to its stated expiration, we write off the unamortized amounts relating to that lease. As of December 31, 2024 and 2023, our acquired real estate leases and assumed real estate lease obligations, excluding properties classified as held for sale, were as follows:
As of December 31, 2024, the weighted average amortization periods for capitalized above market leases, lease origination value and capitalized below market lease values were 4.0 years, 7.3 years and 12.0 years, respectively. Future amortization of net intangible lease assets and liabilities, to be recognized over the current terms of the associated leases as of December 31, 2024 are estimated to be $42,347 in 2025, $34,401 in 2026, $27,444 in 2027, $14,981 in 2028, $13,462 in 2029 and $51,579 thereafter. We regularly evaluate whether events or changes in circumstances have occurred that could indicate an impairment in the value of long lived assets. Impairment indicators may include declining tenant occupancy, lack of progress releasing vacant space, tenant bankruptcies, low long term prospects for improvement in property performance, weak or declining tenant profitability, cash flow or liquidity, our decision to dispose of an asset before the end of its estimated useful life and legislative, market or industry changes that could permanently reduce the value of a property. If there is an indication that the carrying value of an asset is not recoverable, we estimate the projected undiscounted cash flows to determine if an impairment loss should be recognized. The future net undiscounted cash flows are subjective and are based in part on assumptions regarding hold periods, market rents and terminal capitalization rates. We determine the amount of any impairment loss by comparing the historical carrying value to estimated fair value. We estimate fair value through an evaluation of recent financial performance and projected discounted cash flows using standard industry valuation techniques. In addition to consideration of impairment upon the events or changes in circumstances described above, we regularly evaluate the remaining useful lives of our long lived assets. If we change our estimate of the remaining useful lives, we allocate the carrying value of the affected assets over their revised remaining useful lives. Cash and Cash Equivalents. We consider highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. Restricted Cash. Restricted cash consists of amounts escrowed for future real estate taxes, insurance, leasing costs, capital expenditures and debt service, as required by certain of our mortgage debts. Deferred Leasing Costs. Deferred leasing costs include brokerage costs and inducements associated with our entering leases. We amortize deferred leasing costs, which are included in depreciation and amortization expense, and inducements, which are included as a reduction to rental income, on a straight line basis over the terms of the respective leases. Legal costs associated with the execution of our leases are expensed as incurred and included in general and administrative expenses in our consolidated statements of comprehensive income (loss). We recorded amortization of deferred leasing costs of $10,988 and $8,737, and reductions to rental income related to the amortization of inducements of $2,003 and $1,326 for the years ended December 31, 2024 and 2023, respectively. Deferred leasing costs, excluding properties classified as held for sale, totaled $127,095 and $113,433 at December 31, 2024 and 2023, respectively, and accumulated amortization of deferred leasing costs totaled $29,453 and $26,462 at December 31, 2024 and 2023, respectively. Future amortization of deferred leasing costs to be recognized during the current terms of our existing leases as of December 31, 2024 are estimated to be $12,751 in 2025, $11,948 in 2026, $11,203 in 2027, $10,520 in 2028, $9,637 in 2029 and $41,583 thereafter. Debt Issuance Costs. Costs related to the issuance or assumption of debt are capitalized and amortized to interest expense over the terms of the respective loans. Debt issuance costs, net of accumulated amortization, for our $325,000 secured revolving credit facility and our prior $750,000 unsecured revolving credit facility, or our prior revolving credit facility, are included in other assets in our consolidated balance sheets. As of December 31, 2024, debt issuance costs for our revolving credit facility were $7,838 and accumulated amortization of debt issuance costs for our revolving credit facility was $2,396. As of December 31, 2023, debt issuance costs for our prior revolving credit facility were $5,328 and accumulated amortization of debt issuance costs for our prior revolving credit facility was $5,240. Debt issuance costs, net of accumulated amortization, for our senior notes, term loan and mortgage notes payable are presented as a direct deduction from the associated debt liability in our consolidated balance sheets. As of December 31, 2024 and 2023, debt issuance costs, net of accumulated amortization, for our senior notes, term loan and mortgage notes payable totaled $65,802 and $16,623, respectively. Future amortization of debt issuance costs to be recognized with respect to our revolving credit facility and term loan, senior notes and mortgage notes payable as of December 31, 2024 are estimated to be $22,519 in 2025, $22,192 in 2026, $10,086 in 2027, $7,310 in 2028, $4,268 in 2029 and $4,869 thereafter. Equity Method Investments. As of December 31, 2024, we had a noncontrolling ownership interest of 51% in an unconsolidated joint venture that owned two properties. The properties owned by the joint venture were encumbered by $50,000 of mortgage indebtedness. We did not control the activities that are most significant to the joint venture and, as a result, we accounted for our investment in the joint venture under the equity method of accounting. See Note 4 for more information regarding our unconsolidated joint ventures. We periodically evaluate our equity method investments for possible indicators of other than temporary impairment whenever events or changes in circumstances indicate the carrying amount of the investment might not be recoverable. These indicators may include the length of time and the extent to which the market value of our investment is below our carrying value, the financial condition of our investees, our intent and ability to be a long term holder of the investment and other considerations. If the decline in fair value is judged to be other than temporary, we record an impairment charge to adjust the basis of the investment to its estimated fair value. Revenue Recognition. We are a lessor of commercial office properties. Our leases provide our tenants with the contractual right to use and economically benefit from all of the physical space specified in the leases; therefore, we have determined to evaluate our leases as lease arrangements. Our leases provide for base rent payments and in addition may include variable payments. Rental income from operating leases, including any payments derived by index or market-based indices, is recognized on a straight line basis over the lease term when we have determined that the collectability of substantially all of the lease payments is probable. Some of our leases have options to extend or terminate the lease exercisable at the option of our tenants, which are considered when determining the lease term. Allowances for bad debts are recognized as a direct reduction of rental income. Certain of our leases contain non-lease components, such as property level operating expenses and capital expenditures reimbursed by our tenants as well as other required lease payments. We have made the policy election to not separate the lease and non-lease components because (i) the lease components are operating leases and (ii) the timing and pattern of recognition of the non-lease components are the same as those of the lease components. We apply Accounting Standards Codification 842, Leases, to the combined component. Income derived by our leases is recorded in rental income in our consolidated statements of comprehensive income (loss). Certain tenants are obligated to pay directly their obligations under their leases for insurance, real estate taxes and certain other expenses. These obligations, which have been assumed by the tenants under the terms of their respective leases, are not reflected in our consolidated financial statements. To the extent any tenant responsible for any such obligations under the applicable lease defaults on such lease or if it is deemed probable that the tenant will fail to pay for such obligations, we would record a liability for such obligations. See Note 5 for more information regarding our leases. Income Taxes. We have elected to be taxed as a REIT under the United States Internal Revenue Code of 1986, as amended, and, accordingly, we generally will not be subject to federal income taxes provided we distribute our taxable income and meet certain other requirements to qualify for taxation as a REIT. We are, however, subject to certain state and local taxes. Per Common Share Amounts. We calculate basic earnings per common share using the two class method. We calculate diluted earnings per share using the more dilutive of the two class method or the treasury stock method. Unvested share awards and other potentially dilutive common shares, together with the related impact on earnings, are considered when calculating diluted earnings per share. Use of Estimates. Preparation of these financial statements in conformity with GAAP requires us to make estimates and assumptions that may affect the amounts reported in these consolidated financial statements and related notes. The actual results could differ from these estimates. Significant estimates in the consolidated financial statements include purchase price allocations, useful lives of fixed assets and assessment of impairment of real estate and the related intangibles. New Accounting Pronouncements.In November 2023, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities, including those with a single reportable segment, to: (i) provide disclosures of significant segment expenses and other segment items if they are regularly provided to the chief operating decision maker, or the CODM, and included in each reported measure of segment profit or loss; (ii) provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by Accounting Standards Codification 280, Segment Reporting, in interim periods; and (iii) disclose the CODM’s title and position, as well as an explanation of how the CODM uses the reported measures and other disclosures. ASU No. 2023-07 does not change how a public entity identifies its operating segments, aggregates those operating segments or applies the quantitative thresholds to determine its reportable segments. We adopted ASU No. 2023-07 effective December 31, 2024. As a result we have included additional information related to the required disclosures within Note 12 to our consolidated financial statements. In December 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statements Expenses, which requires public entities to provide disaggregated disclosure of certain income statement expense captions within the footnotes to the financial statements. ASU No. 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods after December 15, 2027, with early adoption permitted. We are currently evaluating the impact ASU 2024-03 will have on our consolidated financial statements.
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| Per Common Share Amounts | Per Common Share Amounts The calculation of basic and diluted earnings per share is as follows (amounts in thousands, except per share data):
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Real Estate Properties |
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| Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Real Estate Properties | Real Estate Properties As of December 31, 2024, our wholly owned properties were comprised of 128 properties containing approximately 17,763,000 rentable square feet, with an undepreciated carrying value of $3,699,294, including $41,735 classified as held for sale. We also had a noncontrolling ownership interest of 51% in an unconsolidated joint venture that owned two properties containing approximately 346,000 rentable square feet. We generally lease space at our properties on a gross lease, modified gross lease or net lease basis pursuant to fixed term contracts expiring between 2025 and 2053. Some of our leases generally require us to pay all or some property operating expenses and to provide all or most property management services. During the year ended December 31, 2024, we entered into 52 leases for approximately 2,042,000 rentable square feet for a weighted (by rentable square feet) average lease term of 8.8 years and we made commitments of $95,935 for leasing related costs. As of December 31, 2024, we had estimated unspent leasing related obligations of $81,865. Acquisition Activities 2024 Acquisition Activities We did not acquire any properties during the year ended December 31, 2024. 2023 Acquisition Activities In December 2023, we acquired a vacant land parcel adjacent to a property we own in Irving, TX for $2,750, excluding acquisition related costs. Disposition Activities The sales completed during the years ended December 31, 2024 and 2023, as presented in the tables below, do not represent a strategic shift in our business. As a result, the results of operations of these properties are included in continuing operations through the date of sale in our consolidated statements of comprehensive income (loss). 2024 Disposition Activities During the year ended December 31, 2024, we sold 24 properties containing approximately 2,789,000 rentable square feet for an aggregate sales price of $199,351, excluding closing costs.
