Bond Office Income Realty Trust 4.5% ( US81618TAC45 ) in USD

Office Income Realty Trust

99.65 % ⇌

United States

US81618TAC45 ( in USD )

4.5% per year ( payment 2 times a year)

31/01/2025 - Bond has expired

Prospectus brochure of the bond Office Properties Income Trust US81618TAC45 in USD 4.5%, expired

81618TAC4

CCC- ( Default imminent with little prospect for recovery )

Ca ( Default imminent with little prospect for recovery )

Office Properties Income Trust (OPI) is a real estate investment trust (REIT) that invests in and manages a portfolio of office properties primarily located in the Northeastern United States.

Office Properties Income Trust's 4.5% USD-denominated bond (ISIN: US81618TAC45, CUSIP: 81618TAC4), maturing January 31, 2025, currently trades at 99.26% of par value, with a semi-annual coupon payment, and carries ratings of CCC- from S&P and Ca from Moody's.

424B5 1 a2222895z424b5.htm 424B5
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TABLE OF CONTENTS
TABLE OF CONTENTS
Filed pursuant to Rule 424(b)(5)
Registration Statement No. 333-200620
CALCULATION OF REGISTRATION FEE

Proposed Maximum
Proposed Maximum
Title of Each Class of
Amount to
Offering Price
Aggregate
Amount of
Securities to be Registered

be Registered

per Unit

Offering Price

Registration Fee(1)

2.85% Senior Notes due 2018

$350,000,000

99.616%

$348,656,000

$40,513.83

3.60% Senior Notes due 2020

$400,000,000

99.210%

$396,840,000

$46,112.81

4.15% Senior Notes due 2022

$300,000,000

98.746%

$296,238,000

$34,422.86

4.50% Senior Notes due 2025

$400,000,000

97.990%

$391,960,000

$45,545.75

Total

$1,433,694,000

$166,595.25

(1)
Calculated in accordance with Rule 457(r) under the Securities Act of 1933, as amended, and relates to the Registration Statement on Form S-3
(File No. 333-200620) filed by the Registrant on November 26, 2014. Pursuant to Rule 457(p) under the Securities Act, $125,481.03 of
previously paid fees associated with the registration of unsold securities on Registration Statement No. 333-187849, which was initially filed by
the Registrant with the Securities and Exchange Commission on April 10, 2013, will be used to offset the amount of the registration fee due.
Table of Contents
PROSPECTUS SUPPLEMENT
(To prospectus dated November 26, 2014)
$1,450,000,000
SELECT INCOME REIT
$350,000,000 2.85% Senior Notes due 2018
$400,000,000 3.60% Senior Notes due 2020
$300,000,000 4.15% Senior Notes due 2022
$400,000,000 4.50% Senior Notes due 2025
We are offering $350,000,000 aggregate principal amount of our 2.85% Senior Notes due 2018, or the 2018 notes, $400,000,000 aggregate principal amount of our 3.60% Senior Notes due
2020, or the 2020 notes, $300,000,000 aggregate principal amount of our 4.15% Senior Notes due 2022, or the 2022 notes, and $400,000,000 aggregate principal amount of our 4.50% Senior
Notes due 2025, or the 2025 notes. The 2018 notes, the 2020 notes, the 2022 notes and the 2025 notes are referred to collectively as the notes.
Interest on the notes will be payable semi-annually on February 1 and August 1 of each year, commencing August 1, 2015.
We may redeem the notes at our option in whole at any time or in part from time to time before they mature at a redemption price that includes a "Make-Whole Amount" as described in this
prospectus supplement under the section entitled "Description of Notes -- Optional Redemption of the Notes." If the 2018 notes are redeemed on or after January 1, 2018 (one month prior to
their stated maturity date), the 2020 notes are redeemed on or after January 1, 2020 (one month prior to their stated maturity date), the 2022 notes are redeemed on or after December 1, 2021
(two months prior to their stated maturity date) or the 2025 notes are redeemed on or after November 1, 2024 (three months prior to their stated maturity date), the redemption price for such
series will not include a Make-Whole Amount.
We intend to use the net proceeds from this offering to repay the $1.0 billion of borrowings outstanding under a bridge loan facility and to reduce borrowings outstanding under our revolving
credit facility, both of which were used to fund, in part, our acquisition of Cole Corporate Income Trust, Inc., or CCIT.
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Each series of notes will be our senior unsecured obligation and will rank equally with the other series and with all of our other existing and future unsecured and unsubordinated indebtedness.
The notes will be effectively subordinated to our mortgages and other secured indebtedness (to the extent of the value of the assets securing such indebtedness), and structurally subordinated to
all indebtedness and other liabilities and any preferred equity of our subsidiaries.
Each series of notes constitutes a new issue of securities with no established trading market. We do not intend to apply for listing of the notes on any securities exchange or for quotation of the
notes on any automated dealer quotation system.
Investing in the notes involves risks that are described in "Risk Factors" beginning on page S-6 of this prospectus supplement, in the reports that we file under the Securities
Exchange Act of 1934, as amended, or the Exchange Act, including in the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2013 and of
our Quarterly Reports on Form 10-Q for the quarters ended June 30, 2014 and September 30, 2014 and in the "Risk Factors" section of our Joint Proxy Statement/Prospectus dated
December 23, 2014.
Per
2018 notes
Per
2020 notes
Per
2022 notes
Per
2025 notes

