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Office Properties Income Trust (OPI)
NASDAQ:OPI

Office Properties Income (OPI) AI Stock Analysis

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Office Properties Income

(NASDAQ:OPI)

47Neutral
Office Properties Income Trust is facing substantial financial and operational challenges, including declining revenues, high debt levels, and significant vacancy issues. Despite some positive leasing activity, the company's technical indicators and valuation metrics suggest caution. The stock's high dividend yield is overshadowed by the risk of unsustainability amid cash flow concerns and projected cash burn.

Office Properties Income (OPI) vs. S&P 500 (SPY)

Office Properties Income Business Overview & Revenue Model

Company DescriptionOffice Properties Income Trust (OPI) is a real estate investment trust (REIT) that primarily focuses on owning and leasing office properties located in key metropolitan areas throughout the United States. The company invests in high-quality office spaces leased to single tenants and multi-tenant buildings occupied by government, financial services, technology, and other professional services firms. By focusing on strategic locations and stable tenants, OPI aims to provide long-term value and consistent income for its shareholders.
How the Company Makes MoneyOffice Properties Income Trust generates revenue primarily through the leasing of office spaces to tenants. The company's revenue model is based on collecting rental income from its portfolio of office properties. OPI targets properties in established and growing markets, ensuring a steady demand for office spaces. The trust's earnings are driven by long-term lease agreements, which provide stable cash flows. Additionally, OPI's revenue can be influenced by property acquisitions and dispositions, which help optimize the portfolio's performance. The company may also engage in strategic partnerships or joint ventures to enhance its real estate holdings and increase its income potential. By maintaining high occupancy rates and effectively managing its properties, OPI aims to achieve steady financial growth.

Office Properties Income Financial Statement Overview

Summary
Office Properties Income faces ongoing financial difficulties, marked by declining revenues, negative net income, and increasing leverage. Despite maintaining a strong gross profit margin, the company's profitability and cash flow generation are concerning. The high debt levels pose a potential risk, and the negative return on equity further indicates challenges in generating shareholder value.
Income Statement
45
Neutral
The company has experienced a consistent decline in revenue over the years, with a significant drop from $678M in 2019 to $502M in 2024. Gross profit margin has decreased from 89% in 2019 to 88% in 2024, although it remains strong. However, net income has been negative for the last four years, indicating persistent profitability challenges. The EBIT and EBITDA margins have also shown fluctuations, with EBIT margin decreasing to approximately 61% in 2024, suggesting operational difficulties.
Balance Sheet
50
Neutral
The debt-to-equity ratio has increased over the years, reaching 2.21 in 2024, indicating a high level of leverage. Stockholders' equity has decreased from $1.7B in 2019 to $1.15B in 2024, and the equity ratio has declined, pointing towards financial instability. Return on equity is negative due to consistent net losses, which is a concern for investors seeking returns.
Cash Flow
55
Neutral
Operating cash flow has decreased significantly from $234M in 2020 to $67M in 2024. Free cash flow has also seen a reduction, although it remains positive at $67M in 2024. The operating cash flow to net income ratio is distorted due to net losses, and the free cash flow to net income ratio is unfavorable, reflecting cash flow challenges despite capital expenditure reductions.
Breakdown
Dec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
501.98M533.55M554.27M576.48M587.92M
Gross Profit
439.61M360.84M496.43M504.51M522.80M
EBIT
304.74M334.06M111.58M105.09M112.72M
EBITDA
223.34M302.34M334.14M348.45M368.12M
Net Income Common Stockholders
-136.11M-69.43M-2.60M-5.68M6.68M
Balance SheetCash, Cash Equivalents and Short-Term Investments
261.32M12.31M12.25M83.03M42.05M
Total Assets
3.82B3.99B3.98B4.24B3.95B
Total Debt
2.54B2.58B2.45B2.59B2.21B
Net Debt
2.28B2.57B2.43B2.51B2.17B
Total Liabilities
2.67B2.73B2.59B2.74B2.34B
Stockholders Equity
1.15B1.26B1.39B1.50B1.61B
Cash FlowFree Cash Flow
67.17M141.73M-11.49M121.35M151.87M
Operating Cash Flow
67.17M141.73M192.61M221.49M233.63M
Investing Cash Flow
66.61M-194.82M-4.62M-442.99M-22.99M
Financing Cash Flow
114.67M67.56M-260.26M249.15M-254.48M

Office Properties Income Technical Analysis

Technical Analysis Sentiment
Negative
Last Price0.38
Price Trends
50DMA
0.81
Negative
100DMA
0.99
Negative
200DMA
1.56
Negative
Market Momentum
MACD
-0.12
Positive
RSI
22.62
Positive
STOCH
6.88
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OPI, the sentiment is Negative. The current price of 0.38 is below the 20-day moving average (MA) of 0.64, below the 50-day MA of 0.81, and below the 200-day MA of 1.56, indicating a bearish trend. The MACD of -0.12 indicates Positive momentum. The RSI at 22.62 is Positive, neither overbought nor oversold. The STOCH value of 6.88 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for OPI.

