Real-time Form 4 intelligence. Smarter insider tracking.
YoY shift: Lean -
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.16pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
+0.06pp
Flat
Net-tone change vs last year's 10-K.
MD&A
-0.39pp
Lean -
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
impairment+3
loss+2
costly+2
restructuring+2
adverse+1
Positive rising
successfully+2
able+1
effective+1
successful+1
achieved+1
Risk Factors (Item 1A)
14,434 words
Item 1A. Risk Factors.
You should carefully consider the following risks and other information in this Annual Report on Form 10-K in evaluating our company and our common stock. Any of the following risks could materially and adversely affect our business, financial condition and results of operations.
Risks Related to Our Properties and Business
If global market and economic conditions deteriorate, our business, financial condition and results of operations could be materially adversely affected.
Weak economic conditions generally, sustained uncertainty about global economic conditions, a tightening of credit markets, business layoffs, downsizing, industry slowdowns and other similar factors that affect our tenants could negatively impact commercial real estate fundamentals and may result in lower occupancy, lower rental rates and declining values in our real estate portfolio. Additionally, these factors and conditions have had and may continue to have an impact on our lenders or tenants, which could cause them to reduce their business with us or to meet their obligations to us. We are subject to the risk of increases in interest rates, including that our borrowing costs may increase and we may be to extend or refinance our debt obligations on terms or at all. We are also subject to the risk of inflation, including that our operating costs, such as insurance premiums, utilities, real estate taxes and capital expenditures and repair and maintenance costs, may rise. We also may be to offset any increases in our borrowing costs or operating costs by increases in our rental revenues which are generally fixed. No assurances can be given regarding such macroeconomic factors or conditions, and our ability to lease our properties and increase or maintain rental rates or the of our properties may be impacted, which may have a material effect on our business, financial condition and results of operations.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
impairment+12
loss+5
against+5
demolition+5
terminated+2
Positive rising
satisfied+3
gains+2
effective+1
advantage+1
good+1
MD&A (Item 7)
15,963 words
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and notes thereto appearing elsewhere in this Annual Report on Form 10-K. Orion Properties Inc. (the “Company,” “Orion,” “we,” or “us”) makes statements in this section that are forward-looking statements within the meaning of the federal securities laws. For a complete discussion of forward-looking statements, see the section in this report entitled “ Forward-Looking Statements ”. Certain risks may cause our actual results, performance or achievements to differ materially from those expressed or implied by the following discussion. For a complete discussion of such risk factors, see the section in this report entitled “ Risk Factors ”.
Overview
Orion is an internally managed real estate investment trust (“REIT”) engaged in the ownership, acquisition, and management of a diversified portfolio of office properties located in high-quality suburban markets across the United States and leased primarily on a single-tenant net lease basis to creditworthy tenants. Our portfolio is comprised of traditional office properties, as well as governmental, medical office, flex/laboratory and R&D and flex/industrial properties. As part of our investment strategy, we intend to shift our portfolio concentration over time away from traditional office properties, towards more dedicated use assets with specialized uses that include an office component.
Our strategic review process will be costly and time-consuming and may not result in our identification or completion of a strategic transaction, which could have an adverse effect on our stock price and our business.
In January 2026, in connection with our entry into a cooperation agreement with a stockholder, we announced a formal strategic review process. The strategic review process may be costly and time-consuming, and we may incur significant legal, accounting and advisory fees and other expenses, some of which may be incurred regardless of whether we successfully enter into a transaction. Any such expenses could affect the value to our stockholders in connection with any transaction or, in the absence of such a transaction, will decrease the remaining cash available for use in our business. The attention of management and our Board of Directors could also be diverted from our core business operations as a result of this strategic review process.
No decision has been made at this time by our Board of Directors as to whether to engage in any particular transaction. Any decision by our Board of Directors will depend on numerous factors, which may include our projected financial performance, the interest of potential partners or acquirers in a potential strategic transaction, the value potential partners or acquirers attribute to our business, the likelihood that any such transaction could be successfully completed, potential synergies that could be achieved from any strategic transaction, available alternative options, market conditions and industry trends. There can be no assurance that our Board of Directors will identify an acceptable strategic partner or acquirer or authorize the pursuit of any strategic alternative. Moreover, there can be no assurance as to the terms or the timing of any potential transaction, or whether any transaction may ultimately occur. Any potential transaction would depend on a number of factors, many of which may be beyond our control. Even if we enter into a definitive agreement, we may not be successful in completing a transaction or, if we complete such a transaction, it may not enhance stockholder value or deliver expected benefits. Our inability to identify and complete an acceptable strategic transaction or any decision by our Board of Directors to cease the strategic review process could result in increased volatility of our stock and have an adverse effect on our business.
Changes in workplace practices and office space utilization, including remote and hybrid work arrangements, have reduced the demand for office space at our properties and may continue to do so.
Changes in workplace practices and office space utilization, including remote and hybrid work arrangements, have negatively impacted our company and these factors may continue and worsen. For example, the increased acceptance of and familiarity with remote and hybrid work practices has resulted in decreased demand for and utilization of office space. These trends have impacted our leasing efforts as certain of our tenants have elected to not renew their leases, or to renew them for less space than they were occupying, resulting in increases in vacancy rates at our properties and decreases in rental income. Remote and hybrid work practices may continue to persist, which may cause the trends impacting our leasing efforts to continue or even accelerate. Tenants’ evolving preferences regarding office space configuration may impact their space requirements and also has required and may continue to require us to spend increased amounts for tenant improvements. If a tenant wants to reduce its leasing footprint or substantial office space reconfiguration is required, such tenant may explore other
Table of Contents
office space and find it more advantageous to relocate than to renew its lease and downsize or renovate the existing space. Less successful leasing efforts, lower rents and increased leasing costs have caused our business, operating results, financial condition and prospects to be materially adversely impacted, and may continue to do so.
Leases representing approximately 10.2% of our annualized base rent are scheduled to expire in 2026 and we could experience difficulties or delays renewing leases or re-leasing vacant space, which will increase our costs to operate and maintain such properties without receiving income.
We derive nearly all of our net income from rent received from our tenants, and our profitability is significantly dependent upon our ability to minimize vacancies in our properties and ensure our tenants timely pay rent at an attractive rate. If a tenant experiences a downturn in its business or other types of financial distress, it may be unable to make timely rental payments. If lease defaults occur, we may experience delays in enforcing our rights as landlord. Leases representing approximately 10.2% of our annualized base rent are scheduled to expire in 2026, and as of December 31, 2025, our portfolio, including our proportionate share of properties owned by the Arch Street Joint Venture, had a weighted average lease term of 5.7 years, and had five vacant operating properties, with an aggregate 0.5 million square feet, including four operating properties, with an aggregate of 0.4 million square feet, that have remained vacant for over one year. If our tenants decide not to renew their leases, terminate their leases early or default on their leases, we will experience a loss in the associated rental revenue and will incur property operating costs that will no longer be reimbursed by the vacating tenant. When tenant leases expire, we confirm the condition of the premises and will seek to enforce the performance of any outstanding tenant obligations, such as repair and maintenance and lease surrender obligations. These efforts can lead to disputes with the tenants, and we cannot provide any assurance we will be successful in enforcing the tenant’s obligations. Accordingly, we may incur enforcement and property operating and capital costs in connection with expired leases that may not be recoverable. Tenant lease expirations, delays in re-leasing vacant space and tenant defaults could have a material adverse effect on our financial condition, results of operations and ability to pay dividends to stockholders.
Most of our properties depend upon a single tenant for all or a majority of their rental income; therefore, our financial condition, including our ability to make distributions to stockholders, may be adversely affected by the bankruptcy or insolvency, a downturn in the business, or a lease termination of such a single tenant.
Most of our rental revenue is from our properties leased to single tenants. The value of our single tenant properties is materially dependent on the performance of those tenants under their respective leases. Our tenants face competition within their industries and other factors that could reduce their ability to pay us rent. Lease payment defaults by such tenants could cause us to reduce the amount of distributions that we pay to our stockholders. A default by a single or major tenant, the failure of a guarantor to fulfill its obligations or prematuretermination of a lease to such a tenant or such tenant’s election not to extend a lease upon its expiration could have an adverse effect on our financial condition, results of operations, liquidity and ability to pay distributions to our stockholders.
We expect to continue to convert certain vacant properties to multi-tenant use, and cannot provide any assurance that the investments we make of time and capital to do so will increase the value of the subject properties.
Where we determine it will maximize the value of the subject property, we have converted certain vacant properties to multi-tenant use and expect we will continue to do so. Our multi-tenant properties are subject to a variety of risks not typically encountered in real estate properties that are operated by or for a single tenant, which could materially adversely affect the value of our investment, including:
• conversion to multi-tenant use will require us to make significant investment in the subject property, such as to create common areas, separate building systems, construct new demising walls and corridors and install restrooms and access points;
• in order to attract high quality anchor tenants, we may be required to install and guarantee the full operation of significant amenities like cafeterias and gyms and the cost to operate these amenities may not be recoverable particularly if the building is not fully occupied; and
• multi-tenant properties generally require greater landlord responsibility to manage and operate the properties and bear the associated costs, which will place added burden on our property management team and will result in costs that may not be recoverable from the tenants.
We may incur costs to convert properties to multi-tenant use and to operate multi-tenant properties that may not be recoverable and we cannot provide any assurance that our decision to convert properties to multi-tenant will increase the value of the subject properties.
Table of Contents
Government budgetary pressures and priorities, and trends in government employment and office leasing may adversely impact our business.
We believe that recent government budgetary and spending priorities and enhancements in technology have resulted in a decrease in government office use for employees. Furthermore, over the past several years, government tenants have reduced their space utilization per employee and consolidated government tenants into existing government owned properties. Persistent remote and hybrid work practices have also reduced space utilization at many of our government properties. These factors have reduced the demand for government leased space, may continue to do so and may make it more likely the United States Government terminates the applicable lease at expiration. As of December 31, 2025, approximately 72,000 of our occupied square feet leased to the GSA were within periods during which the tenant has the right to terminate their space without a termination fee, or “non-firm terms.” Efforts to manage space utilization rates and reduce government spending may result in the government tenants exercising early termination rights under our leases, vacating our properties upon expiration of our leases in order to relocate, or renewing their leases for less space than they currently occupy. Also, our government tenants’ desire to reconfigure leased office space to manage utilization per employee may require us to spend significant amounts for tenant improvements, and tenant relocations are often more prevalent in those circumstances. Compared to our historical experience with government tenants, the current government tenants’ leasing decisions and strategies may be less predictable.
We have made equity and member loan investments in the Arch Street Joint Venture which may not be recoverable.
We are invested in the Arch Street Joint Venture where we own a 20% minority, non-controlling interest and our partner owns the remaining 80% interest. As of December 31, 2025, the carrying value of our equity investment in the Arch Street Joint Venture before the impairmentloss described below was $10.8 million and we had member loans outstanding to the Arch Street Joint Venture in the principal amount of $6.6 million. These member loans were made to fund certain capital requirements of the joint venture when our partner in the Arch Street Joint Venture did not have access to sufficient liquidity to contribute its share of capital call obligations, including with respect to a principal paydown the Arch Street Joint Venture was required to make during November 2024 to extend the maturity date of the non-recourse mortgage notes and leasing costs the Arch Street Joint Venture was required to fund in February 2025 to extend the lease at one of the joint venture properties. Our partner in the Arch Street Joint Venture may continue to be unable to contribute its share of capital requirements of the Arch Street Joint Venture.
Our member loan to the Arch Street Joint Venture is non-recourse and unsecured, structurally subordinate to the Arch Street Joint Venture Mortgage Debt, and interest and principal are payable monthly solely out of the excess cash from the joint venture after payment of property operating expenses, interest and principal on the Arch Street Joint Venture Mortgage Debt and other joint venture expenses and excess proceeds from the sale of any of the joint venture properties. Due to the capital constraints of our joint venture partner, the Arch Street Joint Venture has been unable to make an approximately $16.0 million principal prepayment on the Arch Street Joint Venture Mortgage Debt to satisfy the 60% loan-to-value condition to extend the maturity date until November 27, 2026. The Arch Street Joint Venture Mortgage Debt was temporarily extended until February 26, 2026 and the joint venture remains in discussions with the lenders about next steps which may include an additional short-term extension and restructuring of the debt. We cannot provide any assurance that the Arch Street Joint Venture will be able to satisfy the loan-to-value condition or otherwise extend or refinance this debt obligation or that the lenders will not seek to enforce their remedies due to the existing payment default. Because of the subordinate position of our investment in the Arch Street Joint Venture, our investment, including our member loan, may not be recoverable. Due to the uncertainties with regard to recovery of our Arch Street Joint Venture investments, we recorded an other-than-temporary impairmentloss on our investment in the Arch Street Joint Venture, thereby reducing the carrying value of our investment to zero, and recorded a loan loss reserve of $5.9 million against our $6.6 million member loan to the Arch Street Joint Venture during the year ended December 31, 2025. Beginning in 2026, we will record management fees from the Arch Street Joint Venture and interest income on the member loan on a cash basis rather than accrual basis.
The Arch Street Joint Venture and any other joint venture investments we make could be adversely affected by the lack of sole decision-making authority, reliance on joint venture partners’ financial condition and any disputes that may arise between us and our joint venture partners.
We are invested in the Arch Street Joint Venture and have co-invested and may in the future co-invest with third parties through partnerships, joint ventures or other structures in which we acquire non-controlling interests in, or share responsibility for, managing the affairs of a property, partnership, co-tenancy or other entity. Our ability to determine the strategy with respect to properties we own through the Arch Street Joint Venture is materially limited compared to acquisitions we make directly, including with respect to leasing, disposition, financing and liquidation decisions (including if such actions are necessary to maintain compliance with our debt commitments).
Table of Contents
We also may enter into future joint ventures pursuant to which we will not be able to exercise sole decision-making authority regarding the properties owned through such joint ventures or similar ownership structure. In addition, investments in joint ventures may, under certain circumstances, involve risks not present when a third party is not involved, including potential deadlocks in making major decisions, restrictions on our ability to exit the joint venture, reliance on joint venture partners and the possibility that a joint venture partner might become bankrupt or fail to fund its share of required capital contributions, thus exposing us to liabilities in excess of our share of the joint venture or jeopardizing our REIT status. The funding of our capital contributions to such joint ventures may be dependent on proceeds from the sale of real estate assets, credit facility advances or sales of equity securities. Joint venture partners, including Arch Street Capital Partners, may have business interests or goals that are inconsistent with our business interests or goals, and may be in a position to take actions contrary to our best interests. We may, in specific circumstances, be liable for the actions of our joint venture partners. In addition, any disputes that may arise between us and joint venture partners, including Arch Street Capital Partners, may result in litigation or arbitration that would increase our expenses. Any of the foregoing may have a material adverse effect on our business, financial condition and results of operations.
The United States Government’s “green lease” policies may adversely affect us.
In recent years, the United States Government has instituted “green lease” policies which allow a government tenant to require Leadership in Energy and Environmental Design for commercial interiors, or LEED ® -CI, designation in selecting new premises or renewing leases at existing premises, and these policies have and may continue to be expanded to cover additional enhanced requirements. In addition, the Energy Independence and Security Act of 2007 allows the United States Government to give preference to buildings for lease that have received an “Energy Star” label. Complying with enhanced requirements may be costly and time consuming, but our failure to do so may result in our competitive disadvantage in acquiring new or retaining existing government tenants.
We may be unable to successfully execute on our strategy to shift our portfolio concentration over time away from traditional office properties, towards more dedicated use assets.
As part of our investment strategy, we intend to shift our portfolio concentration over time away from traditional office properties, towards more dedicated use assets that have an office component. We believe that by doing so we will increase that value of our portfolio, as it is our experience that dedicated use assets have greater tenant utilization and higher renewal probability. As of December 31, 2025, our portfolio was comprised of 70.1% and 64.2% traditional office properties, calculated based on rentable square feet and annualized base rent, respectively. In order to increase the percentage of dedicated use assets in our portfolio, we intend to acquire additional dedicated use assets and dispose of traditional office properties. Our ability to acquire new properties and dispose of existing properties in our portfolio is dependent upon competitive and market conditions, which may not be favorable to us at any given time, as well as other factors outside of our control. We may not be successful in executing our strategy of shifting our portfolio concentration over time towards more dedicated use assets, and whether or not we are successful in executing such strategy, we may not achieve our objective of increasing the value of our portfolio.
Competition for acquisitions may reduce the number of acquisition opportunities available to us and increase the costs of those acquisitions.
We intend to pursue acquisitions of additional commercial real estate properties as part of our business strategy. We may face competition for such acquisition opportunities from other investors, and such competition may adversely affect us by subjecting us to the following risks:
• an inability to acquire a desired property because of competition from other well-capitalized real estate investors, including publicly traded and privately held REITs, private real estate funds, domestic and foreign financial institutions, life insurance companies, sovereign wealth funds, pension trusts, partnerships and individual investors;
• we may incur costs on unsuccessful acquisitions that we will not be able to recover; and
• an increase in the purchase price for such acquisition property in the event we are able to acquire such desired property.
Accordingly, competition for acquisitions may limit our opportunities to grow our business, which may have a material adverse effect on our business, financial condition and results of operations.
Table of Contents
We may sufferadverse effects from acquisitions of commercial real estate properties.
