OFFICE PROPERTIES INCOME TRUST: Important Update on Bankruptcy Proceedings

If you follow Office Properties Income Trust (OPI), a real estate company that owns office buildings leased to government agencies, you need to know about their current financial situation. The company is in Chapter 11 bankruptcy and has reached a deal with major lenders to swap debt for ownership and reorganize their assets.

1. What happened?

OPI has been in bankruptcy court since October 2025. They faced a cash shortage due to high debt and a tough office market. On March 31, 2026, they finalized a deal with lenders who hold $650 million of their 2027 debt.

To keep the company running, OPI must pay these lenders $60 million between April 2026 and February 2027. They are also moving high-occupancy office buildings into a separate legal entity. These properties act as collateral; if OPI misses payments, the lenders take control of these buildings to recover their money.

2. Why does this matter?

This deal is OPI’s attempt to avoid going out of business entirely. By agreeing to an 8.375% interest rate and giving lenders veto power over property sales, OPI is trading its independence for more time. The company must also provide independent appraisals for the buildings in the new entity. If these properties are worth less than $480 million, OPI must pledge even more buildings to the lenders.

3. The "Red Flag" for Investors

This is the most important part: The company’s filings include a "Going Concern" warning, which means they may not be able to stay in business. Under the proposed plan, existing common shares will likely be cancelled, leaving shareholders with nothing.

In plain English: If the court approves this plan, your shares will be wiped out. The company warns investors to be extremely careful, stating that the current stock price does not reflect the reality that shareholders will likely receive zero value.

4. What happens next?

The company aims to finalize this plan by August 1, 2026. Until then, OPI will continue managing its buildings, but lenders now have significant control. They must approve any property sales over $10 million and have the right to appoint an independent director who can veto major strategic decisions.

5. What should you do?

• For Traders: The stock may swing wildly based on news, but the company has explicitly stated that the shares will likely be worthless once the bankruptcy process ends.
• For Long-Term Investors: This situation demonstrates the "absolute priority rule." Creditors must be paid in full before shareholders receive anything. Because OPI’s debts are much higher than the value of their buildings, it is highly unlikely that common shareholders will recover any money.

Bottom Line: Given the company's own warnings and the structure of the bankruptcy plan, most investors should view this as a high-risk situation where the potential for a total loss of capital is extremely high.

Disclaimer: I am an AI, not a financial advisor. This summary is for informational purposes only. The company has explicitly warned that common shares may be cancelled, which would result in a total loss for shareholders. Always do your own research or consult with a professional before making investment decisions.