Office Properties Income Risk Analysis

Office Properties Income disclosed 52 risk factors in its most recent earnings report. Office Properties Income reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Office Properties Income Peers Comparison

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
CUCUZ
68
Neutral
$4.56B90.990.98%4.71%6.71%-45.29%
61
Neutral
$4.72B17.64-3.07%10.89%5.99%-21.86%
BXBXP
60
Neutral
$10.89B692.480.23%6.26%4.10%-92.47%
VNVNO
58
Neutral
$12.95B805.701.32%2.18%-1.30%-80.81%
HIHIW
55
Neutral
$3.01B29.704.27%7.17%-0.98%-32.02%
SLSLG
52
Neutral
$3.98B670.740.71%5.75%5.12%
OPOPI
47
Neutral
$28.29M-11.33%9.87%-5.92%-54.08%
* Real Estate Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
OPI
Office Properties Income
0.38
-1.42
-78.89%
BXP
Boston Properties
60.42
2.43
4.19%
CUZ
Cousins Properties
26.03
4.49
20.84%
HIW
Highwoods Properties
27.13
4.16
18.11%
SLG
SL Green Realty
50.63
1.33
2.70%
VNO
Vornado Realty
33.00
6.09
22.63%

Office Properties Income Earnings Call Summary

Earnings Call Date: Feb 13, 2025 | % Change Since: -60.42% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture. While there were successful efforts in managing debt maturity and some positive leasing activity, the decrease in revenue, high vacancy rates, and projected cash burn pose significant concerns.
Highlights
Debt Maturity Management
OPI completed $1.8 billion in secured financings, exchanged $488 million of new notes for $378 million of outstanding notes, and reduced total debt principal by nearly $200 million compared to the prior year.
Leasing Activity Growth
Total leasing volume increased by more than 20% year-over-year, with 52 leases signed for over 2 million square feet, a weighted average lease term of nearly nine years, and a rental rate increase of 6.3%.
Strong Quarterly Lease Roll-Up
In Q4, OPI executed 13 leases totaling 359,000 square feet with a 24.3% roll-up in rent, the strongest quarterly growth in over four years.
Lowlights
Decrease in Annualized Revenue and Occupancy
Annualized revenue decreased to $428 million from $513 million a year ago. Total portfolio occupancy fell with a decrease of 2.8 million square feet leased in 2024, ending with 85% occupancy.
High Vacancy and Challenging Market Conditions
OPI's vacancy in Washington, D.C. remains nearly 33%, with challenging leasing conditions and pressure on net effective rents.
Substantial Known Vacates in 2025
2 million square feet, representing nearly 10% of annualized rental income, is set to expire in 2025, with 1.5 million square feet known to vacate.
Projected Cash Burn and Limited Liquidity
OPI projects a cash burn of $60 million to $70 million in 2025, and has limited options to address upcoming debt maturities, excluding cash repayments or debt-for-equity exchanges.
Company Guidance
During the OPI Fourth Quarter 2024 Earnings Conference Call, the company provided guidance on several financial metrics. The call highlighted that OPI reported normalized funds from operations (FFO) of $20.9 million or $0.36 per share for the fourth quarter, surpassing their guidance range by $0.01 due to the timing of dispositions. Looking ahead to the first quarter of 2025, OPI expects normalized FFO to range between $0.08 and $0.10 per share, reflecting anticipated lower net operating income (NOI) and increased interest expenses. The company projects a decrease in same property cash basis NOI by 8% to 10% compared to the first quarter of 2024, driven by tenant vacancies and elevated free rent levels. Additionally, OPI anticipates spending approximately $80 million on capital expenditures in 2025, with $18 million allocated to building capital and $62 million for leasing capital. The company also addressed its debt strategy for upcoming maturities, including a debt exchange offer for its senior unsecured notes due in 2026, seeking to issue up to $175 million in new senior priority guaranteed unsecured notes.

Office Properties Income Corporate Events

Private Placements and FinancingBusiness Operations and Strategy
Office Properties Income Trust’s Note Exchange Discussions
Neutral
Apr 1, 2025

Office Properties Income Trust engaged in confidential discussions with certain parties regarding a proposed transaction involving the exchange of its outstanding senior unsecured notes for new notes with similar terms to its 8.000% Senior Priority Guaranteed Unsecured Notes due 2029. However, the parties could not reach an agreement on the rate, scope of unsecured guarantees, covenants, and other terms. This disclosure was made to satisfy public disclosure obligations under confidentiality agreements, but the information should not be considered a reliable prediction of future events.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.