Office REIT OPI Announces Asset Sales and 2025 Notes Redemption
Office Properties Income Trust (Nasdaq: OPI) today reported the successful completion of a series of property sales totaling $114.5 million in the fourth quarter of 2024. The sales, which include 17 unencumbered properties, encompass approximately 1.79 million square feet with a gross book value of $255.6 million as of September 30, 2024. These properties had an occupancy rate of 44%, with a weighted average remaining lease term of 2.3 years. The trailing twelve-month net operating income (NOI) for these properties was approximately $17.8 million, while the cash basis NOI stood at $19.4 million.
The company also disclosed that, as of December 31, 2024, it is under agreement to sell an additional six properties, comprising about 581,000 square feet, for a combined sales price of $54.8 million, excluding closing costs. These asset dispositions are part of OPI’s ongoing strategy to optimize its portfolio and strengthen its financial position.
Additionally, Office Properties Income Trust announced the early redemption of its remaining 4.50% Senior Notes due 2025. The total redemption amount will be $113.1 million, which includes the principal sum and accrued interest up to, but excluding, the redemption date. The redemption is slated to occur on or about January 22, 2025. The company plans to fund this redemption using cash on hand.
Table: Property Sales and Financial Overview
| Metric | Amount |
|---|---|
| Total Sales Price (Q4 2024) | $114.5 million |
| Number of Properties Sold | 17 |
| Total Square Footage of Sold Properties | 1.79 million sq. ft. |
| Gross Book Value of Sold Properties | $255.6 million |
| Occupancy Rate of Sold Properties | 44% |
| Weighted Average Remaining Lease Term | 2.3 years |
| Trailing 12-Month Net Operating Income (NOI) | $17.8 million |
| Cash Basis Net Operating Income (NOI) | $19.4 million |
| Properties Under Agreement for Sale (as of Dec 31, 2024) | 6 |
| Total Square Footage of Properties for Sale | 581,000 sq. ft. |
| Combined Sales Price of Properties for Sale | $54.8 million |
The series of property sales and the early redemption of the senior notes represent a strategic move by OPI to enhance its balance sheet and refine its portfolio. These actions are aimed at positioning the company for continued growth and stability as it looks to navigate the evolving commercial real estate landscape.
“We are pleased with the successful execution of these property sales, which reflect our ongoing efforts to optimize our portfolio and enhance shareholder value,” said a spokesperson for Office Properties Income Trust. “The sale of these properties, along with the early redemption of the 2025 notes, underscores our commitment to strengthening our financial position and enhancing our liquidity.”
Office Properties Income Trust, as of September 30, 2024, had a total of 145 properties in its portfolio, spanning approximately 19.5 million square feet of office space across 30 states and Washington, D.C. As of that date, about 59% of OPI’s revenues came from investment-grade-rated tenants, highlighting the trust’s strong tenant base and its focus on securing long-term, stable rental income.
In addition to these financial milestones, OPI continues to prioritize sustainability within its operations. For the seventh consecutive year in 2024, the company was named an Energy Star® Partner of the Year, recognizing its ongoing efforts to improve the energy efficiency of its portfolio. This recognition highlights OPI’s commitment to environmentally responsible practices, further solidifying its position as a leader in the commercial real estate industry.
Managed by The RMR Group (Nasdaq: RMR), a prominent U.S.-based alternative asset management company, OPI benefits from over 35 years of experience in managing commercial real estate investments. As of September 30, 2024, The RMR Group manages nearly $41 billion in assets, bringing extensive expertise in buying, selling, financing, and operating commercial real estate to OPI’s portfolio.
The company’s strategy continues to focus on owning and leasing office properties to high-credit-quality tenants across the United States, maintaining a diverse and resilient portfolio. OPI’s emphasis on investment-grade tenants contributes to the stability and reliability of its revenue streams, positioning the company well for long-term growth.
Looking ahead, Office Properties Income Trust remains committed to optimizing its portfolio and delivering value to its shareholders. The successful completion of the property sales and the planned redemption of the 2025 notes are key steps in executing its broader strategy, ensuring that the company is well-positioned to take advantage of future opportunities in the commercial real estate sector.
As the commercial real estate market continues to evolve, OPI’s focus on portfolio optimization, financial strength, and sustainability provides a solid foundation for its ongoing success. With a strong balance sheet, a high-quality tenant base, and a forward-looking approach to asset management, Office Properties Income Trust is poised to navigate the challenges and opportunities of the coming years.
In summary, the fourth-quarter property sales, totaling $114.5 million, along with the additional planned sales and the early redemption of the 2025 senior notes, underscore Office Properties Income Trust’s strategic focus on optimizing its portfolio and improving its financial position. These actions are expected to strengthen OPI’s liquidity, enhance shareholder value, and position the company for continued growth in the commercial real estate market.
