Office Properties Income Exits Chapter 11

Office Properties Income Trust has completed its emergence from Chapter 11 less than one year after filing for bankruptcy. The REIT reduced its debt to $1.7 billion, down approximately $714 million. OPI is expected to resume trading on Nasdaq today, June 18.

Pursuant to Chapter 11 exit, OPI’s $425 million revolving credit facility was amended and restated at a 9.1 percent interest rate. Additionally, the company’s $300 million 9.0 percent senior secured notes due March 2029 and $177 million in mortgage debt were also reinstated.

Holders of 3.25 percent senior secured notes due March 2027 received $385 million of newly issued 8.37 percent senior secured notes due December 2029, while holders of 9.0 percent senior secured notes due September 2029 received $420 million of newly issued 10.0 percent senior secured notes due June 2031.

---

READ ALSO: New Cycle for CRE

---

All previously outstanding common shares were canceled upon emergence and roughly 22 million new common shares were issued. These new shares were given to holders of OPI’s 8.0 percent senior priority guaranteed notes, as well as to other unsecured noteholders.

The RMR Group will continue to manage OPI under a new five-year business and property management agreement. The REIT’s CEO and CFO will remain unchanged; however, a new board of directors was formed, including senior executives with deep investing and operating experience from some of the largest commercial real estate companies such as Helix Partners, Jasper Lake, Diamond Family Office and RMR, among others.

Latham & Watkins, Hunton Andrews Kurth and Sullivan & Worcester provided legal counsel to OPI. Moelis & Co. served as the investment banker and AP Services assisted in restructuring. Joele Frank, Wilkinson Brimmer Katcher advised on communications, while Kroll Restructuring Administration issued claims, noticing and solicitation services.

OPI’s footprint post Chapter 11 emergence

OPI’s portfolio consists of 122 properties comprising 17.1 million rentable square feet throughout 29 states and the District of Columbia. The company’s properties were 78.2 percent leased on average as of March, according to its first quarter report. The weighted average remaining lease term clocked in at 6.4 years, yet a glut of 1.8 million square feet, totaling 13.6 percent of leased space, is set to expire next year.

The REIT’s footprint may undergo adjustments, with the company looking to sell nine properties, according to OPI’s April Chapter 11 filing in the U.S. Bankruptcy Court for the Southern District of Texas. This collection comprises 669,441 square feet throughout states such as Missouri, New York, California, Washington, D.C., Maryland and Virginia.

The largest among the collection is the Tower Building, a 123,450-square-foot office property in Washington, D.C. The REIT acquired this nearly 100-year-old asset in 2014 for $58 million and executed a cosmetic renovation two years later, according to Yardi Matrix.