Moody's cuts Office Properties, may lower further

Moody's Investors Service said it downgraded the corporate family rating and senior unsecured rating of Office Properties Income Trust to Ba3 from Ba2.

The senior unsecured rating of Select Income REIT was also downgraded to Ba3 from Ba2.

Moody's said it also placed each of these ratings on review for further downgrade.

Moody's has maintained the speculative grade liquidity rating at SGL-3.

The ratings downgrades follow the REIT's announced plans to merge with Diversified Healthcare Trust, an affiliated health care REIT with which it shares an external manager.

“The rating action reflects Moody's concerns about OPI's financial policy and business strategy, as it demonstrates its willingness to materially increase its already high financial leverage and increase business risk, regardless of whether this particular transaction closes,” Moody’s said in a news release.

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