Office Properties Income Trust: Leveraged To Office Recovery After Bankruptcy Reorganization
Office Properties Income Trust (OPI) emerged from bankruptcy last month with its equity controlled by savvy credit and special situation investors. An $18 share price values the properties at $123/sf and a 11.4% cap rate.
Bull Case: Asset sales, refinancing of high cost debt, and an office sector recovery could provide a 3X return in 4 years.
Bear Case: Weak asset quality, high cost debt, and an economic downturn lead to another liquidity crunch within 4 years.
“OPI is a national REIT focused on owning and leasing office properties to high credit quality tenants in markets throughout the United States. As of March 31, 2026, approximately 60% of OPI's revenues were from investment grade rated tenants.”
Topics:
Company Profile
Capital Structure & Basic Valuation
Governance (Trustees and Share Ownership)
Management Agreement
Portfolio Commentary ($)
Valuation Perspectives ($)
CBL Precedent ($)
Company Profile:
122 Office Properties, 17.1mm square feet
30 states (including DC) - percentages of 2025 rents:
Mediocre portfolio
Mostly Class A/B Properties with single or majority tenant
78% leased at 3/31/26
26% of revenue from government tenants
WALT 6.4 years
OPI’s portfolio is mostly suburban buildings with low density (under 10 stories) and outdoor parking. It has almost no exposure to new highly amenitized buildings with excellent transit access in top markets.
Capital Structure & Basic Valuation
Bankruptcy eliminated $714mm of pre-petition debt, but all of the $1.7Bn of post-emergence debt bears higher interest rates and leaves minimal free cash flow.
Governance & Ownership
Major Shareholders:
Other significant noteholders who had the option to convert to equity included Exodus Point Capital and Cetus Capital. High yield fund managers with positions included Nuveen, and Mackenzie - they may be sellers of the new OPI equity if it no longer fits their mandates.
Trustees:
Jonathan Heller (Helix Partners)
Jonathan Kotlatch (retired from Redwood Capital)
Irvin Schlussel (family office)
William Lamkin (formerly Ackrell capital)
Adam Portnoy (RMR)
Helix Partners is entitled to appoint up to 3 trustees (out of a maximum of 7) as long as it owns at least 15% of the voting stock. Redwood Capital is entitled to appoint up to 2 trustees as long as it owns at least 10% of the voting stock. These two investors are ultimately in control.
Management Agreement
The notorious RMR Group was retained as the external Business Manager for a fixed annual fee of $14mm for 2 years with subsequent fees subject to negotiation.
RMR entities have delivered poor long-term shareholder returns
RMR received 2% of the new OPI equity and will be able to receive an incentive fee of up to an additional 8% if OPI achieves unspecified objectives (“satisfaction of certain financial criteria to be established by the Board”).
The new OPI management agreement can be terminated after 2 years (in 2028) without any termination fee, not nearly as restrictive as standard RMR agreements (20-year rolling terms and severe termination penalties)
New OPI Management Agreement Excerpt For comparison the prior agreement (filed in 2015) had a rolling 20-year term and severe termination penalties.
Pre-Bankruptcy OPI Management Agreement Excerpt
RMR is heavily incentivized to generate value for OPI shareholders and will be terminated if it doesn’t.