Phoenix, AZ, March 8, 2023 -- Orion Office REIT Inc. (NYSE: ONL) (“Orion” or the “Company”), a fully-integrated real estate investment trust focused on the ownership, acquisition and management of single-tenant net lease mission-critical suburban office properties located across the U.S., announced today its operating results for the fourth quarter and full year ended December 31, 2022. Orion commenced operations on November 12, 2021 after being spun-off by Realty Income Corporation (“Realty Income”).

Paul McDowell, Orion’s Chief Executive Officer and President, commented, “We are proud of the significant progress we have made in our ongoing portfolio optimization efforts that focus on owning mission-critical and corporate headquarter suburban office properties in well-located markets. While the evolving and challenging economic environment, particularly in the office sector, is certainly impacting both our sale and leasing activity, we still completed 0.8 million square feet of lease renewals, expansions and new leases across 11 different properties and closed on the disposition of 11 non-core properties for $33.1 million, this past year. As we execute on our plans in the coming years, we will work to effectively navigate the prolonged uncertainty around the return to the office across the country, while managing our balance sheet and financial flexibility to build sustainable long-term value.”

•Total revenues of $208.1 million

•Net Loss Attributable to Common Stockholders of $(97.5) million, or $(1.72) per share

•Funds from Operations (“FFO”) of $99.7 million, or $1.76 per share

•Core FFO of $101.8 million, or $1.80 per share

•EBITDA of $67.2 million, EBITDAre of $131.2 million and Adjusted EBITDA of $132.2 million

•Sold 11 properties for $33.1 million, which will save an estimated $7.5 million of annual carrying costs

•Total revenues of $50.3 million

•Net Loss Attributable to Common Stockholders of $(19.0) million, or $(0.33) per share

•FFO of $22.9 million, or $0.40 per share

•Core FFO of $23.2 million, or $0.41 per share

•EBITDA of $19.7 million, EBITDAre of $30.6 million and Adjusted EBITDA of $30.7 million

•Sold six properties for $10.0 million

As of December 31, 2022, Orion’s real estate portfolio consisted of 81 properties as well as a 20% ownership interest in the Arch Street Joint Venture, Orion’s Unconsolidated Joint Venture with an affiliate of Arch Street Capital Partners, LLC, comprising six properties. As of December 31, 2022, the Company’s portfolio occupancy rate was 89.0%, with 73.3% of annualized base rent derived from Investment Grade Tenants, and the portfolio’s weighted average remaining lease term was 4.1 years.

Orion’s 20% interest in the Unconsolidated Joint Venture was assumed from Realty Income as part of the Company’s spin-off. As of December 31, 2022, the Unconsolidated Joint Venture owned six real estate assets for total Gross Real Estate Investments of approximately $227.1 million.

Orion is continuing to review a number of potential property acquisitions for both its balance sheet and the Unconsolidated Joint Venture.

Orion employs active asset management strategies to attract new tenants while working to retain high-quality creditworthy tenants, and to maximize tenant retention rates and future cash flow. Orion continues to believe that lease maturities and vacant assets may represent an ongoing value creation opportunity in the coming years.

During the quarter ended December 31, 2022, the Company entered into two 10.0-year lease renewals for a total of 213,000 square feet at two of the Company’s properties in New York, one 5.0-year lease renewal for 90,000 square feet at one of the Company’s properties in Lawrence, Kansas, and one 5.4-year lease renewal for 4,000 square feet at one of the Company’s properties in The Woodlands, Texas.

Including leasing activity during the nine months ended September 30, 2022, the Company entered into new leases or lease renewals for 764,000 square feet of office space across 10 different properties during 2022 and has entered into a lease expansion with an existing tenant at one property covering an additional 41,000 square feet. Additionally, Orion is in various stages of negotiation and documentation for additional leases and renewals at multiple properties.

