Good morning, and welcome to the Office Properties Income Trust second quarter 2024 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Kevin Barry, Senior Director of Investor Relations. Please go ahead. Thank you, and good morning, everyone. Thanks for joining us today. With me on the call are OPI's President and Chief Operating Officer, Yael Duffy, and Chief Financial Officer and Treasurer, Brian Donley. In just a moment, they will provide details about our business and our performance for the second quarter of 2024, followed by a question and answer session with sell-side analysts. I would like to note that the recording and retransmission of today's conference call is prohibited without the prior written consent of the company. Also note that today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. These forward-looking statements are based on OPI's beliefs and expectations as of today, Thursday, August 1, 2024, and actual results may differ materially from those that we project. The company undertakes no obligation to revise or publicly release the results of any revisions of the forward-looking statements made in today's conference call. Additional information concerning factors that could cause those differences is contained in our filings with the Securities and Exchange Commission, or SEC, which can be accessed from our website, opireit.com, or the SEC's website. Investors are cautioned not to place undue reliance upon any forward-looking statements. In addition, we will be discussing non-GAAP numbers during this call, including normalized funds from operations or normalized FFO, and cash basis net operating income or cash basis NOI. A reconciliation of these non-GAAP figures to net income are available in OPI's earnings release presentation that we issued last night, which can be found on our website. Finally, we will be providing guidance on this call, including normalized FFO and cash basis NOI. We are not providing a reconciliation of these non-GAAP measures as part of our guidance because certain information required for such reconciliation is not available without unreasonable efforts or at all, such as gains and losses or impairment charges related to the disposition of real estate. I will now turn the call over to Yael. Thank you, Kevin, and good morning. I will start with an overview of our portfolio, review second quarter leasing results and upcoming lease expirations before providing an update on our property dispositions. Before I begin, I would like to highlight that in the first half of the year, OPI completed $1.3 billion in secured financing. Most recently, in June, we finalized a private debt exchange that reduced OPI's total debt by nearly $300 million, while reducing our upcoming 2025 debt maturities from $650 million to $499 million, which Brian will discuss later on this call. Now, turning to the quarter. OPI's portfolio consists of 151 properties, totaling 20 million sq ft, with a weighted average remaining lease term of over 6.5 years. Our portfolio generates $483 million of annualized revenue and is diversified by industry and geography, with over 60% of our revenues coming from investment-grade tenants or subsidiaries. We ended the quarter with same property occupancy of 89.9%. Through our secured financing initiatives, 62 properties totaling 10 million sq ft within our portfolio are encumbered under our debt agreements. On a consolidated basis, encumbered assets account for $286 million of annualized revenue, are 94% leased, and have a remaining weighted average lease term of nearly 8 years. Our unencumbered assets portfolio consists of 89 properties, totaling 10 million sq ft, provides annualized revenue of approximately $197 million, are 73% leased, and have a weighted average lease term of 4.6 years. As we have shared previously, our known vacates in 2024 and 2025 are heavily concentrated within this portfolio of assets and will negatively impact our results in the coming quarters. In the second quarter, we executed 208,000 sq ft of new and renewal leasing, which resulted in a weighted average lease term of 4 years. Renewals drove almost 90% of our leasing activity, including a short-term extension with an insurance provider in Washington, D.C., for 62,000 sq ft at a 3% roll-up in rent and a 5-year renewal with the GSA in Phoenix, Arizona, for 32,000 sq ft at a 6% roll-up in rent. Subsequent to quarter close, we renewed a 554,000 sq ft lease with an investment-grade single tenant user within our encumbered portfolio that was scheduled to expire in 2026. While we had previously forecasted that this renewal would happen, we are pleased that it has been finalized, and the property will be long-term leased into 2037.... Looking ahead to OPI's upcoming lease expirations. The office sector continues to face headwinds associated with the impacts of work from home, as well as macroeconomic and political uncertainty. Throughout the country, we face pressure in our re-leasing efforts, with minimal tenants in the market to absorb large blocks of vacant space. Most markets are experiencing negative net absorption, declines in asking rents, and heightened competition. Washington, D.C., where OPI has its largest concentration, has a market vacancy rate of over 22%. The upcoming election creates additional volatility as government tenants are hesitant to engage in long-term space planning discussions, given the uncertainty surrounding return-to-work mandates. Our 20 Mass Ave development, which sits in the Capitol Hill submarket, has not been immune to these challenges. The office portion has seen limited leasing interest, especially in recent months, and we are evaluating next steps required to maximize value. However, despite an investment to date of nearly $300 million, we believe, based on broker opinions of value, that the property would trade for under $100 million if we are to pursue a sale. In the second half of 2024, 1.8 million sq ft is scheduled to expire, with an additional 