We intend to pursue acquisitions of additional commercial real estate properties as part of our business strategy. Acquisitions of commercial properties entail risks, such as the risk that we may not be in a position, or have the opportunity in the future, to make suitable property acquisitions on advantageous terms and/or that such acquisitions fail to perform as expected.
We may pursue selective acquisitions of properties in regions where we have not previously owned properties. These acquisitions may entail risks in addition to those we face with acquisitions in more familiar regions, such as our not sufficiently anticipating conditions or trends in a new market and therefore not being able to operate the acquired property profitably.
In addition, we may acquire properties that are subject to liabilities in situations where we have no recourse, or only limited recourse, against the prior owners or other third parties with respect to unknown liabilities. As a result, if a liability were asserted against us based upon ownership of those properties, we might have to pay substantial sums to settle or contest it. Examples of unknown liabilities with respect to acquired properties include, but are not limited to:
• liabilities for remediation of disclosed or undisclosed environmental contamination;
• claims by tenants, vendors or other persons dealing with the former owners of the properties;
• liabilities incurred in the ordinary course of business; and
• claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the properties.
Our performance is subject to risks inherent in owning real estate investments.
We are generally subject to risks incidental to the ownership of real estate. These risks include:
• changes in supply of or demand for properties in our market or sub-markets;
• competition for tenants in our market or sub-markets;
• the ongoing need for capital improvements;
• increased operating costs, which may not necessarily be offset by increased rents, including insurance premiums, utilities, real estate taxes, capital expenditures and repair and maintenance costs, due to inflation and other factors;
• changes in tax, real estate and zoning laws;
• changes in governmental rules and fiscal policies;
• inability of tenants to pay rent;
• competition from the development of new space in our market or sub-markets and the quality of competition, such as the attractiveness of our properties as compared to our competitors’ properties based on considerations such as convenience of location, rental rates, amenities and safety record; and
• civil unrest, rumors or threats of war, terrorism, adverse political conditions, acts of God, including earthquakes, hurricanes and other natural disasters (which may result in uninsuredlosses) and other factors beyond our control.
Should any of the foregoing occur, it may have a material adverse effect on our business, financial condition and results of operations.
We face considerable competition in the leasing market and may be unable to renew existing leases or re-let space on terms similar to our existing leases, or we may expend significant capital in our efforts to re-lease space, which may adversely affect our business, financial condition and results of operations.
We compete with a number of other owners and operators of competitive properties to renew leases with our existing tenants and to attract new tenants. If our properties are not as attractive to existing or new tenants as properties owned by our competitors due to the age of the buildings, physical condition, lack of amenities or other similar factors, we could lose tenants, it could take longer to re-lease our properties and we could suffer lower rental rates. To the extent that we are able to renew leases that are scheduled to expire in the short-term or re-let such space to new tenants, heightened competition may require us to give rent concessions or provide tenant improvements to a greater extent than we otherwise would have.
If our competitors offer space at rental rates below current market rates or below the rental rates we currently charge our tenants, we may lose potential tenants, and we may be pressured to reduce our rental rates below those we currently charge, or
Table of Contents
may not be able to increase rates to market rates, in order to retain tenants upon expiration of their existing leases. Even if our tenants renew their leases or we can re-let the space, the terms and other costs of renewal or re-letting, including the cost of required renovations, increased tenant improvement allowances, leasing commissions, declining rental rates, and rent or other potential concessions, may be less favorable than the terms of our current leases and could require significant capital expenditures. Our inability to renew leases or re-let space in a reasonable time, a decline in rental rates or an increase in tenant improvement allowances, leasing commissions, rent concessions or other costs may have a material adverse effect on our business, financial condition and results of operations.
Tenant payment defaults may have a material adverse effect on our business, financial condition and results of operations.
Nearly all of our revenues and income comes from rental income from real property. As such, our business, financial condition and results of operations could be adversely affected if our tenants default on their lease payment obligations. Our ability to manage our assets is also subject to federal bankruptcy laws and state laws that limit creditors’ rights and remedies available to real property owners to collect delinquent rents. If a tenant becomes insolvent or bankrupt, we cannot be sure that we could recover the premises from the tenant promptly or from a trustee or debtor-in-possession in any bankruptcy proceeding relating to that tenant. We also cannot be sure that we would receive any rent in the proceeding sufficient to cover our expenses with respect to the premises. If a tenant becomes bankrupt, the federal bankruptcy code will apply and, in some instances, may restrict the amount and recoverability of our claimsagainst the tenant. A tenant’s default on its payment obligations may have a material adverse effect on our business, financial condition and results of operations.
Some of our leases provide tenants with the right to terminate their leases early, which may have a material adverse effect on our business, financial condition and results of operations.
Certain of our leases permit our tenants to terminate their leases as to all or a portion of their leased premises prior to their stated lease expiration dates under certain circumstances, such as providing notice by a certain date and, in most cases, paying a termination fee. As of December 31, 2025, 12.3% of our occupied square footage was subject to early termination provisions. There were no tenant-exercised early lease termination options during the year ended December 31, 2025. During the year ended December 31, 2024, one tenant exercised an early termination option which resulted in the partial termination of approximately 30,000 square feet under an approximately 127,000 square foot lease effective in May 2025. We and the tenant agreed on an early termination of the remaining 97,000 square feet leased to this tenant as part of a simultaneous sale of the property in October 2025. To the extent that our tenants exercise early termination rights, our cash flow and earnings will be adversely affected, and we can provide no assurances that we will be able to generate an equivalent amount of net effective rent by leasing the vacated space to new third-party tenants. If our tenants elect to terminate their leases early, it may have a material adverse effect on our business, financial condition and results of operations.
We have a significant amount of indebtedness and may need to incur more in the future.
As of December 31, 2025, we had approximately $465.0 million of total outstanding consolidated indebtedness. In addition, in connection with executing our business strategies going forward, we expect to invest in our current portfolio and, as market conditions permit, intend to acquire additional properties and make strategic investments, and we may elect to finance these endeavors by incurring additional indebtedness. The amount of such indebtedness could have material adverse consequences for us, including:
• hindering our ability to adjust to changing market, industry or economic conditions;
• limiting our ability to access the capital markets to raise additional equity or refinance maturing debt on favorable terms to fund acquisitions, respond to competitive challenges or otherwise execute our business strategy;
• limiting the amount of free cash flow available for future operations, reinvestment in our portfolio, acquisitions, dividends or other uses;
• making us more vulnerable to economic or industry downturns, including interest rate increases; and
• placing us at a competitive disadvantage compared to less leveraged competitors.
Our ability to arrange additional financing will depend on, among other factors, the lender’s view of the quality of our portfolio, including tenant credit quality and weighted average lease term, our financial position and performance, as well as prevailing market conditions and other factors beyond our control. If we are able to obtain additional financing, such financing could further raise our borrowing costs and adversely impact our ability to satisfy our obligations under our indebtedness, which may have a material adverse effect on our business, financial condition and results of operations.
Table of Contents
In addition, our charter and bylaws do not limit the amount of indebtedness we may incur. Accordingly, our Board of Directors may permit us to incur additional debt and would do so, for example, if it were necessary to maintain our status as a REIT. We might become more highly leveraged as a result, and our financial condition, results of operations and funds available for distribution to stockholders might be negatively affected, and the risk of default on our indebtedness could increase, which may have a material adverse effect on our business, financial condition and results of operations.
We have existing debt and refinancing risks that could have a material adverse effect on our business, financial condition and results of operations, including the risk that we will be unable to extend or refinance some or all of our debt, or that the lenders will not seek to enforce their remedies due to the existing payment default under the Arch Street Joint Venture mortgage notes.
We have both fixed and variable rate indebtedness and may incur additional indebtedness in the future, including borrowings under our New Revolving Facility. As described in more detail in the section in this report entitled “Management’s Discussion and Analysis of Results of Operations and Financial Condition - Liquidity and Capital Resources - Credit Agreements”, in February 2026, we entered into a credit agreement for the New Revolving Facility and the Original Revolving Facility was terminated and the indebtedness thereunder discharged and paid in full with borrowings under the New Revolving Facility. Our New Revolving Facility is scheduled to mature in February 2028 and we have options to extend such maturity date until February 2029 if we satisfy certain conditions. Additionally, as described in more detail in the section of this report entitled Management’s Discussion and Analysis of Results of Operations and Financial Condition - Liquidity and Capital Resources - CMBS Loan”, our CMBS loan is now scheduled to mature in February 2029 and we have options to further extend such maturity date an additional 18 months until August 2030 if we satisfy certain conditions. We are dependent upon the New Revolving Facility, which is a fully recourse borrowing facility secured by our ownership interest in 28 of our properties and related collateral and guaranteed in full by us, for liquidity to execute our business strategies, and our CMBS Loan provides cross-collateralized financing for a total of 19 properties in our portfolio, and therefore the lender will have recourse to any and all of the assets that secure the debt in the event we default. We cannot provide assurance we will be able to extend, refinance or repay these debt obligations at maturity. Our ability to extend or refinance debt will be affected by our financial condition and various other factors existing at the relevant time, including factors beyond our control, such as capital and credit market conditions, the state of the national and regional economies, local real estate conditions and the equity in and value of the related collateral. We may be required to make significant principal repayments to extend or refinance our debt obligations.
The non-recourse mortgage notes associated with the Arch Street Joint Venture were scheduled to mature on November 27, 2025, subject to one remaining one-year borrower option to extend the maturity until November 27, 2026. The Arch Street Joint Venture exercised the extension option during September 2025. However, in order to extend the debt, the Arch Street Joint Venture is required to make an approximately $16.0 million prepayment of loan principal outstanding to satisfy the 60% loan-to-value extension condition. Due to capital constraints of our joint venture partner, the joint venture has been unable to make this prepayment. The loan was temporarily extended until February 26, 2026 and the joint venture remains in discussions with the lenders about next steps which may include an additional short-term extension and restructuring of the debt with a lender excess cash flow sweep and the requirement to sell one or more properties and utilize the net proceeds to prepay principal outstanding under the debt. We cannot provide any assurance that the Arch Street Joint Venture will be able to satisfy the loan-to-value condition or otherwise extend or refinance this debt obligation or that the lenders will not seek to enforce their remedies due to the existing payment default. Due to the uncertainties with regard to recovery of our Arch Street Joint Venture investments, we recorded an other-than-temporary impairmentloss on our investment in the Arch Street Joint Venture thereby reducing the carrying value of our investment to zero, and recorded a loan loss reserve of $5.9 million against our $6.6 million member loan to the Arch Street Joint Venture during the year ended December 31, 2025. Beginning in 2026, we will record management fees from the Arch Street Joint Venture and interest income on the member loan on a cash basis rather than accrual basis.
As a result of the indebtedness we incur, we are, and expect to be, subject to the risks normally associated with debt financing including:
• that we will be unable to extend, refinance or repay our debt as it becomes due or increase the availability of overall debt on terms as favorable as those of our existing debt, or at all;
• that interest rates may rise;
• that our cash flow could be insufficient to make required payments of principal and interest;
• that required payments on mortgages and on our other debt are not reduced if the economic performance of any property declines;
• that debt service obligations will reduce funds available for distribution to our stockholders;
Table of Contents
• that any default on our debt, due to non-compliance with financial covenants or otherwise, could result in acceleration of those obligations;
• that we may be unable to extend, refinance or repay the debt as it becomes due; and
• that if our degree of leverage is viewed unfavorably by lenders or potential joint venture partners, it could affect our ability to obtain additional financing.
If we are unable to extend, refinance or repay our indebtedness as it becomes due, we may need to sell assets or to seek protection from our creditors under applicable law, which may have a material adverse effect on our business, financial condition and results of operations.
Financial covenants could materially adversely affect our ability to conduct our business.
We have incurred debt pursuant to the New Revolving Facility and the CMBS Loan. The credit agreement governing the New Revolving Facility and the CMBS Loan each contain various financial and other covenants, including, with respect to the Revolving Facility, various financial covenants and other covenants restricting, subject to certain exceptions, liens, investments, mergers, asset sales, and the payment of certain dividends and share repurchases. The financial covenants under the New Revolving Facility are discussed in the section in this report entitled “Management’s Discussion and Analysis of Results of Operations and Financial Condition – Liquidity and Capital Resources – Credit Agreements – Revolving Facility Covenants”. In addition, pursuant to the February 2026 Loan Modification Agreement described herein, the CMBS Loan contains a cash sweep arrangement, whereby each month until maturity, the lender will sweep all monthly excess cash flows from the 19 properties, after payment of interest and property operating expenses. During the initial extension period, the lender will apply one-half of such excess funds to prepay the outstanding principal balance of the CMBS Loan, and the other half to fund the all-purpose reserve.
The financial and other covenants under our existing indebtedness, as well as any additional restrictions to which we may become subject in connection with additional financings or refinancings, could restrict our ability to pursue business initiatives, effect certain transactions or make other changes to our business that may otherwise be beneficial to us, which could adversely affect our business, financial condition and results of operations. In addition, violations of these covenants could cause declarations of default under, and acceleration of, any related indebtedness, which would result in material adverse consequences to our financial condition. The New Revolving Facility contains cross-default provisions that give the lenders the right to declare a default if we are in default resulting in (or permitting the) acceleration of other debt under other loans in excess of certain amounts. In the event of a default, we may be required to repay such debt with capital from other sources, which may not be available to us on attractive terms, or at all, which may have a material adverse effect on our business, financial condition and results of operations.
We depend on external sources of capital that are outside of our control, which may affect our ability to achieve our business strategies.
We will be required to make significant capital investments in our existing portfolio, including tenant improvement allowances to attract and retain tenants, as well as normal building improvements to replace obsolete building components. As market conditions permit, we intend to acquire new properties which will similarly require us to make capital investments. We do not expect our cash flows from operations alone to be sufficient to fund our future capital investments and, therefore, we will be dependent upon our ability to access third-party sources of capital, including the New Revolving Facility and other sources of debt and equity capital. Our access to third-party sources of capital depends on a number of factors, including general market conditions, the market’s view of the quality of our assets, the market’s perception of our growth potential, our current debt levels and our current and expected future earnings. There can be no assurance that we will be able to obtain the capital necessary to fund the investments we will be required to make in our existing portfolio or to acquire new properties on terms favorable to us or at all. If we are unable to obtain a sufficient level of third-party financing to fund our capital needs, our ability to achieve our business strategies will be materially adversely affected.
Our expenses may remain constant or increase, even if our revenues decrease, which may have a material adverse effect on our business, financial condition and results of operations.
Costs associated with our business, such as debt repayments, real estate taxes, insurance premiums and maintenance costs, are relatively inelastic and generally do not decrease, and may increase, when a property is not fully occupied, rental rates decrease, a tenant fails to pay rent or other circumstances cause a reduction in property revenues. As a result, if revenues drop, we may not be able to reduce our expenses accordingly, which may have a material adverse effect on our business, financial condition and results of operations.
Table of Contents
Real estate taxes may increase without notice.
The real estate taxes on our properties may increase as property tax rates change and as those properties are assessed or reassessed by tax authorities. While the majority of our leases are under a net lease structure, some or all of such real estate taxes may not be collectible from our tenants, and for our vacant properties, we are unable to recover real estate taxes from any former tenants. In such event, our financial condition, results of operations, cash flows, trading price of our common stock and our ability to satisfy our principal and interest obligations and to pay dividends to our stockholders could be adversely affected, which may have a material adverse effect on our business, financial condition and results of operations.
Real estate property investments are illiquid. We may not be able to dispose of properties when desired or on favorable terms.
Real estate investments are relatively illiquid. Our ability to quickly sell or exchange any of our properties in response to changes in economic and other conditions will be limited. No assurances can be given that we will recognize full value, at a price and at terms that are acceptable to us, for any property that we determine to sell. Our ability to successfully execute on our asset disposition and capital recycling sale program is dependent on market conditions, and such conditions have been and may continue to be unfavorable for commercial real estate generally and office assets in particular, as well as for buyer financing of these assets. We may incur costs on unsuccessful dispositions that we will not be able to recover. In general, when we sell properties that are vacant or soon to be vacant, the valuation will be discounted if the new owner is required to make capital improvements and to reflect that the new owner will bear carrying costs until the property has been leased up and take the risk that the property may not be leased up on a timely basis, favorable terms or at all. As part of our asset disposition activities, we have sought and may continue to seek to sell properties to buyers who intend to re-develop the subject property. While these sale transactions can result in higher sale valuations, they also may require us as seller to bear a portion of the buyer’s redevelopment risk through longer due diligence periods during which we remain responsible for carrying costs of the property and the buyer may terminate the transaction. Our inability to respond rapidly to changes in the performance of our investments could adversely affect our business, financial condition and results of operations.
We, our tenants and our properties are subject to various federal, state and local regulatory requirements, such as environmental laws, state and local fire and safety requirements, building codes and land use regulations.
We, our tenants and our properties are subject to various federal, state and local regulatory requirements, such as environmental laws, state and local fire and safety requirements, building codes and land use regulations. Failure to comply with these requirements could subject us, or our tenants, to governmental fines or private litigantdamage awards. In addition, compliance with these requirements, including new requirements or stricter interpretation of existing requirements, may require us, or our tenants, to incur significant expenditures. We do not know whether existing requirements will change or whether future requirements, including any requirements that may emerge from pending or future climate change regulations or legislation, will develop. Environmental noncompliance liability also could impact a tenant’s ability to make rental payments to us. Furthermore, our reputation could be negatively affected if we violate environmental laws or regulations, which may have a material adverse effect on our business, financial condition and results of operations.