During the fourth quarter, the Company closed six dispositions, representing a total of 412,000 square feet, for an aggregate sale price of approximately $10.0 million. The Company also has agreements currently in place to sell seven additional properties, representing 584,000 square feet, for an aggregate sale price of $36.6 million, including the six property Walgreens campus in Deerfield, IL.

Including disposition activity during the nine months ended September 30, 2022, the Company closed 11 dispositions representing a total of 909,000 square feet, for an aggregate sale price of approximately $33.1 million.

As of December 31, 2022, the Company has total debt of $557.3 million, comprised of $175.0 million under the credit facility term loan, $355.0 million under the Company’s securitized mortgage loan (the “CMBS Loan”), and $27.3 million which represents Orion’s pro rata share of indebtedness of the Unconsolidated Joint Venture. As of December 31, 2022, the Company had no outstanding draws under its $425.0 million capacity credit facility revolver. During the fourth quarter and full year ended December 31, 2022, the Company made net repayments of $31.0 million and $90.0 million, respectively, on its credit facility revolver.

As of December 31, 2022, Orion had $446.2 million of liquidity, comprised of $21.2 million cash on hand, including the Company’s pro rata share of cash from the Unconsolidated Joint Venture, as well as $425.0 million of available capacity on Orion’s $425.0 million-capacity credit facility revolver.

On March 7, 2023, Orion’s Board of Directors declared a quarterly cash dividend of $0.10 per share for the first quarter of 2023, payable on April 17, 2023, to stockholders of record as of March 31, 2023. The dividend was sized to permit future growth while preserving meaningful free cash flow for reinvestment into the current portfolio and for accretive investments.

Based on current economic conditions and the Company’s financial condition, Orion is providing the following guidance for fiscal year 2023:

____________________________________

(1)The definition of Core FFO per share used for this guidance reflects revisions the Company is making to the definition of Core FFO such that Core FFO will be calculated differently in 2023 than it was in 2022. See “Definitions” below for further details.

Webcast and Conference Call Information

Orion will host a webcast and conference call to review its financial results at 10:00 a.m. ET on Thursday, March 9, 2023. The webcast and call will be hosted by Paul McDowell, Chief Executive Officer and President, and Gavin Brandon, Chief Financial Officer, Executive Vice President and Treasurer. To participate, the webcast may be accessed live by visiting the “Investors” section of Orion’s website at https://www.onlreit.com/investors. To join the conference call, callers from the United States and Canada should dial 1-877-407-3982, and international callers should dial 1-201-493-6780, ten minutes prior to the scheduled call time.

A replay of the webcast may be accessed via the web by visiting the “Investors” section of Orion’s website at

https://www.onlreit.com/investors. The conference call replay will be available after 1:00 p.m. ET on Thursday, March 9, 2023 through 11:59 a.m. ET on Thursday, March 23, 2023. To access the replay, callers may dial 1-844-512-2921 (domestic) or 1-412-317-6671 (international) and use passcode, 13734696.

To supplement the presentation of the Company’s financial results prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), this press release and the accompanying quarterly supplemental information as of and for the quarter and year ended December 31, 2022 contain certain financial measures that are not prepared in accordance with GAAP, including Funds from Operations (“FFO”), Core Funds from Operations (“Core FFO”), Funds Available for Distribution (“FAD”), Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (“EBITDAre”), and Adjusted EBITDA. Please see the attachments to this press release for how Orion defines these non-GAAP financial measures and a reconciliation to the most directly comparable GAAP measure.

Orion Office REIT Inc. (NYSE: ONL) is an internally-managed real estate investment trust engaged in the ownership, acquisition and management of a diversified portfolio of mission-critical and headquarters office buildings located in high-quality suburban markets across the U.S. and leased primarily on a single-tenant net lease basis to creditworthy tenants. The company was founded on July 1, 2021, spun-off from Realty Income (NYSE: O) on November 12, 2021 and began trading on the New York Stock Exchange on November 15, 2021. The company is headquartered in Phoenix, Arizona and has an office in New York, New York. For additional information on the company and its properties, please visit onlreit.com.