(1)Gross sales price is the gross contract price, excluding closing costs. (2)Property was classified as held for sale as of December 31, 2023. We recorded an $11,299 loss on impairment of real estate during the year ended December 31, 2023 to reduce the carrying value of this property to its estimated fair value less costs to sell as of December 31, 2023. As of December 31, 2024, we had six properties, that are under agreement to sell for an aggregate sales price of $54,763, excluding closing costs, five of which are classified as held for sale in our consolidated balance sheet, as summarized below:
(1)Gross sales price is the contract price, excluding closing costs. (2)Property did not meet held for sale criteria as of December 31, 2024. The pending sales in the preceding table are subject to conditions; accordingly, we cannot be sure that we will complete these sales or that these sales will not be delayed or the pricing will not change. See Note 10 for more information regarding our properties held for sale. We also recorded a $12,017 loss on impairment of real estate to reduce the carrying value of one property that was classified as held for sale to its estimated fair value, less costs to sell as of June 30, 2024. Subsequently, we removed this property from held for sale status due to a change of plan for sale and recorded an additional loss on impairment of $2,573 to reduce the carrying value of this property to its estimated fair value as of September 30, 2024. In February 2025, we sold one additional property with approximately 100,000 rentable square feet for a sale price of $5,750, excluding closing costs. This property previously secured our March 2027 Notes. Accordingly, we expect to use the net proceeds of this sale to redeem a portion of our March 2027 Notes in accordance with the terms of the indenture governing the March 2027 Notes. 2023 Disposition Activities During the year ended December 31, 2023, we sold eight properties containing approximately 553,000 rentable square feet for an aggregate sales price of $44,874, excluding closing costs.
(1)Gross sales price is the gross contract price, excluding closing costs. (2)Properties were classified as held for sale as of December 31, 2022. Unconsolidated Joint Ventures As of December 31, 2024, we owned an interest in one joint venture that owned two properties. We accounted for this investment under the equity method of accounting. During the year ended December 31, 2024, our 1750 H Street, NW joint venture did not have sufficient cash flow to pay its monthly debt service resulting in an event of default under the mortgage, and the non-recourse mortgage lender to this joint venture completed a foreclosure of the property, after which, the joint venture ceased to have an economic interest in the property. We wrote off our full investment in this joint venture as of December 31, 2023 and did not make capital contributions to this joint venture during the year ended December 31, 2024. Accordingly, we did not record our proportionate share of operating results of the joint venture for the year ended December 31, 2024. As of December 31, 2024 and 2023, our investments in our unconsolidated joint ventures consisted of the following:
The following table provides a summary of the mortgage debt of our unconsolidated joint ventures as of December 31, 2024 and 2023:
(1)Includes the effect of mark to market purchase accounting. (2)Reflects the entire balance of the debt secured by the properties and is not adjusted to reflect the interests in the joint ventures we did not own. None of the debt is recourse to us. As of December 31, 2024, the unamortized basis difference of our Prosperity Metro Plaza joint venture of $673 was primarily attributable to the difference between the amount we paid to purchase our interest in this joint venture, including transaction costs, and the historical carrying value of the net assets of this joint venture. This difference is being amortized over the remaining useful life of the related property and the resulting amortization expense is included in equity in net losses of investees in our consolidated statements of comprehensive income (loss).
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Leases |
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Dec. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases | Leases Rental income from operating leases, including any payments derived by index or market-based indices, is recognized on a straight line basis over the lease term once we have determined that the collectability of substantially all of the lease payments is probable. We increased rental income to record revenue on a straight line basis by $31,102 and $26,194 for the years ended December 31, 2024 and 2023, respectively. Rents receivable, excluding properties classified as held for sale, included $140,132 and $112,440 of straight line rent receivables at December 31, 2024 and 2023, respectively. We do not include in our measurement of our lease receivables certain variable payments, including payments determined by changes in the index or market-based indices after the inception of the lease, certain tenant reimbursements and other income until the specific events that trigger the variable payments have occurred. Such payments totaled $86,903 and $88,173 for the years ended December 31, 2024 and 2023, respectively, of which tenant reimbursements totaled $82,647 and $82,885, respectively. The following operating lease maturity analysis presents the future contractual lease payments to be received by us through 2053 as of December 31, 2024:
As of December 31, 2024, tenants representing approximately 1.2% of our total operating lease maturities had exercisable rights to terminate their leases before the stated terms of their leases expire. In 2025, 2026, 2027, 2028, 2029, 2030, 2031, 2032, 2034, 2035, 2036, 2037 and 2040, early termination rights become exercisable by other tenants who represented an additional approximately 1.4%, 1.9%, 2.0%, 5.7%, 4.1%, 2.6%, 1.8%, 5.7%, 1.5%, 4.4%, 0.6%, 0.6% and 2.3% of our total operating lease maturities, respectively. In certain circumstances, some leases provide the tenant with the right to terminate if the legislature or other funding authority does not appropriate the funding necessary for the tenant to meet its lease obligations; we have determined the fixed non-cancelable lease term of these leases to be the full term of the lease because we believe the occurrence of early terminations to be a remote contingency based on both our historical experience and our assessments of the likelihood of lease cancellation on a separate lease basis. As of December 31, 2024, five of our tenants had the right to terminate their leases if the respective legislature or other funding authority does not appropriate the funding necessary for the tenant to meet its obligation. These five tenants represented approximately 2.8% of our total operating lease maturities as of December 31, 2024.
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| Leases | Leases Rental income from operating leases, including any payments derived by index or market-based indices, is recognized on a straight line basis over the lease term once we have determined that the collectability of substantially all of the lease payments is probable. We increased rental income to record revenue on a straight line basis by $31,102 and $26,194 for the years ended December 31, 2024 and 2023, respectively. Rents receivable, excluding properties classified as held for sale, included $140,132 and $112,440 of straight line rent receivables at December 31, 2024 and 2023, respectively. We do not include in our measurement of our lease receivables certain variable payments, including payments determined by changes in the index or market-based indices after the inception of the lease, certain tenant reimbursements and other income until the specific events that trigger the variable payments have occurred. Such payments totaled $86,903 and $88,173 for the years ended December 31, 2024 and 2023, respectively, of which tenant reimbursements totaled $82,647 and $82,885, respectively. The following operating lease maturity analysis presents the future contractual lease payments to be received by us through 2053 as of December 31, 2024:
As of December 31, 2024, tenants representing approximately 1.2% of our total operating lease maturities had exercisable rights to terminate their leases before the stated terms of their leases expire. In 2025, 2026, 2027, 2028, 2029, 2030, 2031, 2032, 2034, 2035, 2036, 2037 and 2040, early termination rights become exercisable by other tenants who represented an additional approximately 1.4%, 1.9%, 2.0%, 5.7%, 4.1%, 2.6%, 1.8%, 5.7%, 1.5%, 4.4%, 0.6%, 0.6% and 2.3% of our total operating lease maturities, respectively. In certain circumstances, some leases provide the tenant with the right to terminate if the legislature or other funding authority does not appropriate the funding necessary for the tenant to meet its lease obligations; we have determined the fixed non-cancelable lease term of these leases to be the full term of the lease because we believe the occurrence of early terminations to be a remote contingency based on both our historical experience and our assessments of the likelihood of lease cancellation on a separate lease basis. As of December 31, 2024, five of our tenants had the right to terminate their leases if the respective legislature or other funding authority does not appropriate the funding necessary for the tenant to meet its obligation. These five tenants represented approximately 2.8% of our total operating lease maturities as of December 31, 2024.
