Office Properties Income Trust Issues Supplement to Previously Announced Private Exchange Offers Relating to Existing Senior Unsecured Notes to Reflect Certain Financial Information in its 10-K Filed Earlier Today

Rhea-AI Summary

Office Properties Income Trust (OPI) has issued a supplement to its February 7, 2025 Offering Memorandum regarding private exchange offers for its outstanding senior unsecured notes due 2026, 2027, and 2031. The supplement reflects financial information from OPI's recently filed 10-K for Q4 and full-year 2024.

The exchange offers propose to swap existing notes for new 8.000% Senior Priority Guaranteed Unsecured Notes due 2030. The new notes will not be registered under the Securities Act and are subject to transfer restrictions. The exchange offers are exclusively available to qualified institutional buyers, non-U.S. persons outside the U.S., and certain institutional accredited investors.

Eligible holders must complete an eligibility letter through D.F. King & Co., the information and exchange agent, to access the offering memorandum and participate in the exchange offers.

Positive

• Offering higher interest rate (8.000%) on new notes compared to existing notes
• New notes come with senior priority and guarantees, potentially providing better security

Negative

• Transfer restrictions on new notes limit liquidity
• Exchange offer indicates potential debt restructuring needs
• New notes extend debt maturity to 2030, potentially increasing long-term debt burden

Insights

Financial Restructuring Analyst

This debt exchange offer represents a critical financial restructuring attempt by OPI, coming at a time when the company's market capitalization has plummeted to just $67.5 million. The offering of new 8.000% Senior Priority Guaranteed Unsecured Notes due 2030 to replace existing notes due 2026, 2027, and 2031 signals several concerning developments:

• The 8% interest rate on the new notes indicates a substantial risk premium, reflecting the market's current assessment of OPI's credit risk and financial stability.
• The "Senior Priority Guaranteed" status of the new notes suggests OPI is offering enhanced security features to entice existing noteholders to participate in the exchange, effectively subordinating other creditors.
• The restriction of this offer to qualified institutional buyers and accredited investors indicates this is a sophisticated restructuring attempt targeting professional investors who can evaluate and absorb potential risks.

The timing of this supplement, coinciding with the release of year-end financial results, suggests the exchange offer terms may have been influenced by OPI's 2024 performance. With a market cap that's likely far below its outstanding debt obligations, this exchange offer appears to be a defensive measure to address upcoming debt maturities and avoid potential default scenarios.

The extension of the maturity to 2030 through this exchange indicates OPI is attempting to buy time and reduce near-term refinancing pressures, but the high interest rate could increase financial strain unless operational performance significantly improves. This restructuring effort, while potentially necessary for survival, signals significant financial distress and raises questions about the company's long-term viability in the challenging office property market.

NEWTON, Mass.--(BUSINESS WIRE)-- Office Properties Income Trust (Nasdaq: OPI) (“OPI”) today announced that it has supplemented the Offering Memorandum dated as of February 7, 2025 (the “Offering Memorandum”) with respect to its previously announced private exchange offers (the “Exchange Offers”) to exchange its outstanding senior unsecured notes due 2026, 2027 and 2031 (collectively, the “Existing Notes”) for new 8.000% Senior Priority Guaranteed Unsecured Notes due 2030 (the “New Notes”) and related guarantees pursuant to the terms and conditions set forth in the Offering Memorandum.

Supplement to Offering Memorandum

OPI previously announced the Exchange Offers on February 7, 2025. In connection with OPI’s announcement of its financial results for the quarter and year ended December 31, 2024, OPI has issued a Supplement to the Offering Memorandum to reflect certain financial information reflected in its annual report on form 10-K for the quarter and year ended December 31, 2024 (such Supplement to the Offering Memorandum, the “Supplement”). Eligible Holders (as defined below) who wish to participate in the Exchange Offers should carefully read the Supplement in conjunction with the Offering Memorandum. The terms and conditions of the Exchange Offers remain as set forth in the Offering Memorandum.

No Registration

The offer and sale of the New Notes and related guarantees will not be 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 the United States or to U.S. persons (other than distributors) absent registration or an applicable exemption from registration requirements and may not be transferred by any holder except in accordance with the restrictions described under “Transfer Restrictions” in the Offering Memorandum.