2018 note

Total
2020 note

Total
2022 note

Total
2025 note

Total

Public offering
price(1)

99.616% $ 348,656,000

99.210% $ 396,840,000

98.746% $ 296,238,000

97.990% $ 391,960,000
Underwriting
discounts

0.450% $
1,575,000

0.600% $
2,400,000

0.625% $
1,875,000

0.650% $
2,600,000
Proceeds, before
expenses, to
Select Income
REIT(1)

99.166% $ 347,081,000

98.610% $ 394,440,000

98.121% $ 294,363,000

97.340% $ 389,360,000
(1)
Plus accrued interest, if any, from February 3, 2015, if settlement occurs after that date.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement or
the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The underwriters expect to deliver the notes to purchasers in book-entry form only through The Depository Trust Company for the accounts of its participants, including Clearstream Banking,
société anonyme and Euroclear Bank S.A./N.V., as operator of the Euroclear System on or about February 3, 2015.
BofA Merrill Lynch

Citigroup

Jefferies

Morgan Stanley

RBC Capital Markets
UBS Investment Bank

The date of this prospectus supplement is January 29, 2015.
Table of Contents
TABLE OF CONTENTS

Page
Prospectus Supplement

Prospectus Supplement Summary

S-1
The Offering

S-2
Ratios of Earnings to Fixed Charges

S-5
Risk Factors

S-6
Use of Proceeds

S-9
Capitalization

S-10
Description of Notes

S-11
Material Federal Income Tax Considerations

S-21
Underwriting (Conflicts of Interest)