2 million sq ft expiring in 2025, comprised predominantly of properties leased to single tenants. As we have long telegraphed, 1.7 million sq ft of the 1.8 million sq ft expiring in 2024 will not renew, and we currently expect an additional 1.3 million sq ft will also vacate in 2025. In total, known vacates over the next 18 months account for $70 million of annualized revenue, or 14.5% of OPI's total annualized revenue. The U.S. government represents the highest percentage of these known vacates, accounting for 32% of annualized rental income, followed by the financial sector at 26% and the technology sector at 20%. Within the government sector, none of the properties being vacated are specialized building facilities or serve mission-critical needs for government agencies. Over time, we expect the non-specialized portion of our government revenues will continue to decline as the GSA seeks to consolidate office space into government-owned buildings while reducing its reliance on leased properties. Our current leasing pipeline totals 2.2 million sq ft, of which approximately 26% could result in positive net absorption. We plan to mitigate the impact to occupancy and associated carry costs through property dispositions. While many of our single-tenant properties that have become vacant could be converted to multi-tenant, the cost and downtime would be significant, which would put further burden on OPI's liquidity. Office dispositions are challenging in this economic environment, where property valuations have been negatively impacted since the pandemic and financing is not readily available to buyers. At OPI, we face additional obstacles, given the properties we are marketing for sale are vacant or soon to be vacant, which further reduces the pool of potential buyers. Additionally, as we evaluate any sale, we must consider the impact the potential disposition will have on our operating metrics and debt covenants. Given these hurdles, we are pleased to report that we currently have 12 unencumbered properties totaling 1.4 million sq ft under agreement to sell for an aggregate sales price of $93.5 million. This group of disposition assets has a total occupancy of 54%, with a remaining lease term less than three years. We hope to close on these transactions by year-end. While we have identified additional properties for disposition, our projection for disposition proceeds in 2024 remains at the $100 million we referenced last quarter due to the challenges in the market I have described. As we look ahead, we remain focused on tenant retention, attracting new tenants to our properties, executing on our property dispositions, and continuing to evaluate strategies to navigate OPI's upcoming debt maturities. With that, I will now hand the call over to Brian to review our financial results. Thank you, Yael, and good morning, everyone. Starting with our financial results for the second quarter, we reported normalized FFO $33.2 million, or $0.68 per share for the quarter, which exceeded the high end of our guidance range by $0.04 per share, largely due to lower-than-expected operating and general administrative expenses. This compares to normalized FFO of $38.3 million, or $0.79 per share for the first quarter of 2024. The decrease on a sequential quarter basis was driven by higher interest expense and lower NOI. Same-property cash basis NOI decreased 7.7% compared to the second quarter of 2023, which also came in better than our guidance range of a decline of 15%-17%, due to lower-than-expected operating costs and certain properties being classified as held for sale as of June thirtieth. The year-over-year decrease was mainly driven by tenant vacancies. Turning to our outlook for normalized FFO and same-property cash basis NOI expectations for the third quarter of 2024. We expect normalized FFO to be between $0.45 and $0.47 per share. The decrease sequentially from Q2 is primarily driven by lower rental income, higher seasonal operating expenses, and increased interest expense related to our debt exchange transaction. Our current estimated quarterly interest expense run rate is approximately $43 million, consisting of $41 million of cash interest expense and $2 million of non-cash amortization of financing costs. We expect same-property cash basis NOI to be down 5%-7% as compared to the third quarter of 2023, driven by tenant vacancies, elevated free rent, specifically related to the lease renewal we executed in July that Yael referenced, and increased operating expenses. This NOI guidance does not include any potential changes to our same store portfolio. Turning to our investing activities. We spent $30.1 million on recurring capital and $3.9 million on redevelopment capital during the second quarter. Our 2024 full year CapEx guidance remains unchanged, with total capital spend expected to be approximately $100 million, comprised of $22 million of building capital and $78 million of leasing capital. We currently have 15 properties with a carrying value of $109 million, classified as held for sale at quarter end. We took a $132 million impairment charge during the quarter to write down the carrying value of 13 of these 15 properties to their estimated fair value. Twelve of these properties are under agreement for sale for $93.5 million that we expect to transact by year-end. We are continuously evaluating the portfolio for disposition opportunities that may improve our liquidity and financial metrics, and we are in various stages of the process to bring additional properties to market. Turning to the balance sheet. As of June 30, we had $160 million of total liquidity, including $147 million of availability under our credit facility, which we expect to use to fund our operations and future leasing activity. We currently have $117 million of committed leasing-related obligations. In mid-June, we completed a private debt exchange and eliminated almost $300 million of debt principal by exchanging $865 million of outstanding