Office Properties Income Trust asked a federal bankruptcy judge to approve the sale of a vacant office complex in Tempe, Arizona, for $11 million as the real estate investment trust works to shed assets and reduce costs during its Chapter 11 restructuring.
The Maryland-based REIT filed a motion in the U.S. Bankruptcy Court for the Southern District of Texas on November 10 seeking approval of a previously negotiated sale of the Regents Center property to Opus Development Company, L.L.C. The 100,500-square-foot office complex has been vacant since American Airlines vacated the premises in November 2023, saddling the company with approximately $720,000 in annual carrying costs.
The property sale represents one of Office Properties Income Trust's efforts to streamline its portfolio after filing for bankruptcy protection on October 30. The company, which owns 124 properties totaling approximately 17.2 million rentable square feet across the United States, has been managed by The RMR Group LLC under business and property management agreements.
Extensive Marketing Process Yields Limited Options
The Tempe property, consisting of two single-story buildings on approximately 10 acres, presented unique challenges that limited viable purchasers. Office Properties Income Trust began marketing the space for lease in November 2022 after learning American Airlines would not renew its lease, but struggled to attract tenants in a Phoenix market suffering from approximately 25% office vacancy rates.
After unsuccessful leasing efforts, the company pivoted to a sale process in May 2024, working with broker Institutional Property Advisors. The marketing campaign generated significant interest, with 101 parties executing confidentiality agreements and seven groups touring the property. However, the competitive bidding process revealed a critical obstacle that eliminated most potential buyers.
Of the four final offers ranging from $9.6 million to $11 million, three bidders included contingencies related to acquiring 90 parking spaces that are not owned by Office Properties Income Trust but are governed by a license arrangement with a neighboring property owner that expires in 2037. Each of these bidders intended to redevelop the property for alternative uses, which would require control of the entire parking area.
Opus Emerges as Only Viable Bidder
Opus Development Company distinguished itself as the sole bidder without parking-related contingencies, despite also planning to redevelop the property. The Delaware-based company also agreed to assume the property's carrying costs pending closing, providing additional financial relief to the debtor.
"The Purchaser was the only group without parking-related contingencies," the court filing states. "Accordingly, the Debtors determined, in their reasonable business judgment, that the Purchaser's offer was the only viable offer on the table."
The original purchase agreement was signed on October 9, 2024, for $10.7 million with a scheduled February 6, 2025 closing. However, Opus requested multiple extensions, ultimately pushing the closing date to November 3, 2025, and increasing the purchase price by approximately $300,000 to $11,037,975 to compensate for the delays.
Strategic Asset Disposal During Restructuring
Office Properties Income Trust argues the sale represents sound business judgment given the property's limited prospects and ongoing costs. The company conducted a comprehensive evaluation of future leasing possibilities and redevelopment options, concluding that both were economically unfeasible given market conditions and the cost of assembling adjacent parcels.
"The Debtors submit that selling the Property represents a reasonable exercise of sound business judgment and is in the best interests of the Debtors' estates," attorneys from Hunton Andrews Kurth and Latham & Watkins wrote in the motion.
The sale price falls within the range of third-party valuations obtained by the company, which estimated the property's value between $9.5 million and $15 million. An earlier unsolicited offer of approximately $12 million fell through in August 2023 when that buyer became concerned about the parking ownership issues.
Court Approval Process Underway
The bankruptcy court has scheduled a hearing on the sale motion for December 3, 2025. Under the proposed order, the property would be sold free and clear of liens and encumbrances, with Opus Development receiving protection as a good-faith purchaser under federal bankruptcy law.
Office Properties Income Trust filed for Chapter 11 protection in October 2025 with a restructuring support agreement backed by holders of more than 80% of its senior secured notes due September 2029. The company continues operating its properties as debtor-in-possession while working through its financial restructuring.
The Tempe property sale, if approved, would eliminate a significant source of operating losses while providing proceeds that could be used to fund the company's operations or pay down debt obligations during the bankruptcy process.
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