S-26
Where You Can Find More Information

S-30
Incorporation of Certain Information by Reference

S-30
Warning Concerning Forward-Looking Statements

S-31
Legal Matters

S-35
Experts

S-35
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Page
Prospectus

About This Prospectus

i
Prospectus Summary

1
Risk Factors

2
Warning Concerning Forward Looking Statements

3
Statement Concerning Limited Liability

7
Ratio of Earnings to Fixed Charges

7
Use of Proceeds

8
Description of Debt Securities

8
Description of Shares of Beneficial Interest

19
Description of Depositary Shares

25
Description of Warrants

29
Description of Certain Provisions of Maryland Law and of our Declaration of Trust And Bylaws

30
Selling Security Holders

41
Legal Matters

42
Experts

42
Where You Can Find More Information

42
Information Incorporated By Reference

42
References in this prospectus supplement to "we," "us," "our" and "SIR" mean Select Income REIT and its consolidated subsidiaries, except in the
sections entitled "Prospectus Supplement Summary -- The Offering" and "Description of Notes" or unless the context otherwise requires.
This prospectus supplement contains a description of this offering, including the terms of the notes. A description of our debt securities generally
is set forth in the accompanying prospectus under the section entitled "Description of Debt Securities." This prospectus supplement and the information
incorporated by reference herein may add, update or change information in the accompanying prospectus (or the information incorporated by reference
therein). If information in this prospectus supplement is inconsistent with the accompanying prospectus, this prospectus supplement, including the
S-i
Table of Contents
information incorporated by reference herein, will supersede that information in the accompanying prospectus.
It is important for you to read and consider all information contained in this prospectus supplement, the accompanying prospectus, including the
information incorporated by reference herein and therein, and any related free writing prospectus issued by us, in making your investment decision. You
should also read and consider the information in the documents to which we have referred you in "Where You Can Find More Information" in this
prospectus supplement and in the accompanying prospectus.
You should rely only on the information contained or incorporated by reference in this prospectus supplement, the accompanying prospectus and
any related free writing prospectus issued by us. We have not, and the underwriters have not, authorized any other person to provide you with different
information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not,
making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in
this prospectus supplement, the accompanying prospectus and any related free writing prospectus issued by us, as well as information we previously
filed with the Securities and Exchange Commission, or the SEC, that is incorporated by reference, is accurate only as of their respective dates. Our
business, financial condition, results of operations, liquidity and prospects may have changed since those dates.
S-ii
Table of Contents

PROSPECTUS SUPPLEMENT SUMMARY
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This summary may not contain all of the information that is important to you. You should carefully read this entire prospectus supplement, the
accompanying prospectus and the documents incorporated by reference in this prospectus supplement and the accompanying prospectus, including our
historical financial statements and the notes thereto, our pro forma financial statements and the notes thereto and the information under the caption
"Risk Factors" in this prospectus supplement, our Annual Report on Form 10-K for the year ended December 31, 2013, our Quarterly Reports on
Form 10-Q for the quarters ended June 30, 2014 and September 30, 2014 and our Joint Proxy Statement/Prospectus dated December 23, 2014 for
more information about important risks that you should consider before investing in the notes.
As used herein, references to "pro forma" mean on a pro forma basis giving effect to (1) our acquisition of CCIT, which acquisition we refer to
as the CCIT Acquisition, and related transactions, including the concurrent sale of subsidiaries of CCIT owning 23 healthcare properties to Senior
Housing Properties Trust, or SNH, which sale we refer to as the Healthcare Properties Sale, and (2) related financing transactions, including
borrowings under our revolving credit facility and bridge loan facility, in each case as described in our "Unaudited Pro Forma Condensed
Consolidated Financial Statements" included in SIR's Current Report on Form 8-K, filed with the SEC on January 28, 2015, and incorporated herein
by reference, adjusted to give effect to the issuance of $1.45 billion aggregate principal amount of notes in this offering and the application of the net
proceeds therefrom as described under "Use of Proceeds."
Our Company
We are a real estate investment trust, or REIT, organized under Maryland law that primarily owns and invests in single tenant, net leased
properties. As of September 30, 2014, we owned 50 properties (280 buildings, leasable land parcels and easements) with a total of approximately
27.0 million square feet located in 21 states, including 11 properties (229 buildings, leasable land parcels and easements) with approximately
17.8 million square feet which are located on the island of Oahu, Hawaii.
Our principal executive offices are located at Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458-1634, and our
telephone number is (617) 796-8303. Our website is www.sirreit.com. The content of our website, and any information that is linked to our website
(other than our filings with the SEC that are expressly incorporated by reference, as set forth under "Incorporation of Certain Information by
Reference"), is not incorporated by reference in this prospectus supplement or the accompanying prospectus, and you should not consider it a part of this
prospectus supplement or the accompanying prospectus.
CCIT Acquisition
On August 30, 2014, we, a wholly owned subsidiary of ours and CCIT entered into a merger agreement that provides for the CCIT Acquisition
and a purchase and sale agreement that provides for the Healthcare Properties Sale. The CCIT Acquisition and Healthcare Properties Sale closed on
January 29, 2015.
On a pro forma basis, we expect to be the largest publicly traded REIT in the United States focused on domestic office and industrial net leased
properties, as measured by square footage. Based on our and CCIT's properties owned or subject to a binding purchase agreement as of September 30,
2014, on a pro forma basis, we would have owned 114 properties (344 buildings, leasable land parcels and easements), located in 35 states containing
43.1 million square feet. As of September 30, 2014, these properties were 97.5% leased (based on square feet) to 308 different tenants, with investment
grade tenants representing 38.4% of the properties' annualized rental revenues, and the average remaining lease term of these properties, weighted by
annualized rental revenues, was 11.0 years.

