Office Properties Income Trust Expands Share Authorization

Office Properties Income Trust (NASDAQ:OPI) has updated its corporate framework and financial strategy, according to a recent 8-K filing with the Securities and Exchange Commission. Trading at just 0.05 times book value and an EV/EBITDA multiple of 8.57, InvestingPro analysis suggests the stock may be undervalued despite facing significant challenges, with shares down over 59% in the past year. On March 14, 2025, the company, which operates in the real estate sector, announced a notable expansion of its share authorization and the establishment of an "at the market" equity offering program.

The Maryland-incorporated trust, formerly known as Government Properties Income Trust , has increased its authorized common shares from 200 million to 250 million. With a current market capitalization of just $58 million and a healthy current ratio of 3.88, the company maintains strong liquid assets relative to its short-term obligations. This amendment to its Articles of Incorporation was filed and became effective on the same day.

Concurrent with this change, Office Properties Income Trust entered into a sales agreement with Clear Street LLC. Under this arrangement, the trust may sell up to $100 million of its common shares over time. The sales are to be conducted as part of an "at the market" offering, which allows shares to be sold directly into the trading market at current prices.

The trust will use Clear Street LLC’s services to facilitate the sale of shares, with the agent receiving a commission of 3.0% of the gross sales price. While there is no obligation for either party to execute sales, the agreement provides a flexible mechanism for Office Properties Income Trust to raise capital as needed.

The proceeds from any sales are intended for general business purposes. This move provides the trust with additional liquidity and the potential to fund growth initiatives, acquisitions, or other corporate activities.

This announcement comes on the heels of the trust’s recent filing of a shelf registration statement on February 12, 2025, and a prospectus supplement on the date of the sales agreement, which allows for the offering of these shares.

Investors and market watchers should note that the filing of this report does not constitute an offer of securities, and sales will only be conducted in compliance with applicable state and jurisdictional securities laws.

This news is based on the latest SEC filings and reflects Office Properties Income Trust’s ongoing efforts to manage its capital structure and support its strategic business objectives. For investors seeking deeper insights, InvestingPro offers comprehensive analysis with 13 additional ProTips and detailed financial metrics, including the company’s 17-year track record of consecutive dividend payments, despite recent market challenges.

In other recent news, Office Properties Income Trust (OPI) has been actively engaged in financial restructuring efforts. S&P Global recently downgraded OPI’s issuer credit rating to ’CC’ from ’ CCC (WA:CCCP)’ due to a proposed debt exchange offer, which involves swapping existing notes for new senior priority guaranteed unsecured notes. This exchange is viewed as a distressed transaction, potentially leading to a selective default rating if completed. However, following a private exchange offer, S&P Global later upgraded OPI’s credit rating to ’CCC’ from ’CCC-’, reflecting improved near-term liquidity, although the outlook remains negative due to ongoing liquidity pressures.

Additionally, OPI has announced a plan for the resale of up to 5,700,900 common shares, previously issued as part of an exchange agreement. This move is part of the company’s strategy to manage its debt and equity structure, addressing maturing debt obligations. As part of its exchange offer, OPI issued new senior secured notes and common shares, using proceeds to manage outstanding senior unsecured notes. The company also completed the sale of 17 properties, generating $114.5 million, which will help repay existing debt.

Despite these efforts, OPI faces refinancing risks due to upcoming debt maturities and limited access to capital. The company’s operating performance remains challenged, with a decline in net operating income and a drop in leased percentage. Analysts from S&P Global have indicated that further rating actions could occur depending on OPI’s ability to refinance upcoming maturities and improve its liquidity position.

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