Office Properties Income Trust (Nasdaq: OPI) (“OPI”) has entered into a private exchange agreement (“Exchange Agreement”) with certain members of an ad hoc group of noteholders, facilitating the refinancing of up to $340 million of its outstanding $453.6 million senior unsecured notes due 2025 (the “2025 Notes”). This exchange is part of OPI’s strategy to address the 2025 debt maturities. The remaining $113.6 million of the 2025 Notes will be repurchased, redeemed, or repaid with cash upon the consummation of the exchange, expected to close by the end of 2024.
Details of the Exchange Agreement
Under the terms of the Exchange, noteholders participating in the Exchange Agreement will exchange their 2025 Notes for the following:
- A pro rata portion of $445 million in new senior secured notes due 2027 (the “2027 Notes”).
- Cash payment for accrued interest on the 2025 Notes up to, but not including, the closing date.
- A pro rata portion of approximately 11.5 million shares of OPI common stock, representing 19.9% of OPI’s outstanding shares at the time of the Exchange (the “Exchange Shares”).
- Certain premiums for participants, as outlined in the Exchange Agreement.
The 2027 Notes, which will mature on March 15, 2027, will bear an interest rate of 3.25% per annum. The notes will also require quarterly principal amortization of $6.5 million, with a mandatory principal repayment of $125 million due by March 1, 2026, unless satisfied earlier through asset sales. These notes will be secured by first-priority liens on 35 properties, collectively valued at $1.3 billion, and second-priority liens on 19 additional properties securing approximately $610 million in senior secured notes due 2029.
Backstop Commitments and Support Premium
Certain noteholders, referred to as the “Backstop Parties,” have agreed to purchase any remaining Exchange Consideration if the full $340 million in 2025 Notes is not exchanged. OPI has agreed to pay a $15 million premium to these Backstop Parties, which will be allocated based on their respective backstop commitments. Additionally, OPI will pay a $10 million support premium to the initial exchanging noteholders.
Statements from OPI Leadership
Brian Donley, Chief Financial Officer of OPI, commented, “We view this agreement as an important step in managing our debt maturities amidst operational and market challenges. We are grateful for the constructive discussions with our noteholders and appreciate their continued support.”
Keith Gloeckl, CEO of Office Properties Income Trust, added, “This exchange is an essential part of our broader strategy to address upcoming debt maturities and strengthen OPI’s capital structure. We are focused on ensuring that OPI remains well-positioned for future growth and stability.”
About Office Properties Income Trust
OPI is a national real estate investment trust (REIT) focused on owning and leasing office properties to high-credit-quality tenants across the U.S. As of September 30, 2024, approximately 59% of OPI’s revenue came from investment-grade tenants. OPI’s portfolio includes 145 properties across 30 states and Washington, D.C., totaling 19.5 million square feet of space. In recognition of its environmental efforts, OPI was named Energy Star® Partner of the Year for the seventh consecutive year in 2024. OPI is managed by The RMR Group (Nasdaq: RMR), which oversees nearly $41 billion in assets as of September 30, 2024.