S-1
Table of Contents

THE OFFERING
The following summary of the offering contains basic information about the offering and the principal terms of the notes and is not intended to be
complete. It does not contain all the information that may be important to you. Certain of the terms described below are subject to important limitations
and exceptions. The "Description of Notes" section of this prospectus supplement and the "Description of Debt Securities" section of the accompanying
prospectus contain a more detailed description of the terms of the notes. See "Description of Notes" for defined terms.
Issuer
Select Income REIT
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Notes Offered
$350,000,000 aggregate principal amount of 2.85% Senior Notes due 2018

$400,000,000 aggregate principal amount of 3.60% Senior Notes due 2020

$300,000,000 aggregate principal amount of 4.15% Senior Notes due 2022

$400,000,000 aggregate principal amount of 4.50% Senior Notes due 2025
Maturity
2018 notes: February 1, 2018

2020 notes: February 1, 2020

2022 notes: February 1, 2022

2025 notes: February 1, 2025
Interest Rate
2018 notes: 2.85% per annum

2020 notes: 3.60% per annum

2022 notes: 4.15% per annum

2025 notes: 4.50% per annum
Interest Payment Dates
Semi-annually on February 1 and August 1 of each year, commencing
August 1, 2015
Ranking
Each series of notes will be our senior unsecured obligation and will rank
equally with the other series and with all of our other existing and future
unsecured and unsubordinated indebtedness. The notes will be effectively
subordinated to our mortgages and other secured indebtedness (to the extent
of the value of the assets securing such indebtedness), and structurally
subordinated to all indebtedness and other liabilities and any preferred equity
of our subsidiaries.

S-2
Table of Contents

As of September 30, 2014, on a pro forma basis, our total outstanding
indebtedness would have been $2.2 billion, including $285.0 million in
secured mortgage debt of our subsidiaries, and total indebtedness and other
liabilities (excluding security and other deposits and guaranties) of our
subsidiaries would have been $353.4 million. Our subsidiaries do not have
any outstanding preferred equity. In addition, as of September 30, 2014, on a
pro forma basis, we would have had $617.1 million available for borrowing
under our $750.0 million revolving credit facility.
Optional Redemption
We may redeem, at our option, any or all series of the notes in whole at any
time or in part from time to time before they mature. The redemption price
for notes of a series will equal the outstanding principal amount of the notes
being redeemed plus accrued and unpaid interest to, but not including, the
applicable redemption date and the applicable Make-Whole Amount, if any,
for the notes of such series. If the 2018 notes are redeemed on or after
January 1, 2018 (one month prior to their stated maturity date), the 2020
notes are redeemed on or after January 1, 2020 (one month prior to their
stated maturity date), the 2022 notes are redeemed on or after December 1,
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2021 (two months prior to their stated maturity date) or the 2025 notes are
redeemed on or after November 1, 2024 (three months prior to their stated
maturity date), as the case may be, the Make-Whole Amount for such series
will be zero. See "Description of Notes -- Optional Redemption of the
Notes."
Limitations on Incurrence of Debt
The indenture under which the notes will be issued contains various
covenants, including the following:

· We may not incur any additional Debt if such additional Debt would cause
the aggregate principal amount of our outstanding Debt to be greater than
60% of our Adjusted Total Assets.

· We may not incur any additional Secured Debt if such additional Secured
Debt would cause the aggregate principal amount of our outstanding
Secured Debt to be greater than 40% of our Adjusted Total Assets.

· We may not incur any additional Debt if such additional Debt would cause
the ratio of our Consolidated Income Available for Debt Service to our
Annual Debt Service to be less than 1.5 to 1.0, determined on a pro forma
basis after giving effect to certain assumptions.