In addition, as a current or former owner or operator of real property, we may be subject to liabilities resulting from the presence of hazardous substances, waste or petroleum products at, on, under or emanating from such property, including investigation and cleanup costs, natural resource damages, third-party liability for cleanup costs, personal injury or property damage and costs or losses arising from property use restrictions. In particular, some of our properties are adjacent to or near other properties that have contained or currently contain underground storage tanks used to store petroleum products or other hazardous or toxic substances. In addition, certain of our properties are on, adjacent to or near sites upon which others, including former owners or tenants of our properties, have engaged, or may in the future engage, in activities that have released or may have released petroleum products or other hazardous or toxic substances. Cleanup liabilities are often imposed without regard to whether the owner or operator knew of, or was responsible for, the presence of such contamination, and the liability may be joint and several. The presence of hazardous substances also may result in use restrictions on impacted properties or result in liens on contaminated sites in favor of the government for damages it incurs to address contamination. We also may be liable for the costs of removal or remediation of hazardous substances or waste disposal or treatment facilities if we arranged for disposal or treatment of hazardous substances at such facilities, whether or not we own such facilities. Moreover, buildings and other improvements on our properties may contain asbestos-containing material or other hazardous building materials or could have indoor air quality concerns ( e.g. , from airborne contaminants such as mold), which may subject us to costs, damages and other liabilities including abatement cleanup, personal injury, and property damage liabilities. The foregoing could adversely affect occupancy and our ability to lease, sell or borrow against any affected property and could require us to make significant unanticipated expenditures that may have a material adverse effect on our business, financial condition and results of operations.
Table of Contents
We are subject to risks associated with climate change.
The physical effects of climate change could have a material adverse effect on our properties, operations and business. To the extent the physical effects of climate change impact our markets, over time, we could experience declining demand for leasing our buildings or increasing costs associated with remediation and adaptation. Climate change may also make property insurance unavailable or available only with less favorable terms and increase energy and other operating costs. In addition, we face risks associated with the transition to a lower-carbon economy related to, among other things, federal, state and local legislation and regulations that are being implemented or are under consideration to mitigate the effects of climate change as well as evolving tenant preferences. The operating costs and capital expenditures associated with meeting new and evolving regulatory and legal requirements and tenant preferences, including those related to reporting and managing greenhouse gas emissions, could negatively impact our financial results.
Compliance or failure to comply with the Americans with Disabilities Act could result in substantial costs.
Our properties must comply with the Americans with Disabilities Act (the “ADA”) and any equivalent state or local laws, to the extent that our properties are public accommodations as defined under such laws. Under the ADA, all public accommodations must meet federal requirements related to access and use by disabled persons. If one or more of our properties is not in compliance with the ADA or any equivalent state or local laws, we may be required to incur additional costs to bring such property into compliance with the ADA or similar state or local laws. Noncompliance with the ADA or similar state and local laws could also result in the imposition of fines or an award of damages to private litigants. We cannot predict the ultimate amount of the cost of compliance with the ADA or any equivalent state or local laws. If we incur substantial costs to comply with the ADA or any equivalent state or local laws, it may have a material adverse effect on our business, financial condition and results of operations.
Our assets may be subject to impairment charges.
We regularly review our real estate assets for impairment, and based on these reviews, we have recorded and may continue to record impairmentlosses on our properties. Negative or uncertain market and economic conditions, as well as market volatility, increase the likelihood of incurring impairmentlosses. Other factors that could increase the likelihood of incurring impairment include actual or expected tenant vacancies, identification of a property for potential sale and a tenant bankruptcy or default. Such impairmentlosses may have a material adverse effect on our business, financial condition and results of operations.
Uninsured and underinsuredlosses may adversely affect our operations.
We, or in certain instances, tenants at our properties, carry comprehensive commercial general liability, fire, extended coverage, business interruption, rental loss coverage, environmental and umbrella liability coverage on all of our properties. We also carry wind and flood coverage on properties in areas where we believe such coverage is warranted, in each case with limits of liability that we deem adequate. Similarly, we are insured against the risk of direct physical damage in amounts we believe to be adequate to reimburse us, on a replacement cost basis, for costs incurred to repair or rebuild each property, including loss of rental income during the reconstruction period. However, we may be subject to certain types of losses that are generally uninsuredlosses, including, but not limited to losses caused by riots, war or acts of God. In the event of substantial property loss, the insurance coverage may not be sufficient to pay the full current market value or current replacement cost of the property. In the event of an uninsuredloss, we could lose some or all of our capital investment, cash flow and anticipated profits related to one or more properties. Inflation, changes in building codes and ordinances, environmental considerations and other factors also might make it not feasible to use insurance proceeds to replace a property after it has been damaged or destroyed. Under such circumstances, the insurance proceeds we receive might not be adequate to restore our economic position with respect to such property, which may have a material adverse effect on our business, financial condition and results of operations.
Our business could be materially adversely affected by security breaches through cyber-attacks, cyber intrusions or otherwise.
We face risks associated with security breaches, whether through cyber-attacks or cyber intrusions, malware, computer viruses, business email compromise, compromised vendor software, attachments to e-mails, persons inside our organization or persons with access to systems inside our organization and other significant disruptions of our information technology networks and related systems, which are essential to the operation of our business. These risks include potential operational interruptions, fraudulent transfer of assets or unauthorized access to and exposure of valuable and confidential data, ransom costs, increased cybersecurity protection and insurance costs, litigation and remediation costs and damage to our relationships with our tenants,
Table of Contents
among other things. There can be no assurance that our efforts to maintain the security and integrity of our information technology networks and related systems will be effective. A security breach involving our information technology networks and related systems could disrupt our operations in numerous ways that may have a material adverse effect on our business, financial condition and results of operations.
The obligations and requirements to which we are subject as a public company are extensive and will increase when we no longer qualify as an “emerging growth company.”
As a public company, we are subject to the reporting requirements of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Sarbanes-Oxley Act and the Dodd-Frank Act and are required to prepare our financial statements in accordance with the rules and regulations promulgated by the SEC. These and other public company obligations and requirements place significant demands on our management, administrative and operational resources, including accounting and information technology resources. If we are unable to satisfy these compliance obligations in a timely and effective fashion, our ability to comply with our financial reporting requirements and other rules that apply to reporting companies could be impaired and our business, prospects, financial condition and results of operations could be harmed.
As of the date of filing of this Annual Report on Form 10-K, we qualify as an “emerging growth company.” As such, we are eligible to take advantage of certain exemptions from various reporting requirements that apply to other public companies that are not emerging growth companies, including, but not limited to, compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and the requirements to hold a non-binding advisory vote on executive compensation and any golden parachute payments not previously approved. These exemptions will expire no later than December 31, 2026 (the last day of the fiscal year following the fifth anniversary of the first sale of our common equity securities pursuant to an effective registration statement under the Securities Act), at which time our public company compliance demands and costs will increase. We cannot predict if investors will find our common stock less attractive because we will rely on the exemptions available to us as an emerging growth company. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
Our business could be adversely impacted if there are deficiencies in our disclosure controls and procedures or internal control over financial reporting.
The design and effectiveness of our disclosure controls and procedures and internal control over financial reporting may not prevent all errors, misstatements or misrepresentations. While management will continue to review the effectiveness of our disclosure controls and procedures and internal control over financial reporting, there can be no assurance that our internal control over financial reporting will be effective in accomplishing all control objectives all of the time. Even if we continue to conclude that our internal control over financial reporting provides reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, because of its inherent limitations, internal control over financial reporting may not prevent or detect fraud or misstatements. Failure to implement or maintain required controls, or difficulties encountered in their implementation or maintenance, could harm our results of operations or cause us to fail to meet our reporting obligations. If we or our independent registered public accounting firm discover a material weakness in our internal control, the disclosure of that fact, even if quickly remedied, could reduce the market’s confidence in our financial statements and harm our stock price. In addition, a delay in compliance with Section 404 of the Sarbanes-Oxley Act could subject us to a variety of administrative sanctions, including ineligibility for short form resale registration, action by the SEC, the suspension or delisting of our common stock from and the inability of registered broker-dealers to make a market in our common stock, which would further reduce our stock price and could harm our business.
The success of our business depends on retaining officers and employees.
Our continued success depends to a significant degree upon the contributions of certain key personnel including, but not limited to, Paul H. McDowell, our Chief Executive Officer, who would be difficult to replace. We cannot provide any assurance that Mr. McDowell or any of our other key personnel will remain employed by us. Our ability to retain such individuals, or to attract a suitable replacement should he leave, is dependent on the competitive nature of the employment market. The loss of services of Mr. McDowell or other key personnel may have a material adverse effect on our business, financial condition and results of operations. No assurance can be given that we will be able to retain key employees, which may have a material adverse effect on our business, financial condition and results of operations.
Table of Contents
Failure to hedge effectively against interest rate changes may have a material adverse effect on our business, financial condition and results of operations.
The interest rate hedge instruments we have used and may continue to use to manage some of our exposure to interest rate volatility involve risk, such as the risk that counterparties may fail to honor their obligations under these arrangements. Failure to hedge effectively against such interest rate changes may have a material adverse effect on our business, financial condition and results of operations.
We may amend our investment strategy and business policies without stockholder approval.
Our Board of Directors may change our investment strategy or any of our investment guidelines, financing strategy or leverage policies with respect to investments, developments, acquisitions, growth, operations, indebtedness, capitalization and dividends at any time without the consent of our stockholders, which could result in an investment portfolio with a different risk profile. Such a change in our strategy may increase our exposure to interest rate risk, default risk and real estate market fluctuations, among other risks. These changes could adversely affect our ability to pay dividends to our stockholders and may have a material adverse effect on our business, financial condition and results of operations.
The New Revolving Facility may limit our ability to pay dividends on our common stock, including repurchasing shares of our common stock.
Under the credit agreement governing the New Revolving Facility, our dividends may not exceed the greater of (1) 100% of our adjusted funds available for distribution (as defined in the credit agreement), and (2) the amount required for us to maintain our qualification as a REIT. Any inability to pay dividends may negatively impact our REIT status or could cause stockholders to sell shares of our common stock, which may have a material adverse effect on our business, financial condition and results of operations.
The market price of our common stock may vary substantially.
The market price of our common stock may fluctuate widely as a result of a number of factors, many of which are outside of our control. In addition, the stock market is subject to fluctuations in share prices and trading volumes that affect the market prices of the shares of many companies. These fluctuations in the stock market may adversely affect the market price of our common stock. Among the factors that could affect the market price of our common stock are:
• actual or anticipated quarterly fluctuations in our business, financial condition and operating results;
• changes in revenues or earnings estimates or publication of research reports and recommendations by financial analysts or actions taken by rating agencies with respect to our securities or those of other REITs;
• the ability of our tenants to pay rent to us and meet their other obligations to us under current lease terms;
• our ability to re-lease spaces as leases expire;
• our ability to extend or refinance our indebtedness as it matures;
• any changes in our dividend policy;
• any future issuances of equity securities;
• strategic actions by us or our competitors, such as acquisitions or restructurings;
• general economic, political and financial market conditions and, in particular, developments related to market conditions for the real estate industry; and
• domestic and international economic factors unrelated to our performance.
Risks Related to Our Status as a REIT
Our failure to maintain our qualification as a REIT for U.S. federal income tax purposes could have a material adverse effect on us.
We have elected to be taxed as a REIT and believe we have been organized and have operated in a manner that has allowed us to qualify and to remain qualified as a REIT for U.S. federal income tax purposes commencing with our initial taxable year ended December 31, 2021. We have not requested and do not plan to request a ruling from the IRS that we qualify as a REIT and the statements in this Annual Report on Form 10-K are not binding on the IRS or any court. Therefore, we cannot guarantee that we have qualified as a REIT or that we will remain qualified as such in the future. If we fail to maintain our qualification as
Table of Contents
a REIT or lose our REIT status, we will face significant tax consequences that would substantially reduce our cash available for distribution to our stockholders for each of the years involved because:
• we would not be allowed a deduction for dividends paid to stockholders in computing our taxable income and would be subject to regular U.S. federal corporate income tax;
• we could be subject to increased state and local taxes; and
• unless we are entitled to relief under applicable statutory provisions, we could not elect to be taxed as a REIT for four taxable years following the year during which we were disqualified.
Any such corporate tax liability could be substantial and would reduce our cash available for, among other things, our operations and distributions to stockholders. In addition, if we fail to maintain our qualification as a REIT, we will not be required to make distributions to our stockholders. As a result of all these factors, our failure to qualify as a REIT also could impair our ability to expand our business and raise capital and could materially and adversely affect the trading price of our common stock.
Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations. The determination of various factual matters and circumstances not entirely within our control may affect our ability to qualify as a REIT. In order to maintain our qualification as a REIT, we must satisfy a number of requirements, including requirements regarding the ownership of our common stock, requirements regarding the composition of our assets and a requirement that at least 95% of our gross income in any year must be derived from qualifying sources, such as “rents from real property.” Also, we must make distributions to stockholders aggregating annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains. In addition, legislation, new regulations, administrative interpretations or court decisions may materially and adversely affect our investors, our ability to maintain our qualification as a REIT for federal income tax purposes or the desirability of an investment in a REIT relative to other investments.
Even if we remain qualified as a REIT for federal income tax purposes, we may be subject to some federal, state and local income, property and excise taxes on our income or property and, in certain cases, a 100% penalty tax, in the event we sell property as a dealer. In addition, our taxable REIT subsidiaries will be subject to income tax as regular corporations in the jurisdictions in which they operate.
If either Realty Income or VEREIT failed to qualify as a REIT during certain periods prior to the Distribution, we would be prevented from electing to qualify as a REIT.
Under applicable Treasury Regulations, if Realty Income or VEREIT failed to qualify as a REIT during certain periods prior to the Distribution, unless Realty Income’s or VEREIT’s failure was subject to relief under U.S. federal income tax laws, we would be prevented from electing to qualify as a REIT prior to the fifth calendar year following the year in which Realty Income or VEREIT failed to qualify.
If certain of our subsidiaries, including our operating partnership, fail to qualify as partnerships or disregarded entities for federal income tax purposes, we would cease to qualify as a REIT and would suffer other adverse consequences.
One or more of our subsidiaries may be treated as a partnership or disregarded entity for federal income tax purposes and, therefore, will not be subject to federal income tax on its income. Instead, each of its partners or its members, as applicable, which may include us, will be allocated, and may be required to pay tax with respect to, such partner’s or member’s share of its income. We cannot assure you that the IRS will not challenge the status of any subsidiary partnership or limited liability company in which we own an interest as a disregarded entity or partnership for federal income tax purposes, or that a court would not sustain such a challenge. If the IRS were successful in treating any subsidiary partnership or limited liability company as an entity taxable as a corporation for federal income tax purposes, we could fail to meet the gross income tests and certain of the asset tests applicable to REITs and, accordingly, we would likely cease to qualify as a REIT. Also, the failure of any subsidiary partnerships or limited liability company to qualify as a disregarded entity or partnership for applicable income tax purposes could cause it to become subject to federal and state corporate income tax, which would reduce significantly the amount of cash available for debt service and for distribution to its partners or members, including us.
Table of Contents
Any taxable REIT subsidiaries owned by us are subject to corporate-level taxes and our dealings with our taxable REIT subsidiaries may be subject to 100% excise tax.
A REIT may own up to 100% of the stock of one or more taxable REIT subsidiaries. Both the subsidiary and the REIT must jointly elect to treat the subsidiary as a taxable REIT subsidiary. A corporation of which a taxable REIT subsidiary directly or indirectly owns more than 35% of the voting power or value of the stock will automatically be treated as a taxable REIT subsidiary. Overall, no more than 25% (20% for tax years beginning before January 1, 2026) of the gross value of a REIT’s assets may consist of stock or securities of one or more taxable REIT subsidiaries. In addition, the taxable REIT subsidiary rules limit the deductibility of amounts paid or accrued by a taxable REIT subsidiary to its parent REIT to assure that the taxable REIT subsidiary is subject to an appropriate level of corporate taxation. The rules also impose a 100% excise tax on certain transactions between a taxable REIT subsidiary and its parent REIT that are not conducted on an arm’s length basis.
Taxable REIT subsidiaries that we own or may form will pay federal, state and local income tax on their taxable income, and their after-tax net income will be available for distribution to us but will not be required to be distributed to us, unless necessary to maintain our REIT qualification. In certain circumstances, the ability of our taxable REIT subsidiaries to deduct interest expenses for U.S. federal income tax purposes may be limited. While we plan to monitor the aggregate value of the securities of our taxable REIT subsidiaries and intend to conduct our affairs so that such securities will represent less than 25% of the value of our total assets, there can be no assurance that we will be able to comply with the taxable REIT subsidiary limitation or avoid the application of the 100% excise tax discussed above in all market conditions.
Distribution requirements imposed by law limit our flexibility.
To maintain our status as a REIT for federal income tax purposes, we generally are required to distribute to our stockholders at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains, each year. We also are subject to tax at regular corporate rates to the extent that we distribute less than 100% of our taxable income (including net capital gains) each year.
In addition, we are subject to a 4% non-deductible excise tax to the extent that we fail to distribute during any calendar year at least the sum of 85% of our ordinary income for that calendar year, 95% of our capital gain net income for the calendar year, and any amount of that income that was not distributed in prior years.