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 Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate. Nareit defines EBITDAre as net income or loss computed in accordance with GAAP, adjusted for interest expense, income tax expense (benefit), depreciation and amortization, impairment write-downs on real estate, gains or losses from disposition of property and our pro rata share of EBITDAre adjustments related to the Unconsolidated Joint Venture. We calculated EBITDAre in accordance with Nareit's definition described above.

In addition to EBITDAre, we use Adjusted EBITDA as a non-GAAP supplemental performance measure to evaluate the operating performance of the Company. Adjusted EBITDA, as defined by the Company, represents EBITDAre, modified to exclude non-routine items such as transaction related expenses and spin related expenses. We also exclude certain non-cash items such as impairments of intangible and right of use assets, gains or losses on derivatives, gains or losses on the extinguishment or forgiveness of debt, amortization of intangibles, above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities and our pro rata share of Adjusted EBITDA adjustments related to the Unconsolidated Joint Venture. Management believes that excluding these costs from EBITDAre provides investors with supplemental performance information that is consistent with the performance models and analysis used by management, and provides investors a view of the performance of our portfolio over time. Therefore, EBITDAre and Adjusted EBITDA should not be considered as an alternative to net income, as computed in accordance with GAAP. The Company uses Adjusted EBITDA as one measure of its operating performance when formulating corporate goals and evaluating the effectiveness of the Company's strategies. EBITDAre and Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

Funds available for distribution, as defined by the Company, represents Core FFO, as defined below, modified to exclude capital expenditures, as well as certain non-cash items such as amortization of deferred financing costs, amortization of above market leases and deferred lease incentives, net of amortization of below market lease liabilities, straight-line rental revenue, equity-based compensation, equity in income or losses of the Unconsolidated Joint Venture and our pro rata share of FAD adjustments related to the Unconsolidated Joint Venture. Management believes that adjusting these items from Core FFO provides investors with supplemental performance information that is consistent with the performance models and analysis used by management and provides useful information regarding the Company's ability to fund its dividend. Beginning in 2023, the Company's definition of FAD will not adjust for the following items, which will already be an adjustment in calculating Core FFO: (i) amortization of deferred lease incentives, (ii) amortization of deferred financing costs, (iii) equity-based compensation, and (iv) amortization of premiums and discounts on debt, net. Additionally, the Company will revise the FAD adjustment for equity in income (loss) of unconsolidated joint venture to only exclude the non-cash amortization related to the joint venture investment basis difference. If this definitional change had been made in 2022, the impact would have been an increase to FAD for the year-ended December 31, 2022 of $0.5 million, or $0.01 per share. This change in definition will be applied retrospectively beginning January 1, 2023.

However, not all REITs calculate FAD and those that do may not calculate FAD the same way, so comparisons with other REITs may not be meaningful. FAD should not be considered as an alternative to net income (loss) or cash flow provided by (used in) operating activities as determined under GAAP.

Due to certain unique operating characteristics of real estate companies, as discussed below, Nareit 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 a REIT. FFO is not equivalent to our net income or loss as determined under GAAP.

Nareit defines FFO as net income or loss computed in accordance with 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 our pro rata 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, spin related expenses and gains or losses on extinguishment of swaps and/or debt, and our pro rata share of Core FFO adjustments related to the Unconsolidated Joint Venture. Beginning in 2023, the Company will be revising its definition of Core FFO to also exclude the following non-cash charges which management believes do not reflect the ongoing operating performance of our business: (i) amortization of deferred lease incentives, (ii) amortization of deferred financing costs, (iii) equity-based compensation, and (iv) amortization of premiums and discounts on debt, net. If this definitional change had been made in 2022, the impact would have been an increase to Core FFO for the year-ended December 31, 2022 of $6.4 million, or $0.11 per share. This change in definition will be applied retrospectively beginning January 1, 2023.

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 an equivalent 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 defined by 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.

