Office Properties Income Trust Announces Final Results of Private Exchange Offers Relating to Existing Unsecured Senior Notes

Rhea-AI Summary

Office Properties Income Trust (OPI) has announced the final results of its private exchange offers for outstanding senior unsecured notes. The exchange involves notes due in 2026, 2027, and 2031, which will be exchanged for new 8.000% Senior Priority Guaranteed Unsecured Notes due 2030.

The settlement date for the Exchange Offers is scheduled for March 12, 2025. The new notes are being offered exclusively to qualified institutional buyers in the U.S., non-U.S. persons outside the U.S., and institutional accredited investors who are existing note holders.

The new notes will not be registered under the Securities Act of 1933 and will have restrictions on transferability and resale. OPI does not plan to register these notes under the Securities Act or any other jurisdiction's securities laws.

Positive

• Successful completion of exchange offers to extend debt maturities to 2030
• New notes feature enhanced security with senior priority guaranteed status

Negative

• Higher interest rate of 8.000% on new notes indicates increased cost of debt
• Restricted transferability of new notes may limit secondary market liquidity

Insights

Financial Restructuring Analyst

Office Properties Income Trust's announcement represents a significant debt restructuring initiative aimed at extending maturity dates and reconfiguring its capital structure. By exchanging existing unsecured notes due in 2026, 2027, and 2031 for new 8.000% Senior Priority Guaranteed Unsecured Notes due in 2030, OPI is effectively pushing out near-term debt obligations.

The "Senior Priority Guaranteed" designation is particularly noteworthy as it suggests these new notes will hold a higher position in the company's capital structure compared to other unsecured debt. This provides enhanced security for participating noteholders but potentially subordinates other creditors.

The 8.000% interest rate is a key consideration - this rate likely reflects current risk assessments for office REITs in today's market environment. Without knowing the rates on the existing notes, it's difficult to determine if this represents a higher cost of capital for OPI.

For REITs like OPI, maturity extension through debt exchanges is often a defensive financial engineering technique that provides breathing room to navigate market challenges. The private nature of the exchange and restriction to qualified institutional buyers and accredited investors limits liquidity for these securities.

This transaction demonstrates proactive liability management but may signal challenges in accessing conventional refinancing options on favorable terms, which is typical in these types of exchanges.

REIT Capital Markets Specialist

This debt exchange transaction has multiple strategic implications for OPI's financial flexibility. By consolidating three different maturities (2026, 2027, and 2031) into a single 2030 maturity, management is streamlining the company's debt profile while pushing out near-term obligations.

The structure of the new notes is telling - the "Senior Priority Guaranteed" status represents an upgrade in security for participating bondholders compared to the existing unsecured notes. This structural enhancement was likely necessary to incentivize participation in the exchange.

For an office REIT with a market capitalization of just $63.4 million against what is likely a substantially larger debt load (though specific figures aren't provided), debt maturity management is critical. The small market cap relative to the complexity of this exchange suggests significant leverage that requires careful navigation.

The private nature of the exchange and the restrictions on the new notes' transferability will create illiquidity for these securities, effectively locking in these investors for the long term absent a registration of the notes later.

While this exchange buys time by extending maturities, it's important to recognize that debt exchanges of this nature typically occur when companies perceive challenges in conventional refinancing markets or are seeking to proactively address potential future refinancing obstacles. The transaction demonstrates prudent financial management but also reflects the challenging position of office REITs in the current market.

Exchange Settlement Date Scheduled for March 12, 2025

NEWTON, Mass.--(BUSINESS WIRE)-- Office Properties Income Trust (Nasdaq: OPI) (“OPI”) today announced the final results for the previously announced private exchange offers (as amended, the “Exchange Offers”) to exchange its outstanding senior unsecured notes due 2026 (the “Existing 2026 Notes”), 2027 (the “Existing 2027 Notes”) and 2031 (the “Existing 2031 Notes”, and together with the Existing 2026 Notes and the Existing 2027 Notes, 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 an Offering Memorandum, dated as of February 7, 2025 (the “Offering Memorandum”), as supplemented by the supplement dated February 13, 2025 and as amended by OPI’s press releases dated February 24, 2025 and March 3, 2025. OPI expects that the settlement date for the Exchange Offers on which it will deliver the New Notes to participating Eligible Holders, subject to the satisfaction or waiver of applicable conditions, will be March 12, 2025.

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
	Existing 2026 Notes		67623CAD1/ US67623CAD11		$140,488,000		$6,559,000		4.7%		$890		$5,836,000
	Existing 2031 Notes		67623CAF6/ US67623CAF68		$114,355,000		$11,953,000		10.5%		$563		$6,721,000
	Existing 2027 Notes		67623CAE9/ US67623CAE93		$80,784,000		$2,478,000		3.1%		$761		$1,882,000
	Total						$20,990,000						$14,439,000

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 the United States 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. The Exchange Offers were made, and the New Notes and related guarantees are being offered and issued, only to holders who have certified to OPI that 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, “Eligible Holders”). Only Eligible Holders were authorized to receive or review the Offering Memorandum or to participate in the Exchange Offers.

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/20250310318911/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

When is the settlement date for OPI's Exchange Offers?

The settlement date for OPI's Exchange Offers is scheduled for March 12, 2025.

What is the interest rate on OPI's new Senior Priority Guaranteed Notes?

The new notes carry an 8.000% interest rate and are due in 2030.

Which existing OPI notes are eligible for the exchange offer?

The exchange offer applies to OPI's outstanding senior unsecured notes due in 2026, 2027, and 2031.

Who is eligible to participate in OPI's Exchange Offers?

Only qualified institutional buyers in the U.S., non-U.S. persons outside the U.S., and institutional accredited investors who hold existing notes are eligible.