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Business and Property Management Agreements with RMR |
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| Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business and Property Management Agreements with RMR | Business and Property Management Agreements with RMR We have no employees. The personnel and various services we require to operate our business are provided to us by The RMR Group LLC, or RMR. We have two agreements with RMR to provide management services to us: (1) a business management agreement, which relates to our business generally; and (2) a property management agreement, which relates to our property level operations. Management Agreements with RMR. Our management agreements with RMR provide for an annual base management fee, an annual incentive management fee and property management and construction supervision fees, payable in cash, among other terms: •Base Management Fee. The annual base management fee payable to RMR by us for each applicable period is equal to the lesser of: •the sum of (a) 0.5% of the average aggregate historical cost of the real estate assets acquired from a REIT to which RMR provided business management or property management services, or the Transferred Assets, plus (b) 0.7% of the average aggregate historical cost of our real estate investments excluding the Transferred Assets up to $250,000, plus (c) 0.5% of the average aggregate historical cost of our real estate investments excluding the Transferred Assets exceeding $250,000; and •the sum of (a) 0.7% of the average closing price per share of our common shares on the stock exchange on which such shares are principally traded during such period, multiplied by the average number of our common shares outstanding during such period, plus the daily weighted average of the aggregate liquidation preference of each class of our preferred shares outstanding during such period, plus the daily weighted average of the aggregate principal amount of our consolidated indebtedness during such period, or, together, our Average Market Capitalization, up to $250,000, plus (b) 0.5% of our Average Market Capitalization exceeding $250,000. The average aggregate historical cost of our real estate investments includes our consolidated assets invested, directly or indirectly, in equity interests in or loans secured by real estate and personal property owned in connection with such real estate (including acquisition related costs and costs which may be allocated to intangibles or are unallocated), all before reserves for depreciation, amortization, impairment charges or bad debts or other similar non-cash reserves. •Incentive Management Fee. The incentive management fee which may be earned by RMR for an annual period is calculated as follows: •An amount, subject to a cap based on the value of our common shares outstanding, equal to 12% of the product of: •our equity market capitalization on the last trading day of the year immediately prior to the relevant year measurement period, and •the amount (expressed as a percentage) by which the total return per share, as defined in the business management agreement and further described below, of our common shareholders (i.e., share price appreciation plus dividends) exceeds the total shareholder return of the applicable index, or the benchmark return per share, for the relevant measurement period. The MSCI U.S. REIT/Office REIT Index is the applicable benchmark index. For purposes of the total return per share of our common shareholders, share price appreciation for a measurement period is determined by subtracting (1) the closing price of our common shares on The Nasdaq Stock Market LLC, or Nasdaq, on the last trading day of the year immediately before the first year of the applicable measurement period, or the initial share price, from (2) the average closing price of our common shares on the 10 consecutive trading days having the highest average closing prices during the final 30 trading days in the last year of the measurement period. •The calculation of the incentive management fee (including the determinations of our equity market capitalization, initial share price and the total return per share of our common shareholders) is subject to adjustments if we issue or repurchase our common shares, or if our common shares are forfeited, during the measurement period. •No incentive management fee is payable by us unless our total return per share during the measurement period is positive. •The measurement periods are periods ending with the year for which the incentive management fee is being calculated. •If our total return per share exceeds 12% per year in any measurement period, the benchmark return per share is adjusted to be the lesser of the total shareholder return of the applicable index for such measurement period and 12% per year, or the adjusted benchmark return per share. In instances where the adjusted benchmark return per share applies, the incentive management fee will be reduced if our total return per share is between 200 basis points and 500 basis points below the applicable index in any year by a low return factor, as defined in the business management agreement, and there will be no incentive management fee paid if, in these instances, our total return per share is more than 500 basis points below the applicable index in any year, determined on a cumulative basis (i.e., between 200 basis points and 500 basis points per year multiplied by the number of years in the measurement period and below the applicable market index). •The incentive management fee is subject to a cap. The cap is equal to the value of the number of our common shares which would, after issuance, represent 1.5% of the number of our common shares then outstanding multiplied by the average closing price of our common shares during the 10 consecutive trading days having the highest average closing prices during the final 30 trading days of the relevant measurement period. •Incentive management fees we paid to RMR for any period may be subject to “clawback” if our financial statements for that period are restated due to material non-compliance with any financial reporting requirements under the securities laws as a result of the bad faith, fraud, willful misconduct or gross negligence of RMR and the amount of the incentive management fee we paid was greater than the amount we would have paid based on the restated financial statements. Business management fees are included in general and administrative expenses in our consolidated statements of comprehensive income (loss). We did not incur any incentive management fee pursuant to our business management agreement for the years ended December 31, 2024 or 2023. •Property Management and Construction Supervision Fees. The property management fees payable to RMR by us for each applicable period are equal to 3.0% of gross collected rents and the construction supervision fees payable to RMR by us for each applicable period are equal to 5.0% of construction costs. Property management fees are included in other operating expenses in our consolidated statements of net income (loss) and construction supervision fees are capitalized as building improvements in our consolidated balance sheets and are depreciated over the estimated useful lives of the related capital assets. •Expense Reimbursement. We are generally responsible for all of our operating expenses, including certain expenses incurred or arranged by RMR on our behalf. We are generally not responsible for payment of RMR’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR’s employees assigned to work exclusively or partly at our properties, our share of the wages, benefits and other related costs of RMR’s centralized accounting personnel, our share of RMR’s costs for providing our internal audit function and as otherwise agreed. Our property level operating expenses are generally incorporated into rents charged to our tenants, including certain payroll and related costs incurred by RMR which are included in other operating expenses and general and administrative expense, as applicable, in our consolidated statements of comprehensive income (loss). •Term. Our management agreements with RMR have terms that end on December 31, 2044, and automatically extend on December 31st of each year for an additional year, so that the terms of our management agreements thereafter end on the 20th anniversary of the date of the extension. •Termination Rights. We have the right to terminate one or both of our management agreements with RMR: (i) at any time on 60 days’ written notice for convenience, (ii) immediately on written notice for cause, as defined therein, (iii) on written notice given within 60 days after the end of an applicable calendar year for a performance reason, as defined therein, and (iv) by written notice during the 12 months following a change of control of RMR, as defined therein. RMR has the right to terminate the management agreements for good reason, as defined therein. •Termination Fee. If we terminate one or both of our management agreements with RMR for convenience, or if RMR terminates one or both of our management agreements for good reason, we have agreed to pay RMR a termination fee in an amount equal to the sum of the present values of the monthly future fees, as defined therein, for the terminated management agreement(s) for the term that was remaining prior to such termination, which, depending on the time of termination, would be between 19 and 20 years. If we terminate one or both of our management agreements with RMR for a performance reason, we have agreed to pay RMR the termination fee calculated as described above, but assuming a 10-year term was remaining prior to the termination. We are not required to pay any termination fee if we terminate our management agreements with RMR for cause or as a result of a change of control of RMR. •Transition Services. RMR has agreed to provide certain transition services to us for 120 days following an applicable termination by us or notice of termination by RMR, including cooperating with us and using commercially reasonable efforts to facilitate the orderly transfer of the management and real estate investment services provided under our business management agreement and to facilitate the orderly transfer of the management of the managed properties under our property management agreement, as applicable. •Vendors. Pursuant to our management agreements with RMR, RMR may from time to time negotiate on our behalf with certain third party vendors and suppliers for the procurement of goods and services to us. As part of this arrangement, we may enter agreements with RMR and other companies to which RMR or its subsidiaries provide management services for the purpose of obtaining more favorable terms from such vendors and suppliers. •Investment Opportunities. Under our business management agreement with RMR, we acknowledge that RMR may engage in other activities or businesses and act as the manager to any other person or entity (including other REITs) even though such person or entity has investment policies and objectives similar to ours and we are not entitled to preferential treatment in receiving information, recommendations and other services from RMR. In January 2025, in connection with a $100,000 credit agreement and related security agreement entered into by RMR and certain of its subsidiaries with Citibank, N.A., or Citibank, and the other lenders party thereto, we consented to the pledge and assignment of RMR’s interest in our management agreements under the security agreement. Pursuant to the consent, we agreed, among other things, that upon notice that an event of default under the RMR credit agreement has occurred and is continuing, we will continue to make all payments under our management agreements in accordance with the instructions of Citibank, and that if there is an event of default by RMR under our management agreements that would allow us to terminate or suspend our obligations, we will not terminate or suspend without notice to Citibank and providing Citibank 30 days to cure the default on RMR’s behalf. The consent was approved by our Independent Trustees. For the years ended December 31, 2024 and 2023, the business management fees, property management fees and construction supervision fees and expense reimbursements recognized in our consolidated financial statements were as follows:
(1)The net business management fees we recognized for the years ended December 31, 2024 and 2023 each reflect a reduction of $603 for the amortization of the liability we recorded in connection with our former investment in RMR Inc. (2)The net property management fees we recognized for the years ended December 31, 2024 and 2023 each reflect a reduction of $484 for the amortization of the liability we recorded in connection with our former investment in RMR Inc. Management Agreements between our Joint Venture and RMR. RMR provides management services to our unconsolidated joint venture. We are not obligated to pay management fees to RMR under our management agreement with RMR for the services it provides regarding the joint venture. The joint venture pays management fees directly to RMR.
