- A group of eight lenders plans to take ownership of Office Properties Income Trust (OPI) as part of a bankruptcy restructuring.
- The deal would eliminate roughly $700M in debt, leaving the REIT with about $1.7B still outstanding.
- The move underscores continued distress in the office sector, particularly among owners of Class-B assets in major markets like Washington, D.C.
According to Bisnow, Office Properties Income Trust is nearing a creditor-led takeover as part of its ongoing Chapter 11 proceedings, marking another significant shakeup in the struggling office sector.
A Lender Takeover
The REIT filed for bankruptcy protection in October. It later reached an agreement with eight secured creditors to transfer control. These creditors hold debt that matures in 2029.
Redbox Capital Management, Helix Partners Management, and WhiteBox Advisors lead the lender group. Each firm holds a significant share of OPI’s outstanding debt.
The Details
The proposed restructuring would reduce OPI’s debt by approximately $700M, though the company would still carry about $1.7B post-restructuring. The REIT owns roughly 17.3M SF of primarily Class-B office space across 125 properties, with a heavy concentration in Washington, D.C., and Northern Virginia.
Additional creditors involved in the takeover include Cetus Capital, ExodusPoint Capital Management, Liberty Mutual Investments, Mackenzie Financial Corp., and Nuveen Asset Management.
Legal Tensions
The agreement follows a dispute with another creditor group, including MSD Partners and Bracebridge Capital. The conflict centers on default interest tied to separate debt maturing in 2027.
Meanwhile, the parties plan to finalize restructuring terms in upcoming court filings. Creditors will vote on the plan before a court hearing scheduled for next month.
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Management Remains
Despite the ownership change, The RMR Group will continue managing OPI under a revised agreement. The firm will retain limited governance influence, including appointing one board member, while the creditor group is expected to control the majority of board seats.
Why It Matters
The restructuring highlights the mounting pressure on office landlords, particularly those with older, less competitive buildings. As valuations fall and refinancing becomes more difficult, creditor takeovers are becoming an increasingly common outcome, with major institutions also circling distressed commercial real estate debt portfolios to capitalize on pricing dislocations across the market.
What’s Next
Creditors are set to vote on the plan in the coming weeks, with court approval potentially following shortly after. If finalized, the deal could serve as a blueprint for similar restructurings across the battered office REIT landscape.
