25 Newport Ave. Extension. Photo courtesy of Quincy Assessors Office
A Newton-based office REIT with a heavy concentration of U.S. government tenants filed for Chapter 11 bankruptcy reorganization.
Office Properties Income Trust received $125 million in debtor-in-possession financing through an agreement with senior secured creditors.
The restructuring plan is intended to reduce OPI’s debt from approximately $2.4 billion to approximately $1.3 billion, according to an SEC filing.
OPI reported a second-quarter net loss of $41.2 million and funds from operation of $9.4 million in July. At the time, the company had total liquidity of $90.1 million, and issued a warning that there was “substantial doubt about its ability to continue as a going concern.”
OPI owns 124 properties totaling 17.2 million square feet of rental space. The federal government is by far the largest single tenant, comprising 17.1 percent of OPI’s annualized rental income. Google parent Alphabet Inc. is the second-largest tenant, accounting for 5.8 percent of annualized rental income.
OPIT hired John Castellano, a partner at AlixPartners LLP, as chief restructuring officer in September.
“We remain committed to serving our tenants and working with our brokers and other vendors with the continued support of our manager, The RMR Group,” Chief Operating Officer Yael Duffy said in a statement. “We expect no disruptions to our business or properties during the pendency of the proceedings and expect OPI to emerge as a more stable and financially flexible company, well positioned to advance its strategic initiatives.”
The restructuring plan includes the equitization of approximately $1 billion of existing notes.
OPI is one of five publicly traded REITs managed by The RMR Group of Newton. A new 5-year management arrangement with RMR Group is proposed through the reorganization, with an annual fee of $14 million for the first two years.
The Chapter 11 case was filed in the U.S. District Court in Houston, which has scheduled a hearing on Monday afternoon to hear first-day motions.
Offices leased to the federal government comprised 17 percent of OPIT’s annual rental income in 2024. The Trump administration’s attempts to cut the government’s real estate footprint and costs prompted OPIT executives to warn in February of potential financial consequences.
OPI’s local properties include 330 Billerica Road in Chelmsford, 25 Newport Ave. Extension in Quincy and 251 Causeway St., 100 North Washington St. and 126-132 North Washington St. in Boston’s West End.
RMR Group proposed a 40-story tower on the West End site in 2024, but has not submitted any updates to the Boston Planning Department since February.
