Office Properties Expects $360 Million From Second Phase of Asset Sales
Key Facts
Office Properties Income Trust expects to collect about $360 million in 2027 from the sale of 26 additional properties, according to management remarks on its third-quarter earnings call published on November 10, 2026. These properties represent the second phase of a broader program covering 58 properties, with the initial plan covering 32 properties. The additional assets total 3.5 million square feet and generate about $87 million in annual revenue. The company said proceeds from this phase would be used for general purposes, including debt repayment. Management linked the sales to debt obligations that include notes due in December 2029.
The $360 million estimate differs from proceeds from the first phase, as it relates solely to the 26 additional properties, while management said total gross proceeds from selling the first 32 properties are expected to exceed $300 million. The initial estimate for that group was $275 million, meaning management's forecast has risen from its previous estimate. It added that prices achieved or under negotiation in the initial program had met or exceeded expectations. Management said total proceeds from the 32 assets "should exceed $300 million, up from our initial expectations of $275 million." The 58-property program therefore combines a first phase with expected proceeds above $300 million and a second phase estimated to generate about $360 million in 2027.
Part of the second phase is concentrated in assets pledged against secured debt notes, management said on the earnings call. Eighteen properties secure notes due in December 2029, and six properties secure notes due in June 2031. Two properties also secure notes due in March 2029. The company said net proceeds from property sales would be directed, among other purposes, to debt repayment and increased liquidity. In its quarterly filing, it cautioned that it could not guarantee the completion of any listed property sale or that it would achieve the targeted amounts.
Management linked the initial sales program to the goal of repaying the December 2029 notes, whose outstanding principal was about $307 million, according to its remarks dated November 10, 2026. The company had said proceeds from the first 32 properties would exceed $300 million, compared with a previous estimate of $275 million. Proceeds from the second phase, estimated at about $360 million, are expected in 2027, according to management. These figures show a difference between the timing of sales and the maturity dates of debt tied to the properties. The company listed debt repayment and increased liquidity among the expected uses of net sale proceeds, while retaining its caveat about completing transactions and achieving prices.
After completing the sale of the 58 properties, the company expects its remaining portfolio to comprise 64 properties totaling about 10 million square feet. Management estimated that occupancy in the portfolio would then reach 93%, with Class A buildings accounting for more than 70% of its area. The outlook comes as overall portfolio occupancy stood at 80.7% on September 30, 2026, while same-store occupancy was 88.8% on the same date. These indicators show the portfolio's size and current and targeted occupancy rates after the sales. Those future figures remain contingent on completing the sale of the 58 properties identified by the company.
The company reported a net loss of $45.8 million, or $2.09 per common share, in the third quarter of 2026. In the same period, adjusted funds from operations totaled $20.5 million, or $0.93 per share, according to the earnings release filed with the Securities and Exchange Commission. The results coincided with the announcement of the second phase of property sales and an update to proceeds expectations for the initial program. The stock rose 11.73% to $15.34 from $13.73 in the session cited after the results, according to Reuters via Investing.com. The company had emerged from Chapter 11 after a restructuring, according to an earlier report published by EL7 in June 2026.