· We are required to maintain Total Unencumbered Assets of at least 150%
of the aggregate outstanding principal amount of our Unsecured Debt.

The terms "we" and "our" in the preceding four bullet points include SIR and
its Subsidiaries. See "Description of Notes -- Certain Covenants."

S-3
Table of Contents
Use of Proceeds
We estimate that our net proceeds from this offering will be approximately
$1.42 billion after deducting the underwriting discounts and other estimated
offering expenses payable by us.

We intend to use the net proceeds from this offering to repay the $1.0 billion
of borrowings outstanding under a bridge loan facility and to reduce
borrowings outstanding under our revolving credit facility, both of which
were used to fund, in part, the CCIT Acquisition. See "Use of Proceeds."

Affiliates of certain of the underwriters are lenders under the bridge loan
facility and our revolving credit facility. Therefore, these affiliates will
receive pro rata portions of the net proceeds from this offering used to repay
borrowings under the bridge loan facility or to reduce borrowings outstanding
under our revolving credit facility, as applicable. See "Underwriting
(Conflicts of Interest) -- Conflicts of Interest."

Pending such uses, the net proceeds may be invested in short-term,
investment-grade, interest bearing securities.
Risk Factors
Investing in the notes involves risks that are described under the section
entitled "Risk Factors" in this prospectus supplement, our Annual Report on
Form 10-K for the year ended December 31, 2013, our Quarterly Reports on
Form 10-Q for the quarters ended June 30, 2014 and September 30, 2014 and
our Joint Proxy Statement/Prospectus dated December 23, 2014, as well as
the other information included or incorporated by reference in this prospectus
supplement, the accompanying prospectus and any free writing prospectus we
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may provide you in connection with this offering.

S-4
Table of Contents

RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratios of earnings to fixed charges for the periods shown:

Nine Months Ended

Year Ended December 31,

September 30, 2014
2013
2013

Pro Forma(2) Actual Pro Forma(2) Actual 2012 2011 2010 2009
Ratio of Earnings to
Fixed Charges(1)
2.2x
8.9x
1.9x
7.7x
9.7x
--
--
--
(1)
There is no ratio for the years ended December 31, 2011, 2010 and 2009 because there were no fixed charges attributable to us
during these years. See the last paragraph of this section below for further information.
(2)
We have included this information, which is calculated on a pro forma basis, only for purposes of illustration, and it does not
necessarily indicate what the ratio would have been had the transactions underlying the pro forma adjustments actually been
completed on such dates. Moreover, this information does not necessarily indicate what our future ratios of earnings to fixed
charges will be. You should read this table in conjunction with the "Unaudited Pro Forma Condensed Consolidated Financial
Statements" included in SIR's Current Report on Form 8-K, filed with the SEC on January 28, 2015, and incorporated herein by
reference.
For purposes of calculating the ratios above, earnings have been calculated by adding fixed charges to income before income tax expense. Fixed
charges consist of interest expense, including amortization of debt premiums and deferred financing fees. The ratios of earnings to fixed charges were
computed by dividing our earnings by fixed charges. We did not have any preferred securities outstanding during any of the periods presented above.
We were formed as a wholly owned subsidiary of Equity Commonwealth (formerly known as CommonWealth REIT), or EQC, and commenced
operations on December 19, 2011. We remained a wholly owned subsidiary of EQC until we closed our initial public offering on March 12, 2012 and
we became a separately traded public company. For periods prior to our initial public offering and prior to our formation, our financial information was
consolidated with EQC. Because of this, our historical results of operations for periods prior to March 12, 2012 and the related ratio do not necessarily
reflect what our results of operations, financial position, cash flows or expenses would have been if we had operated as a stand-alone company, are not
comparable to our results or ratios since then and should not be relied upon as an indicator of our future performance. For more information about our
historical financial statements, please refer to our filings with the SEC, including our Annual Report on Form 10-K for the year ended December 31,
2013 (including our audited financial statements and related notes and under the section entitled "Risk Factors -- Our Audited Financial Statements
May Not Be Representative of Our Results as an Independent Public Company.").