We intend to continue to make distributions to our stockholders to comply with the distribution requirements of the Code as well as to reduce our exposure to federal income taxes and the non-deductible excise tax. Differences in timing between the receipt of income and the payment of expenses to arrive at taxable income, along with the effect of required debt amortization payments, could require us to borrow funds to meet the distribution requirements that are necessary to achieve the tax benefits associated with qualifying as a REIT.
We may make distributions on our common stock in common stock and/or cash. Our stockholders may sell shares of our common stock to pay tax on such dividends, placing downward pressure on the market price of our common stock.
In order to satisfy our REIT distribution requirements, we are permitted, subject to certain conditions and limitations, to make distributions that are in part payable in shares of our common stock. Distributions of cash and common stock will be treated as dividends to the extent of our current and accumulated earnings and profits, as determined for U.S. federal income tax purposes. As a result, stockholders may be required to pay income tax with respect to such dividends in excess of the cash received in the distribution. If a stockholder sells shares of our stock to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of the stock at the time of the sale. Moreover, if a significant number of our stockholders sell shares of our stock to pay such taxes, it may cause the stock distribution to be viewed as economically equivalent to a dividend reduction and put downward pressure on the market price of our stock. Furthermore, we may be required to withhold federal income tax with respect to dividends paid to certain non-U.S. stockholders, including dividends payable in our stock.
The tax imposed on REITs engaging in “prohibited transactions” may limit our ability to engage in transactions which would be treated as sales for federal income tax purposes.
A REIT’s net income from prohibited transactions is subject to a 100% penalty tax. In general, prohibited transactions are sales or other dispositions of property, other than foreclosure property, held in inventory primarily for sale to customers in the ordinary course of business. Although we do not intend to hold any properties that would be characterized as inventory held for sale to customers in the ordinary course of our business, such characterization is a factual determination and no guarantee can
Table of Contents
be given that the IRS would agree with our characterization of our properties or that we will always be able to make use of the available safe harbors.
Legislative or other actions affecting REITs could have a negative effect on us or our investors.
The rules dealing with federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Department of the Treasury. Changes to the tax laws, with or without retroactive application, could adversely affect us or our investors, including holders of our common stock or debt securities. We cannot predict how changes in the tax laws might affect us or our investors. New legislation, Treasury Regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to qualify as a REIT, the federal income tax consequences of such qualification, or the federal income tax consequences of an investment in us. Also, the law relating to the tax treatment of other entities, or an investment in other entities, could change, making an investment in such other entities more attractive relative to an investment in a REIT.
Risks Related to an Investment in Our Common Stock
Limitations on the ownership of our common stock and other provisions of our charter may preclude the acquisition or change of control of our Company.
Certain provisions contained in our charter and certain provisions of Maryland law may have the effect of discouraging a third party from making an acquisition proposal for us and may thereby inhibit a change of control. Provisions of our charter are designed to assist us in maintaining our qualification as a REIT under the Code by preventing concentrated ownership of our capital stock that might jeopardize REIT qualification. Among other things, unless exempted by our Board of Directors, no person may actually or constructively own more than 9.8% of the aggregate of the outstanding shares of our common stock by value or by number of shares, whichever is more restrictive, or 9.8% of the aggregate of the outstanding shares of all classes and series of our outstanding stock by value. Our Board of Directors may, in its sole discretion, grant exemptions to the stock ownership limits, subject to such conditions and the receipt by our Board of Directors of certain representations and undertakings.
In addition to these ownership limits, our charter also prohibits any person from:
• beneficially or constructively owning, as determined by applying certain attribution rules of the Code, shares of our capital stock that would result in us being “closely held” under Section 856(h) of the Code;
• transferring our capital stock if such transfer would result in our stock being owned by fewer than 100 persons (determined under the principles of Section 856(a)(5) of the Code);
• beneficially or constructively owning shares of our capital stock to the extent such ownership would result in us owning (directly or indirectly) an interest in a tenant if the income derived by us from that tenant for our taxable year during which such determination is being made would reasonably be expected to equal or exceed the lesser of one percent of our gross income or an amount that would cause us to fail to satisfy any of the REIT gross income requirements; and
• beneficially or constructively owning shares of our capital stock that would cause us otherwise to fail to qualify as a REIT.
If any transfer of our shares of stock occurs which, if effective, would result in any person beneficially or constructively owning shares of stock in excess, or in violation, of the above transfer or ownership limitations (such person, a prohibited owner), then that number of shares of stock, the beneficial or constructive ownership of which otherwise would cause such person to violate the transfer or ownership limitations (rounded up to the nearest whole share), will be automatically transferred to a charitable trust for the exclusivebenefit of a charitable beneficiary, and the prohibited owner will not acquire any rights in such shares. If the transfer to the charitable trust would not be effective for any reason to prevent the violation of the above transfer or ownership limitations, then the transfer of that number of shares of our capital stock that otherwise would cause any person to violate the above limitations will be void. The prohibited owner will not benefit economically from ownership of any shares of our capital stock held in the charitable trust, will have no rights to dividends or other distributions and will not possess any rights to vote or other rights attributable to the shares of our capital stock held in the charitable trust.
Generally, the ownership limits imposed under the Code are based upon direct or indirect ownership by “individuals,” but only during the last half of a taxable year. The ownership limits contained in our charter are based upon direct or indirect ownership at any time by any “person,” which term includes entities. These ownership limitations in our charter are common in REIT governing documents and are intended to provide added assurance of compliance with the tax law requirements, and to
Table of Contents
minimize administrative burdens. However, the ownership limits on our common stock also might delay, defer or prevent a transaction or a change in control of our company that might involve a premium price for shares of our common stock or otherwise be in the best interest of our stockholders.
Furthermore, under our charter, our Board of Directors has the authority to classify and reclassify any of our unissued shares of capital stock into shares of capital stock with such preferences, rights, powers and restrictions as our Board of Directors may determine. The authorization and issuance of a new class of capital stock could have the effect of delaying or preventing someone from taking control of us, even if a change in control were in our stockholders’ best interests, which could have a material adverse effect on our business, financial condition and results of operations.
Maryland law may limit the ability of a third party to acquire control of us.
The Maryland General Corporation Law (the “MGCL”) provides protection for Maryland corporations against unsolicited takeovers by limiting, among other things, the duties of the directors in unsolicited takeover situations. The duties of directors of Maryland corporations do not require them to:
• accept, recommend or respond to any proposal by a person seeking to acquire control of the corporation;
• authorize the corporation to redeem any rights under, or modify or render inapplicable, any stockholder rights plan;
• make a determination under the Maryland Business Combination Act; or
• act or fail to act solely because of the effect the act or failure to act may have on an acquisition or potential acquisition of control of the corporation or the amount or type of consideration that may be offered or paid to the stockholders in an acquisition.
Moreover, under the MGCL, the act of a director of a Maryland corporation relating to or affecting an acquisition or potential acquisition of control is not subject to any higher duty or greaterscrutiny than is applied to any other act of a director. The MGCL also contains a statutory presumption that an act of a director of a Maryland corporation satisfies the applicable standards of conduct for directors under the MGCL.
The MGCL also provides that unless exempted, certain Maryland corporations may not engage in business combinations, including mergers, dispositions of 10% or more of its assets, certain issuances of shares of stock and other specified transactions, with an “interested stockholder” or an affiliate of an interested stockholder for five years after the most recent date on which the interested stockholder became an interested stockholder, and thereafter unless specified criteria are met. An interested stockholder is generally a person owning or controlling, directly or indirectly, 10% or more of the voting power of the outstanding stock of the Maryland corporation, unless the stock had been obtained in a transaction approved by its Board of Directors. These and other provisions of the MGCL could have the effect of delaying, deferring or preventing a proxy contest, tender offer, merger or other change in control, which may have a material adverse effect on our business, financial condition and results of operations.
Market interest rates may have an effect on the value of our common stock.
One of the factors that will influence the price of our common stock will be its dividend yield, or the dividend per share as a percentage of the price of our common stock, relative to market interest rates. If market interest rates remain elevated or increase, prospective purchasers of our common stock may expect a higher dividend yield, and higher interest rates would likely increase our borrowing costs and potentially decrease funds available for distribution. If market interest rates increase and we are unable to increase our dividend in response, including due to an increase in borrowing costs, insufficient funds available for distribution or otherwise, investors may seek alternative investments with a higher dividend yield, which would result in selling pressure on, and a decrease in the market price of, our common stock. As a result, the price of our common stock may decrease as market interest rates increase, which may have a material adverse effect on our business, financial condition and results of operations.
The number of shares of our common stock available for future issuance or sale could adversely affect the per share trading price of our common stock and may be dilutive to current stockholders.
Our charter authorizes our Board of Directors to, among other things, issue additional shares of our common stock without stockholder approval. In addition, our Board of Directors has the power under our charter to amend our charter to increase (or decrease) the number of authorized shares of our stock of any class from time to time, without approval of our stockholders. We cannot predict whether future issuances or sales of shares of our common stock, or the availability of shares for resale in the open market, will decrease the per share trading price of our common stock. The issuance of a substantial number of shares of
Table of Contents
our common stock in the open market or the issuance of a substantial number of shares of our common stock upon the exercise of the warrants granted to affiliates of Arch Street Capital Partners in connection with the Distribution or the exchange of OP units or other securities exchangeable or convertible into shares of our common stock, or the perception that such issuances might occur, could adversely affect the per share trading price of our common stock. In addition, any such issuance could dilute our existing stockholders’ interests in our company. In addition, we have adopted an equity compensation plan, and we have issued and expect to continue to issue shares of our common stock or grant equity incentive awards exercisable for or convertible or exchangeable into shares of our common stock under the plan. Future issuances of shares of our common stock may be dilutive to existing stockholders, which may have a material adverse effect on our business, financial condition and results of operations.
Future offerings of debt securities, which would be senior to our common stock upon liquidation, or preferred equity securities which may be senior to our common stock for purposes of dividends or upon liquidation, may materially adversely affect the per share trading price of our common stock.
In the future, we may attempt to increase our capital resources by making additional offerings of debt or equity securities (or causing Orion OP to issue such debt securities), including medium-term notes, senior or subordinated notes and additional classes or series of preferred stock. Upon liquidation, holders of our debt securities and shares of preferred stock or preferred units and lenders with respect to other borrowings will be entitled to receive our available assets prior to distribution of such assets to holders of our common stock. Additionally, any convertible or exchangeable securities that we may issue in the future may have rights, preferences and privileges more favorable than those of our common stock and may result in dilution to owners of our common stock. Holders of our common stock are not entitled to preemptive rights or other protections against dilution. Any shares of preferred stock or preferred units that we issue in the future could have a preference on liquidating distributions or a preference on dividends that could limit our ability to pay dividends to the holders of our common stock. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Any such future offerings may reduce the per share trading price of our common stock, which may have a material adverse effect on our business, financial condition and results of operations.
Our ability to pay dividends is limited by the requirements of Maryland law.
Our ability to pay dividends on our common stock is limited by Maryland law. Under the MGCL, a Maryland corporation, including Orion, generally may not pay a dividend if, after giving effect to the dividend, the corporation would not be able to pay its debts as such debts become due in the ordinary course of business or the corporation’s total assets would be less than the sum of its total liabilities plus , unless the corporation’s charter permits otherwise, the amount that would be needed, if the corporation were dissolved at the time of the dividend, to satisfy the preferential rights upon dissolution of stockholders whose preferential rights are superior to those receiving the dividend. If we are unable to pay dividends, or our ability to pay dividends is limited, investors may seek alternative investments, which would result in selling pressure on, and a decrease in the market price of, our common stock. As a result, the price of our common stock may decrease, which may have a material adverse effect on our business, financial condition and results of operations.
We may change our dividend policy.
Future dividends will be declared and paid at the discretion of our Board of Directors, and the amount and timing of dividends will depend upon cash generated by operating activities, our business, financial condition, results of operations, capital requirements, annual distribution requirements under the REIT provisions of the Code, and such other factors as our Board of Directors deems relevant. Our Board of Directors may change our dividend policy at any time, and there can be no assurance as to the manner in which future dividends will be paid or that the current dividend level will be maintained in future periods. Any reduction in our dividends may cause investors to seek alternative investments, which would result in selling pressure on, and a decrease in the market price of, our common stock. As a result, the price of our common stock may decrease, which may have a material adverse effect on our business, financial condition and results of operations.
The Company was initially formed as a wholly owned subsidiary of Realty Income Corporation (“Realty Income”). Following completion of the merger transaction involving Realty Income and VEREIT, Inc. (“VEREIT”) on November 1, 2021, Realty Income contributed the combined business comprising certain office real properties and related assets previously owned by subsidiaries of Realty Income, and certain office real properties and related assets previously owned by subsidiaries of VEREIT (the “Separation”), to the Company and its operating partnership, Orion Properties LP (“Orion OP”), and on November 12, 2021, effected a special distribution to Realty Income’s stockholders of all the outstanding shares of common stock of the Company (the “Distribution”).
Following the Distribution, we became an independent and publicly traded company, and our common stock, par value $0.001, trades on the New York Stock Exchange (the “NYSE”) under the symbol “ONL”. The Company has elected to be taxed as a REIT for U.S. federal income tax purposes, commencing with its initial taxable year ended December 31, 2021.
Cooperation Agreement and Strategic Review Process
On January 26, 2026, we entered into a cooperation agreement (the “Cooperation Agreement”) with one of the Company’s stockholders, The Kawa Fund Limited and its affiliate, Kawa Capital Management, Inc. (collectively, “Kawa”).
Also on January 26, 2026, pursuant to the Cooperation Agreement, we commenced a review of strategic options for the Company, which review may include, without limitation, the consideration of potential acquisition and merger targets, the potential sale of the Company and continuing to operate as an independent publicly traded entity. The Cooperation Agreement does not obligate the Company to pursue or consummate any such transaction or require our Board of Directors to take any action that it determines in good faith is inconsistent with its duties under applicable law.
The Cooperation Agreement contains customary standstill and non-disparagement provisions. The Cooperation Agreement will terminate on September 1, 2026. Pursuant to the Cooperation Agreement, Kawa withdrew its notice of intent to nominate director candidates for election to our Board of Directors at the Company’s 2026 annual meeting of stockholders, and Kawa must cause all shares of common stock pursuant to which it has the sole or shared power to direct the voting to be present for quorum purposes at our 2026 annual meeting of stockholders and to refrain from “withholding” or voting “against” the directors nominated by our Board of Directors for election at such annual meeting.
Table of Contents
Real Estate Portfolio
As of December 31, 2025, we owned and operated 58 operating properties with an aggregate of 6.5 million leasable square feet located in 26 states with an occupancy rate of 78.1% and a weighted average remaining lease term of 5.6 years. As of December 31, 2025, we had eight properties designated as non-operating properties. We also owned a 20% equity interest in the Arch Street Joint Venture, which as of December 31, 2025, owned a portfolio of six properties with an aggregate of 1.0 million leasable square feet located in six states with an occupancy rate of 100% and a weighted average remaining lease term of 6.3 years. Including our proportionate share of leasable square feet and annualized base rent from the Arch Street Joint Venture, we owned an aggregate of 6.7 million leasable square feet with an occupancy rate of 78.7%, or 78.2% adjusted for one consolidated operating property and our proportionate share of one Arch Street Joint Venture operating property that are currently under agreements to be sold, and a weighted average remaining lease term of 5.7 years, as of December 31, 2025.
Executive Summary
We are a real estate investment trust that owns and operates primarily single tenant office properties in suburban locations leased to high credit quality tenants. Our largest tenant as measured by annualized base rent is the United States Government, representing 17.8% of our annualized base rent as of December 31, 2025. We were formed in 2021 and spun-off as an independent publicly traded company in November 2021, by our former parent company, Realty Income Corporation.
We continue to be significantly impacted by declining demand for office space which began with the onset of the COVID-19 pandemic in 2020. We have experienced significant lease expirations and contractions over the last few years, including 681,000 square feet during the year ended December 31, 2025. This has resulted in declines in both our revenues and earnings since our spin-off from Realty Income. During the year ended December 31, 2025, our total revenues decreased $17.2 million, or approximately 11.0%, versus the prior year, primarily driven by the impact of lease expirations. During the year ended December 31, 2025, our property operating expenses decreased $0.3 million, or approximately 0.5%, versus the prior year, primarily due to operating expense savings from disposed properties of $3.3 million, offset by $3.0 million of costs incurred for the demolition of the buildings on the six-property campus in Deerfield, Illinois. See “Results of Operations - Operating Expenses - Property Operating Expenses” below for more information. As of December 31, 2025, we owned a total of five fully vacant operating properties, compared to 11 fully vacant operating properties owned as of December 31, 2024.
During the year ended December 31, 2025, office leasing market conditions continued to improve and we completed approximately 0.9 million square feet of new and renewed leases, compared to approximately 1.1 million square feet and 0.3 million square feet during the years ended December 31, 2024 and December 31, 2023, respectively.
We have agreed to provide rent concessions to tenants and incur leasing costs with respect to our properties, including amounts paid directly to tenants to improve their space and/or building systems, or tenant improvement allowances, landlord agreements to perform and pay for certain improvements, and leasing commissions. In connection with the 0.9 million square feet of leasing activity during the year ended December 31, 2025, we made aggregate commitments for tenant improvement allowances and base building allowances, leasing commissions and rent concessions of $43.8 million, or $6.44 per rentable square foot leased per year over a weighted average lease term of 7.4 years. As of December 31, 2025, we had total outstanding commitments for rent concessions and leasing costs of approximately $51.4 million, including $39.1 million of tenant improvement allowances. The actual amount we pay for tenant improvement allowances may be lower than the amount agreed upon in the applicable lease and will depend upon the tenant’s use of the capital on the agreed upon timeline. We anticipate that we will continue to agree to tenant improvement allowances and to pay leasing commissions, the amount of which may increase in future periods.