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Related Person Transactions |
12 Months Ended |
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Dec. 31, 2024 | |
| Related Party Transactions [Abstract] | |
| Related Person Transactions | Related Person Transactions We have relationships and historical and continuing transactions with RMR, RMR Inc. and others related to them, including other companies to which RMR or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. RMR is a majority owned subsidiary of RMR Inc. The Chair of our Board of Trustees and one of our Managing Trustees, Adam Portnoy, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., the chair of the board of directors, a managing director, the president and chief executive officer of RMR Inc. and an officer and employee of RMR. Jennifer Clark, our other Managing Trustee, is a managing director and the executive vice president, general counsel and secretary of RMR Inc., an officer and employee of RMR and an officer of ABP Trust. Each of our officers is also an officer and employee of RMR. Some of our Independent Trustees also serve as independent trustees of other public companies to which RMR or its subsidiaries provide management services. Mr. Portnoy serves as chair of the boards and as a managing trustee of these public companies. Other officers of RMR, including Ms. Clark, serve as managing trustees or officers of certain of these companies. Our Manager, RMR. We have two agreements with RMR to provide management services to us. RMR also provides management services to our unconsolidated joint venture. See Note 6 for more information regarding our and our unconsolidated joint venture’s management agreements with RMR. Leases with RMR. We lease office space to RMR in certain of our properties for RMR’s property management offices. Pursuant to our lease agreements with RMR, we recognized rental income from RMR for leased office space of $807 and $851 for the years ended December 31, 2024 and 2023, respectively. Our office space leases with RMR are terminable by RMR if our management agreements with RMR are terminated. Share Awards to RMR Employees. As described further in Note 11, we award shares to our officers and other employees of RMR annually. Generally, one fifth of these awards vest on the grant date and one fifth vests on each of the next anniversaries of the grant dates. In certain instances, we may accelerate the vesting of an award, such as in connection with the award holder’s retirement as an officer of us or an officer or employee of RMR. These awards to RMR employees are in addition to the share awards to our Managing Trustees, as Trustee compensation, and the fees we paid to RMR. See Note 11 for more information regarding our share awards and activity as well as certain share purchases we made in connection with share award recipients satisfying tax withholding obligations on the vesting of share awards. Sonesta. Prior to January 1, 2025, we leased 240,000 rentable square feet of a mixed-use property in Washington, D.C. pursuant to a lease with a subsidiary of Sonesta, or the Sonesta Lease. We terminated the Sonesta Lease, effective January 1, 2025. The Sonesta Lease commenced in August 2023 and was amended in September 2024 to expand the premises by 5,900 rentable square feet. Pursuant to the amended Sonesta Lease, Sonesta was required to pay us annual base rent of approximately $6,724 beginning February 2025, and the annual base rent would have increased by 10% every five years throughout the term. Sonesta was also obligated to pay its pro rata share of the operating costs for the property. We recognized rental income of $12,428 in 2024 under the Sonesta Lease. As of December 31, 2024, we had paid approximately $76,834 of tenant improvement costs for the build out of the hotel space pursuant to the Sonesta Lease. Effective January 1, 2025, we entered into a management agreement with Sonesta, or the Sonesta Management Agreement, to replace the Sonesta Lease. The Sonesta Management Agreement expires on December 31, 2040, and includes two 10-year renewal options. The Sonesta Management Agreement provides that we are paid an annual owner’s priority return if gross revenues of the hotels, after payment of hotel operating expenses and management and related fees (other than Sonesta’s incentive fee, if applicable), are sufficient to do so. The Sonesta Management Agreement further provides that we are paid an additional return of the operating profits, as defined therein, after paying the owner’s priority return, reimbursing owner or manager advances, funding furniture, fixtures and equipment, or FF&E, reserves and paying Sonesta’s incentive fee, if applicable. We do not have any security deposits or guarantees for this Sonesta hotel. The stated annual owner’s priority return is initially $7,500 and increases by 8.0% of our out-of-pocket capital expenditures and will increase annually to 102% of our prior year’s annual owner’s priority return. We are responsible for any capital expenditures in excess of available funds in the FF&E reserve. The Sonesta Management Agreement requires that 1.0% of gross revenues for 2025, 3.0% of gross revenues for 2026 and 4.0% of gross revenues for each calendar year thereafter be escrowed for future capital expenditures as FF&E reserves. Pursuant to the Sonesta Management Agreement, we are required to pay Sonesta, after payment of hotel operating expenses, a base management fee equal to 1.5% of gross revenues, as defined in the Sonesta Management Agreement, for 2025 and 3.0% of gross revenues each calendar year thereafter. Additionally, we are required to pay (i) an incentive fee equal to 20% of net operating profit, as defined in the Sonesta Management Agreement, in excess of the annual owner’s priority; (ii) a brand promotion fee of 1.75% of gross revenues for 2025 and 3.5% of gross revenues for each calendar year thereafter; and (iii) a loyalty fee of the greater of 1.0% of room revenues or 4.5% of qualified room revenues from guests participating in certain loyalty programs. Sonesta’s incentive management fee, but not its other fees, is earned only after our annual owner’s priority return is paid. The Sonesta Management Agreement also provides that the pro rata costs Sonesta incurs for advertising, marketing, promotional and public relations programs and campaigns, including its Rewards Program, for the benefit of this hotel are subject to reimbursement by us or are otherwise treated as hotel operating expenses. We are required to maintain working capital under the Sonesta Management Agreement and have advanced a fixed amount based on the number of rooms in the hotel to meet the cash needs for hotel operations. The Sonesta Management Agreement also provides that, prior to August 2, 2026, our approval is required for Sonesta to operate another Royal Sonesta Hotel in Washington D.C., other than the Royal Sonesta Washington Dupont Circle located at 2121 P Street, N.W., Washington D.C. In general, we and Sonesta may terminate the Sonesta Management Agreement for events of default and casualty and condemnation events. We also have the right to terminate the Sonesta Management Agreement if minimum performance thresholds are not met starting in 2027 for any two consecutive calendar years. Pursuant to the Sonesta Management Agreement, we or Sonesta may be obligated to pay the other party damages if the terminating party terminates the Sonesta Management Agreement due to the other party’s event of default. Mr. Portnoy is a director and controlling shareholder of Sonesta, and Ms. Clark is a director of Sonesta. Another officer and employee of RMR is a director and president and chief executive officer of Sonesta.
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Concentration |
12 Months Ended |
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Dec. 31, 2024 | |
| Risks and Uncertainties [Abstract] | |
| Concentration | Concentration Tenant and Credit Concentration As of December 31, 2024 and 2023, the U.S. government and certain state and other government tenants combined were responsible for approximately 24.8% and 27.5%, respectively, of our annualized rental income. The U.S. government is our largest tenant by annualized rental income and represented approximately 17.0% and 19.5% of our annualized rental income as of December 31, 2024 and 2023, respectively. We define annualized rental income as the annualized contractual base rents from our tenants pursuant to our lease agreements as of the measurement date, plus straight line rent adjustments and estimated recurring expense reimbursements to be paid to us, and excluding lease value amortization. Geographic Concentration As of December 31, 2024, our 128 wholly owned properties were located in 29 states and the District of Columbia. Properties located in Virginia, California, District of Columbia, Texas and Illinois were responsible for approximately 13.2%, 11.0%, 11.0%, 10.4%, and 10.1% of our annualized rental income as of December 31, 2024, respectively.
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Indebtedness | Indebtedness As of December 31, 2024 and 2023, our outstanding indebtedness consisted of the following:
(1)These senior notes were redeemed in March 2024. (2)Certain of these senior notes were redeemed through a series of exchange transactions during the year ended December 31, 2024. The remaining balance of $171,586 at December 31, 2024 was redeemed in cash in January 2025. (3)These senior notes were issued in December 2024. (4)These senior notes were issued in February 2024. (5)These senior notes were issued in June and October 2024. In January 2024, we entered into an amended and restated credit agreement, or our credit agreement, governing a new $325,000 secured revolving credit facility and a $100,000 secured term loan. Our credit agreement replaced our prior revolving credit facility, which had a maturity date of January 31, 2024. As collateral for all loans and other obligations under our credit agreement, certain of our subsidiaries pledged all of their respective equity interests in certain of our direct and indirect property owning subsidiaries, and our pledged subsidiaries provided first mortgage liens on 19 properties that had a gross book value of real estate assets of $1,030,889 as of December 31, 2024. We can borrow, repay and reborrow funds available under our revolving credit facility until maturity, and no principal repayments on borrowings under our credit agreement are due until maturity. The maturity date of our credit agreement is January 29, 2027 and, subject to the payment of an extension fee and meeting certain other requirements, we can extend the stated maturity date of our revolving credit facility by one year. Our credit agreement contains a number of covenants, including covenants that require us to maintain certain financial ratios, restrict our ability to incur additional debt in excess of calculated amounts and, subject to limited exceptions, restrict our ability to increase our distribution rate above the current level of $0.01 per common share per quarter and enter into share repurchases. Availability of borrowings under our credit agreement is subject to ongoing minimum performance and market values of the 19 collateral properties, our satisfying certain financial covenants and other credit facility conditions. Interest payable on borrowings under our credit agreement is at a rate of the secured overnight financing rate, or SOFR, plus a margin of 350 basis points. We are also required to pay an unused facility fee on the amount of total lending commitments, which was 25 basis points per annum at December 31, 2024. As of December 31, 2024, we were fully drawn on our $325,000 revolving credit facility and $100,000 was outstanding under our term loan. As of December 31, 2024, the annual interest rate payable on borrowings under our credit agreement was 7.9%. The weighted average annual interest rate for borrowings under our credit agreement for the year ended December 31, 2024 was 8.7%. Under our prior revolving credit facility, we were required to pay interest at a rate of SOFR plus a premium, which was 145 basis points per annum at December 31, 2023, on the amount outstanding under our prior revolving credit facility, as well as a facility fee on the total amount of lending commitments, which was 30 basis points per annum at December 31, 2023. As of December 31, 2023, the annual interest rate payable on borrowings under our prior revolving credit facility was 6.9%. The weighted average annual interest rate for borrowings under our prior revolving credit facility for the year ended December 31, 2023 was 6.5%. Our revolving credit facility is governed by a credit agreement with a syndicate of institutional lenders. Our credit agreement and senior notes indentures and their supplements provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default, such as, in the case of our credit agreement, a change of control of us, which includes RMR, ceasing to act as our business and property manager. Our credit agreement and senior notes indentures and their supplements also contain covenants, including covenants that restrict our ability to incur debts, require us to comply with certain financial covenants and, in the case of our credit agreement, restrict our ability to increase our distribution rate above the current level of $0.01 per common share per quarter. We believe we were in compliance with the terms and conditions of the respective covenants under our credit agreement and senior notes indentures and their supplements at December 31, 2024. Senior Secured Notes Issuance In February 2024, we issued $300,000 in aggregate principal amount of 9.000% senior secured notes due March 2029, or the March 2029 Notes. The aggregate net proceeds from the offering of the March 2029 Notes were $270,712, after initial purchaser discounts and other offering expenses. The March 2029 Notes are fully and unconditionally guaranteed on a joint, several and senior secured basis by certain of our subsidiaries and secured by a pledge of all of the respective equity interests of the subsidiary guarantors and first mortgage liens on 17 properties with a gross book value of real estate assets of $621,506 as of December 31, 2024. The March 2029 Notes require semi-annual payments of interest only and are prepayable, at par plus accrued interest, after March 31, 2028. Senior Unsecured Notes Redemption In March 2024, we redeemed, at par plus accrued interest, all $350,000 of our 4.25% senior unsecured notes due 2024. As a result of this redemption, we recorded a loss on early extinguishment of debt of $425 during the year ended December 31, 2024, which represented the unamortized discounts related to these notes. Senior Notes Exchanges In June and October 2024, through two exchange transactions, we exchanged $609,999 in aggregate principal amount of new 9.000% senior secured notes due September 2029, or the September 2029 Notes, for an aggregate $895,373 of certain of our outstanding senior unsecured notes, or the Existing Notes, and an aggregate 1,406,952 of our common shares valued at $2.26 per share, and such transactions, the 2029 Senior Note Exchanges, as follows:
