OFFICE PROPERTIES INCOME TRUST: Bankruptcy Update – What Investors Need to Know

For investors in OFFICE PROPERTIES INCOME TRUST (OPI), recent developments are critical. This summary cuts through the financial jargon to explain the company's bankruptcy filing, its impact, and what comes next, especially for common shareholders.

1. The Big News: OPI Files for Bankruptcy and Reaches Key Settlements

OFFICE PROPERTIES INCOME TRUST (OPI) and its affiliates filed for Chapter 11 bankruptcy protection on October 30, 2025. This action means the company is under court supervision to reorganize its business and address its substantial debts.

Since the filing, OPI has engaged in court-supervised negotiations, known as mediations, to resolve its financial obligations. The company recently reached crucial agreements, or "settlements," with key creditor groups, which it formally reported on March 4, 2026:

• Unsecured Noteholders: These creditors, whose debts are not backed by specific assets, reached a settlement on February 24, 2026. They will receive 6.3% of the reorganized company's new common stock and warrants (which grant the right to buy more stock later). They also have the opportunity to participate in a $35 million "equity rights offering," allowing them to purchase additional new stock.
• 2027 Senior Secured Noteholders: These creditors hold loans secured by specific OPI properties. On March 2, 2026, OPI settled with this group. They will receive a new $385 million secured promissory note with an 8.125% interest rate, maturing in approximately 3.5 years. Additionally, they will get upfront cash payments totaling $60 million by early 2027. OPI retains the option to sell some properties securing this new loan, using the proceeds to reduce the $385 million note.
• Trade and Vendor Claims: OPI expects to pay smaller amounts owed to suppliers and service providers in full, in cash.

2. Why This Happened: Office Market Downturn and Debt Burden

As a landlord for numerous office buildings, OPI confronted significant challenges. The office market has struggled as many companies adopted remote or hybrid work models, reducing demand for traditional office spaces. This confluence of factors created a severe financial strain for OPI:

• Massive Debt Burden: OPI carried billions in debt. Rising interest rates made servicing these obligations increasingly expensive and unsustainable. The company's prior plan to sell $1.3 billion in properties proved insufficient to resolve its financial distress.
• Declining Occupancy and Revenue: While the company didn't provide exact figures for occupancy rates or revenue declines in their filings, it's clear the impact was substantial, severely hindering OPI's ability to meet its financial obligations.
• Stock Price Collapse: Investor confidence sharply declined due to concerns about OPI's debt load and the long-term viability of its office-centric business model, causing a steep drop in its stock price.

Ultimately, OPI filed for Chapter 11 bankruptcy to gain court protection, restructure its overwhelming debts, and attempt to reset its operations.

3. What This Means for You: Common Shareholders Wiped Out

This bankruptcy filing carries significant implications for OPI, particularly for its common shareholders.

• FOR COMMON SHAREHOLDERS: YOUR SHARES ARE EXPECTED TO BECOME WORTHLESS. This is the most critical information. Under the proposed bankruptcy plan, all existing common shares of OPI will be cancelled and extinguished. This means that if the court approves the plan, you will not recover any money invested in OPI's common stock, and your shares will hold no value.
• A New Beginning (for OPI): For OPI, these settlements represent vital steps toward a court-approved reorganization plan. If successful, OPI will emerge from bankruptcy with substantially less debt and a new ownership structure. It will be a fundamentally different, likely smaller, company, potentially focusing on a more streamlined portfolio or adapting to evolving office space needs.
• Creditors Receive Shares/Payments: The settlements demonstrate how different creditors are prioritized. Secured creditors, such as the 2027 Noteholders, are generally in a stronger position, receiving new loans and some cash. Unsecured creditors, reflecting their lower priority in bankruptcy, are receiving a smaller portion of the new company's stock.

4. Who Is Affected?

The bankruptcy proceedings impact various stakeholders differently:

• Common Shareholders: As previously stated, your investment in OPI common stock is expected to be wiped out. The company explicitly warns investors about this outcome.
• Unsecured Noteholders: They will receive new equity in the reorganized company and an opportunity to purchase more, though likely not the full amount they were originally owed.
• Secured Noteholders (e.g., 2027 group): They will receive a new, restructured loan with interest and some upfront payments, representing a more favorable outcome compared to unsecured creditors.
• Trade Creditors/Vendors: These smaller claims are expected to be paid in full in cash.
• OPI Management/Employees: They continue to operate the company under the strict supervision of the bankruptcy court, focused on implementing the reorganization plan.
• Tenants: Their leases generally remain in effect, but their landlord is undergoing a significant financial restructuring.

5. What Happens Next? The Path to Reorganization

The settlements are key components of a broader "Plan of Reorganization," which must still gain approval from the Bankruptcy Court.

• Court Approval Process: This process involves additional legal steps, including potential votes from different creditor classes. It is often complex and typically spans several months.
• Operating Under Supervision: OPI will continue to operate its business as "debtors-in-possession" under the court's jurisdiction until the reorganization plan is confirmed and becomes effective.
• Potential for Further Property Sales: Although the previous $1.3 billion sale plan is no longer current, OPI retains the ability to sell properties, especially those securing the new $385 million promissory note. These sales would help reduce that debt as part of the bankruptcy plan. A clear strategy for future portfolio management will be crucial for the reorganized entity.
• Emergence from Bankruptcy: If the court approves the plan, OPI will eventually emerge from Chapter 11. It will likely have a significantly altered capital structure, a potentially smaller and more focused property portfolio, and possibly new leadership.

6. Key Takeaways for Investors

For investors, here are the essential points:

• Common Shares Are Likely Worthless: This is the most critical takeaway. OPI has explicitly stated that common shares will be cancelled and will hold no value. Do not expect to recover your investment in OPI common stock.
• Exercise Extreme Caution: The company itself urges "extreme caution" when trading its common shares, as their value is expected to fall to zero.
• Stock Price vs. Underlying Value: While the shares are expected to become worthless, the stock price might still fluctuate due to speculation. These movements do not indicate any underlying value for common shareholders. The ultimate outcome for common stock is cancellation.
• Reorganization, Not Shareholder Recovery: This plan aims to restructure debt and allow the business to continue operating for its creditors, not to "fix" the company for existing shareholders. This comes at the expense of common shareholders.

In summary, OPI is in bankruptcy, and the outlook for common shareholders is dire, with investments expected to be wiped out. The company is pursuing court-supervised settlements to reorganize its debts and emerge as a new entity, but existing common stockholders will not be part of that future.