Office Properties Income Trust emerged from Chapter 11 bankruptcy protection on Wednesday, completing a restructuring that cut $714 million from its debt load. The REIT, managed by The RMR Group, carries $1.7 billion in debt and 122 properties comprising approximately 17 million rentable square feet across the United States.
The emergence follows an October filing that came a year after OPI first warned investors about concerns servicing maturing obligations. The company's new shares began trading on Nasdaq Thursday afternoon, down approximately 33% from pre-restructuring levels.
Restructuring Terms
The reorganization eliminated all previously outstanding common shares, effectively wiping out existing equity holders. OPI issued approximately 22 million new common shares, with noteholders including Helix Partners Management and Redwood Capital Management receiving substantial positions as compensation for debt converted to equity.
The company's $425 million revolving credit facility was amended and restated at 9.1% interest. Senior secured notes of $300 million at 9% due March 2029 and $177 million in mortgage debt were reinstated, maintaining these obligations while extending runway for operations.
In January, OPI was denied access to a $125 million bankruptcy loan after a Houston bankruptcy judge ruled the financing would inappropriately restrict business decisions and court handling of the case, as reported by The Wall Street Journal.
Leadership and Governance
RMR Group will continue managing OPI under new five-year business management and property management agreements. The company's senior management remained in place through the restructuring, providing continuity for asset operations and tenant relationships.
A new board of directors was formed upon emergence, including Jonathan Heller of Helix Partners, Jonathan Kolatch of Jasper Lake, Irvin Schlussel of Diamond Family Office, William Lamkin formerly of Ackrell Capital, and Adam Portnoy, president and CEO of RMR.
Portfolio Disposition Plans
OPI indicated in its first quarter 2026 report that property sales would manage use levels and improve liquidity. As of May, the company was under contract to sell a 275,000 square foot office property in Virginia for $18 million by 2027.
Additionally, 31 properties totaling approximately 3 million square feet are being actively marketed for sale. Proceeds from these dispositions would repay debt and reduce use.
Why This Matters
OPI's restructuring illustrates the continued reckoning facing office real estate as remote work patterns reduce demand and maturity walls approach for debt accumulated during pre-pandemic underwriting. The elimination of existing equity demonstrates how quickly shareholder value can evaporate when operating performance disappoints.
Who Wins and Loses
The clearest winners are noteholders, who converted debt to equity at terms suggesting they found post-restructuring valuations attractive. Their board representation provides accountability that typical equity holders lack, potentially improving operational discipline.
The clearest losers are former common shareholders, who lost everything. Their stakes were canceled and replaced with shares now worth roughly a third of pre-restructuring levels.
The Trade-offs Ahead
OPI must now execute a disposition strategy in a challenging market. Selling at current prices forfeits value compared to prior-cycle pricing but provides certainty and liquidity. Holding assets hoping for recovery requires capital and patience the balance sheet may not support.
The noteholder board presence cuts both ways. Creditor oversight should enforce financial discipline, but it could also constrain management's flexibility to pursue strategies creditors dislike.
What to Watch
OPI's disposition program will reveal true asset values. Properties marketed for sale will either confirm current valuations or expose further writedowns needed to attract buyers.
Tenant retention during ownership transition also merits monitoring. Major tenants may negotiate differently knowing OPI's financial constraints, potentially accelerating vacancy before sales close.
The 33% share price decline on the first day of trading suggests markets remain skeptical. Whether this skepticism proves warranted depends on disposition proceeds, tenant performance, and broader office market stabilization.
Key takeaways
- OPI eliminated $714 million in debt through Chapter 11; $1.7 billion remains
- Existing equity wiped out; noteholders received equity stakes and board representation
- Disposition program targets 3 million square feet to repay debt
- Market skepticism reflected in 33% first-day share decline
Frequently asked questions
How much debt did Office Properties Income Trust eliminate through bankruptcy?
OPI reduced its debt load by $714 million through the Chapter 11 restructuring process, emerging with $1.7 billion in remaining obligations.
What happened to existing OPI shareholders in the restructuring?
All previously outstanding common shares were effectively canceled. Approximately 22 million new common shares were issued, with significant positions going to noteholders including Helix Partners and Redwood Capital.
What is OPI's post-restructuring portfolio composition?
The company maintains 122 properties totaling approximately 17 million rentable square feet across the United States.
How does OPI plan to reduce its remaining debt load?
OPI is marketing 31 properties totaling about 3 million square feet for sale, with proceeds targeted for debt repayment. A 275,000 SF Virginia office is already under contract for $18 million closing by 2027.
Why did the new shares decline 33% on their first day of trading?
Markets appear skeptical of post-restructuring valuations, potentially pricing in continued office sector headwinds, disposition discounts, or use concerns that the restructuring alone did not resolve.