The September 2029 Notes are fully and unconditionally guaranteed on a joint, several and senior secured basis by certain of our subsidiaries and are secured by first mortgage liens on 19 properties with a gross book value of real estate assets of $721,375 as of December 31, 2024 and second mortgage liens on the 19 properties securing our credit agreement. The September 2029 Notes require semi-annual payments of interest only and are prepayable, at par plus accrued interest, after June 3, 2028. During the year ended December 31, 2024, we recorded a net gain on early extinguishment of debt of $212,735 as a result of the 2029 Senior Note Exchanges. In December 2024, through an exchange transaction, we exchanged $444,992 of new 3.250% senior secured notes due March 2027, or the March 2027 Notes, 11,532,794 of our common shares valued at $1.37 per share and cash premiums of $25,000 for $281,514 of 4.500% senior unsecured notes due 2025, or the 2025 Notes, and $58,486 in cash from certain existing noteholders. This transaction is referred to herein as the 2027 Senior Note Exchange. The March 2027 Notes require quarterly payments of interest and quarterly principal amortization payments of $6,500, and on or before March 1, 2026, require a mandatory principal payment of $125,000, which is subject to reduction for certain prior redemptions of the March 2027 Notes. The March 2027 Notes are fully and unconditionally guaranteed on a joint, several and senior secured basis by certain of our subsidiaries and are secured by first mortgage liens on 37 properties with a gross book value of real estate assets of $1,279,487 as of December 31, 2024 and second mortgage liens on the 19 properties securing the September 2029 Notes and they are fully and unconditionally guaranteed, on a joint, secured and senior unsecured basis by certain of our other subsidiaries. During the year ended December 31, 2024, we recorded a loss on early extinguishment of debt of $87,064 as a result of the 2027 Senior Note Exchange. We redeemed, at par plus accrued interest, the remaining $171,586 of the 2025 Notes in January 2025. During the year ended December 31, 2024, in a series of exchange transactions, we exchanged $15,900 in aggregate principal amount of the 2025 Notes for an aggregate amount of 7,565,722 of our common shares at a weighted average price of $2.07 per share. During the year ended December 31, 2024, we recorded a gain on early extinguishment of debt of $939 as a result of these exchanges. The gains we realized on early extinguishment of debt are considered cancellation of debt income, or CODI, for income tax purposes and part of our REIT taxable income. We do not expect that any special distribution will be required to maintain our qualification for taxation as a REIT as a result of generating CODI in 2024 as a result of offsetting losses from the sale of real estate and other tax strategies. On February 7, 2025, we commenced a series of exchange offers, or the Exchange Offers, pursuant to which we are offering to issue up to $175,000 in aggregate principal amount of new 8.000% senior guaranteed unsecured notes due 2030, or the New 2030 Notes, and related guarantees in exchange for our outstanding (i) 2.650% senior unsecured notes due 2026, (ii) 2.400% senior unsecured notes due 2027 and (iii) 3.450% senior unsecured notes due 2031. The Exchange Offers are being made subject to the terms and conditions set forth in an offering memorandum dated as of February 7, 2025. As of December 31, 2024, seven of our properties with an aggregate gross book value of real estate assets of $304,673 were encumbered by mortgage notes with an aggregate principal amount of $177,320. Our mortgage notes are non-recourse, subject to certain limited exceptions and do not contain any material financial covenants. The required principal payments due during the next five years and thereafter under all our outstanding consolidated debt as of December 31, 2024 were as follows:
(1)Includes $171,586 aggregate principal of the 2025 Notes, which were redeemed in full in January 2025. (2)Total consolidated debt outstanding as of December 31, 2024, net of unamortized premiums, discounts and issuance costs totaling $91,890, was $2,534,634. None of our unsecured debt obligations require principal or sinking fund payments prior to their maturity dates.
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| Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value of Assets and Liabilities | Fair Value of Assets and Liabilities The following table presents certain of our assets measured at fair value at December 31, 2024, categorized by level of inputs as defined in the fair value hierarchy under GAAP, used in the valuation of each asset:
(1)We recorded an impairment charge of $19,042 to reduce the carrying values of three properties that are classified as held for sale in our condensed consolidated balance sheet to their estimated fair values less estimated costs to sell of $739, based on negotiated sales prices with third party buyers (Level 2 inputs as defined in the fair value hierarchy under GAAP). See Note 4 for more information. In addition to the assets described above, our financial instruments include our cash and cash equivalents, restricted cash, rents receivable, accounts payable, a revolving credit facility, a term loan, senior notes, mortgage notes payable, amounts due to related persons, other accrued expenses and security deposits. At December 31, 2024 and 2023, the fair values of our financial instruments approximated their carrying values in our consolidated financial statements, due to their short term nature or floating interest rates, except as follows:
(1)Includes unamortized debt premiums, discounts and issuance costs totaling $90,218 and $21,711 as of December 31, 2024 and 2023, respectively. We estimated the fair values of our senior notes (except for our senior unsecured notes due 2050) using an average of the bid and ask price of the notes (Level 2 inputs as defined in the fair value hierarchy under GAAP) as of the measurement date. We estimated the fair values of our senior unsecured notes due 2050 based on the closing price on Nasdaq (Level 1 inputs as defined in the fair value hierarchy under GAAP) as of the measurement date. We estimated the fair values of our mortgage notes payable using discounted cash flow analyses and currently prevailing market rates (Level 3 inputs as defined in the fair value hierarchy under GAAP) as of the measurement date. Because Level 3 inputs are unobservable, our estimated fair values may differ materially from the actual fair values.
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Shareholders' Equity |
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| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shareholders' Equity | Shareholders’ Equity Share Awards We have common shares available for issuance under the terms of our Amended and Restated 2009 Incentive Share Award Plan, or the 2009 Plan. During the years ended December 31, 2024 and 2023, we awarded to our officers and other employees of RMR annual share awards of 544,555 and 210,300 of our common shares, respectively, valued at $1,160 and $1,211, in aggregate, respectively. During the years ended December 31, 2024 and 2023, we awarded each of our nine Trustees, in accordance with our Trustee compensation arrangements, 11,627 and 3,500 of our common shares, respectively. These awards had aggregate values of $225 ($25 per Trustee) and $249 ($28 per Trustee) in 2024 and 2023, respectively. The values of the share awards were based upon the closing price of our common shares on Nasdaq on the date of award. The common shares awarded to our officers and certain other employees of RMR vest in five equal annual installments beginning on the date of award. The common shares awarded to our Trustees vest immediately. We recognize share forfeitures as they occur and include the value of awarded shares in general and administrative expenses ratably over the vesting period. A summary of shares awarded, forfeited, vested and unvested under the terms of the 2009 Plan for the years ended December 31, 2024 and 2023, is as follows:
The 591,879 unvested shares as of December 31, 2024 are scheduled to vest as follows: 176,976 shares in 2025, 162,596 shares in 2026, 143,675 shares in 2027 and 108,632 shares in 2028. As of December 31, 2024, the estimated future compensation expense for the unvested shares was $2,222. The weighted average period over which the compensation expense will be recorded is approximately 23 months. During the years ended December 31, 2024 and 2023, we recorded $1,662 and $2,257, respectively, of compensation expense related to the 2009 Plan. At December 31, 2024, 94,000 of our common shares remained available for issuance under the 2009 Plan. Share Purchases During the years ended December 31, 2024 and 2023, we purchased 85,338 and 48,329 of our common shares, respectively, valued at weighted average share prices of $2.25 and $6.08 per common share, respectively, from certain of our current and former Trustees and officers and certain current and former officers and employees of RMR in satisfaction of tax withholding and payment obligations in connection with the vesting of prior awards of our common shares. Distributions During the years ended December 31, 2024 and 2023, we paid distributions on our common shares as follows:
On January 16, 2025, we declared a quarterly cash distribution payable to common shareholders of record on January 27, 2025 in the amount of $0.01 per share, or approximately $698. We expect to pay this distribution on or about February 20, 2025.
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Segment Reporting |
12 Months Ended |
|---|---|
Dec. 31, 2024 | |
| Segment Reporting [Abstract] | |
| Segment Reporting | Segment Reporting We manage our business on a consolidated basis and therefore have one reportable segment: ownership and leasing of properties. The chief operating decision maker, or CODM, is our President and Chief Operating Officer. The CODM assesses performance, allocates resources and makes strategic decisions based on net income (loss) as shown in our consolidated statements of comprehensive income (loss). The CODM is also regularly provided with information on expenses related to our management agreements with RMR, which are detailed in Note 9. The accounting policies of our reportable segment are the same as those described in Note 2. The measure of segment assets is reported as total assets in our consolidated balance sheets.
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SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION |
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| SEC Schedule, 12-28, Real Estate Companies, Investment in Real Estate and Accumulated Depreciation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION |
(1) Represents mortgage debt, net of the unamortized balance of debt issuance costs totaling $4,407. (2) Excludes the value of real estate intangibles. Aggregate cost for federal income tax purposes is approximately $7,540,917. (3) Depreciation on building and improvements is provided for periods ranging up to 40 years and on equipment up to seven years. (4) These two properties are collateral for our $54,300 mortgage note. (5) These 19 properties are first lien collateral for our $425,000 credit agreement and second lien collateral for our $610,000 of 9.000% senior secured notes due September 2029, or the September 2029 Notes. (6) These 17 properties are collateral for our $300,000 of 9.000% senior secured notes due March 2029. (7) These 37 properties are collateral for our $445,000 of 3.250% senior secured notes due March 2027, or the March 2027 Notes. (8) These 19 properties are first lien collateral for the September 2029 Notes and second lien collateral for the March 2027 Notes. An analysis of the carrying amount of real estate properties and accumulated depreciation is as follows:
(1) Represents the reclassification between accumulated depreciation and building made to certain properties measured at fair value in accordance with GAAP.