S-5
Table of Contents
RISK FACTORS
Investing in the notes involves risks. The risks described below and in the "Risk Factors" section of our Annual Report on Form 10-K for the year
ended December 31, 2013, our Quarterly Reports on Form 10-Q for the quarters ended June 30, 2014 and September 30, 2014 and our Joint Proxy
Statement/Prospectus dated December 23, 2014, are the material risks that we can identify at this time. You should carefully consider all of these risks
and the other information contained in or incorporated by reference into this prospectus supplement and the accompanying prospectus before making a
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decision to invest in the notes. If any of these risks occur, our business, financial condition and results of operations could be harmed and the trading
price of the notes could decline and you might lose part or all of your investment in the notes. Additional risks that we do not know of, or that we
currently think are immaterial, may also become important factors that affect us and your investment in the notes.
We will have a substantial amount of indebtedness and other obligations, which could adversely affect our financial condition and ability to meet
our obligations under the notes.
As of September 30, 2014, on a pro forma basis, our total outstanding indebtedness would have been $2.2 billion, including $285.0 million in
secured mortgage debt of our subsidiaries, and, in addition, we would have had $617.1 million available for borrowing under our $750.0 million
revolving credit facility. Our revolving credit facility and our $350.0 million term loan can be increased to up to $2.2 billion on a combined basis under
certain circumstances. A substantial portion of our indebtedness, including our revolving credit facility, term loan and mortgage notes payable, matures
prior to certain series of the notes.
These obligations are substantial and could limit our ability to make payments of interest and principal on the notes, and to obtain financing for
working capital, capital expenditures, acquisitions, refinancing, lease obligations or other purposes. They may also increase our vulnerability to adverse
economic, market and industry conditions, limit our flexibility in planning for, or reacting to, changes in our business operations or to our industry
overall and place us at a disadvantage in relation to competitors that have lower debt levels. In addition, amounts outstanding under our revolving credit
facility and term loan bear interest at variable interest rates. When interest rates increase, so will our interest costs, which could adversely affect our
cash flow, our ability to pay principal and interest on our debt and our cost of refinancing our debt when it becomes due. Additionally, if we choose to
hedge our interest rate risk, we cannot assure that the hedge will be effective or that our hedging counterparty will meet its obligations to us. Any or all
of the above events and factors could have an adverse effect on our results of operations, financial condition and ability to meet our obligations under
the notes.
The notes will be structurally subordinated to the payment of all indebtedness and other liabilities and any preferred equity of our subsidiaries.
We are the sole obligor on the notes, and the notes are not guaranteed, and are not required to be guaranteed, by any of our subsidiaries. Our
subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due on the notes, or to make any
funds available therefor, whether by dividend, distribution, loan or other payments. The rights of holders of notes to benefits from any of the assets of
our subsidiaries will be subject to the prior satisfaction of claims of our subsidiaries' creditors and any preferred equity holders. As a result, the notes
will be structurally subordinated to all of the existing and other debts, liabilities and obligations, including guarantees of other indebtedness of ours,
payment obligations under lease agreements, trade payables and any preferred equity, of our subsidiaries. As of September 30, 2014, on a pro forma
basis, our subsidiaries would have had total indebtedness and other liabilities (excluding security and other deposits and guaranties) of $353.4 million.
Our subsidiaries do not have any outstanding preferred equity.
S-6
Table of Contents
The notes are unsecured and effectively subordinated to all of our existing and future secured indebtedness to the extent of the value of the assets
securing such indebtedness.
Upon any distribution to our creditors in a bankruptcy, liquidation, reorganization or similar proceeding relating to us or our property, the holders
of our secured debt will be entitled to exercise the remedies available to a secured lender under applicable law and pursuant to the instruments governing
such debt and to be paid in full from the assets securing that secured debt before any payment may be made with respect to the notes. In that event,
because the notes will not be secured by any of our assets, it is possible that there will be no assets from which claims of holders of the notes can be
satisfied or, if any assets remain, that the remaining assets will be insufficient to satisfy those claims in full. If the value of such remaining assets is less
than the aggregate outstanding principal amount of the notes and accrued interest and all future debt ranking pari passu with the notes, we will be unable
to fully satisfy our obligations under the notes. In addition, if we fail to meet our payment or other obligations under our secured debt, the holders of that
secured debt would be entitled to foreclose on our assets securing that secured debt and liquidate those assets. Accordingly, we may not have sufficient
funds to pay amounts due on the notes. As a result, you may lose a portion of or the entire value of your investment in the notes. Further, the terms of
the notes permit us to incur additional secured indebtedness subject to compliance with certain debt ratios. Your notes will be effectively subordinated
to any such additional secured indebtedness. As of September 30, 2014, on a pro forma basis, our subsidiaries would have had $285.0 million in secured
mortgage debt.
The notes restrict, but do not eliminate, our ability to incur additional debt, which could exacerbate any or all of the risks described above, or
prohibit us from taking other action that could negatively impact holders of the notes.
We are restricted from incurring additional indebtedness under the terms of the notes and the indenture governing the notes. However, these
limitations are subject to numerous exceptions. See "Description of Notes -- Certain Covenants -- Limitations on Incurrence of Debt" in this prospectus