senior unsecured notes for $567 million of new 9% senior secured notes due 2029 and 1.5 million common shares. Our new 9% senior notes are secured by 19 properties with a gross book value of $716 million, as well as second liens on the 19 properties that secure our credit agreement. We ended the quarter with $2.3 billion of outstanding debt, with a weighted average interest rate of 7.1% and a weighted average maturity of 5.2 years. Our next maturity consists of $499 million of senior unsecured notes due in February of 2025. We are focused on evaluating all potential strategies to address this maturity and continue to work with our third party advisor, Moelis & Company, on evaluating the different options available to us, as well as the impact each option would have on OPI's leverage, debt, covenants, and liquidity. We look forward to providing you with further updates as our plans progress. That concludes our prepared remarks. Operator, we're ready to open up the call for questions. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question is from Bryan Maher with B. Riley FBR. Please go ahead. Thank you, and good morning. A few from me today. As you move through to the second half of 2024 and close on these dispositions and receive those proceeds, is there anything that precludes you from taking those proceeds and immediately starting to buy back 2025 notes at the meaningful discount that they currently trade at? Brian, good morning, and thank you for the question. Yeah, that's something we're evaluating here now. We're looking at all different options to be able to pull in those notes, whether it be via cash or exchanges or other options as we talk with our advisor, as I mentioned in the remarks. So, you know, that's our immediate focus. It's a large amount coming due in February, and we're gonna do everything we can to sort of get this in in short order. And then as we think about the debt exchange that you just completed, I think that there's like $46 million, I might be off a little bit, balance that's still available for more exchanges. Are you seeing any traction from owners of your you know, 2025 paper, to possibly take you up on that sometime in the next couple of few months? Yeah, that too, is something we're looking at very closely, and we're having discussions with various groups. But that is something that is definitely on the table as we try to utilize the maximum amount of notes that we had offered, the $610 million which I think is around $43 billion left of capacity. Yes, we are looking to use those. Okay. And then as it relates to your comments on Twenty Mass Ave, I guess I'm a little perplexed there, the commentary that you would only get $100 million. I mean, when we look at the recent transaction of Apple Hospitality buying the AC Hotel just a few blocks away a couple of months ago, I believe they paid, like, $500,000 per key. I think it was 218 keys there. And, you know, I've toured Twenty Mass Avenue. It's a great hotel, large rooms, new, fresh.... Can't believe for a second you probably couldn't get $600 a key for that. If you sold it just as a hotel, forget the office space that's empty, which would get you, like, $165 million just for the hotel component. So, where are the brokers coming up with this $100 million? It's just, you know, when you've just spent $300 million on it, it's pretty hard to get my head around that. Thanks. Thanks, Brian. Trust me, if we could sell the property, today for the valuations that you believe, we would be thrilled. I think there's a couple factors that the brokers are taking into account. First, the hotel has been open less than a year, so it's still in its ramp-up period. Additionally, the office component, you know, it's that that provides 45% vacancy on the whole site, and I think it's impairing the value of the property in whole, because I think any potential buyer has a hard time underwriting what it would take to re-lease that property, or to lease that property as office, given the challenges in DC for the office market. So the specific, the market has vacancy of over 26%, so I think it's a long ramp-up to lease the, lease the office component. And then if a potential buyer was to convert the whole, property into more hotel rooms, there's significant costs associated with that. So, you know, I think the property you're referencing was a stabilized asset, and this, this isn't today. Yeah, I understand that, but, I mean, is that, is that one of the options that you're considering? You made a comment about considering options for that space. Are you considering maybe converting those three floors to hotel, given that there clearly is a market for hotel? Forget for a second that it's only been open for, you know, nine or 10 months. Is that something that you're thinking about doing to maximize the value of that property? We're trying to understand what the cost would be. I don't know that OPI would do that on it itself right now, given where we are, but it is something that we're evaluating to see what the cost would be, and then also what the ramp-up would be if we were to hold it as office and try to lease it. Mm-hmm. And, and can you share with us who the tenant was who renewed the 554,000 sq ft? Yeah, it was actually Bank of America. They're one of our top five tenants. Okay. You know, maybe one last from me, and I'll jump back in the queue. You know, we get leasing activity reports and news from, you know, the greater D.C. area. It seems like a big law firm, Brown Rudnick, just signed a new lease in Dupont Circle. Just came across my desk this morning. Are you seeing any early shoots of improvement and demand in that market? And I think that, you know, when we look at the election, you know, forget who you're backing, you know, the Democrats or the Republicans. I do believe I've heard Trump say that he's going to demand federal employees get back to the office if he's elected. I mean, do you see any movement whatsoever that the federal employees