We intend to shift our portfolio concentration over time away from traditional office properties, towards more dedicated use assets that have an office component. Our experience is that dedicated use assets have greater tenant utilization and higher renewal probability, given their generally specialized uses and general inability for the tenant’s employees to conduct business at these sites on a remote or hybrid basis. We define dedicated use assets as those that include a substantial specialized use component such as government, medical, laboratory and research and development, and flex operations, and would therefore not be considered traditional office properties. As of December 31, 2025, approximately 35.8% of our annualized base rent was derived from properties we deemed dedicated use assets, compared to 31.8% as of December 31, 2024.
We continued our efforts to divest of vacancies and non-core properties by selling 10 properties totaling approximately 1.0 million square feet for an aggregate gross sales price of $80.7 million during the year ended December 31, 2025. As of March 5, 2026, we had pending agreements in place to sell eight additional non-core properties for an aggregate gross sales price of $43.3 million, including the 37.4 acre Deerfield, Illinois properties where we completed the demolition of the six
Table of Contents
buildings during the fourth quarter of 2025 and our proportionate share of the gross sales price of one Arch Street Joint Venture operating property. We expect to continue to selectively dispose of properties in our current portfolio if we determine that they do not fit our investment strategies. The sale of these assets will allow us to both reduce carry costs and avoid the uncertainty and significant capital expenditures associated with re-tenanting. Proceeds from the sale of real estate assets are expected to be redeployed to fund capital investment into our existing portfolio to further enhance the quality of our portfolio and stability of our cash flows, selective acquisitions and other general corporate purposes.
During and subsequent to the year ended December 31, 2025, we took certain steps to strengthen our balance sheet. This included refinancing our $350.0 million senior revolving credit facility (the “Original Revolving Facility”) by entering into a new $215.0 million senior secured revolving credit facility during February 2026 (the “New Revolving Facility”). The New Revolving Facility extended the maturity date under the Original Revolving Facility until February 2028, subject to two six-month borrower extension options until February 2029 if we satisfy certain conditions, reduced the lenders’ commitment to $215.0 million to more closely align with our business plan, reduced the interest rate margin on our borrowings by 50-basis points and eliminated the 10-basis point SOFR adjustment. Also during February 2026, we entered into an amendment to the CMBS Loan which, among other things, extended the maturity date two years until February 2029, subject to two borrower extension options for a total of 18 months until August 2030 if certain conditions have been satisfied. The fixed interest rate on the CMBS Loan is unchanged during the extension terms. See “Liquidity and Capital Resources - Credit Agreements” below for more information about the New Revolving Facility and the amendment to the CMBS Loan.
General and administrative expenses of $20.3 million during the year ended December 31, 2025 were largely unchanged compared to the same period in 2024, as lower employee compensation costs of $0.3 million in the 2025 period were offset by additional legal and other costs attributable to unsolicited acquisition proposals and our response to activist investors during 2025.
Interest expense, net decreased $1.1 million during the year ended December 31, 2025, as compared to the prior year, primarily due to $0.5 million of interest capitalized during the year ended December 31, 2025, compared to no interest capitalized during the year ended December 31, 2024. We expect our overall debt levels to increase as we continue to re-invest in our property portfolio and execute on our shift in portfolio concentration away from traditional office properties. We are also exposed to changes in market interest rates on our floating rate borrowings, including those under our New Revolving Facility.
The Company’s Board of Directors declared and paid a quarterly cash dividend of $0.02 per share for each of the four quarters of 2025 (record dates March 31, 2025, June 30, 2025, September 30, 2025 and December 31, 2025). On March 4, 2026, the Company’s Board of Directors declared a quarterly cash dividend of $0.02 per share for the first quarter of 2026, payable on April 15, 2026 to stockholders of record as of March 31, 2026.
Factors That May Influence Our Operating Results and Financial Condition
Rental Revenues
Our operating results depend primarily upon generating rental revenue from the properties in our portfolio. The amount of rental revenue generated by these properties is affected by our ability to maintain or increase occupancy levels, which will depend upon our ability to re-lease expiring space at favorable rates (see “Economic Environment and Tenant Retention” below). In addition, we have agreed to provide rent concessions to tenants and incur leasing costs with respect to our properties, including amounts paid directly to tenants to improve their space and/or building systems, or tenant improvement allowances, landlord agreements to perform and pay for certain improvements, and leasing commissions, and we anticipate we will continue to do so in future periods (see “Leasing Activity and Capital Expenditures” below).
Economic Environment and Tenant Retention
Our portfolio comprises primarily single-tenant leases, and tenant retention remains a significant challenge, as we have faced and will continue to face significant lease expirations the next few years. For example, leases representing approximately 10.2% and 12.7% of our annualized base rent are scheduled to expire during 2026 and 2027, respectively, and we may be unable to renew leases or find replacement tenants. Certain changes in office space utilization, including increased remote and hybrid work arrangements and tenants consolidating their real estate footprint, continue to impact the office leasing market. The utilization and demand for office space continue to face headwinds and the duration and ultimate impact of current trends on the demand for office space at our properties remains uncertain and subject to change. Accordingly, we do not yet know what the full extent of the impacts will be on our or our tenants’ businesses and operations or the long-term outlook for leasing our properties. Higher interest rates, inflationary pressures, geopolitical hostilities and tensions, changes in United States trade policy and the imposition of new tariffs and concerns that the United States economy may enter an economic recession have
Table of Contents
caused disruptions in the financial markets; in addition, the impact of a future prolonged federal government shutdown, similar to the shutdown that began in the third quarter of 2025, may cause increased government budgetary pressures and uncertainty surrounding budgetary priorities. These factors could adversely affect our and our tenants’ financial condition and the ability or willingness of our current and prospective tenants to renew their leases, enter into new leases or pay rent to us.
Our leasing and asset disposition activity since the completion of our distribution from Realty Income continues to be adversely impacted by a variety of market and property specific conditions. The COVID-19 pandemic and its aftermath has significantly reduced demand for office space and changes in space usage in the office leasing market, as tenants seek to attract employees back to the office, in newer, renovated properties with more amenities.
As of December 31, 2025, 69.7%, 24.2% and 6.1% of our properties by rentable square feet were classified as class A, class B and class C, respectively, as determined primarily by the most recent appraisals of the properties . As of December 31, 2025, our class B and class C properties collectively included the following 10% or greater geographic concentrations and property type concentrations as measured by rentable square feet:
Geographic Concentration
% of Rentable Square Feet
Texas
California
Property Type
% of Rentable Square Feet
Traditional Office
Flex/Industrial
Governmental
In the current office environment, class B and class C properties generally have been experiencing reduced demand and lea se or sell at discounts to class A properties and our tenants and prospective new tenants across our portfolio sometimes compare the cost and the value of leasing space in our property to the value of newer space with more amenities asking higher rent in other properties in the market. The class of buildings we own may be negatively impacting our leasing velocity and pushing our leasing costs higher and may also be negatively impacting our sales price on non-core asset sales.
Indebtedness
We have incurred significant amounts of indebtedness and, therefore, are subject to the risks normally associated with debt financing, including that we may be unable to extend, refinance or repay our debt obligations as they come due. Deteriorating office fundamentals, high interest rates, market sentiment towards the office sector and recent changes in United States trade policy and the imposition of new tariffs may adversely impact us or our lenders or restrict our access to, and increase our cost of, capital as we seek to extend, refinance or repay our debts. See “Liquidity and Capital Resources - Credit Agreements” below for more information about our indebtedness.
Property Acquisitions and Dispositions
We intend to shift our portfolio concentration over time away from traditional office properties, towards more dedicated use assets that have an office component. We expect to continue to selectively dispose of properties in our current portfolio if we determine that they do not fit our investment strategies. Proceeds from the sale of real estate assets are expected to be redeployed to fund capital investment into our existing portfolio to further enhance the quality of our portfolio and stability of our cash flows, selective acquisitions and other general corporate purposes. As part of our capital recycling efforts, we are seeking opportunities to invest in properties featuring, among other uses, government, medical, laboratory and research and development, and flex operations. We cannot provide any assurance as to whether we will be able to acquire new properties or sell non-core assets on favorable terms and in a timely manner, or at all. See “Item 1A. Risk Factors – We may be unable to successfully execute on our strategy to shift our portfolio concentration over time away from traditional office properties, towards more dedicated use assets” in this Annual Report on Form 10-K for risks related to property acquisitions and dispositions.
Table of Contents
Emerging Growth Company Status
We have been an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”) since the public Distribution of our common stock in November 2021. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that apply to other public companies that are not emerging growth companies, including compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and the requirements to hold a non-binding advisory vote on executive compensation and any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we rely on the exemptions available to us as an emerging growth company. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
In addition, Section 107 of the JOBS Act provides that an emerging growth company may take advantage of the extended transition period provided in Section 13(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period and, therefore, will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies until we can no longer avail ourselves of the exemptions applicable to emerging growth companies or until we affirmatively and irrevocably opt out of the extended transition period.
We will lose our emerging growth company status on December 31, 2026. As such, we will be subject to the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act for our annual report on Form 10-K for the year ended December 31, 2026, and the requirements to hold a non-binding advisory vote on executive compensation for our 2027 annual meeting of stockholders.
We are also a “smaller reporting company” as defined in Regulation S-K under the Securities Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company and as such may elect to take advantage of certain scaled disclosures available to smaller reporting companies.
Basis of Presentation
The consolidated financial statements of the Company for the years ended December 31, 2025, 2024 and 2023, include the accounts of the Company and its consolidated subsidiaries, including Orion OP, and a consolidated joint venture. All intercompany transactions have been eliminated upon consolidation.
Election as a REIT
The Company elected to be taxed as a REIT for U.S. federal income tax purposes under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, commencing with the taxable year ended December 31, 2021. To maintain our qualification as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute annually at least 90% of our REIT taxable income, subject to certain adjustments and excluding any net capital gain, to stockholders. As a REIT, except as discussed below, we generally are not subject to federal income tax on taxable income that we distribute to our stockholders so long as we distribute at least 90% of our annual taxable income (computed without regard to the deduction for dividends paid and excluding net capital gains). REITs are subject to a number of other organizational and operational requirements. Even if we maintain our qualification for taxation as a REIT, we may become subject to certain state and local taxes on our income and property, and federal income taxes on certain income and excise taxes on our undistributed income.
Critical Accounting Estimates
Our accounting policies have been established to conform with U.S. GAAP. The preparation of financial statements in conformity with U.S. GAAP requires us to use judgment in the application of accounting policies, including making estimates and assumptions. These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Management believes that it has made these estimates and assumptions in an appropriate manner and in a way that accurately reflects our financial condition. We continually test and evaluate these estimates and assumptions using our historical knowledge of the business, expectations and projections regarding future events and plans, as well as other factors, to ensure that they are reasonable for reporting purposes. However, actual results may differ from these estimates and assumptions. If our judgment or interpretation of the facts and circumstances relating to the various transactions had been different, it is possible
Table of Contents
that different accounting estimates would have been applied, thus resulting in a different presentation of the financial statements. Additionally, other companies may utilize different assumptions or estimates that may impact comparability of our results of operations to those of companies in similar businesses. We believe the critical accounting policies described below involve significant judgments and estimates used in the preparation of our financial statements, which should be read in conjunction with the more complete discussion of our accounting policies and procedures included in Note 2 – Summary of Significant Accounting Policies to our consolidated financial statements.
Real Estate Impairment
We invest in real estate assets and subsequently monitor those investments quarterly for impairment. The risks and uncertainties involved in applying the principles related to real estate impairment include, but are not limited to, the following:
• The review of impairment indicators and subsequent determination of the undiscounted future cash flows could require us to reduce the carrying value of assets and recognize an impairmentloss.
• The evaluation of real estate assets for potential impairment requires our management to exercise significant judgment and make certain key assumptions, including the following: (1) capitalization rate; (2) discount rate; (3) number of years the property will be held; (4) property operating expenses; and (5) re-leasing assumptions including the number of months to re-lease, market rental revenue and required tenant improvements. There are inherent uncertainties in making these estimates such as market conditions and performance and sustainability of our tenants.
• Changes related to management’s intent to sell or lease the real estate assets used to develop the forecasted cash flows may have a material impact on our financial results.
Equity Method Investment Impairment
We are required to determine whether an event or change in circumstances has occurred that may have a significant adverse effect on the fair value of our investment in the Arch Street Joint Venture. If an event or change in circumstance has occurred, the Company is required to evaluate its investment in the Arch Street Joint Venture for potential impairment and determine if the carrying value of its investment exceeds its fair value. An impairment charge is recorded when an impairment is deemed to be other-than-temporary. To determine whether an impairment is other-than-temporary, the Company considers whether it has the intent and ability to hold the investment until the carrying value is fully recovered. The evaluation of an investment in an unconsolidated joint venture for potential impairment requires the Company’s management to exercise significant judgment and to make certain assumptions. The use of different judgments and assumptions could result in different conclusions.
Allocation of Purchase Price of Real Estate Assets
We generally account for acquisitions of properties as asset acquisitions and we measure the real estate assets acquired based on the purchase price or total consideration exchanged, inclusive of acquisition costs, and allocate the total consideration exchanged to tangible and intangible assets and liabilities based on their respective estimated fair values. Tangible assets consist of land, buildings, fixtures and improvements. Intangible assets and liabilities consist of any above-market and below-market leases, acquired in-place leases and other identified intangible assets and assumed liabilities (including ground leases, if applicable). Our purchase price allocations are developed utilizing third-party appraisal reports, industry standards and management experience. The risks and uncertainties involved in applying the principles related to purchase price allocations include, but are not limited to, the following:
• The value allocated to land, as opposed to buildings, fixtures and improvements, affects the amount and timing of depreciation expense we record. If more value is attributed to land, depreciation expense is lower than if more value is attributed to buildings, fixtures and improvements.
• Intangible lease assets and liabilities can be significantly affected by estimates, including market rent, lease term (including renewal options at rental rates below estimated market rental rates), carrying costs of the property during a hypothetical expected lease-up period, and current market conditions and costs, including tenant improvement allowances and rent concessions.
• If any financing is assumed, we determine whether such financing is above-market or below-market based upon comparison to similar financing terms for similar investment properties.
Table of Contents
Recently Issued Accounting Pronouncements
Recently issued accounting pronouncements are described in Note 2 – Summary of Significant Accounting Policies to our consolidated financial statements.
Significant Transactions Summary
Activity during the year ended December 31, 2025 and Subsequent Events
Real Estate Operations
• During the year ended December 31, 2025, we completed approximately 0.9 million square feet of lease renewals and new leases across 14 different properties, which includes one Arch Street Joint Venture property, and a weighted average lease term of 7.5 years.
• During the year ended December 31, 2025, we closed on the sale of 10 properties totaling approximately 1.0 million square feet for an aggregate gross sales price of $80.7 million. Subsequent to the year ended December 31, 2025, we completed an additional two property dispositions totaling approximately 0.5 million square feet for an aggregate sales price of $13.1 million. As of March 5, 2026, we had pending agreements in place to sell eight additional non-core properties for an aggregate gross sales price of $43.3 million, including the 37.4 acre Deerfield, Illinois properties where we completed the demolition of the six buildings during the fourth quarter of 2025 and our proportionate share of the gross sales price of one Arch Street Joint Venture operating property. Our pending sale agreements are subject to a variety of conditions outside of our control, such as the buyer’s satisfactory completion of its due diligence and therefore, we cannot provide any assurance the transaction will close on the agreed upon price or other terms, or at all.
• During February 2026, we acquired one 75,000 square foot property in Northbrook, Illinois for a gross purchase price of $15.0 million. The property is fully leased to a single tenant through December 2036.
• During February 2025, we made an additional member loan of $8.3 million to fund leasing costs related to a lease extension that was completed for one of the properties in the Arch Street Joint Venture portfolio. As of December 31, 2025, the outstanding balance of the member loan was $6.6 million. We recorded a loan loss reserve of $5.9 million against our member loan during the year ended December 31, 2025.
• During the year ended December 31, 2025, six leases expired or were downsized comprising a total reduction in occupied square feet of approximately 0.7 million square feet. As of December 31, 2025, we had a total of five fully vacant operating properties.
Debt
• On May 9, 2025, we entered into an interest rate collar agreement to hedge against interest rate volatility under the Original Revolving Facility and subsequently the New Revolving Facility. Under the agreement, the benchmark rate for the Original Revolving Facility or subsequently the New Revolving Facility will float between no higher than 4.29% and no lower than 3.28% on a total notional amount of $75.0 million, effective from May 12, 2025 to May 12, 2026.
• On February 18, 2026, the Company entered into a credit agreement for the New Revolving Facility and the Original Revolving Facility was terminated and the indebtedness thereunder discharged and paid in full with borrowings under the New Revolving Facility. Among other things, the New Revolving Facility extended the maturity date under the Original Revolving Facility until February 2028, subject to two six-month borrower extension options until February 2029 if we satisfy certain conditions, reduced the lenders’ commitment to $215.0 million to more closely align with our business plan, reduced the interest rate margin on our borrowings by 50-basis points and eliminated the 10-basis point SOFR adjustment. See “Liquidity and Capital Resources - Credit Agreements” below for more information about the New Revolving Facility.