Investment-Grade Tenants are those with a Credit Rating of BBB- or higher from Standard & Poor’s or a Credit Rating of Baa3 or higher from Moody’s. The ratings may reflect those assigned by Standard & Poor’s or Moody’s to the lease guarantor or the parent company, as applicable.

Principal Outstanding is a non-GAAP measure that represents the Company's outstanding principal debt balance, excluding certain GAAP adjustments, such as premiums and discounts, financing and issuance costs, and related accumulated amortization. Adjusted Principal Outstanding includes the Company's pro rata share of the Unconsolidated Joint Venture's outstanding principal debt balance. We believe that the presentation of Principal Outstanding and Adjusted Principal Outstanding, which show our contractual debt obligations, provides useful information to investors to assess our overall financial flexibility, capital structure and leverage. Principal Outstanding and Adjusted Principal Outstanding should not be considered as alternatives to the Company's consolidated debt balance as determined in accordance with GAAP or any other GAAP financial measures and should only be considered together with, and as a supplement to, the Company's financial information prepared in accordance with GAAP.

Net Debt is a non-GAAP measure used to show the Company's Adjusted Principal Outstanding, less all cash and cash equivalents and the Company's pro rata share of the Unconsolidated Joint Venture's cash and cash equivalents. We believe that the presentation of Net Debt provides useful information to investors because our management reviews Net Debt as part of its management of our overall liquidity, financial flexibility, capital structure and leverage.

NOI is a non-GAAP performance measure used to evaluate the operating performance of a real estate company. NOI represents total revenues less property operating expenses and excludes fee revenue earned for services to the Unconsolidated Joint Venture, impairment, depreciation and amortization, general and administrative expenses, transaction related expenses and spin related expenses. Cash NOI excludes the impact of certain GAAP adjustments included in rental revenue, such as straight-line rent adjustments and amortization of above-market intangible lease assets and below-market lease intangible liabilities. Cash NOI includes the pro rata share of such amounts from properties owned by the Unconsolidated Joint Venture. It is management's view that NOI and Cash NOI provide investors relevant and useful information because it reflects only income and operating expense items that are incurred at the property level and presents them on an unleveraged basis. NOI and Cash NOI should not be considered as an alternative to operating income in accordance with GAAP. Further, NOI and Cash NOI may not be comparable to similarly titled measures of other companies.

Unencumbered Asset Ratio equals unencumbered Gross Real Estate Investments divided by Gross Real Estate Investments. Management believes that Unencumbered Asset Ratio is a useful supplemental measure of our overall liquidity and leverage.

Information set forth in this press release includes “forward-looking statements” which reflect the Company's expectations and projections regarding future events and plans, future financial condition, results of operations, liquidity and business, including leasing and occupancy, acquisitions, dispositions, rent receipts, the payment of future dividends, the Company’s growth and the impact of the coronavirus (COVID-19) on the Company's business. Generally, the words "anticipates," "assumes," "believes," "continues," "could," "estimates," "expects," "goals," "intends," "may," "plans," "projects," "seeks," "should," "targets," "will," “guidance,” variations of such words and similar expressions identify forward-looking statements. These forward-looking statements are based on information currently available to the Company and involve a number of known and unknown assumptions and risks, uncertainties and other factors, which may be difficult to predict and beyond the Company's control, that could cause actual events and plans or could cause the Company's business, financial condition, liquidity and results of operations to differ materially from those expressed or implied in the forward-looking statements. Further, information regarding historical rent collections should not serve as an indication of future rent collections.