will get back to that market sometime in the next year or two? Based on what we're seeing at our own properties, that are, especially the non-specialized portion, where it's mostly office, we are not seeing employees back at work at even 50% capacity today. Okay, thanks. I'll hop back in the queue. Again, if you have a question, please press star, then one. The next question is from Ronald Kamdem with Morgan Stanley. Please go ahead. Hey, good morning, guys. This is Tamin for Morgan for Ron. Just a question on the operating metrics by collateral pool page that you guys have in the supplemental. I found it really helpful. But, you know, if I, if I add the remaining unsecured properties, there's about 10 million sq ft, and it looks like the occupancy, you know, for, for those assets, you know, blends to about 7 million sq ft. And, and if I just take your disclosure, about 2 million sq ft expected to vacate, that brings you to about 50% occupancy on those buildings. Can you guys maybe just talk about where you expect NOI to trend on an annualized basis for that pool of assets, assuming, you know, the, the 2 million sq ft that you guys are, that you guys referenced on that page actually vacates? Yeah, it's a great question. Thank you. Yeah, the properties that are held for sale, the 15, you know, with about 2 million sq ft, they were 53% occupied, as of quarter end. They generated about $20 million of annualized NOI, for the trailing four quarters, only $4 million in Q2, and that's continuing to decline. As some of these tenants have such a short WALT, the NOI is gonna be burning off. We're only projecting $2 million of revenue, for Q3, and, you know, those properties will start generating losses, which is part of why we're disposing of them. So take those out of the equation, you know, our occupancy, you know, is still tracking where it is today overall in the mid-high 80s. Got it. And then just on the 2.2 million sq ft pipeline, how much of that relates to properties currently unencumbered? It's about half unencumbered. Is most of that renewal, or is it any new leasing as well? ... It is, it is. Of the 2.2 million in the total pipeline, about 1.4 million of it is related to renewals. Got it. Thank you, guys. That's all I had. Thank you. The next question is a follow-up from Brian Maher with B. Riley FBR. Please go ahead. Great, thank you. Given the commentary on, on asset sales, are any of the properties that you're considering selling to reduce debt or maybe address the 4.99, are any of those encumbered properties at all? And I'm assuming if you sell any of the encumbered properties, do all the proceeds from the asset sale have to go towards the debt it's encumbered on? I'll start, and Brian can add. All of the properties we're looking to sell or are under agreement are all unencumbered. Yeah, and as far as whether or not we decide to pursue sales on anything that's part of a debt transaction, yeah, there are factors that could impact, such as, you know, if we were to sell something out of the credit agreement pool of properties, that could affect our availability of the total revolver capacity. So again, unencumbered assets are where we're focused. You know, we just entered into some of these debt transactions that are backing these, so it's unlikely we'll sell anything out of the encumbered pool. Mm-hmm. And who are the buyers that you're talking to? Is it people that, you know, they're just looking for distressed properties and hoping for a market turnaround? Are they planning on doing, you know, office to residential conversions? I mean, who are these buyers? So it's a mix, Brian. That's a good question. We have some owner users, and those are actually of relevance when we have owner users because they pay a premium. And then we also have some value add investors and some potential developers. So it is a mixed bag of buyers. Maybe one last one for me, for Brian. You know, look, the expense part of the income statement looked pretty solid. You know, expenses coming in fairly meaningfully below our expectations. Is there anything going on there, per se, that would continue that trend, or was there any anomalies that we should be thinking about? It was, it was a mixed bag, Brian. You know, Q2, we had some successful tax appeals that we had not projected at a handful of properties as we continue to evaluate and appeal taxes across the country. It's part of our normal process, so we were successful, and a couple of that was about, you know, call it $1.6 million of where we're difference to our projections. We had some projects that I think we'll just defer, were deferred from Q2 to Q3, so we'll see some increase in Q3. As I mentioned, sequentially, we're expecting costs to be up, and we'll also see some increased utilities as the summer months are impacting Q3. So really, it was a mixed bag. Some of it's deferral, some of it's one time, and some of it's just, you know, savings. Okay. Thank you. Thank you. Thank you. The next question is a follow-up from Ronald Kamdem with Morgan Stanley. Please go ahead. Hey, just to follow up to that previous question. You know, so the life science development, you know, those are encumbered assets. But, you know, given some of the commentary on Twenty Mass Ave and what you guys think that's worth, what are the broker conversations suggesting, you know, the life science development could be worth, if you've had any conversations on those assets as well? So I think, you know, given that those are life science properties, I think the valuation of what we've put them into the debt agreements is still holding true once stabilized. So it's a little hard to. It's very much apples and oranges, given one is office and one is lab. Got it. Thank you. Thank you. This concludes our question and answer session. I would like to turn the conference back over to Yael Duffy for any closing remarks. Thank you for joining us on the call today. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.