OFFICE PROPERTIES INCOME TRUST: Navigating Chapter 11 Bankruptcy

OFFICE PROPERTIES INCOME TRUST (NYSE: OPI) has filed for Chapter 11 bankruptcy, a significant event for its investors. This summary cuts through the complexity, offering retail investors a clear understanding of the situation, key risks, and what lies ahead.

What Happened

On October 30, 2025, OFFICE PROPERTIES INCOME TRUST (OPI) and some of its affiliates filed for voluntary Chapter 11 bankruptcy in the U.S. Bankruptcy Court. This move begins a court-supervised financial reorganization aimed at addressing OPI's significant debt and restructuring its operations. As a "debtor-in-possession," OPI continues to manage its daily business under court supervision.

OPI's bankruptcy filing resulted from major financial difficulties, mainly an unsustainable debt burden compounded by a tough office real estate market. Common reasons for such a filing include high debt, falling asset values, low occupancy, and rising interest rates.

Significantly, OPI filed for bankruptcy under a Restructuring Support Agreement (RSA). This agreement, typically negotiated with major creditors like secured lenders or bondholders, sets the framework for the company's reorganization plan. RSAs often include debt-for-equity exchanges, new funding (such as debtor-in-possession (DIP) financing), and terms for existing equity, which frequently faces cancellation or severe dilution.

Key Dates

• October 30, 2025: OPI and certain affiliates filed for voluntary Chapter 11 bankruptcy in the U.S. Bankruptcy Court.
• January 30, 2026: OPI filed its Monthly Operating Report (MOR) for December 2025 with the Bankruptcy Court.
• February 10, 2026: OPI filed amended MORs to correct specific interest expense figures.

Who and What Is Affected

The Chapter 11 filing significantly impacts OPI's common shareholders, creditors, and the company's operations:

• Common Shareholders: Face an extreme risk of losing their entire investment. OPI's shares were delisted, reducing liquidity and transparency. The company also suspended dividends.
• Creditors: The Restructuring Support Agreement (RSA) details how different creditor classes will be treated, possibly through debt-for-equity exchanges or other restructuring methods. The specific impact on various creditor classes (e.g., secured vs. unsecured) depends on the final Plan of Reorganization.
• Company Operations: OPI continues to operate its properties as a debtor-in-possession under court oversight. The company's long-term strategy and real estate portfolio could change significantly during reorganization, potentially affecting tenants through property sales, management changes, or lease renegotiations. OPI's immediate priority is stabilizing its financial structure.

Financial Impact

OPI's financial distress stems from a substantial and unsustainable debt load, worsened by a challenging office real estate market.

• Debt Restructuring: The Chapter 11 filing aims to restructure the company's significant debt obligations. The company didn't provide much detail about the specific amount of debt they're looking to restructure in their initial filings.
• Debtor-in-Possession (DIP) Financing: We don't have specific details about any DIP financing OPI might have secured, including the amount or terms. This information wasn't made public in the initial filings.
• Suspension of Dividends: OPI suspended all dividend payments. This is a pretty standard move in Chapter 11 to save cash for operations and creditors.
• Equity Value: OPI itself explicitly warns that trading its shares is "highly speculative and poses substantial risks." As an existing shareholder, you face a significant risk of losing your entire investment. The "potential cancellation of the Company’s equity" is a very real outcome because, in bankruptcy, creditors get paid before shareholders.
• Monthly Operating Reports (MORs): OPI is filing MORs with the Bankruptcy Court. While they filed the December 2025 MOR and later amended it to correct some interest expense numbers, the company hasn't shared concrete financial figures from these reports, like specific revenue, operating expenses, cash flow, or how much cash they have on hand. We also don't know how significant that interest expense correction was.

Key Takeaways for Investors

• Exercise Extreme Caution: OPI's own warnings about the "highly speculative" nature and "substantial risks" to its common shares warrant serious consideration.
• High Probability of Total Loss: Remember that in Chapter 11, existing equity is typically last in the repayment hierarchy. Common shareholders have a low likelihood of meaningful recovery, and their shares face a significant risk of becoming worthless.
• No Dividends Expected: Do not expect any dividend payments while OPI is in bankruptcy.
• Limited Transparency and Liquidity: Delisting from Nasdaq means less information and fewer opportunities to trade shares at fair market value.
• Focus on the RSA: The Restructuring Support Agreement's terms are crucial. Investors must understand how the RSA proposes to treat existing equity, as this will largely determine any potential outcome.
• Avoid Speculative Trading: Given the explicit warnings and the inherent structure of Chapter 11, investing in OPI common shares at this stage is a highly speculative gamble with a high probability of loss.