• Also during February 2026, the Company entered into an amendment to the CMBS Loan which, among other things, extended the maturity date two years until February 11, 2029, subject to two borrower extension options for a total of 18 months until August 2030 if certain conditions have been satisfied. The fixed interest rate on the CMBS Loan is unchanged during the extension terms. See “Liquidity and Capital Resources - Credit Agreements” below for more information about the amendment to the CMBS Loan.
Table of Contents
Equity
• On November 10, 2025, we filed a new universal shelf registration statement on Form S-3, which expires in November 2028.
• On December 31, 2025, the Share Repurchase Program expired.
• The Company’s Board of Directors declared and paid quarterly cash dividends of $0.02 per share for each of the four quarters of 2025 (record dates March 31, 2025, June 30, 2025, September 30, 2025 and December 31, 2025), which were paid on April 15, 2025, July 15, 2025, October 15, 2025 and January 15, 2026, respectively.
• On March 4, 2026, the Company’s Board of Directors declared a quarterly cash dividend of $0.02 per share for the first quarter of 2026, payable on April 15, 2026 to stockholders of record as of March 31, 2026.
Portfolio Overview
Real Estate Portfolio Metrics
Our financial performance is impacted by the timing of acquisitions and dispositions and the operating performance of our properties. The following table shows the property statistics of our operating properties as of the dates indicated below, including our proportionate share of the applicable statistics of the properties owned by the Arch Street Joint Venture:
December 31, 2025
December 31, 2024
Portfolio Metrics
Operating properties
Arch Street Joint Venture properties
Non-Operating properties
Rentable square feet (in thousands) (1)
Annualized base rent (in thousands)
Occupancy rate (2)
Leased rate (3)
Investment-grade tenants (4)
Weighted average remaining lease term (in years)
(1) Represents leasable square feet of operating properties and the Company’s proportionate share of leasable square feet of properties owned by the Arch Street Joint Venture.
(2) Occupancy rate equals the sum of occupied square feet divided by rentable square feet of operating properties. Adjusting for one consolidated operating and our proportionate share of the square footage of one Arch Street Joint Venture operating property that are currently under agreements to be sold, the occupancy rate as of December 31, 2025 would be 78.2%.
(3) Leased rate equals the sum of leased square feet divided by rentable square feet of operating properties.
(4) Based on annualized base rent of our real estate portfolio, including the Company’s proportionate share of annualized base rent for properties owned by the Arch Street Joint Venture, as of December 31, 2025. Investment-grade tenants are those with a credit rating of BBB- or higher by Standard & Poor’s Financial Services LLC or a credit rating of Baa3 or higher by Moody’s Investor Service, Inc. The ratings may reflect those assigned by Standard & Poor’s Financial Services LLC or Moody’s Investor Service, Inc. to the lease guarantor or the parent company, as applicable.
Table of Contents
Operating Performance
In addition, management uses the following financial metrics to assess our operating performance (in thousands, except per share amounts):
Year Ended December 31,
Financial Metrics
Total revenues
Net loss attributable to common stockholders
Basic and diluted net loss per share attributable to common stockholders
FFO attributable to common stockholders (1)
FFO attributable to common stockholders per diluted share (1)
Core FFO attributable to common stockholders (1)
Core FFO attributable to common stockholders per diluted share (1)
(1) See the Non-GAAP Measures section below for descriptions of our non-GAAP measures and reconciliations to the most comparable U.S. GAAP measure.
Leasing Activity and Capital Expenditures
We remain highly focused on leasing activity, given the 5.7 year weighted average remaining lease term and the significant lease maturities which will occur across the portfolio over the next few years. If our tenants decide not to renew their leases, terminate their leases early or default on their leases, we will seek to re-lease the space to new tenants. We may not, however, be able to re-lease the space to suitable replacement tenants on a timely basis, or at all. Our properties may not be as attractive to existing or new tenants as properties owned by our competitors due to age of buildings, physical condition, lack of amenities or other similar factors. Even if we are able to renew leases with existing tenants or enter into new leases with replacement tenants, the terms of renewals or new leases, including the cost of required renovations, improvements or concessions to tenants, may be less favorable to us than current lease terms. As a result of the above factors, our net income and ability to pay dividends to stockholders could be materially adversely affected. Further, if any of our properties cannot be leased on terms and conditions favorable to us, we may seek to dispose of the property; however, such property may not be marketable at a suitable price without substantial capital improvements, alterations, or at all, which could inhibit our ability to effectively dispose of those properties and could require us to expend capital to fund necessary capital improvements or alterations. In general, when we sell properties that are vacant or soon to be vacant, the valuation will be discounted to reflect that the new owner will bear carrying costs until the property has been leased up and take the risk that the property may not be leased up on a timely basis, favorable terms or at all.
As an owner of commercial real estate, we are required to make capital expenditures with respect to our portfolio, which include normal building improvements to replace obsolete building components and expenditures to extend the useful life of existing assets and lease related expenditures to retain existing tenants or attract new tenants to our properties. We have agreed to provide rent concessions to tenants and incur leasing costs with respect to our properties, including amounts paid directly to tenants to improve their space and/or building systems, or tenant improvement allowances, landlord agreements to perform and pay for certain improvements, and leasing commissions. We anticipate that we will continue to agree to tenant improvement allowances, the amount of which may increase in future periods. These rent concessions and leasing costs could be significant and are expected to vary due to factors such as competitive market conditions for leasing of commercial office space and the volume of square footage subject to re-leasing by us.
Table of Contents
As of December 31, 2025, we had the following estimated total outstanding rent concessions and leasing costs commitments, including our proportionate share of the commitments of the Arch Street Joint Venture (in thousands, except per square foot amounts):
Outstanding Amount
Leased Square Feet (1)
Outstanding Amount Per Square Foot (1)
Rent concessions (2)
Tenant improvement allowances (3)
Reimbursable landlord work (4)
Non-reimbursable landlord work (4)
Total
(1) Certain leases may contain more than one of the above rent concessions and leasing costs. The total leased square feet associated with our outstanding rent concessions and leasing costs excludes any duplicate square footage for the purpose of calculating the total outstanding amount per square foot.
(2) Rent concessions include free rent for future periods under our executed leases which include certain leases for which the lease term has yet to commence, and include estimates of property operating expenses, where applicable.
(3) Includes additional allowances of $3.6 million provided within the respective lease agreements, which require election by the tenant in exchange for additional rental income through the remaining term of the lease as well as $1.4 million for our proportionate share of a tenant improvement allowance outstanding with an Arch Street Joint Venture tenant.
(4) Landlord work represents specific improvements agreed to within the lease agreement to be performed by us, as landlord, as a new non-recurring obligation and in order to induce the tenant to enter into a new lease or lease renewal or extension. Outstanding commitments for reimbursable and non-reimbursable landlord work amounts include estimates and are subject to change.
The actual amount we pay for tenant improvement allowances may be lower than the amount agreed upon in the applicable lease and will depend upon the tenant’s use of the capital on the agreed upon timeline. The timing of our cash outlay for tenant improvement allowances is significantly uncertain and will depend upon the applicable tenant’s schedule for the improvements and corresponding use of capital, if any. We estimate that the foregoing rent concessions and leasing costs will be funded between 2026 and 2041.
We have funded and intend to continue to fund our outstanding leasing costs with cash on hand, which may include proceeds from dispositions. For assets financed on our CMBS Loan, we have funded reserves with the lender for tenant improvement allowances and rent concessions. In connection with the February 2026 modification of the CMBS Loan, we funded an additional $7.74 million into an all-purpose reserve which may be used for leasing costs and we agreed that a portion of future excess cash flows from the 19 properties collateralizing the CMBS Loan will be used to continue to fund the all-purpose reserve. As of December 31, 2025, total restricted cash of $38.2 million was reserved for outstanding leasing costs, including $25.5 million for tenant improvement allowances and $12.7 million for rent concession commitments, and is included in restricted cash in our consolidated balance sheets.
Table of Contents
During the periods indicated below, we entered into new and renewal leases as summarized in the following tables (dollars and square feet in thousands):
Year Ended December 31, 2025
New Leases
Renewals (1)
Total
Number of leases
Rentable square feet leased
Weighted average lease term (by rentable square feet) (years) - firm term (2)
Weighted average lease term (by rentable square feet) (years) - non-firm term (2)
Weighted average new term rental rate per rentable square foot per year (cash basis)
Weighted average rental rate change (cash basis) (3) (4)
Tenant rent concessions and leasing costs per rentable square foot per year - firm term (5)
Tenant rent concessions and leasing costs per rentable square foot per year - non-firm term (5)
Year Ended December 31, 2024
New Leases
Renewals
Total
Number of leases
Rentable square feet leased
Weighted average lease term (by rentable square feet) (years) - firm term (2)
Weighted average lease term (by rentable square feet) (years) - non-firm term (2)
Weighted average new term rental rate per rentable square foot per year (cash basis)
Weighted average rental rate change (cash basis) (3) (4)
Tenant rent concessions and leasing costs per rentable square foot per year - firm term (5) (6)
Tenant rent concessions and leasing costs per rentable square foot per year - non-firm term (5)
(1) Includes the Company’s proportionate share of rentable square feet and tenant rent concessions and leasing costs for one 163,000 square foot renewal at a property owned by the Arch Street Joint Venture and excludes one four-month extension at the Company’s 109,000 square foot property in East Syracuse, New York.
(2) Firm term includes the non-cancellable portion of the lease term and any cancellable portion of the lease term if the tenant's right to cancel requires payment of a termination fee. Non-firm term includes the firm term plus the portion of the lease term, principally under our United States Government leases, where the tenant has the right to terminate without payment of a termination fee.
(3) Represents weighted average percentage increase or decrease in (i) the annualized monthly cash amount charged to the applicable tenants (including monthly base rent receivables and certain fixed contractually obligated reimbursements by the applicable tenants, which may include estimates) as of the commencement date of the new lease term (excluding any full or partial rent abatement period) compared to (ii) the annualized monthly cash amount charged to the applicable tenants (including the monthly base rent receivables and certain fixed contractually obligated reimbursements by the applicable tenants, which may include estimates) as of the expiration date of the prior lease term. Contractually obligated reimbursements include estimated amortization of certain landlord funded improvements under our United States Government leases. If a space has been or will be vacant for more than 12 months prior to the commencement of a new lease or was previously otherwise not generating full cash rental revenue, the lease will be excluded from the rental rate change calculation.
(4) Excludes five new leases for approximately 239,000 square feet and four new leases for approximately 149,000 square feet for the years ended December 31, 2025 and 2024, respectively, that had been or will be vacant for more than 12 months at the time the new lease commences.
(5) Includes tenant improvement allowances and base building allowances, certain reimbursable and non-reimbursable landlord funded improvements, leasing commissions and rent concessions (includes estimates of property operating expenses, where applicable). For our multi-tenant properties, we have allocated the estimated cost of landlord funded improvements that benefit the property generally and/or the common areas and not the tenant’s premises in particular, to the applicable lease based on square footage of the related tenant.
(6) Includes reimbursable landlord funded improvements and tenant improvement allowances per rentable square foot per year of $2.22 for new leases, $0.05 for renewals and $0.82 in total for the year ended December 31, 2024.
Table of Contents
During the year ended December 31, 2025, six leases expired or were downsized comprising a total reduction in occupied square feet of approximately 681,000 square feet. We closed on the sale of two of these properties totaling approximately 235,000 square feet during the year ended December 31, 2025. There were no scheduled lease expirations during the three months ended December 31, 2025.
During the periods indicated below, amounts capitalized by the Company for capital expenditures were as follows (in thousands):
Year Ended December 31,
Lease related costs (1)
Lease incentives (2)
Building, fixtures and improvements (3)
Total capital expenditures
(1) Lease related costs generally include lease commissions paid in connection with the execution of new and/or renewed leases.
(2) Lease incentives generally include expenses paid on behalf of the tenant or reimbursed to the tenant, including expenditures related to the construction of tenant-owned improvements.
(3) Building, fixtures and improvements generally include expenditures to replace obsolete building or land components, expenditures that extend the useful life of existing assets, expenditures to construct landlord owned improvements and any capitalized interest charges associated with such expenditures.
Future Lease Expirations
For a tabular summary of scheduled lease expirations in our property portfolio as of December 31, 2025, see the Lease Expirations table under “Item 2. Properties” in this Annual Report on Form 10-K.
Results of Operations
Comparison of the year ended December 31, 2025 to the year ended December 31, 2024
The results of operations discussed in this section include the accounts of the Company and its consolidated subsidiaries for the years ended December 31, 2025 and 2024.
Revenues
The table below sets forth, for the periods presented, revenue information and the dollar amount change year over year (in thousands):
Year Ended December 31,
Increase/(Decrease)
Rental
Fee income from unconsolidated joint venture
Total revenues
Rental
The decrease in rental revenue of $17.2 million during the year ended December 31, 2025 as compared to the same period in 2024 was primarily due to the impact of decreasing overall occupied square footage from expiration of leases totaling $20.9 million. We had 58 operating properties with an aggregate of 5.1 million occupied square feet as of December 31, 2025, as compared to 69 properties with an aggregate of 5.8 million occupied square feet as of December 31, 2024.
Other items impacting year over year rental revenue results include $3.8 million increase in rental revenue in the 2025 period from the property we acquired in September 2024 and a $3.2 million increase in lease termination income in the 2025 period and a $0.7 million increase from timing of certain reimbursable revenues, offset by $3.3 million of reimbursements from previous tenants for certain end of lease obligations recognized in rental revenue during the year ended December 31, 2024 and a $0.7 million decline in reimbursement revenue for real estate taxes in the 2025 period due to lower property values.
Table of Contents
Operating Expenses
The table below sets forth, for the periods presented, certain operating expense information and the dollar amount change year over year (in thousands):
Year Ended December 31,
Increase/(Decrease)
Property operating
General and administrative
Depreciation and amortization
Impairments
Transaction related
Total operating expenses
Property operating expenses
Property operating expenses such as taxes, insurance, ground rent and maintenance include both reimbursable and non-reimbursable property expenses. Property operating expenses decreased $0.3 million during the year ended December 31, 2025 as compared to the same period in 2024 primarily due to decreases in property operating expenses resulting from property dispositions of $3.3 million, a $1.7 million decrease in real estate taxes due to lower property values, timing of certain operating expenses of $0.3 million, offset by $3.0 million of costs incurred for the demolition of the buildings on the six-property campus in Deerfield, Illinois, increased operating expenses from vacancies of $1.2 million, and $0.7 million from our property acquired in September 2024.
General and administrative expenses
General and administrative expenses of $20.3 million during the year ended December 31, 2025 were largely unchanged compared to the same period in 2024, as lower employee compensation costs of $0.3 million in the 2025 period were offset by additional legal and other costs attributable to unsolicited acquisition proposals and our response to activist investors during 2025.
Depreciation and amortization expenses
Depreciation and amortization expenses decreased $42.1 million during the year ended December 31, 2025 as compared to the same period in 2024, due to the $27.3 million impact of full amortization of certain intangible assets, the $15.9 million impact from the full depreciation of the buildings on the six-property campus in Deerfield, Illinois in the 2024 period as a result of management’s plans to demolish the buildings, the $1.7 million impact from depreciation and amortization expenses from disposed properties, and the $0.9 million impact of real estate asset impairments, offset by depreciation and amortization expenses related to capitalized real estate assets and intangible lease assets of $2.2 million and related to the property we acquired in September 2024 of $1.2 million.
Impairments
Impairments increased $51.8 million during the year ended December 31, 2025 as compared to the same period in 2024. The impairment charges of $99.4 million in the year ended December 31, 2025 include a total of 12 properties and the charges were incurred primarily with respect to real estate assets sold or expected to be sold and reflect management’s estimates of lease renewal probability, timing and terms of such renewals, carrying costs for vacant properties, sale probability and estimates of sale proceeds. Impairment charges totaling $47.6 million with respect to 12 properties were recorded during the year ended December 31, 2024. See Note 5 – Fair Value Measures for further information.
Transaction related expenses
Transaction related expense increased $0.4 million during the year ended December 31, 2025 as compared to the same period in 2024 primarily due to a $0.3 million payment during 2025 in connection with the sale of a property to settle a tenant dispute with regard to landlord maintenance obligations and higher dead deal costs of $0.2 million, offset by lower acquisition related costs of $0.1 million.
Table of Contents
Other (Expenses) Income and Provision for Income Taxes
The table below sets forth, for the periods presented, certain financial information and the dollar amount change year over year (in thousands):
Year Ended December 31,
Increase/(Decrease)
Interest expense, net
Gain on disposition of real estate assets
Loss on extinguishment of debt, net
Other income
Other expenses
Reserve on member loan to unconsolidated joint venture
Equity in loss and impairment of investment in unconsolidated joint venture, net
Provision for income taxes
Interest expense, net
Interest expense, net decreased $1.1 million during the year ended December 31, 2025 as compared to the same period in 2024. The Company’s average debt outstanding was $478.5 million for the year ended December 31, 2025 compared to $481.5 million during the same period in 2024. The Company’s weighted average interest rate on its debt obligations was 5.62% for the year ended December 31, 2025 and 5.85% for the same period in 2024. Interest expense, net was offset by capitalized interest of $0.5 million during the year ended December 31, 2025, and there was no capitalized interest during the year ended December 31, 2024.