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Pay vs Performance Disclosure - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
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| Pay vs Performance Disclosure | ||
| Net loss | $ (136,107) | $ (69,432) |
Insider Trading Arrangements |
3 Months Ended |
|---|---|
Dec. 31, 2024 | |
| Trading Arrangements, by Individual | |
| Rule 10b5-1 Arrangement Adopted | false |
| Non-Rule 10b5-1 Arrangement Adopted | false |
| Rule 10b5-1 Arrangement Terminated | false |
| Non-Rule 10b5-1 Arrangement Terminated | false |
Insider Trading Policies and Procedures |
12 Months Ended |
|---|---|
Dec. 31, 2024 | |
| Insider Trading Policies and Procedures [Line Items] | |
| Insider Trading Policies and Procedures Adopted | true |
Cybersecurity Risk Management and Strategy Disclosure |
12 Months Ended |
|---|---|
Dec. 31, 2024 | |
| Cybersecurity Risk Management, Strategy, and Governance [Line Items] | |
| Cybersecurity Risk Management Processes for Assessing, Identifying, and Managing Threats [Text Block] | We rely on the information technology and systems maintained by our manager, RMR, and rely on our manager to identify, assess and manage material risks from cybersecurity threats. RMR takes various actions, and incurs significant costs, to maintain and protect the operation and security of information technology and systems, including the data maintained in those systems. Our Audit Committee oversees cybersecurity matters, including the material risks related thereto, and regularly receives updates from RMR’s Chief Information Officer regarding the development and advancement of its cybersecurity strategy, as well as the related risks. In the event of a cybersecurity incident, RMR has a detailed incident response plan in place for contacting authorities and informing key stakeholders, including our management. |
| Cybersecurity Risk Management Processes Integrated [Flag] | true |
| Cybersecurity Risk Management Processes Integrated [Text Block] | We rely on the information technology and systems maintained by our manager, RMR, and rely on our manager to identify, assess and manage material risks from cybersecurity threats. RMR takes various actions, and incurs significant costs, to maintain and protect the operation and security of information technology and systems, including the data maintained in those systems. |
| Cybersecurity Risk Management Third Party Engaged [Flag] | true |
| Cybersecurity Risk Materially Affected or Reasonably Likely to Materially Affect Registrant [Flag] | false |
| Cybersecurity Risk Board Committee or Subcommittee Responsible for Oversight [Text Block] | Our Audit Committee oversees cybersecurity matters, including the material risks related thereto, and regularly receives updates from RMR’s Chief Information Officer regarding the development and advancement of its cybersecurity strategy, as well as the related risks. |
| Cybersecurity Risk Role of Management [Text Block] | We rely on the information technology and systems maintained by our manager, RMR, and rely on our manager to identify, assess and manage material risks from cybersecurity threats. RMR takes various actions, and incurs significant costs, to maintain and protect the operation and security of information technology and systems, including the data maintained in those systems. Our Audit Committee oversees cybersecurity matters, including the material risks related thereto, and regularly receives updates from RMR’s Chief Information Officer regarding the development and advancement of its cybersecurity strategy, as well as the related risks. In the event of a cybersecurity incident, RMR has a detailed incident response plan in place for contacting authorities and informing key stakeholders, including our management. |
| Cybersecurity Risk Management Positions or Committees Responsible [Flag] | true |
| Cybersecurity Risk Management Positions or Committees Responsible [Text Block] | Our Audit Committee oversees cybersecurity matters, including the material risks related thereto, and regularly receives updates from RMR’s Chief Information Officer regarding the development and advancement of its cybersecurity strategy, as well as the related risks. |
| Cybersecurity Risk Process for Informing Management or Committees Responsible [Text Block] | In the event of a cybersecurity incident, RMR has a detailed incident response plan in place for contacting authorities and informing key stakeholders, including our management. |
Summary of Significant Accounting Policies (Policies) |
12 Months Ended |
|---|---|
Dec. 31, 2024 | |
| Accounting Policies [Abstract] | |
| Basis of Presentation | Basis of Presentation. These consolidated financial statements include the accounts of us and our subsidiaries, all of which are wholly owned directly or indirectly by us. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated.
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| Real Estate Properties | Real Estate Properties. We record our properties at cost and provide depreciation on real estate investments on a straight line basis over estimated useful lives generally ranging from 7 to 40 years. In some circumstances, we engage independent real estate appraisal firms to provide market information and evaluations which are relevant to our purchase price allocations and determinations of useful lives; however, we are ultimately responsible for the purchase price allocations and determinations of useful lives. We allocate the purchase prices of our properties to land, buildings and improvements based on determinations of the relative fair values of these assets assuming the properties are vacant. We determine the fair value of each property using methods similar to those used by independent appraisers, which may involve estimated cash flows that are based on a number of factors, including capitalization rates and discount rates, among others. We allocate a portion of the purchase price of our properties to above market and below market leases based on the present value (using an interest rate which reflects the risks associated with acquired in place leases at the time each property was acquired by us) of the difference, if any, between (i) the contractual amounts to be paid pursuant to the acquired in place leases and (ii) our estimates of fair market lease rates for the corresponding leases, measured over a period equal to the terms of the respective leases. We allocate a portion of the purchase price to acquired in place leases and tenant relationships based upon market estimates to lease up the property based on the leases in place at the time of purchase. We allocate this aggregate value between acquired in place lease values and tenant relationships based on our evaluation of the specific characteristics of each tenant’s lease. However, we have not separated the value of tenant relationships from the value of acquired in place leases because such value and related amortization expense is immaterial to the accompanying consolidated financial statements. In making these allocations, we consider factors such as estimated carrying costs during the expected lease up periods, including real estate taxes, insurance and other operating income and expenses and costs, such as leasing commissions, legal and other related expenses, to execute similar leases in current market conditions at the time a property was acquired by us. If the value of tenant relationships becomes material in the future, we may separately allocate those amounts and amortize the allocated amounts over the estimated life of the relationships. For transactions that qualify as business combinations, we allocate the excess, if any, of the consideration over the fair value of the assets acquired to goodwill. We amortize capitalized above market lease values (included in acquired real estate leases, net in our consolidated balance sheets) and below market lease values (presented as assumed real estate lease obligations, net in our consolidated balance sheets) as a reduction or increase, respectively, to rental income over the terms of the associated leases. Such amortization resulted in net increases to rental income of $402 and $252 during the years ended December 31, 2024 and 2023, respectively. We amortize the value of acquired in place leases (included in acquired real estate leases, net in our consolidated balance sheets), exclusive of the value of above market and below market acquired in place leases, over the terms of the associated leases. Such amortization, which is included in depreciation and amortization expense, amounted to $65,039 and $93,057 during the years ended December 31, 2024 and 2023, respectively. If a lease is terminated prior to its stated expiration, we write off the unamortized amounts relating to that lease. We regularly evaluate whether events or changes in circumstances have occurred that could indicate an impairment in the value of long lived assets. Impairment indicators may include declining tenant occupancy, lack of progress releasing vacant space, tenant bankruptcies, low long term prospects for improvement in property performance, weak or declining tenant profitability, cash flow or liquidity, our decision to dispose of an asset before the end of its estimated useful life and legislative, market or industry changes that could permanently reduce the value of a property. If there is an indication that the carrying value of an asset is not recoverable, we estimate the projected undiscounted cash flows to determine if an impairment loss should be recognized. The future net undiscounted cash flows are subjective and are based in part on assumptions regarding hold periods, market rents and terminal capitalization rates. We determine the amount of any impairment loss by comparing the historical carrying value to estimated fair value. We estimate fair value through an evaluation of recent financial performance and projected discounted cash flows using standard industry valuation techniques. In addition to consideration of impairment upon the events or changes in circumstances described above, we regularly evaluate the remaining useful lives of our long lived assets. If we change our estimate of the remaining useful lives, we allocate the carrying value of the affected assets over their revised remaining useful lives.
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| Cash and Cash Equivalents | Cash and Cash Equivalents. We consider highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.
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| Restricted Cash | Restricted Cash. Restricted cash consists of amounts escrowed for future real estate taxes, insurance, leasing costs, capital expenditures and debt service, as required by certain of our mortgage debts.
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| Deferred Leasing Costs | Deferred Leasing Costs. Deferred leasing costs include brokerage costs and inducements associated with our entering leases. We amortize deferred leasing costs, which are included in depreciation and amortization expense, and inducements, which are included as a reduction to rental income, on a straight line basis over the terms of the respective leases. Legal costs associated with the execution of our leases are expensed as incurred and included in general and administrative expenses in our consolidated statements of comprehensive income (loss). |
| Debt Issuance Costs | Debt Issuance Costs. Costs related to the issuance or assumption of debt are capitalized and amortized to interest expense over the terms of the respective loans. Debt issuance costs, net of accumulated amortization, for our $325,000 secured revolving credit facility and our prior $750,000 unsecured revolving credit facility, or our prior revolving credit facility, are included in other assets in our consolidated balance sheets. As of December 31, 2024, debt issuance costs for our revolving credit facility were $7,838 and accumulated amortization of debt issuance costs for our revolving credit facility was $2,396. As of December 31, 2023, debt issuance costs for our prior revolving credit facility were $5,328 and accumulated amortization of debt issuance costs for our prior revolving credit facility was $5,240. Debt issuance costs, net of accumulated amortization, for our senior notes, term loan and mortgage notes payable are presented as a direct deduction from the associated debt liability in our consolidated balance sheets. |
| Equity Method Investments | Equity Method Investments. As of December 31, 2024, we had a noncontrolling ownership interest of 51% in an unconsolidated joint venture that owned two properties. The properties owned by the joint venture were encumbered by $50,000 of mortgage indebtedness. We did not control the activities that are most significant to the joint venture and, as a result, we accounted for our investment in the joint venture under the equity method of accounting. See Note 4 for more information regarding our unconsolidated joint ventures. We periodically evaluate our equity method investments for possible indicators of other than temporary impairment whenever events or changes in circumstances indicate the carrying amount of the investment might not be recoverable. These indicators may include the length of time and the extent to which the market value of our investment is below our carrying value, the financial condition of our investees, our intent and ability to be a long term holder of the investment and other considerations. If the decline in fair value is judged to be other than temporary, we record an impairment charge to adjust the basis of the investment to its estimated fair value.
