Office REIT Misses $30M In Interest Bills, Will Be Delisted From Nasdaq
Office Properties Income Trust will be delisted from the Nasdaq Stock Market as its debt troubles deepen.
The embattled REIT, which is managed by Massachusetts-based The RMR Group, is losing its publicly traded status because it failed to maintain a stock price above the $1-per-share threshold required by the index. OPI made the disclosure in financial filings Tuesday, adding that it missed roughly $30M in debt service payments and had informed its creditor that it expects to be in default on their agreement.
On Sept. 30, OPI failed to make a $27.4M payment on senior secured notes set to mature in September 2029 and missed another $3.4M due for debt that expires in March 2027, the company said in a Securities and Exchange Commission disclosure dated Tuesday.
Both loans offer a 30-day grace period to cure the nonpayment before it constitutes a default, and OPI said it continues “to work with our advisors to pursue our restructuring efforts.”
OPI’s board of trustees brought in turnaround consultant John Castellano from AlixPartners as its chief restructuring officer on Sept. 15.
OPI also notified Wells Fargo, the administrative agent of its revolving credit agreement that began in January 2024, that it missed the interest payments and expects to be in default on the contract because of its Nasdaq delisting.
OPI’s stock, which has traded for less than $1 per share since the start of the year, opened down more than 30% but recovered to be down 5% in early trading Wednesday. The REIT’s price peaked around $30 in 2021 and was trading for roughly 27 cents Wednesday. It will move from the Nasdaq to over-the-counter trading next week.
A spokesperson for OPI declined to comment beyond the SEC filing. Nasdaq declined to comment.
The REIT has a portfolio of 17M SF of mostly Class-B office space and a concentration of buildings around Washington, D.C. Its largest tenant is the federal government, at 17% of the REIT's leased space, which has added more pressure to the stock as President Donald Trump’s administration moves to aggressively downsize the federal bureaucracy.
OPI’s leadership has acknowledged that its more than $1B debt stack is unsustainable. A merger with The RMR Group’s healthcare REIT that was meant to shore up OPI’s finances fell apart in 2023 after shareholder pushback.
OPI executives flagged possible doubt over the REIT's ability to continue as a going concern in October 2024, and its debt is rated as junk. The REIT had $90M in cash on hand at the end of June, down from $275M at the start of the year.
It was planning to draw down an additional $50M to cover debt costs this year, Chief Operating Officer Yael Duffy said on the firm's second-quarter earnings call on July 31, and analysts expect it will run out of money next year.
The REIT has been unable to refinance the debt and has instead been exploring everything from asset sales to insolvency.
“If we are unable to obtain sufficient funds, our Board of Trustees may consider a reorganization in a bankruptcy court,” OPI said in a June 30 SEC filing.
