Research Update: Office Properties Income Trust Downgraded To 'BB' On Elevated Leverage, Sustained Office Headwinds; Outlook Negative

Office Properties Income Trust?s (OPI) S&P Global Ratings-adjusted debt to EBITDA remains elevated due to weak operating performance and challenging transaction environment. We expect ongoing secular headwinds, material lease expirations, and refinancing at significantly higher interest rates will pressure its key credit metrics over the next few years. As a result, we lowered our issuer credit rating on OPI to 'BB' from 'BBB-' and maintained its negative outlook. At the same time, we lowered our issue-level rating on its senior unsecured notes to 'BB+' from 'BBB-' and assigned a '2' recovery rating. The negative outlook reflects our view that liquidity could be further strained with looming debt maturities. The outlook also reflects our expectation that cyclical and secular headwinds will

...- Office Properties Income Trust's (OPI) S&P Global Ratings-adjusted debt to EBITDA remains elevated due to weak operating performance and challenging transaction environment. - We expect ongoing secular headwinds, material lease expirations, and refinancing at significantly higher interest rates will pressure its key credit metrics over the next few years. - As a result, we lowered our issuer credit rating on OPI to '##' from '###-' and maintained its negative outlook. At the same time, we lowered our issue-level rating on its senior unsecured notes to '##+' from '###-' and assigned a '2' recovery rating. - The negative outlook reflects our view that liquidity could be further strained with looming debt maturities. The outlook also reflects our expectation that cyclical and secular headwinds will continue pressuring OPI's operating performance. We project S&P Global Ratings-adjusted debt to EBITDA will rise slightly to the high-7x area, with fixed-charge coverage (FCC) declining modestly...

Research Update