OPINL - Office Properties Income: Debt Maturity Risk And The 15.2% Yielding Baby Bonds
2024-05-19 06:17:57 ET
Summary
- Office Properties Income is down 70% year-to-date as market concerns about its solvency reach a crescendo.
- The REIT held an outstanding debt balance of $2.6 billion at the end of its recent first quarter, with $650 million maturing in February 2025.
- OPI's debt exchange offers should see the issuance of up to $610 million of new 9% senior secured notes, mostly in exchange for the February 2025 debt.
I bought Office Properties Income Trust's ( OPI ) 6.375% Senior Notes due 6/23/2050 ( OPINL ) in November on the back of what was then a roughly 40% discount to their $25 liquidation value per note. This security has since continued to dip as market angst over office properties ramped up in response to the Fed's higher-for-longer rhetoric with consumer inflation remaining sticky above their 2% target rate. OPINL now trades hands for $10.40 per share, a nearly 60% discount to their liquidation value. The notes pay a $1.59375 annual coupon for a 15.2% yield on cost. OPI last declared a peppercorn cash dividend of $0.01 per share for common shareholders, unchanged sequentially and $0.04 per share annualized, for a 1.8% dividend yield....
Office Properties Income: Debt Maturity Risk And The 15.2% Yielding Baby Bonds