Office Properties Income Trust Emerges from Bankruptcy

Office Properties Income Trust emerged from Chapter 11 bankruptcy with a dramatically reworked balance sheet, shedding more than $700 million in debt as it seeks to stabilize a portfolio heavily exposed to the battered office sector.

The Massachusetts-based real estate investment trust announced it completed its restructuring and exited bankruptcy this month after winning court approval for its reorganization plan in April. The process eliminated roughly $714 million of debt, reduced leverage and converted large portions of the company’s creditor base into shareholders.

Under the plan, OPI reinstated its $425 million revolving credit facility, which now carries a 9.1 percent interest rate, along with $300 million in secured notes due in 2029 and $177 million in mortgage debt. Holders of the company’s various secured and unsecured notes received a mix of newly issued debt, equity, warrants and rights tied to a $35 million equity offering.

The company emerged with approximately $1.7 billion in debt and about 22 million newly issued common shares outstanding. Existing shareholders were wiped out in the restructuring with all prior common stock canceled upon emergence. Trade creditors and operating vendors, meanwhile, are slated to be paid in full.

A significant portion of the reorganized company is now controlled by former noteholders, including affiliates of Helix Partners Management and Redwood Capital Management. Jonathan Heller, founder and chief executive officer of Helix, will chair OPI’s newly constituted board.

The new board also includes investor Jonathan Kolatch, Diamond Family Office Chief Investment Officer Irvin Schlussel, former Ackrell Capital partner William Lamkin and RMR chief executive Adam Portnoy. President and CEO Yael Duffy and CFO Brian Donley will remain in their roles.

Notably, OPI will remain under the management umbrella of The RMR Group. RMR secured five-year property and business management agreements as part of the post-bankruptcy structure.

The company’s shares started trading on Nasdaq under the ticker OPI on Thursday, giving investors a fresh opportunity to wager on whether a leaner capital structure can help the office landlord navigate one of commercial real estate’s toughest stretches in decades. The early returns weren’t great with the stock down 50 percent from its debut as of Tuesday morning.

The restructuring represents another chapter in the office market’s long-running distress cycle, which has pushed landlords across the country to refinance, recapitalize or surrender assets as vacancies remain elevated and property values continue to lag pre-pandemic levels.