Investor Presentaiton
OFFICE PROPERTIES
INCOME TRUST
DEFINITIONS OF CERTAIN NON-GAAP FINANCIAL MEASURES
Non-GAAP Financial Measures
We present certain "non-GAAP financial measures" within the meaning of applicable SEC rules, including Property NOI, Property Cash Basis NOI, EBITDA, EBITDAre, Adjusted EBITDAre, FFO
available for common shareholders and Normalized FFO available for common shareholders. These measures do not represent cash generated by operating activities in accordance with
GAAP and should not be considered alternatives to income (loss) from continuing operations, net income (loss) or net income (loss) available for common shareholders as indicators of our
operating performance or as measures of our liquidity. These measures should be considered in conjunction with income (loss) from continuing operations, net income (loss) and net income
(loss) available for common shareholders as presented in our condensed consolidated statements of income (loss). We consider these non-GAAP measures to be appropriate supplemental
measures of operating performance for a REIT, along with income (loss) from continuing operations, net income (loss) and net income (loss) available for common shareholders. We believe
these measures provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation and amortization expense, they may facilitate a
comparison of our operating performance between periods and with other REITs and, in the case of Property NOI and Property Cash Basis NOI reflecting only those income and expense
items that are generated and incurred at the property level may help both investors and management to understand the operations at our properties.
Property NOI and Property Cash Basis NOI
The calculations of Property net operating income, or NOI, and Cash Basis NOI exclude certain components of net income (loss) available for common shareholders in order to provide results
that are more closely related to our property level results of operations. We calculate Property NOI and Property Cash Basis NOI as shown on page 19. We define Property NOI as income
from our rental of real estate less our property operating expenses. Property NOI excludes amortization of capitalized tenant improvement costs and leasing commissions that we record as
depreciation and amortization expense. We define Property Cash Basis NOI as Property NOI excluding non-cash straight line rent adjustments, lease value amortization, lease termination
fees, if any, and non-cash amortization included in other operating expenses. We use Property NOI and Property Cash Basis NOI to evaluate individual and company-wide property level
performance. Other real estate companies and REITS may calculate Property NOI and Property Cash Basis NOI differently than we do.
EBITDA, EBITDAre and Adjusted EBITDAre
We calculate earnings before interest, taxes, depreciation and amortization, or EBITDA, EBITDA for real estate, or EBITDAre, and Adjusted EBITDAre as shown on page 20. EBITDAre is
calculated on the basis defined by The National Association of Real Estate Investment Trusts, or Nareit, which is EBITDA, excluding gains and losses on the sale of real estate, loss on
impairment of real estate assets and adjustments to reflect our share of EBITDAre of our unconsolidated joint ventures and our prior investment in SIR included in discontinued operations.
In calculating Adjusted EBITDAre, we adjust for the items shown on page 20 and include business management incentive fees only in the fourth quarter versus the quarter when they are
recognized as expense in accordance with GAAP due to their quarterly volatility not necessarily being indicative of our core operating performance and the uncertainty as to whether any
such business management incentive fees will be payable when all contingencies for determining such fees are known at the end of the calendar year. Other real estate companies and REITS
may calculate EBITDA, EBITDAre and Adjusted EBITDAre differently than we do.
FFO and Normalized FFO
We calculate funds from operations, or FFO, available for common shareholders and Normalized FFO available for common shareholders as shown on page 21. FFO available for common
shareholders is calculated on the basis defined by Nareit, which is net income (loss) available for common shareholders, calculated in accordance with GAAP, plus real estate depreciation
and amortization of consolidated properties and our proportionate share of the real estate depreciation and amortization of unconsolidated joint venture properties, and the difference
between FFO attributable to an equity investment and equity in earnings of SIR included in discontinued operations, but excluding impairment charges on and increases in the carrying value
of real estate assets, any gain or loss on sale of real estate, as well as certain other adjustments currently not applicable to us. In calculating Normalized FFO available for common
shareholders, we adjust for the items shown on page 21 and include business management incentive fees, if any, only in the fourth quarter versus the quarter when they are recognized as
an expense in accordance with GAAP due to their quarterly volatility not necessarily being indicative of our core operating performance and the uncertainty as to whether any such business
management incentive fees will be payable when all contingencies for determining such fees are known at the end of the calendar year. FFO available for common shareholders and
Normalized FFO available for common shareholders are among the factors considered by our Board of Trustees when determining the amount of distributions to our shareholders. Other
factors include, but are not limited to, requirements to maintain our qualification for taxation as a REIT, limitations in our credit agreement and public debt covenants, the availability to us of
debt and equity capital, our expectation of our future capital requirements and operating performance and our expected needs for and availability of cash to pay our obligations. Other real
estate companies and REITs may calculate FFO available for common shareholders and Normalized FFO available for common shareholders differently than we do.
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