supplement. Our ability to recapitalize, incur additional debt, secure existing or future debt or take a number of other actions that are not limited by the
terms of the indenture governing the notes, including repurchasing indebtedness or paying distributions, could have the effect of diminishing our ability
to make payments on the notes when due. Additionally, except as set forth under "Description of Notes -- Certain Covenants -- Limitations on
Incurrence of Debt" in this prospectus supplement, the indenture does not contain any provisions applicable to these notes that would limit our ability to
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incur indebtedness or that would afford holders of the notes protection in the event of a highly leveraged or similar transaction involving us or in the
event of a change of control. To the extent that we incur additional indebtedness or such other obligations, the risks associated with our indebtedness
described above would increase.
An active trading market for the notes may not develop, be maintained or be liquid.
The notes are new securities for which there currently is no established trading market. We do not intend to apply for listing of the notes on any
securities exchange or for quotation of the notes on any automated dealer quotation system. The underwriters have advised us that they currently intend
to make a market in the notes. However, the underwriters are not obligated to do so, and any market-making with respect to the notes may be
discontinued, in their sole discretion, at any time without notice.
We can give no assurances concerning the liquidity of any market that may develop for the notes offered hereby, the ability of any investor to sell
the notes or the price at which investors would be able to sell them. If a market for the notes does not develop, investors may be unable to resell the
notes for an extended period of time, if at all. If a market for the notes does develop, it may not continue or it may not be sufficiently liquid to allow
holders to resell any of the notes. Consequently, investors may not be able to liquidate their investment readily, and lenders may not readily accept the
notes as collateral for loans.
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The notes may trade at a discount from their initial issue price or principal amount, depending upon many factors, including prevailing interest
rates, the ratings assigned by rating agencies, the market for similar securities and other factors, including general economic conditions and our
financial condition, performance and prospects. Any decline in trading prices, regardless of cause, may adversely affect the liquidity and trading
markets for the notes.
Our credit ratings may not reflect all risks of your investment in the notes and may be revised or withdrawn.
Our credit ratings are an assessment by rating agencies of our ability to pay our debts when due. These credit ratings may not reflect the potential
impact of risks relating to the structure or marketing of the notes. Agency ratings are not a recommendation to buy, sell or hold any security, and may be
revised or withdrawn at any time by the issuing organization. Rating agencies continually review the ratings they have assigned to companies and debt
securities, and real or anticipated changes in our credit ratings will generally affect the market value of the notes. In particular, negative changes in the
ratings assigned to us or our debt securities could have an adverse effect on the market prices of the notes.
An increase in market interest rates could result in a decrease in the value of the notes.
In general, as market interest rates rise, notes bearing interest at a fixed rate decline in value. Consequently, if you purchase the notes, and the
market interest rates subsequently increase, the market value of your notes may decline. We cannot predict the future level of market interest rates.
Redemption may adversely affect your return on the notes.
We have the right to redeem some or all of the notes prior to maturity, as described under "Description of Notes -- Optional Redemption of the
Notes." We may redeem the notes at times when prevailing interest rates may be relatively low compared to the interest rate of the notes. Accordingly,
you may not be able to reinvest the redemption proceeds in a comparable security at an effective interest rate as high as that of the notes.
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USE OF PROCEEDS
We estimate that our net proceeds from this offering, after deducting the underwriting discounts and other estimated offering expenses payable by
us, will be approximately $1.42 billion. We intend to use the net proceeds from this offering to repay the $1.0 billion of borrowings outstanding under a
bridge loan facility and to reduce borrowings outstanding under our revolving credit facility, both of which were used to fund, in part, the CCIT
Acquisition. The maturity of the bridge loan facility is January 28, 2016, and the interest rate on the bridge loan is LIBOR plus 1.400%. Upon
completion of the CCIT Acquisition, we had $597 million outstanding under our revolving credit facility. Our revolving credit facility matures on
March 29, 2019 (subject to potential extension to March 29, 2020 upon payment of a fee and meeting certain other conditions) and bears interest at
LIBOR plus 105 basis points (subject to adjustment based on changes to its credit ratings).
Affiliates of certain of the underwriters are lenders under the bridge loan facility. Therefore, these affiliates will receive pro rata portions of the net
proceeds from this offering used to repay borrowings under the bridge loan facility or to reduce borrowings outstanding under our revolving credit
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facility, as applicable. See "Underwriting (Conflicts of Interest) -- Conflicts of Interest."
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CAPITALIZATION
The following table sets forth our cash and cash equivalents and capitalization as of September 30, 2014:
·
on an actual basis;
·
on a pro forma basis (including the CCIT Acquisition and the Healthcare Properties Sale and related financing transactions but not
including this offering); and
·
on a pro forma basis.
The following table is unaudited and should be read in conjunction with "Use of Proceeds," as described herein, and our consolidated financial
statements and the notes thereto and our "Unaudited Pro Forma Condensed Consolidated Financial Statements" (included in our Current Report on
Form 8-K, filed with the SEC on January 28, 2015), in each case incorporated by reference in this prospectus supplement and the accompanying
prospectus.
As of September 30, 2014