Eligible Holders

The Exchange Offers are being made, and the New Notes and related guarantees are being offered and issued, only to holders who have certified to OPI that either they are (a) in the U.S. and are “qualified institutional buyers” (as defined in Rule 144A under the Securities Act) and are holders of the Existing Notes, (b) outside the U.S. and are holders of the Existing Notes who are non-U.S. persons in reliance upon and in compliance with Regulation S under the Securities Act or (c) institutions and holders of the Existing Notes that can certify they are institutional “accredited investors” as defined in subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act (such holders, collectively, “Eligible Holders”). Only Eligible Holders are authorized to receive or review the Offering Memorandum and Supplement or to participate in the Exchange Offers.

The Offering Memorandum and Supplement are only available to holders who complete an eligibility letter confirming their status as Eligible Holders. Holders of Existing Notes who wish to receive a copy of the eligibility letters for the Exchange Offers may contact the information and exchange agent, D.F. King & Co (the “Information and Exchange Agent”), at D.F. King & Co., Inc., 48 Wall Street, New York, New York 10005, Attn: Michael Horthman, (212) 269-5550 (for banks and brokers) or (800) 628-8528 (for all others). Holders may also obtain and complete an electronic copy of the applicable eligibility letter on the following website links maintained by the Information and Exchange Agent: www.dfking.com/opi.

Requests for the Exchange Offer materials from Eligible Holders may be directed to the Information and Exchange Agent at D.F. King & Co., Inc., 48 Wall Street, New York, New York 10005, Attn: Michael Horthman, (212) 269-5550 (for banks and brokers) or (800) 628-8528 (for all others).

General

OPI is making the Exchange Offers only by, and pursuant to, the terms of the Offering Memorandum and Supplement. OPI reserves the right to terminate, withdraw, amend or extend one or more of the Exchange Offers in its discretion, subject to the terms and conditions set forth in the Offering Memorandum and Supplement.

None of OPI, Moelis & Company LLC, as dealer manager, the Information and Exchange Agent, their respective affiliates nor any other person makes any recommendation as to whether Eligible Holders should tender or refrain from tendering their Existing Notes in the Exchange Offers, as applicable. Eligible Holders must make their own decision as to whether or not to tender their Existing Notes, as applicable, as well as with respect to the principal amount of the Existing Notes to tender.

The Exchange Offers are not being made to any holders of Existing Notes in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. The Existing Notes that are not exchanged will continue to be outstanding in accordance with all other terms of the Existing Notes and the indentures governing such Existing Notes.

This press release is being made for informational purposes only in accordance with Rule 135c of the Securities Act and does not constitute an offer to purchase securities or a solicitation of an offer to sell any securities or an offer to sell or the solicitation of an offer to purchase any new securities, nor does it constitute an offer or solicitation in any jurisdiction in which such offer or solicitation is unlawful. The Exchange Offers are being made solely on the terms and subject to the conditions set forth in the Offering Memorandum and Supplement and the information in this press release is qualified by reference to such Offering Memorandum and Supplement.

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 the United States. As of December 31, 2024, approximately 58% of OPI's revenues were from investment grade rated tenants. OPI owned 128 properties as of December 31, 2024, with approximately 17.8 million square feet located in 29 states and Washington, D.C. In 2024, OPI was named as an Energy Star® Partner of the Year for the seventh consecutive year. OPI is managed by The RMR Group (Nasdaq: RMR), a leading U.S. alternative asset management company with over $40 billion in assets under management as of December 31, 2024, and more than 35 years of institutional experience in buying, selling, financing and operating commercial real estate. OPI is headquartered in Newton, MA.

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 OPI’s ability to consummate the Exchange Offers.

You should not place undue reliance upon forward-looking statements. Except as required by law, OPI does not intend to update or change any forward-looking statements 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/20250213694477/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

What are the terms of OPI's new 8.000% Senior Priority Guaranteed Notes due 2030?

The new notes will be 8.000% Senior Priority Guaranteed Unsecured Notes due 2030, offered in exchange for existing notes due 2026, 2027, and 2031. They will not be registered under the Securities Act and will have transfer restrictions.

Who is eligible to participate in OPI's 2025 exchange offers?

Eligible participants include qualified institutional buyers in the U.S., non-U.S. persons outside the U.S. complying with Regulation S, and institutional accredited investors as defined in Rule 501 subparagraphs (a)(1), (2), (3) or (7).

What is the purpose of OPI's February 2025 supplement to the exchange offers?

The supplement reflects financial information from OPI's annual report on Form 10-K for the quarter and year ended December 31, 2024, updating the original February 7, 2025 Offering Memorandum.

How can eligible holders participate in OPI's note exchange offers?

Eligible holders must complete an eligibility letter through D.F. King & Co., the information and exchange agent, to receive the Offering Memorandum and participate in the exchange offers.