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| Revenue Recognition | Revenue Recognition. We are a lessor of commercial office properties. Our leases provide our tenants with the contractual right to use and economically benefit from all of the physical space specified in the leases; therefore, we have determined to evaluate our leases as lease arrangements. Our leases provide for base rent payments and in addition may include variable payments. Rental income from operating leases, including any payments derived by index or market-based indices, is recognized on a straight line basis over the lease term when we have determined that the collectability of substantially all of the lease payments is probable. Some of our leases have options to extend or terminate the lease exercisable at the option of our tenants, which are considered when determining the lease term. Allowances for bad debts are recognized as a direct reduction of rental income. Certain of our leases contain non-lease components, such as property level operating expenses and capital expenditures reimbursed by our tenants as well as other required lease payments. We have made the policy election to not separate the lease and non-lease components because (i) the lease components are operating leases and (ii) the timing and pattern of recognition of the non-lease components are the same as those of the lease components. We apply Accounting Standards Codification 842, Leases, to the combined component. Income derived by our leases is recorded in rental income in our consolidated statements of comprehensive income (loss). Certain tenants are obligated to pay directly their obligations under their leases for insurance, real estate taxes and certain other expenses. These obligations, which have been assumed by the tenants under the terms of their respective leases, are not reflected in our consolidated financial statements. To the extent any tenant responsible for any such obligations under the applicable lease defaults on such lease or if it is deemed probable that the tenant will fail to pay for such obligations, we would record a liability for such obligations. See Note 5 for more information regarding our leases.
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| Income Taxes | Income Taxes. We have elected to be taxed as a REIT under the United States Internal Revenue Code of 1986, as amended, and, accordingly, we generally will not be subject to federal income taxes provided we distribute our taxable income and meet certain other requirements to qualify for taxation as a REIT. We are, however, subject to certain state and local taxes. |
| Per Common Share Amounts | Per Common Share Amounts. We calculate basic earnings per common share using the two class method. We calculate diluted earnings per share using the more dilutive of the two class method or the treasury stock method. Unvested share awards and other potentially dilutive common shares, together with the related impact on earnings, are considered when calculating diluted earnings per share.
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| Use of Estimates | Use of Estimates. Preparation of these financial statements in conformity with GAAP requires us to make estimates and assumptions that may affect the amounts reported in these consolidated financial statements and related notes. The actual results could differ from these estimates. Significant estimates in the consolidated financial statements include purchase price allocations, useful lives of fixed assets and assessment of impairment of real estate and the related intangibles.
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| New Accounting Pronouncements | New Accounting Pronouncements.In November 2023, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities, including those with a single reportable segment, to: (i) provide disclosures of significant segment expenses and other segment items if they are regularly provided to the chief operating decision maker, or the CODM, and included in each reported measure of segment profit or loss; (ii) provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by Accounting Standards Codification 280, Segment Reporting, in interim periods; and (iii) disclose the CODM’s title and position, as well as an explanation of how the CODM uses the reported measures and other disclosures. ASU No. 2023-07 does not change how a public entity identifies its operating segments, aggregates those operating segments or applies the quantitative thresholds to determine its reportable segments. We adopted ASU No. 2023-07 effective December 31, 2024. As a result we have included additional information related to the required disclosures within Note 12 to our consolidated financial statements. In December 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statements Expenses, which requires public entities to provide disaggregated disclosure of certain income statement expense captions within the footnotes to the financial statements. ASU No. 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods after December 15, 2027, with early adoption permitted. We are currently evaluating the impact ASU 2024-03 will have on our consolidated financial statements.
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Summary of Significant Accounting Policies (Tables) |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Real Estate Properties | As of December 31, 2024 and 2023, our acquired real estate leases and assumed real estate lease obligations, excluding properties classified as held for sale, were as follows:
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Per Common Share Amounts (Tables) |
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| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Earnings Per Share, Basic and Diluted | The calculation of basic and diluted earnings per share is as follows (amounts in thousands, except per share data):
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Real Estate Properties (Tables) |
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| Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Disposal Groups |
(1)Gross sales price is the gross contract price, excluding closing costs. (2)Property was classified as held for sale as of December 31, 2023. We recorded an $11,299 loss on impairment of real estate during the year ended December 31, 2023 to reduce the carrying value of this property to its estimated fair value less costs to sell as of December 31, 2023. As of December 31, 2024, we had six properties, that are under agreement to sell for an aggregate sales price of $54,763, excluding closing costs, five of which are classified as held for sale in our consolidated balance sheet, as summarized below:
(1)Gross sales price is the contract price, excluding closing costs. (2)Property did not meet held for sale criteria as of December 31, 2024.
(1)Gross sales price is the gross contract price, excluding closing costs. (2)Properties were classified as held for sale as of December 31, 2022.
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| Schedule of Joint Ventures | As of December 31, 2024 and 2023, our investments in our unconsolidated joint ventures consisted of the following:
The following table provides a summary of the mortgage debt of our unconsolidated joint ventures as of December 31, 2024 and 2023:
(1)Includes the effect of mark to market purchase accounting. (2)Reflects the entire balance of the debt secured by the properties and is not adjusted to reflect the interests in the joint ventures we did not own. None of the debt is recourse to us.
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Leases (Tables) |
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Dec. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Future Contractual Lease Payments to be Received | The following operating lease maturity analysis presents the future contractual lease payments to be received by us through 2053 as of December 31, 2024:
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Business and Property Management Agreements with RMR (Tables) |
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| Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Related Party Transactions | For the years ended December 31, 2024 and 2023, the business management fees, property management fees and construction supervision fees and expense reimbursements recognized in our consolidated financial statements were as follows:
(1)The net business management fees we recognized for the years ended December 31, 2024 and 2023 each reflect a reduction of $603 for the amortization of the liability we recorded in connection with our former investment in RMR Inc. (2)The net property management fees we recognized for the years ended December 31, 2024 and 2023 each reflect a reduction of $484 for the amortization of the liability we recorded in connection with our former investment in RMR Inc.
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Indebtedness (Tables) |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Long-Term Debt Instruments | As of December 31, 2024 and 2023, our outstanding indebtedness consisted of the following:
(1)These senior notes were redeemed in March 2024. (2)Certain of these senior notes were redeemed through a series of exchange transactions during the year ended December 31, 2024. The remaining balance of $171,586 at December 31, 2024 was redeemed in cash in January 2025. (3)These senior notes were issued in December 2024. (4)These senior notes were issued in February 2024. (5)These senior notes were issued in June and October 2024.
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| Schedule of Senior Note Exchanges | In June and October 2024, through two exchange transactions, we exchanged $609,999 in aggregate principal amount of new 9.000% senior secured notes due September 2029, or the September 2029 Notes, for an aggregate $895,373 of certain of our outstanding senior unsecured notes, or the Existing Notes, and an aggregate 1,406,952 of our common shares valued at $2.26 per share, and such transactions, the 2029 Senior Note Exchanges, as follows:
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| Schedule of Required Principal Payments | The required principal payments due during the next five years and thereafter under all our outstanding consolidated debt as of December 31, 2024 were as follows:
(1)Includes $171,586 aggregate principal of the 2025 Notes, which were redeemed in full in January 2025. (2)Total consolidated debt outstanding as of December 31, 2024, net of unamortized premiums, discounts and issuance costs totaling $91,890, was $2,534,634.
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Fair Value of Assets and Liabilities (Tables) |
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Assets Measured at Fair Value | The following table presents certain of our assets measured at fair value at December 31, 2024, categorized by level of inputs as defined in the fair value hierarchy under GAAP, used in the valuation of each asset:
(1)We recorded an impairment charge of $19,042 to reduce the carrying values of three properties that are classified as held for sale in our condensed consolidated balance sheet to their estimated fair values less estimated costs to sell of $739, based on negotiated sales prices with third party buyers (Level 2 inputs as defined in the fair value hierarchy under GAAP). See Note 4 for more information.
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| Schedule of Fair Value and Carrying Value of Financial Instruments | At December 31, 2024 and 2023, the fair values of our financial instruments approximated their carrying values in our consolidated financial statements, due to their short term nature or floating interest rates, except as follows:
(1)Includes unamortized debt premiums, discounts and issuance costs totaling $90,218 and $21,711 as of December 31, 2024 and 2023, respectively.
