Research Update: Office Properties Income Trust Downgraded To 'BB-' On Increased Leverage Following Terminated Merger; Outlook Negative

Office Properties Income Trust's (OPI) S&P Global Ratings-adjusted debt to EBITDA has increased throughout the first half of 2023 amid weak operating performance and a challenging transaction environment. We expect ongoing secular headwinds, material lease expirations, and refinancing at significantly higher interest rates will continue to pressure its key credit metrics over the next few years. We lowered our issuer credit rating on OPI to 'BB-' from 'BB' and removed it from CreditWatch with negative implications, where we placed it on April 11, 2023. At the same time, we lowered our issue-level rating on its senior unsecured notes to 'BB' from 'BB+'. The recovery rating on this debt is '2'. The negative outlook reflects our expectation that cyclical and secular

...- Office Properties Income Trust's (OPI) S&P Global Ratings-adjusted debt to EBITDA has increased throughout the first half of 2023 amid weak operating performance and a challenging transaction environment. - We expect ongoing secular headwinds, material lease expirations, and refinancing at significantly higher interest rates will continue to pressure its key credit metrics over the next few years. - We lowered our issuer credit rating on OPI to '##-' from '##' and removed it from CreditWatch with negative implications, where we placed it on April 11, 2023. - At the same time, we lowered our issue-level rating on its senior unsecured notes to '##' from '##+'. The recovery rating on this debt is '2'. - The negative outlook reflects our expectation that cyclical and secular headwinds will continue pressuring OPI's operating performance. The outlook also reflects our view that liquidity could be further strained with looming debt maturities. We project S&P Global Ratings-adjusted debt to...

Research Update