Office Properties Income Trust Exits Chapter 11
The office REIT cut debt by $714 million and closed the quarter with $1.71 billion of principal outstanding.
Office Properties Income Trust (OPI) exited Chapter 11 bankruptcy in the second quarter of 2026 and reduced debt by $714 million, splitting the quarter into a Predecessor period from April 1 through June 17 and a Successor period from June 18 through June 30.
The national office REIT, which owns properties leased to high-credit tenants across the United States, reported a net loss of $3.1 million in the 13-day Successor period and $789.0 million in the 78-day Predecessor period, including $745.3 million of reorganization items, net. Normalized FFO was $4.5 million in the Successor period and $15.1 million in the Predecessor period.
Rental income was $18.4 million in the Successor period versus $98.5 million in the Predecessor period, a comparison that reflects the different lengths of the two periods rather than a run-rate break. Same property Cash Basis NOI was $8.9 million in the Successor period and $46.1 million in the Predecessor period. Same property NOI margin was 62.5% in the Successor period versus 57.0% in the Predecessor period; same property Cash Basis NOI margin was 58.6% versus 55.8%.
Same property occupancy ended at 88.7% versus 89.0% in the Predecessor period, across 90 same-property buildings and 13.4 million square feet. Companywide occupancy was 77.9% at June 30, 2026, versus 78.2% at March 31, 2026, across 122 properties and 17.1 million square feet.
Leasing in the three months ended June 30, 2026 totaled 176,000 square feet at a 7.3-year weighted average term, with renewals accounting for 87.3% of leased square footage. New leases were 22,000 square feet and renewals 154,000 square feet. The same property portfolio carried a weighted average lease term of 6.2 years by annualized revenue.
Investment-grade tenants accounted for 62.2% of total annualized rental income as of June 30, 2026, versus 60.1% as of March 31, 2026. The U.S. government remained the largest tenant, contributing 18.0% of annualized rental income. Alphabet Inc. (Google) accounted for 5.4% and Bank of America Corporation for 4.5%.
Debt principal stood at $1.71 billion as of June 30, 2026, with a weighted average interest rate of 9.017% and 75.1% of the stack fixed. The company was fully drawn on its $325 million revolving credit facility and a $100 million term loan, both at 9.150% and maturing January 29, 2027. Senior secured notes due March 2029, December 2029 and June 2031 carried principal of $300 million, $385 million and $420 million, respectively. On August 1, 2026, OPI paid a $5 million principal payment under the December 2029 notes, with further scheduled payments of $15 million by November 1, 2026 and $30 million by February 1, 2027.
In July 2026 the company sold two properties totaling about 504,000 square feet for an aggregate $58.5 million, excluding closing costs. It was under agreement to sell nine more properties of about 994,000 square feet for $49.7 million, excluding closing costs, and had an additional 21 properties with 40.7% combined occupancy in various stages of marketing. Assets of properties held for sale were $295.0 million on the June 30 balance sheet.
The unconsolidated joint venture Prosperity Metro Plaza, in which OPI owns a 51% interest, included two Fairfax, Virginia properties of 346,000 square feet at 92.4% occupancy. OPI’s share of the venture’s principal balance was $24.8 million, with a 4.090% rate and a December 1, 2029 maturity.
Total capital expenditures in the Successor period were $5.9 million, of which $5.9 million was recurring. Cash and cash equivalents were $50.8 million as of June 30, 2026. Total shareholders’ equity was $511.5 million, and the closing share price was $17.00.
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