(in thousands)

Pro Forma
(not including

Actual

this offering)

Pro Forma
Cash and cash equivalents
$
14,710
$
43,767
$
33,117
?
?
?
?
?
?
?
?
?
?
?
?
?
?
? ?
?
? ?
?
? ?
?
?
?
?
?
?
?
?
?
?
?
Revolving credit facility(1)
$
65,000
$
566,553
$
132,859
Term loan(1)

350,000

350,000

350,000
Bridge loan facility

--

1,000,000

--
Mortgage notes payable

18,952

285,021

285,021
Notes offered hereby(2)

--

--

1,433,694
?
?
?
?
?
?
?
?
?
?
?
Total debt

433,952

2,201,574

2,201,574
Total shareholders' equity

1,482,099

2,202,124

2,202,124
?
?
?
?
?
?
?
?
?
?
?
Total capitalization
$ 1,916,051
$
4,403,698
$
4,403,698
?
?
?
?
?
?
?
?
?
?
?
?
?
?
? ?
?
? ?
?
? ?
?
?
?
?
?
?
?
?
?
?
?
(1)
Our revolving credit facility is a $750.0 million facility. We can increase the size of our revolving credit facility and term
loan to up to $2.2 billion on a combined basis under certain circumstances. Upon completion of the CCIT Acquisition, we
had $597.0 million outstanding under our revolving credit facility.
(2)
Represents the aggregate principal amount of the notes offered hereby, less original issue discount.
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DESCRIPTION OF NOTES
The following description of the particular terms of the notes supplements and, to the extent inconsistent with, replaces the description of the
general terms and provisions of debt securities set forth under "Description of Debt Securities" in the accompanying prospectus. See "-- Certain
Definitions" at the end of this section for the definitions of certain capitalized words used in discussing the terms of the notes. References in this section
to "we," "us," "our" and "SIR" mean Select Income REIT and not its subsidiaries.
General
We will issue each series of notes under an indenture, dated as of February 3, 2015, which we refer to as the "base indenture," and a separate
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Document Outline

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