OFFICE PROPERTIES INCOME TRUST Material Event - 8-K Summary

1. Event Description

OFFICE PROPERTIES INCOME TRUST (OPI) and several of its subsidiaries have filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware. This action aims to address the company's substantial debt and facilitate a comprehensive financial and operational restructuring. The filing follows a period of severe financial distress, characterized by declining occupancy rates in its office portfolio, reduced rental income, increased tenant concessions, and a significant rise in debt service costs due to rising interest rates. OPI previously signaled its deteriorating financial condition by substantially reducing its quarterly dividend payment.

2. Event Date/Timeline

• October 30, 2025: OPI and its subsidiaries filed for Chapter 11 bankruptcy protection.
• February 4, 2026: The U.S. Bankruptcy Court approved OPI's request for Debtor-in-Possession (DIP) financing, essential for funding operations during reorganization.
• May 4, 2026: Initial maturity date for DIP financing.
• July 2, 2026: Potential extended maturity date for DIP financing.

3. Impact Assessment

The Chapter 11 filing significantly impacts OPI's stakeholders and operations:

• Shareholders: Existing common shareholders face an exceptionally high risk of losing their entire investment, as their shares will likely be canceled or rendered worthless under the reorganization plan. Equity holders rank at the bottom of the priority list in bankruptcy proceedings, junior to all classes of creditors. OPI's filings explicitly acknowledge the potential cancellation of its equity. Additionally, OPI's shares will likely be delisted from major stock exchanges and may trade on over-the-counter (OTC) markets, if at all.
• Company Operations: OPI now operates under the strict supervision of the bankruptcy court. All significant financial and operational decisions, including asset sales, new contracts, and debt restructuring, will require court approval. The company intends to continue operations as a "debtor-in-possession" while it develops and implements a reorganization plan.
• Creditors: The bankruptcy process establishes a strict hierarchy for debt repayment. Secured creditors generally hold priority over unsecured creditors, such as bondholders. The reorganization plan will detail the treatment for each class of creditors, potentially involving debt-for-equity swaps, partial repayments, or other restructuring mechanisms.
• Employees and Customers: OPI intends to continue paying employee wages and benefits and honoring customer commitments in the ordinary course of business, supported by the DIP financing.

4. Financial Impact

• Debt Burden: OPI faced an estimated debt load of approximately $3.5 billion, which became unsustainable due to market conditions and increased financing costs.
• Operating Performance: OPI experienced significant declines in occupancy rates across its portfolio, with some estimates falling below 70% in key markets. This resulted in substantial revenue shortfalls from reduced rental income and increased tenant concessions, contributing to a severe cash flow deficit.
• Interest Expense: Rapid increases in interest rates significantly elevated the cost of servicing OPI's variable-rate debt and made refinancing existing debt more expensive, further exacerbating its cash flow crisis.
• DIP Financing: OPI secured up to $125 million in Debtor-in-Possession (DIP) financing. This funding is critical for maintaining liquidity and supporting ongoing operations during the Chapter 11 process, holding senior priority over pre-petition debt.
• Equity Impairment: The financial restructuring will likely cancel or severely dilute existing equity, leading to a near-total loss for current shareholders.
• Dividend Suspension: The company had previously suspended its quarterly dividend, and existing equity holders should not anticipate any future dividends.

5. Key Takeaways for Investors

• Extreme Risk for Existing Shareholders: Investors holding OPI common shares face an exceptionally high risk of losing their entire investment. Bankruptcy proceedings typically prioritize creditors over equity holders, making any recovery of value for existing shares highly unlikely.
• Highly Speculative Investment: Purchasing OPI shares at this stage represents an extremely speculative endeavor. The outcome for equity in Chapter 11 cases is almost always unfavorable for pre-petition shareholders.
• Focus on Bankruptcy Filings: Investors should monitor official bankruptcy court filings and disclosures for information regarding the reorganization plan. These documents will dictate the company's future structure and potential value, or lack thereof.
• Not a "Buy the Dip" Opportunity: A Chapter 11 filing signifies a fundamental financial crisis and a restructuring of the company's capital structure, not a temporary market correction. This fundamentally impairs the underlying value proposition for existing equity.