Office Properties Income Trust Announces Final Results of Private Exchange Offers Relating to Existing Unsecured Senior Notes
Office Properties Income Trust (Nasdaq: OPI) announced the final results of its private exchange offers for senior unsecured notes. The offers were to exchange notes due in 2025, 2026, 2027, and 2031 for new 9.000% Senior Secured Notes due 2029. The aggregate principal amount of notes accepted for exchange totaled $865.2 million, with $567.4 million in new notes expected to be issued. The exchange offers expired on June 17, 2024, and the settlement date is anticipated to be June 20, 2024. The new notes and related guarantees are not registered under the Securities Act of 1933 and come with transfer restrictions. Only qualified institutional buyers and certain non-U.S. persons were eligible to participate.
- OPI successfully exchanged $865.2 million of existing notes.
- New 9.000% Senior Secured Notes due 2029 will be issued as consideration.
- High participation rate for existing 2026 and 2027 notes, at 53% and 77% respectively.
- Settlement date for the exchange offers is set for June 20, 2024.
- The new notes and guarantees are not registered under the Securities Act, limiting transferability and resale.
- OPI will not register the sale of any new notes, potentially reducing liquidity.
- Only qualified institutional buyers and specific non-U.S. persons could participate.
- Existing 2025 notes had a lower participation rate of only 23%.
The final results of Office Properties Income Trust's (OPI) private exchange offers to swap their existing senior unsecured notes for new 9% senior secured notes are a significant move. The aim of these exchanges is likely to mitigate the credit risk associated with their unsecured debt by offering secured notes, which generally have a lower risk profile due to the collateral backing them.
The exchange results show a substantial acceptance rate: 23% for the 2025 notes, 53% for the 2026 notes, 77% for the 2027 notes and 71% for the 2031 notes. These high acceptance rates indicate strong participation from current noteholders, likely reflecting trust in OPI's financial health and the attractiveness of the new note's terms.
From a financial perspective, this transition to secured notes provides OPI with a more stabilized debt structure. The company is now committed to a 9% interest rate on the new notes, which is relatively high, suggesting that the new debt is more expensive. However, given the secured nature, it might enhance OPI's creditworthiness and reduce future financing costs.
For retail investors, understanding the shift from unsecured to secured debt is crucial. It suggests that while there may be higher costs in the short term due to the higher interest rate, the overall financial stability of the company could improve, potentially leading to a more favorable investment environment in the long term.
The legal implications of OPI's exchange offers are noteworthy. The new notes are not registered under the Securities Act of 1933, which imposes significant restrictions on their transferability and resale. This means that only specific types of institutional investors, namely 'qualified institutional buyers' or non-U.S. persons under Regulation S, can trade these notes. This restriction can limit the liquidity of the new notes, potentially affecting their market value.
The lack of registration rights suggests that OPI wants to limit its reporting obligations and the associated costs. However, it also means that retail investors won't be able to participate directly in these offerings. They may need to be aware of how these restrictions shape the secondary market for these notes, possibly affecting the company's overall valuation and market perception.
Retail investors should interpret these legal constraints as a reflection of the company’s strategy to target a specific investor base that is more equipped to deal with these kinds of securities. This approach might streamline the company’s debt servicing process but could also limit broader market participation.
The following table sets forth (a) the aggregate principal amount of tendered Existing Notes accepted for exchange pursuant to the Exchange Offers and (b) the aggregate principal amount of New Notes that OPI expects to issue as consideration in each of the Exchange Offers.
Existing Notes to Be Exchanged |
CUSIP/ISIN |
Existing Aggregate Outstanding Principal Amount |
Principal Amount of Existing Notes Accepted for Exchange Pursuant to the Exchange Offers |
Percentage of Existing Notes Accepted for Exchange Pursuant to the Exchange Offers |
Exchange Consideration |
Principal Amount of New Notes Expected to be Delivered |
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Existing 2025 Notes |
81618TAC4/US81618TAC45 |
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|
|
|
|
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Existing 2031 Notes |
67623CAF6/US67623CAF68 |
|
|
|
|
|
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Existing 2027 Notes |
67623CAE9/US67623CAE93 |
|
|
|
|
|
||||||
Existing 2026 Notes |
67623CAD1/US67623CAD11 |
|
|
|
|
|
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Total |
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|
|
|
|
|
The maximum aggregate principal amount of New Notes that could have been issued in connection with the Exchange Offers was
No Registration; Eligible Holders
The offer and sale of the New Notes and related guarantees was not registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws, and the New Notes and related guarantees will therefore be subject to restrictions on transferability and resale. OPI does not intend to register the sale of any of the New Notes and related guarantees under the Securities Act or the securities laws of any other jurisdiction and is not providing registration rights. The New Notes and related guarantees may not be offered or sold in
About Office Properties Income Trust
OPI is a national REIT focused on owning and leasing office properties to high credit quality tenants in markets throughout
WARNING CONCERNING FORWARD-LOOKING STATEMENTS
Statements in this news release, including statements regarding the Exchange Offers constitute “forward-looking statements” that do not directly or exclusively relate to historical facts. When used in this release, the words “may,” “will,” “might,” “should,” “expect,” “plan,” “anticipate,” “project,” “believe,” “estimate,” “predict,” “intend,” “potential,” “outlook,” and “continue,” and the negative of these terms, and other similar expressions are intended to identify forward-looking statements and information.
The forward-looking statements reflect OPI’s intentions, plans, expectations, anticipations, projections, estimations, predictions, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors, many of which are outside of OPI’s control. Important factors that could cause actual results to differ materially from the expectations expressed or implied in the forward-looking statements include known and unknown risks. Known risks include, among others, market conditions and the risks described in OPI’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports and risks and uncertainties related to our ability to consummate the Exchange Offers.
Because actual results could differ materially from OPI’s intentions, plans, expectations, anticipations, projections, estimations, predictions, assumptions and beliefs about the future, you are urged to view all forward-looking statements with caution. OPI does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
A Maryland Real Estate Investment Trust with transferable shares of beneficial interest listed on the Nasdaq.
No shareholder, Trustee or officer is personally liable for any act or obligation of the Trust.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240617258061/en/
Questions regarding the Exchange Offers may be directed to:
Kevin Barry, Senior Director, Investor Relations
(617) 219-1410
Source: Office Properties Income Trust
FAQ
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