Moody's cuts Office Properties

Moody's Investors Service said it downgraded Office Properties Income Trust’s (OPI) senior unsecured rating to Ba1 from Baa3 and withdrew OPI's issuer rating and assigned it a corporate family rating of Ba1, placed on review for downgrade and SGL-3 rating.

The agency also dropped the senior unsecured rating of Select Income REIT to Ba1 from Baa3 and placed the OPI’s and Select’s ratings under review for further downgrade.

“The ratings downgrades reflect OPI's elevated leverage and challenges it faces as it seeks to execute asset sales and reduce debt levels amidst a challenging transaction environment for commercial office real estate. The downgrade also considers risks to operating cash flows as OPI faces a large amount of lease expirations in 2023 and 2024,” Moody’s said in a press release.

Moody's said the review will consider the REIT's prospects for selling assets and raising the capital needed to handle 2024 refinancing needs, including the maturity of its unsecured revolver and $350 million of bonds that come due.

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