Lender Group Poised To Take Over Bankrupt Office REIT
A deal is underway for a group of secured creditors of Office Properties Income Trust to take control of the company to eliminate hundreds of millions of dollars of debt.
Office Properties Income Trust, which filed for chapter 11 bankruptcy protection in October, has reached an agreement to hand control of the business to eight of its creditors who own loans due in September 2029, according to bankruptcy filings first reported by Bloomberg.
The restructuring would slash the REIT's debt load by $700M, leaving it with $1.7B still owed to creditors, according to Bloomberg.
The company, which traded on the Nasdaq exchange under the ticker OPI, owns 17.3M SF of mostly Class-B office space across 125 properties, a large chunk of which is in Washington, D.C., and Virginia.
The lender group taking over OPI is led by Redbox Capital Management, Helix Partners Management and WhiteBox Advisors, which own the largest share of the notes maturing in 2029. Redwood owns $235.2M of secured debt, Helix Partners owns $159.3M and WhiteBox owns $97.6M of secured and unsecured debt, according to a bankruptcy court filing.
The other creditors in the ownership group include Cetus Capital, ExodusPoint Capital Management, Liberty Mutual Investments, Mackenzie Financial Corp. and Nuveen Asset Management.
The deal comes after another group of secured creditors, Michael Dell-founded MSD Partners LP and Bracebridge Capital, filed a dispute over default interest it was owed on notes maturing in 2027.
Lawyers for OPI and the creditors told the bankruptcy judge overseeing the case that final plans for the ownership transfer and debt reduction will be laid out in legal documents by Friday, Bloomberg reported.
Representatives for the creditors didn't respond to Bisnow's requests for comment. Eight creditor groups have until the middle of next month to vote on the deal, and the judge will take that vote into consideration when deciding whether to approve the settlement at a hearing scheduled for next month.
OPI is managed by Newton, Massachusetts-based The RMR Group. The company, led by CEO Adam Portnoy, will continue managing OPI after the restructuring under an amended agreement, according to a plan of reorganization filed this week. It will be able to appoint one member to OPI's new board of directors. The Redwood-led consortium would appoint five directors if the plan receives approval.
RMR also manages Diversified Healthcare Trust, Industrial Logistics Properties Trust and Service Properties Trust. In 2023, RMR attempted to rescue OPI by merging it with DHC, but the healthcare REIT's shareholders rejected the deal.
SPT has also been struggling with $2B in debt — its credit was downgraded last month by the S&P from a B to a B-.