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Shareholders' Equity (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Shares Granted And Vested Under The Terms of The Entity's 2009 Plan | A summary of shares awarded, forfeited, vested and unvested under the terms of the 2009 Plan for the years ended December 31, 2024 and 2023, is as follows:
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| Schedule of Dividends | During the years ended December 31, 2024 and 2023, we paid distributions on our common shares as follows:
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Business (Details) $ in Thousands |
Feb. 13, 2025
USD ($)
|
Dec. 31, 2024
USD ($)
ft²
property
|
|---|---|---|
| Real Estate Properties [Line Items] | ||
| 2025 | $ 197,586 | |
| 2026 | $ 291,488 | |
| Subsequent Event | ||
| Real Estate Properties [Line Items] | ||
| Cash | $ 113,000 | |
| 2025 | 26,000 | |
| 2026 | $ 291,488 | |
| Unconsolidated Properties | ||
| Real Estate Properties [Line Items] | ||
| Number of Properties (in properties) | property | 3 | |
| Rentable area of properties (in square feet) | ft² | 471,000 | |
| Joint Venture Property 1 | ||
| Real Estate Properties [Line Items] | ||
| Percentage of ownership interest | 51.00% | |
| Joint Venture Property 1 | Unconsolidated Properties | ||
| Real Estate Properties [Line Items] | ||
| Number of Properties (in properties) | property | 2 | |
| Rentable area of properties (in square feet) | ft² | 346,000 | |
| Continuing Operations | ||
| Real Estate Properties [Line Items] | ||
| Number of Properties (in properties) | property | 128 | |
| Rentable area of properties (in square feet) | ft² | 17,763,000 |
Summary of Significant Accounting Policies - Schedule of Real Estate Assets and Obligations (Details) - USD ($) $ in Thousands |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Real Estate [Line Items] | ||
| Acquired real estate leases, net | $ 193,739 | $ 263,498 |
| Capitalized below market lease values | 14,177 | 25,678 |
| Less: accumulated amortization | (4,652) | (14,013) |
| Assumed real estate lease obligations, net | 9,525 | 11,665 |
| Above Market Lease | ||
| Real Estate [Line Items] | ||
| Real estate leases | 7,715 | 14,758 |
| Less: accumulated amortization | (5,814) | (10,876) |
| Acquired real estate leases, net | 1,901 | 3,882 |
| Original Value Lease | ||
| Real Estate [Line Items] | ||
| Real estate leases | 433,347 | 572,766 |
| Less: accumulated amortization | (241,509) | (313,150) |
| Acquired real estate leases, net | $ 191,838 | $ 259,616 |
Summary of Significant Accounting Policies - Equity Method Investments (Details) $ in Thousands |
Dec. 31, 2024
USD ($)
property
|
Dec. 31, 2023
USD ($)
|
|---|---|---|
| Joint Venture Property 1 | ||
| Schedule of Equity Method Investments [Line Items] | ||
| Percentage of ownership interest | 51.00% | |
| Unconsolidated Properties | ||
| Schedule of Equity Method Investments [Line Items] | ||
| Number of Properties (in properties) | property | 3 | |
| Unconsolidated Properties | Mortgage Note Payable | ||
| Schedule of Equity Method Investments [Line Items] | ||
| Principal balance | $ | $ 50,000 | $ 82,000 |
| Unconsolidated Properties | Joint Venture Property 1 | ||
| Schedule of Equity Method Investments [Line Items] | ||
| Number of Properties (in properties) | property | 2 | |
| Unconsolidated Properties | Joint Venture Property 1 | Mortgage Note Payable | ||
| Schedule of Equity Method Investments [Line Items] | ||
| Principal balance | $ | $ 50,000 |
Per Common Share Amounts - Income (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Numerators: | ||
| Net loss | $ (136,107) | $ (69,432) |
| Income attributable to unvested participating securities | (14) | (305) |
| Net loss used in calculating earnings per common share | $ (136,121) | $ (69,737) |
| Denominators: | ||
| Weighted average common shares outstanding - basic (in shares) | 51,806 | 48,389 |
| Weighted average common shares outstanding - diluted (in shares) | 51,806 | 48,389 |
| Net loss per common share - basic (in dollars per share) | $ (2.63) | $ (1.44) |
| Net loss per common share - diluted (in dollars per share) | $ (2.63) | $ (1.44) |
Real Estate Properties - Acquisition Activities (Details) $ in Thousands |
1 Months Ended |
|---|---|
|
Dec. 31, 2023
USD ($)
| |
| Real Estate [Abstract] | |
| Asset acquisition, consideration transferred | $ 2,750 |
Leases - Operating Lease Maturity (Details) $ in Thousands |
Dec. 31, 2024
USD ($)
|
|---|---|
| Leases [Abstract] | |
| 2025 | $ 318,530 |
| 2026 | 310,043 |
| 2027 | 291,562 |
| 2028 | 259,443 |
| 2029 | 249,250 |
| Thereafter | 1,296,713 |
| Total | $ 2,725,541 |
Business and Property Management Agreements with RMR - Business Management Fees, Property Management Fees and Construction Supervision Fees (Details) - RMR LLC - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Business management agreement | ||
| Related Party Transaction [Line Items] | ||
| Transaction amount | $ 13,145 | $ 14,751 |
| Recognized amortization of the liability | 603 | 603 |
| Property management agreement | ||
| Related Party Transaction [Line Items] | ||
| Transaction amount | 16,456 | 23,280 |
| Reimbursement amounts | 484 | 484 |
| Property management fees | ||
| Related Party Transaction [Line Items] | ||
| Transaction amount | 13,584 | 14,890 |
| Construction supervision fees | ||
| Related Party Transaction [Line Items] | ||
| Transaction amount | 2,872 | 8,390 |
| Expense Reimbursement | ||
| Related Party Transaction [Line Items] | ||
| Transaction amount | $ 25,797 | $ 25,872 |
Indebtedness - Future Principal Payments (Details) - USD ($) $ in Thousands |
1 Months Ended | |||
|---|---|---|---|---|
Jan. 31, 2025 |
Feb. 13, 2025 |
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Debt Instrument [Line Items] | ||||
| 2025 | $ 197,586 | |||
| 2026 | 291,488 | |||
| 2027 | 773,776 | |||
| 2028 | 123,487 | |||
| 2029 | 910,278 | |||
| Thereafter | 329,909 | |||
| Total | 2,626,524 | $ 2,594,320 | ||
| Unamortized debt premiums, discounts and issuance | 91,890 | 21,711 | ||
| Total debt outstanding | 2,534,634 | 2,572,609 | ||
| Subsequent Event | ||||
| Debt Instrument [Line Items] | ||||
| 2025 | $ 26,000 | |||
| 2026 | $ 291,488 | |||
| Senior unsecured notes, 4.500% interest rate, due in 2025 | Senior Notes | ||||
| Debt Instrument [Line Items] | ||||
| Total | $ 171,586 | $ 650,000 | ||
| Senior unsecured notes, 4.500% interest rate, due in 2025 | Senior Notes | Subsequent Event | ||||
| Debt Instrument [Line Items] | ||||
| Extinguishment of debt, amount | $ 171,586 |
Shareholders' Equity - Unvested Shares Activity (Details) - 2009 Award Plan - $ / shares |
12 Months Ended | |
|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Number of Shares | ||
| Unvested at the beginning of the period (in shares) | 288,681 | 231,301 |
| Granted (in shares) | 649,198 | 241,800 |
| Forfeited (in shares) | 0 | (3,700) |
| Vested (in shares) | (346,000) | (180,720) |
| Unvested at the end of the period (in shares) | 591,879 | 288,681 |
| Weighted Average Grant Date Fair Value | ||
| Unvested at the beginning of the period (in dollars per share) | $ 12.01 | $ 21.47 |
| Granted (in dollars per share) | 2.14 | 6.04 |
| Forfeited (in dollars per share) | 0 | 17.31 |
| Vested (in dollars per share) | 6.62 | 16.00 |
| Unvested at the end of the period (in dollars per share) | $ 4.32 | $ 12.01 |
Shareholders' Equity - Share Purchases (Details) - $ / shares |
12 Months Ended | |
|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Equity [Abstract] | ||
| Share repurchases (in shares) | 85,338 | 48,329 |
| Stock repurchase price (in dollars per share) | $ 2.25 | $ 6.08 |
Shareholders' Equity - Distributions (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Jan. 16, 2025 |
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Class of Stock [Line Items] | |||
| Annual Per Share Distribution (in dollars per share) | $ 0.04 | $ 1.30 | |
| Total Distributions | $ 2,033 | $ 63,187 | |
| Characterization of Distribution, Return of Capital | 100.00% | 100.00% | |
| Characterization of Distribution, Ordinary Income | 0.00% | 0.00% | |
| Characterization of Distribution, Quality Dividend | 0.00% | 0.00% | |
| Subsequent Event | |||
| Class of Stock [Line Items] | |||
| Total Distributions | $ 698 | ||
| Common distributions declared (in dollars per share) | $ 0.01 | ||
Segment Reporting (Details) |
12 Months Ended |
|---|---|
|
Dec. 31, 2024
segment
| |
| Segment Reporting [Abstract] | |
| Number of reportable segments | 1 |
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION - Carrying Amount and Accumulated Depreciation (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Real Estate Properties | ||
| Balance at the beginning of the period | $ 4,065,679 | $ 3,936,074 |
| Additions | 107,912 | 221,246 |
| Loss on asset impairment | (181,578) | (11,299) |
| Disposals | (283,534) | (51,011) |
| Cost basis adjustment | (9,185) | |
| Reclassification of assets of properties held for sale | (41,735) | (29,331) |
| Balance at the end of the period | 3,657,559 | 4,065,679 |
| Accumulated Depreciation | ||
| Balance at the beginning of the period | 650,179 | 561,458 |
| Additions | 118,710 | 107,460 |
| Loss on asset impairment | 0 | 0 |
| Disposals | (131,024) | (15,709) |
| Cost basis adjustment | (9,185) | |
| Reclassification of assets of properties held for sale | (10,030) | (3,030) |
| Balance at the end of the period | $ 618,650 | $ 650,179 |