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OPI

Office Properties Income Trust NasdaqGS:OPI Stock Report

Last Price

US$20.56

Market Cap

US$996.2m

7D

5.1%

1Y

-23.1%

Updated

14 Aug, 2022

Data

Company Financials +
OPI fundamental analysis
Snowflake Score
Valuation4/6
Future Growth0/6
Past Performance0/6
Financial Health3/6
Dividends4/6

OPI Stock Overview

OPI is a REIT focused on owning, operating and leasing properties primarily leased to single tenants and those with high credit quality characteristics such as government entities.

Office Properties Income Trust Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Office Properties Income Trust
Historical stock prices
Current Share PriceUS$20.56
52 Week HighUS$28.49
52 Week LowUS$18.75
Beta1.09
1 Month Change1.23%
3 Month Change0.88%
1 Year Change-23.05%
3 Year Change-26.49%
5 Year Change-71.74%
Change since IPO-73.60%

Recent News & Updates

Jul 28

Office Properties Income Trust GAAP EPS of -$0.33, rental income of $141.32M

Office Properties Income Trust press release (NASDAQ:OPI): Q2 GAAP EPS of -$0.33. Rental Income of $141.32M (+3.1% Y/Y). Cash available for distribution of $0.78 per share.  Since the beginning of the year, we have sold seven properties for approximately $87.5 million and now anticipate lower aggregate 2022 sales proceeds in the range of $100 million to $200 million," company statement.

Jul 14

The 11% Dividend Of Office Properties Is Attractive But Not Entirely Safe

OPI is offering a dividend yield of 11.0% with a payout ratio of 50%. OPI has an exceptionally defensive business model, generating 64% of its rental income from investment grade tenants. On the other hand, OPI has a high debt load. The stock of Office Properties Income Trust (OPI) has declined 22% this year, along with the broad market. As a result, the stock is currently offering a nearly 10-year high dividend yield of 11.0%. When a stock offers such an abnormally high yield, it usually signals that a dividend cut is just around the corner. However, this is not the case for Office Properties. The REIT has a solid business model and a healthy payout ratio and hence its dividend is attractive, though it is not entirely safe. Business overview Office Properties is a REIT that owns more than 170 buildings, which are primarily leased to single tenants with high credit quality. It generates approximately 20% of its rental income from U.S. government agencies and 64% of its rental income from tenants with an investment grade credit rating. Overall, Office Properties has one of the most defensive business models in the REIT universe. In the last two years, Office Properties has been hurt by the coronavirus crisis, which has led many companies to shift to a “work-from-home” model. This trend, which has significantly reduced the occupancy rate of Office Properties, has resulted in an unusually tenant-friendly environment. Consequently, the trust has lower negotiating power with its tenants than it used to have in the past. The impact of the pandemic on Office Properties is reflected in the 19% decrease in the funds from operations [FFO] per unit of the REIT in the last two years, from $6.01 in 2019 to $4.87 in 2021. The decrease has resulted primarily from the divestment of many properties, as the REIT has been caught in the coronavirus crisis with a high debt load. Fortunately, the REIT has begun to stabilize its performance. In the first quarter of 2022, it marginally improved its occupancy rate sequentially, from 91.1% to 91.2%, and grew its FFO per unit by 2% over last year’s quarter, from $1.28 to $1.30. Analysts expect the REIT to post just a 3% decrease in its FFO per unit this year, from $4.87 to $4.70, and begin to recover from next year. Moreover, Office Properties has begun to observe positive trends in its business in recent quarters. Its new leasing activity has exceeded 230,000 square feet for four consecutive quarters and thus its occupancy has significantly improved during this period. Government agencies have accounted for about 40% of new leasing volume. It is also worth noting that management has a capital recycling program in place. In other words, it divests low-return properties and uses the funds to acquire high-return properties, with lower capital requirements. Furthermore, as the pandemic subsides and people are claiming back their normal lifestyle, it is reasonable to expect many employees to return to their offices. Office Properties will greatly benefit from the return of employees to their desks. Overall, it is evident that the worse is probably behind Office Properties in reference to the pandemic. Dividend – Debt Office Properties is currently offering a dividend yield of 11.0%. The REIT has a payout ratio of only 50% and hence the dividend seems to have a wide margin of safety. However, it is important to note that Office Properties has frozen its dividend for 14 consecutive quarters. This is a signal that the trust is somewhat struggling to maintain its generous dividend. The reason behind the freeze of the dividend is the high debt load of Office Properties. Its net debt (as per Buffett, net debt = total liabilities – cash – receivables) currently stands at $2.5 billion, which is 2.5 times the current market capitalization of the stock and 11 times the annual funds from operations and hence it is excessive. It is also worth noting that interest expense currently consumes nearly all the operating income of the trust and the leverage ratio (Net Debt to EBITDA) stands at an eye-opening 7.2, far above the normal range of 3.0-5.0.

Shareholder Returns

OPIUS REITsUS Market
7D5.1%4.5%3.2%
1Y-23.1%-3.6%-10.2%

Return vs Industry: OPI underperformed the US REITs industry which returned -3.6% over the past year.

Return vs Market: OPI underperformed the US Market which returned -10.2% over the past year.

Price Volatility

Is OPI's price volatile compared to industry and market?
OPI volatility
OPI Average Weekly Movement4.2%
REITs Industry Average Movement4.3%
Market Average Movement7.7%
10% most volatile stocks in US Market16.9%
10% least volatile stocks in US Market3.2%

Stable Share Price: OPI is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: OPI's weekly volatility (4%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
n/an/an/ahttps://www.opireit.com/home/default.aspx

OPI is a REIT focused on owning, operating and leasing properties primarily leased to single tenants and those with high credit quality characteristics such as government entities. OPI is managed by the operating subsidiary of The RMR Group Inc. (Nasdaq: RMR), an alternative asset management company that is headquartered in Newton, Massachusetts.

Office Properties Income Trust Fundamentals Summary

How do Office Properties Income Trust's earnings and revenue compare to its market cap?
OPI fundamental statistics
Market CapUS$996.24m
Earnings (TTM)-US$8.81m
Revenue (TTM)US$583.53m

1.7x

P/S Ratio

-113.1x

P/E Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
OPI income statement (TTM)
RevenueUS$583.53m
Cost of RevenueUS$99.33m
Gross ProfitUS$484.20m
Other ExpensesUS$493.01m
Earnings-US$8.81m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)-0.18
Gross Margin82.98%
Net Profit Margin-1.51%
Debt/Equity Ratio175.7%

How did OPI perform over the long term?

See historical performance and comparison

Dividends

10.7%

Current Dividend Yield

43%

Payout Ratio