We expect our overall debt levels to increase as we continue to re-invest in our property portfolio and execute on our shift in portfolio concentration away from traditional office properties. We are also exposed to changes in market interest rates on our floating rate borrowings, including those under our Revolving Facility.
Gain on disposition of real estate assets
Gains on disposition of real estate assets were $7.1 million during the year ended December 31, 2025 as compared to no gains on disposition of real estate assets during the year ended December 31, 2024. The gains recognized during the year ended December 31, 2025 were related to six of our dispositions. Of the six dispositions with gains recognized during the year ended December 31, 2025, three were subject to cumulative impairmentlosses of $18.2 million in prior periods.
Loss on extinguishment of debt, net
Loss on extinguishment of debt, net during the year ended December 31, 2024 related to the proportionate write off of deferred financing costs due to the $75.0 million permanent reduction of the borrowing capacity of the Original Revolving Facility. There were no such costs incurred during the year ended December 31, 2025.
Other income
Other income, net increased $0.3 million during the year ended December 31, 2025 as compared to the same period in 2024, primarily due to increased interest income of $0.6 million, offset by other non-routine income recognized in 2024 of $0.3 million which was related to forfeited escrow deposits on the six-property campus in Deerfield, Illinois when a prospective buyer terminated an agreement to acquire the properties.
Other expenses
Other expenses of $1.6 million recognized during the year ended December 31, 2025 were primarily related to a loss on deferred offering costs of $0.6 million in connection with the scheduled expiration of our universal shelf registration statement, $0.6 million in connection with the retirement of our Chief Investment Officer, and $0.4 million of costs incurred for professional services rendered in connection with the February 2026 amendment to the CMBS Loan.
Table of Contents
Reserve on member loan to unconsolidated joint venture
During the year ended December 31, 2025, we recorded a loan loss reserve of $5.9 million for the Arch Street Joint Venture member loan due to the uncertainties with regard to recovery of our Arch Street Joint Venture investments.
Equity in loss and impairment of investment in unconsolidated joint venture, net
Equity in loss of the unconsolidated joint venture increased $11.1 million during the year ended December 31, 2025 as compared to the same period in 2024, primarily due to the other-than-temporary impairment of our investment in the unconsolidated joint venture of $10.8 million.
Comparison of the year ended December 31, 2024 to the year ended December 31, 2023
For a comparison of the year ended December 31, 2024 to the year ended December 31, 2023, see “Item. 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2024 Annual Report on Form 10-K filed on March 5, 2025.
Non-GAAP Measures
Our results are presented in accordance with U.S. GAAP. We also disclose certain non-GAAP measures, as discussed further below. M anagement uses these non-GAAP financial measures in our internal analysis of results and believes these measures are useful to investors for the reasons explained below. These non-GAAP financial measures should not be considered as substitutes for any measures derived in accordance with U.S. GAAP.
Funds From Operations (“FFO”) and Core Funds From Operations (“Core FFO”) Attributable to Common Stockholders
Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts, Inc. (“Nareit”), an industry trade group, has promulgated a supplemental performance measure known as FFO, which we believe to be an appropriate supplemental performance measure to reflect the operating performance of the Company. FFO is not equivalent to our net income (loss) as determined under U.S. GAAP.
Nareit defines FFO as net income (loss) computed in accordance with U.S. GAAP adjusted for gains or losses from disposition of real estate assets, depreciation and amortization of real estate assets, impairment write-downs on real estate and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity, and our proportionate share of FFO adjustments related to the unconsolidated joint venture. We calculate FFO in accordance with Nareit’s definition described above.
In addition to FFO, we use Core FFO as a non-GAAP supplemental financial performance measure to evaluate the operating performance of the Company. Core FFO, as defined by the Company, excludes from FFO items that we believe do not reflect the ongoing operating performance of our business such as transaction related expenses, amortization of deferred financing costs, amortization of deferred lease incentives, net, equity-based compensation, amortization of premiums and discounts on debt, net and gains or losses on extinguishment of swaps and/or debt, and our proportionate share of Core FFO adjustments related to the unconsolidated joint venture.
We believe that FFO and Core FFO allow for a comparison of the performance of our operations with other publicly-traded REITs, as FFO and Core FFO, or a substantially similar measure, are routinely reported by publicly-traded REITs, each adjust for items that we believe do not reflect the ongoing operating performance of our business and we believe are often used by analysts and investors for comparison purposes.
For all of these reasons, we believe FFO and Core FFO, in addition to net income (loss), as determined under U.S. GAAP, are helpful supplemental performance measures and useful in understanding the various ways in which our management evaluates the performance of the Company over time. However, not all REITs calculate FFO and Core FFO the same way, so comparisons with other REITs may not be meaningful. FFO and Core FFO should not be considered as alternatives to net income (loss) and are not intended to be used as a liquidity measure indicative of cash flow available to fund our cash needs. Neither the SEC, Nareit, nor any other regulatory body has evaluated the acceptability of the exclusions used to adjust FFO in order to calculate Core FFO and its use as a non-GAAP financial performance measure.
Table of Contents
The table below presents a reconciliation of FFO and Core FFO to net loss attributable to common stockholders, the most directly comparable U.S. GAAP financial measure, for the periods indicated below (in thousands, except per share amounts):
Year Ended December 31,
Net loss attributable to common stockholders
Depreciation and amortization of real estate assets
Gain on disposition of real estate assets
Impairment of real estate
Impairment of investment in unconsolidated joint venture and proportionate share of adjustments for items above, as applicable
FFO attributable to common stockholders
Transaction related
Amortization of deferred financing costs
Amortization of deferred lease incentives, net
Equity-based compensation
Loss on extinguishment of debt, net
Other adjustments, net (1)
Proportionate share of unconsolidated joint venture adjustments for items above, as applicable
Core FFO attributable to common stockholders
Weighted average shares of common stock outstanding - basic
Effect of weighted average dilutive securities (2)
Weighted average shares of common stock outstanding - diluted
FFO attributable to common stockholders per diluted share
Core FFO attributable to common stockholders per diluted share
(1) Other adjustments, net during the year ended December 31, 2025 includes $3.0 million of costs incurred in connection with the demolition of the six buildings on the Deerfield, Illinois campus presented in property operating expenses on the consolidated statements of operations, as well as a loan loss reserve of $5.9 million recognized on the Arch Street Joint Venture member loan presented separately on the consolidated statements of operations, $0.6 million of previously deferred equity offering costs in connection with the scheduled expiration of the Company’s universal shelf registration statement, $0.6 million in connection with the retirement of the Company’s Chief Investment Officer, and $0.4 million of costs incurred for professional services rendered in connection with the February 2026 amendment to the CMBS Loan, each presented in other expenses on the consolidated statements of operations other than the loan loss reserve. Each of the above items have been included as “other adjustments” to Core FFO as they do not reflect the ongoing operating performance of the Company.
(2) Dilutive securities include unvested restricted stock units net of assumed repurchases in accordance with the treasury stock method and exclude Performance-Based RSUs for which the performance thresholds have not been met by the end of the applicable reporting period. Such dilutive securities are not included when calculating net loss per diluted share applicable to the Company for the periods presented above, as the effect would be antidilutive.
Liquidity and Capital Resources
General
Our principal liquidity needs for the next twelve months are to: (i) fund operating expenses; (ii) pay interest on our debt; (iii) pay dividends to our stockholders; (iv) fund capital expenditures and leasing costs at properties we own; (v) fund capital contributions to the Arch Street Joint Venture; (vi) fund new acquisitions and (vii) extend, refinance or repay debt at or prior to maturity. We believe that our principal sources of short-term liquidity, which are our cash and cash equivalents on hand, cash flows from operations, proceeds from real estate dispositions, and borrowings under the New Revolving Facility are sufficient to meet our liquidity needs for the next twelve months. As of December 31, 2025, we had $22.4 million of cash and cash equivalents and $123.0 million of borrowing capacity (on a pro forma basis assuming closing of the refinancing of the Original Revolving Facility with the New Revolving Facility as of December 31, 2025.
The non-recourse mortgage notes associated with the Arch Street Joint Venture were scheduled to mature on November 27, 2025, subject to one remaining one-year borrower option to extend the maturity until November 27, 2026. As of December 31,
Table of Contents
2025, there was $128.8 million outstanding under the mortgage notes and our proportionate share was $25.8 million. The Arch Street Joint Venture exercised the extension option during September 2025. However, in order to extend the debt, the Arch Street Joint Venture is required to make an approximately $16.0 million prepayment of loan principal outstanding to satisfy the 60% loan-to-value extension condition. Due to capital constraints of our joint venture partner, the joint venture has been unable to make this prepayment. The loan was temporarily extended until February 26, 2026 and the joint venture remains in discussions with the lenders about next steps which may include an additional short-term extension and restructuring of the debt with a lender excess cash flow sweep and the requirement to sell one or more properties and utilize the net proceeds to prepay principal outstanding under the debt. We cannot provide any assurance that the Arch Street Joint Venture will be able to satisfy the loan-to-value condition or otherwise extend or refinance this debt obligation or that the lenders will not seek to enforce their remedies due to the existing payment default.
The Arch Street Joint Venture mortgage notes have a variable interest rate and the spread on a SOFR (the secured overnight financing rate as administered by the Federal Reserve Bank of New York) loan is 2.60%, and the spread on a base rate loan is 0.50%.
During November 2024, we provided a member loan to the Arch Street Joint Venture of $1.4 million in connection with the partial repayment of the Arch Street Joint Venture mortgage notes to satisfy the maximum 60% loan-to-value extension condition. During February 2025, we made an additional member loan of $8.3 million to fund leasing costs related to a lease extension that was completed for one of the properties in the Arch Street Joint Venture portfolio. Our member loan to the Arch Street Joint Venture is legally entitled to receive interest at 15% and is non-recourse and unsecured, structurally subordinate to the Arch Street Joint Venture mortgage notes and matures on November 27, 2026. However, interest and principal are payable monthly solely out of the excess cash from the joint venture after payment of property operating expenses, interest and principal on the Arch Street mortgage notes and other joint venture expenses and excess proceeds from the sale of any of the joint venture properties. Due to the uncertainties with regard to recovery of our Arch Street Joint Venture investments, we recorded an other-than-temporary impairmentloss on our investment in the Arch Street Joint Venture, thereby reducing the carrying value of our investment to zero, and recorded a loan loss reserve of $5.9 million against our $6.6 million member loan to the Arch Street Joint Venture during the year ended December 31, 2025. Beginning in 2026, we will record management fees from the Arch Street Joint Venture and interest income on the member loan on a cash basis rather than accrual basis.
Our principal liquidity needs beyond the next twelve months are to: (i) extend, refinance or repay debt at or prior to maturity; (ii) pay dividends to our stockholders; (iii) fund capital expenditures and leasing costs at properties we own; and (iv) fund new acquisitions. We generally believe we will be able to satisfy these liquidity needs by a combination of cash flows from operations, borrowings under the New Revolving Facility, proceeds from real estate dispositions, new borrowings such as bank term loans or other secured or unsecured debt, and issuances of equity securities. We believe we will be successful in either repaying or refinancing our debt obligations at or prior to maturity, but we cannot provide any assurance we will be able to do so. Our ability to extend, refinance or repay debt, raise capital and/or sell assets will be affected by various factors existing at the relevant time, such as capital and credit market conditions, the state of the national and regional economies, commercial real estate market conditions, available interest rate levels, the lease terms for and equity in and value of any related collateral, our financial condition and the operating history of the collateral, if any.
Table of Contents
Credit Agreements
Summary
As of December 31, 2025, we had $465.0 million of total consolidated debt outstanding, consisting of a $355.0 million fixed rate mortgage note collateralized by 19 properties (the “CMBS Loan”), $92.0 million borrowed under the Original Revolving Facility and an $18.0 million fixed rate mortgage note secured by our San Ramon, California property (the “San Ramon Loan”). The following is a summary of the interest rate and scheduled maturities of our consolidated debt obligations as of December 31, 2025 (in thousands):
Weighted Average Interest Rate (1)
Weighted Average Years to Maturity
Principal Amounts Due During the Years Ending December 31,
Total
Thereafter
Original Revolving Facility (2) (3)
Mortgages payable (4) (5)
Total
(1) The weighted average interest rate represents the interest rate in effect as of December 31, 2025.
(2) Includes interest rate margin of 3.25% plus SOFR adjustment of 0.10%. As of December 31, 2025, a total of $75.0 million of the debt outstanding under the Original Revolving Facility was subject to an interest rate collar agreement to hedge against interest rate volatility. Under the agreement, the benchmark rate for the Original Revolving Facility or subsequently the New Revolving Facility will float between no higher than 4.29% and no lower than 3.28% on a total notional amount of $75.0 million, effective from May 12, 2025 to May 12, 2026. As described below, the interest rate margin under the New Revolving Facility is 2.75% with no SOFR adjustment.
(3) During February 2026, the Company entered into the New Revolving Facility.
(4) Includes $355.0 million securitized mortgage note secured by 19 of our properties which bears interest at a fixed rate of 4.971% and matures on February 11, 2027. During February 2026, the Company entered into an amendment to the CMBS Loan which among other things extended the maturity date two years until February 11, 2029, subject to two borrower extension options for an aggregate of 18 months until August 11, 2030. Also includes $18.0 million fixed rate mortgage note secured by the San Ramon, California property, which bears interest at a fixed rate of 5.90% and matures on December 1, 2031.
(5) Does not include non-recourse mortgage notes associated with the Arch Street Joint Venture of $128.8 million, of which our proportionate share was $25.8 million as of December 31, 2025.
Credit Agreement Obligations
As of December 31, 2025, $92.0 million of principal was outstanding under the Original Revolving Facility, which was scheduled to mature on May 12, 2026.
On February 18, 2026, the Company, as parent, and Orion OP, as borrower, entered into a credit agreement for the New Revolving Facility. The credit agreement for the New Revolving Facility includes the following terms and conditions, among others:
• The Original Revolving Facility has been terminated and the indebtedness thereunder has been discharged and paid in full with borrowings under the New Revolving Facility. As of March 5, 2026, the Company had $127.0 million of outstanding borrowings and $88.0 million of additional borrowing capacity under the New Revolving Facility.
• The lenders have agreed to make revolving loans in an aggregate principal balance of up to $215.0 million to Orion OP (a reduction in the lenders’ commitment from $350.0 million pursuant to the Original Revolving Facility). Consistent with the Original Revolving Facility, proceeds from the New Revolving Facility may be used for general corporate purposes and loans under the New Revolving Facility may be prepaid and reborrowed, and unused commitments under the New Revolving Facility may be reduced, at any time, in whole or in part, by Orion OP, without premium or penalty (except for SOFR breakage costs).
• The maturity date of the New Revolving Facility is February 18, 2028, subject to Orion OP’s right to further extend the maturity date for two additional option periods of six months each, upon satisfaction of certain conditions.
• The interest rate applicable to the loans under the New Revolving Facility may be determined, at the election of Orion OP, on the basis of Daily Simple SOFR, Term SOFR or a base rate, plus an applicable margin of 2.75% for SOFR loans and 1.75% for base rate loans (representing a 50-basis point reduction in the applicable margins under the Original Revolving Facility and the 10-basis point SOFR adjustment under the Original Revolving Facility has been eliminated). To the extent that amounts under the New Revolving Facility remain unused, consistent with the Original
Table of Contents
Revolving Facility, Orion OP is required to pay a quarterly commitment fee on the unused portion of the New Revolving Facility in an amount equal to 0.25% of the unused portion of the New Revolving Facility.
• Orion OP and the Company have agreed to grant the lenders first priority mortgages and deeds of trust on a pool of 28 of the Company’s properties and on any additional properties acquired in the future by the Company and approved by the administrative agent (the “Collateral Properties”), and to provide other customary collateral associated with a first lien on commercial office properties. Collateral Properties may only be released from the applicable lien in connection with a sale of such property to a third party or qualified financing and 100% of the net cash proceeds must be applied to repay borrowings under the New Revolving Facility.
• Consistent with the Original Revolving Facility, Orion OP’s borrowings are also secured by, among other things, first priority pledges of the equity interest in our subsidiaries that own the Collateral Properties (the “Subsidiary Guarantors”).
• Consistent with the Original Revolving Facility, Orion OP’s borrowings under the New Revolving Facility are guaranteed pursuant to a guaranty by each of the Company, Orion Properties Holdings I LLC and the Subsidiary Guarantors.
• Orion OP and the lenders agreed that the financial covenants set forth below must be satisfied by Orion OP under the New Revolving Facility.
◦ The ratio of total debt to total asset value must be not more than 0.60 to 1.00.
◦ The ratio of adjusted EBITDA to fixed charges must be not less than 1.50 to 1.00.
◦ Orion OP’s consolidated tangible net worth must be not less than $740.6 million plus 75% of the net proceeds from any equity offering after the date of the New Revolving Facility.
◦ Collateral Property Availability must be at least $215.0 million. For this purpose, Collateral Property Availability means 60% of the aggregate as-is appraised value of all Collateral Properties.
◦ Collateral Property Debt Yield must be at least 13%.
• Consistent with the Original Revolving Facility, the New Revolving Facility requires that Orion OP comply with various covenants, including covenants restricting, subject to certain exceptions, liens, investments, mergers, asset sales and the payment of certain dividends. If, on any day, Orion OP has unrestricted cash and cash equivalents in excess of $25.0 million (excluding amounts that are then designated for application or use and are subsequently used for such purposes within 30 days), Orion OP will use such excess amount to prepay loans under the New Revolving Facility, without premium or penalty and without any reduction in the lenders’ commitment under the New Revolving Facility.
Consistent with the Original Revolving Facility, the New Revolving Facility includes customary representations and warranties of the Company and Orion OP, which must be true and correct in all material respects as a condition to future extensions of credit under the New Revolving Facility. The New Revolving Facility also includes customary events of default, the occurrence of which, following any applicable grace period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations of Orion OP under the New Revolving Facility to be immediately due and payable and foreclose on the collateral securing the New Revolving Facility.
We entered into interest rate collar agreements on a total notional amount of $60.0 million to hedge against interest rate volatility on the Original Revolving Facility. Under the agreements, the benchmark rate for the Original Revolving Facility floated between no higher than 5.50% and no lower than 4.20% on $25.0 million, and no higher than 5.50% and no lower than 4.035% on $35.0 million, effective from November 13, 2023 until May 12, 2025. Upon the scheduled expiration of the interest rate collar agreements, the Company entered into an interest rate collar agreement to hedge against interest rate volatility on the Original Revolving Facility and subsequently the New Revolving Facility. Under the agreement, the benchmark rate for the Original Revolving Facility or subsequently the New Revolving Facility will float between no higher than 4.29% and no lower than 3.28% on a total notional amount of $75.0 million, effective from May 12, 2025 to May 12, 2026. As of December 31, 2025, the weighted average effective interest rate of the Original Revolving Facility was 7.01%.
Table of Contents
Revolving Facility Covenants
The New Revolving Facility requires that Orion OP satisfy certain financial covenants. The table that follows summarizes the financial covenants for the Company’s New Revolving Facility, and the Company’s compliance therewith as of December 31, 2025 as calculated per the terms of the credit agreement. These calculations are presented to show the Company’s compliance with the financial covenants and are not measures of the Company’s liquidity or performance. The Original Revolving Facility has been terminated and replaced by the New Revolving Facility, and therefore the financial covenants under the Original Revolving Facility are no longer relevant or applicable.
New Revolving Facility Financial Covenants
Required
December 31, 2025
Ratio of total indebtedness to total asset value
Ratio of adjusted EBITDA to fixed charges
Consolidated tangible net worth
≥ $740.6 million
$987.3 million
Collateral property availability
≥ $215.0 million
$289.3 million
Collateral property debt yield
As of December 31, 2025, Orion OP was in compliance with the financial covenants for the New Revolving Facility.
CMBS Loan
On February 10, 2022, certain indirect subsidiaries of the Company (the “Mortgage Borrowers”) obtained a $355.0 million fixed rate mortgage note (the “CMBS Loan”) from Wells Fargo Bank, National Association (together with its successor, the “Lender”), which is secured by the Mortgage Borrowers’ fee simple or ground lease interests in 19 properties owned indirectly by the Company (collectively, the “Mortgaged Properties”). During March 2022, Wells Fargo effected a securitization of the CMBS Loan. The CMBS Loan bears interest at a fixed rate of 4.971% and upon issuance was scheduled to mature on February 11, 2027.
The CMBS Loan requires monthly payments of interest only and, except as described below under “Loan Extension and Modification Agreement”, all principal is due at maturity.
The CMBS Loan is secured by, among other things, first priority mortgages and deeds of trust granted by the Mortgage Borrowers and encumbering the Mortgaged Properties.
The CMBS Loan may be prepaid in whole, but not in part, at any time, upon the satisfaction of certain terms and conditions set forth in the loan agreement governing the CMBS Loan (the “CMBS Loan Agreement”). Further, releases of individual properties are permitted in connection with an arm’s length third party sale upon repayment of the Release Price (as defined in the CMBS Loan Agreement) for the applicable individual property and subject to the satisfaction of other terms and conditions set forth in the CMBS Loan Agreement. Pursuant to the Loan Modification Agreement described below, the lender is entitled to 100% of the net proceeds of any sale to prepay the outstanding principal balance of the CMBS Loan.
In connection with the CMBS Loan Agreement, the Company (as the guarantor) delivered a customary non-recourse carveout guaranty to the Lender (the “Guaranty”), under which the Company guaranteed the obligations and liabilities of the Mortgage Borrowers to the Lender with respect to certain non-recourse carveout events and the circumstances under which the CMBS Loan will be fully recourse to the Mortgage Borrowers, and which includes requirements for the Company to maintain a net worth of no less than $355.0 million and liquid assets of no less than $10.0 million, in each case, exclusive of the values of the collateral for the CMBS Loan. As of December 31, 2025, the Company was in compliance with these financial covenants.
The Mortgage Borrowers and the Company also provided a customary environmental indemnity agreement, pursuant to which the Mortgage Borrowers and the Company agreed to protect, defend, indemnify, release and hold harmless the Lender from and against certain environmental liabilities relating to the Mortgaged Properties.
The CMBS Loan Agreement includes customary representations, warranties and covenants of the Mortgage Borrowers and the Company. The CMBS Loan Agreement also includes customary events of default, the occurrence of which, following any applicable grace period, would permit the Lender to, among other things, declare the principal, accrued interest and other obligations of the Mortgage Borrowers to be immediately due and payable and foreclose on the Mortgaged Properties.
Table of Contents
Loan Extension and Modification Agreement
On February 17, 2026, the Company, through certain of its subsidiaries (the “Mortgage Borrowers”), entered into a loan extension and modification agreement with the lender under the CMBS Loan (“Loan Modification Agreement”). The Loan Modification Agreement includes the following terms and conditions, among others:
• The maturity date of the CMBS Loan has been extended two years until February 11, 2029, subject to two borrower extension options, with the first giving the Mortgage Borrowers the right to further extend the maturity date for an additional one year until February 11, 2030, and the second giving the Mortgage Borrowers the right to further extend the maturity date for an additional six months, until August 11, 2030, each upon satisfaction of certain conditions, including prepayment of the outstanding principal balance of the CMBS Loan by $2.5 million for the initial one-year additional extension and $10.0 million for the six-month additional extension.
• The fixed annual interest rate on the CMBS Loan of 4.971% is unchanged during all extension terms.
• Upon closing of the Loan Modification Agreement, the Mortgage Borrowers made a $2.05 million partial prepayment of the CMBS Loan.
• A new all-purpose reserve was established by the lender into which all existing tenant improvement, leasing commission and other borrower reserve amounts were funded (a total of $37.7 million on the loan modification date) and the Mortgage Borrowers deposited an additional $7.74 million into the all-purpose reserve which was funded from borrowings under the Original Revolving Facility and such borrowings were refinanced with borrowings under the New Revolving Facility.
• The all-purpose reserve will be used to pay leasing costs and capital expenditures associated with the 19 properties that serve as collateral for the CMBS Loan, as well as to pay any property operating expenses not otherwise fully covered by revenues from the 19 properties.
• The Mortgage Borrowers have agreed that until maturity, the lender will sweep all monthly excess cash flows from the 19 properties, after payment of interest and property operating expenses. During the initial two-year extension period, the lender will apply one-half of such excess funds to prepay the outstanding principal balance of the CMBS Loan, and the other half to fund the all-purpose reserve. During any additional extension period, the lender will apply 75% of such excess funds to prepay the outstanding principal balance of the CMBS Loan, and the remaining 25% of such excess funds to fund the all-purpose reserve. The all-purpose reserve is subject to a cap of $15.0 million during the one-year additional extension period and $5.0 million during the six-month additional extension period. If the reserve cap has been reached, all additional or excess amounts will be utilized to prepay the outstanding principal balance of the CMBS Loan.
• The Company agreed to certain additional obligations that are recourse to the Company pursuant to the non-recourse carveout Guaranty described above.
San Ramon Loan
On November 7, 2024, an indirect subsidiary of the Company (the “San Ramon Borrower”) obtained an $18.0 million fixed rate mortgage note (the “San Ramon Loan”) from RGA Americas Investments LLC (the “San Ramon Lender”) secured by the fee simple interest in the San Ramon, California property acquired in September 2024 (the “San Ramon Property”). The San Ramon Loan bears interest at a fixed rate of 5.90% and matures on December 1, 2031.
The San Ramon Loan requires monthly payments of interest only and all principal is due at maturity and is generally not freely prepayable by the San Ramon Borrower until December 2026, and thereafter without payment of certain prepayment premiums and costs. In connection with the San Ramon Loan, the Company (as guarantor) delivered a customary non-recourse carveout guaranty, under which the Company guaranteed the obligations and liabilities of the San Ramon Borrower under the San Ramon Loan with respect to certain non-recourse carveout events and the circumstances under which the San Ramon Loan will be fully recourse to the San Ramon Borrower. The San Ramon Borrower and the Company also provided a customary environmental indemnity agreement, pursuant to which the San Ramon Borrower and the Company agreed to protect, defend, indemnify and hold harmless the San Ramon Lender from and against certain environmental liabilities related to the San Ramon Property.
The loan agreement governing the San Ramon Loan (the “San Ramon Loan Agreement”) includes customary representations, warranties and covenants of the San Ramon Borrower and the Company. The San Ramon Loan Agreement also includes customary events of default, the occurrence of which, following any applicable grace period, would permit the Lender
Table of Contents
to, among other things, declare the principal, accrued interest and other obligations of the San Ramon Borrower to be immediately due and payable and foreclose on the San Ramon Property.
Arch Street Warrants
On November 12, 2021, in connection with the Distribution, Orion OP entered into an amendment and restatement of the limited liability agreement (the “LLCA”) for the Arch Street Joint Venture with the Arch Street Partner, an affiliate of Arch Street Capital Partners, pursuant to which the Arch Street Partner consented to the transfer of the equity interests of the Arch Street Joint Venture previously held by VEREIT Real Estate, L.P. to Orion OP.
Also on November 12, 2021, in connection with the entry into the LLCA, we granted the Arch Street Partner and Arch Street Capital Partners warrants to purchase up to 1,120,000 shares of our common stock (the “Arch Street Warrants”). The Arch Street Warrants entitle the respective holders to purchase shares of our common stock at a price per share equal to $22.42, at any time. The Arch Street Warrants may be exercised, in whole or in part, through a cashless exercise, in which case the holder would receive upon such exercise the net number of shares of our common stock determined according to the formula set forth in the Arch Street Warrants. The Arch Street Warrants expire on the earlier of (a) ten years after issuance and (b) if the Arch Street Joint Venture is terminated, the later of the termination of the Arch Street Joint Venture and seven years after issuance.
In accordance with our obligation under the Arch Street Warrants, on November 2, 2022, we filed with the SEC a registration statement on Form S-3 for the registration, under the Securities Act, of the shares of our common stock issuable upon exercise of the Arch Street Warrants, and the registration statement was declared effective by the SEC on November 14, 2022. We will use our commercially reasonable efforts to maintain the effectiveness of the registration statement, and a current prospectus relating thereto, until the earlier of (a) the expiration of the Arch Street Warrants, or (b) the shares issuable upon such exercise become freely tradable under United States federal securities laws by anyone who is not an affiliate (as such term is defined in Rule 144 under the Securities Act (or any successor rule)) of us. The holders of the Arch Street Warrants will also remain subject to the ownership limitations pursuant to our organizational documents.
Derivatives and Hedging Activities
As of December 31, 2025 and December 31, 2024, we had outstanding derivative agreements with aggregate notional amounts of $75.0 million and $60.0 million, respectively, which were designated as cash flow hedges under U.S. GAAP. The interest rate derivative agreements comprise interest rate collar agreements entered into in order to hedge interest rate volatility with respect to the Company’s borrowings under the Original Revolving Facility. Under the agreements, the benchmark rate for the Original Revolving Facility floated between no higher than 5.50% and no lower than 4.20% on $25.0 million, and no higher than 5.50% and no lower than 4.035% on $35.0 million, effective from November 13, 2023 until May 12, 2025. Upon the scheduled expiration of the interest rate collar agreements, we entered into a new interest rate collar agreement to hedge against interest rate volatility on the Original Revolving Facility and subsequently the New Revolving Facility. Under the agreement, the benchmark rate for the Original Revolving Facility or subsequently the New Revolving Facility will float between no higher than 4.29% and no lower than 3.28% on a total notional amount of $75.0 million, effective from May 12, 2025 to May 12, 2026. As of December 31, 2025, the weighted average effective interest rate of the Original Revolving Facility was 7.01%.
Distributions
We have elected to be taxed as a REIT for U.S. federal income tax purposes beginning with our taxable year ended December 31, 2021. We intend to make distributions to our stockholders to satisfy the requirements to maintain our qualification as a REIT.
During the year ended December 31, 2025, the Company’s Board of Directors declared quarterly cash dividends on shares of the Company’s common stock as follows:
Declaration Date
Record Date
Paid Date
Distributions Per Share
March 4, 2025
March 31, 2025
April 15, 2025
May 6, 2025
June 30, 2025
July 15, 2025
August 5, 2025
September 30, 2025
October 15, 2025
November 5, 2025
December 31, 2025
January 15, 2026
Table of Contents
On March 4, 2026, the Company’s Board of Directors declared a quarterly cash dividend of $0.02 per share for the first quarter of 2026, payable on April 15, 2026 to stockholders of record as of March 31, 2026.
Our dividend policy is established at the discretion of the Company’s Board of Directors and the amount and timing of dividends will depend upon cash generated by operating activities, the Company’s business, financial condition, results of operations, capital requirements, annual distribution requirements under the REIT provisions of the Code, and such other factors as the Company’s Board of Directors deems relevant. The Company’s Board of Directors may change our dividend policy at any time, and there can be no assurance as to the manner in which future dividends will be paid or that the current dividend level will be maintained in future periods.
Universal Shelf Registration Statement
On November 10, 2025, the Company filed a new universal shelf registration statement on Form S-3 (the “Universal Shelf”), and the Universal Shelf was declared effective by the SEC on November 28, 2025. Pursuant to the Universal Shelf, the Company is able to offer and sell from time to time in multiple transactions, up to $750.0 million of the Company’s securities, including through “at the market” offering programs or firm commitment underwritten offerings. These securities may include shares of the Company’s common stock, shares of the Company’s preferred stock, depository shares representing interests in shares of the Company’s preferred stock, debt securities, warrants to purchase shares of the Company’s common stock or shares of the Company’s preferred stock and units consisting of two or more shares of common stock, shares of preferred stock, depository shares, debt securities and warrants. The Company has not established an “at the market” offering program under the Universal Shelf, although it may do so at any time in the future.
Share Repurchase Program
On November 1, 2022, the Company’s Board of Directors authorized the repurchase of up to $50.0 million of the Company’s outstanding common stock until December 31, 2025, as market conditions warrant (the “Share Repurchase Program”). The Company did not purchase any shares under the Share Repurchase Program during the year ended December 31, 2025, and the Share Repurchase Program expired by its terms on December 31, 2025. While the Share Repurchase Program was active, the Company repurchased approximately 0.9 million shares of common stock in multiple open market transactions, at a weighted average share price of $5.46 for an aggregate purchase price of $5.0 million.
Cash Flow Analysis for the Year Ended December 31, 2025 and 2024
The following table summarizes the changes in cash flows for the periods indicated below (in thousands):
Year Ended December 31,
Increase/(Decrease)
Net cash provided by operating activities
Net cash provided by (used in) investing activities
Net cash used in financing activities
Net cash provided by operating activities decreased $30.7 million during the year ended December 31, 2025, compared to the same period in 2024, driven in part by the tenant at our Hopewell, New Jersey property entering a scheduled one-year rent concession period in December 2024, resulting in a decrease in cash revenue receipts of $10.8 million during the year ended December 31, 2025, compared to the same period in 2024. The total abated rent for this one-year rent concession period was included in the reserves we had previously funded with the lender of the CMBS Loan and was released to us over the rent concession period. The decrease in net cash provided by operating activities is also due to the decrease in revenues as a result of property dispositions and vacancies.
Net cash provided by (used in) investing activities increased $68.0 million during the year ended December 31, 2025, compared to the same period in 2024. Net cash provided by investing activities during the year ended December 31, 2025 includes proceeds from the sale of real estate assets of $71.5 million, payments received on the Arch Street Joint Venture member loan of $3.1 million and on the seller financing note receivable of $2.5 million, offset by cash paid for capital expenditures and leasing costs of $51.7 million and the funding of an additional member loan of $8.3 million to the Arch Street Joint Venture. Net cash used in investing activities during the year ended December 31, 2024 includes the acquisition of one real estate asset for $34.7 million, cash paid for capital expenditures and leasing costs of $22.6 million and the origination of a
Table of Contents
member loan to the Arch Street Joint Venture of $1.4 million, offset by proceeds from the sale of real estate assets of $5.1 million, payments received on seller financing notes receivable of $1.2 million and distributions received from the Arch Street Joint Venture of $1.0 million.
Net cash used in financing activities increased $33.9 million during the year ended December 31, 2025, compared to the same period in 2024, primarily due to net repayments on the Original Revolving Facility of $27.0 million during the 2025 period, compared to net draws of $3.0 million during the 2024 period, and proceeds from the San Ramon Loan of $18.0 million in the 2024 period, offset by a decrease in distributions paid to stockholders of $13.4 million during the year ended December 31, 2025, compared to the same period in 2024 as a result of the change in cash dividend policy of $0.02 per share from $0.10 per share effective for the first quarter 2025, and payments of deferred financing costs of less than $0.1 million during the year ended December 31, 2025, compared to $1.3 million during the same period in 2024.