•the risk of rising interest rates, including that our borrowing costs may increase and we may be unable to refinance our debt obligations on favorable terms and in a timely manner, or at all;

•the risk of inflation, including that our operating costs, such as insurance premiums, utilities, real estate taxes, capital expenditures and repair and maintenance costs, may rise;

•conditions associated with the global market, including an oversupply of office space, tenant credit risk and general economic conditions;

•the ongoing impact of the COVID-19 pandemic or any future pandemic or outbreak of a highly infectious or contagious disease or fear of such pandemics or outbreaks, on our business, operating results, financial condition and prospects, which is highly uncertain and cannot be predicted with confidence, including the impact on the U.S. economy and changes in tenant behavior that may continue to adversely affect the use of and demand for office space;

•our ability to acquire new properties and sell non-core assets on favorable terms and in a timely manner, or at all;

•our ability to comply with the terms of our credit agreements or to meet the debt obligations on certain of our properties;

•our ability to access the capital markets to raise additional equity or refinance maturing debt on favorable terms and in a timely manner, or at all;

•changes in the real estate industry and in performance of the financial markets and interest rates and our ability to effectively hedge against interest rate changes;

•the risk of tenants defaulting on their lease obligations, which is heightened due to our focus on single tenant properties;

•our ability to renew leases with existing tenants or re-let vacant space to new tenants on favorable terms and in a timely manner, or at all;

•the cost of rent concessions, tenant improvement allowances and leasing commissions;

•the potential for termination of existing leases pursuant to tenant termination rights;

•the amount, growth and relative inelasticity of our expenses;

•risks associated with the ownership and development of real property;

•risks accompanying the management of OAP/VER Venture, LLC (the “Arch Street Joint Venture”), our unconsolidated joint venture, in which we hold a non-controlling interest;

•our ability to close pending real estate transactions, which may be subject to conditions that are outside of our control;

•risks associated with acquisitions, including 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 will fail to perform as expected;

•risks associated with the fact that we have a limited operating history and our future performance is difficult to predict;

•our properties may be subject to impairment charges;

•risks resulting from losses in excess or insured limits or uninsured losses;

•risks associated with the potential volatility of our common stock; and

•the risk that we may fail to maintain our qualification as a REIT.

Additional factors that may affect future results are contained in the Company's filings with the SEC, which are available at the SEC’s website at www.sec.gov. The Company disclaims any obligation to publicly update or revise any forward-looking statements, whether as a result of changes in underlying assumptions or factors, new information, future events or otherwise, except as required by law.

(In thousands)

(In thousands, except for per share data)

(In thousands, except for per share data) (Unaudited)

(In thousands) (Unaudited)

____________________________________

(1)Refer to the Statement of Operations for interest expense calculated in accordance with GAAP and to the Supplemental Information Package for the required reconciliation to the most directly comparable GAAP financial measure.

(2)Refer to the Statement of Operations for net income calculated in accordance with GAAP and to the EBITDAre and Adjusted EBITDA table in the Supplemental Information Package for the required reconciliation to the most directly comparable GAAP financial measure.

____________________________________

(1)Refer to the Balance Sheets for total debt and real estate investments, at cost calculated in accordance with GAAP and to the Supplemental Information Package for the required reconciliation to the most directly comparable GAAP financial measure.

(2)Adjusted EBITDA for December 31, 2022 has not been annualized for the purpose of this calculation. Adjusted EBITDA for September 30, 2022 has been annualized for the purpose of this calculation.

(Unaudited)

The Company expects its 2023 Core FFO per diluted share to be in a range between $1.55 and $1.63. This guidance assumes:

• General & Administrative Expenses: $18.75 million to $19.75 million

• Net Debt to Adjusted EBITDA: 4.3x to 5.3x

The estimated net income per diluted share is not a projection and is provided solely to satisfy the disclosure requirements of the U.S. Securities and Exchange Commission.

The Company does not provide a reconciliation of Net Debt to Adjusted EBITDA guidance to the most directly comparable GAAP measure, due to the inherent difficulty and uncertainty in quantifying certain adjustments principally related to the Company’s investment in the unconsolidated joint venture.

____________________________________

(1)Includes transaction related expenses, amortization of deferred lease incentives, amortization of deferred financing costs, equity-based compensation, and our proportionate share of such adjustments for the Unconsolidated Joint Venture.

(2)The definition of Core FFO per share used for this guidance reflects revisions the Company is making to the definition of Core FFO such that Core FFO will be calculated differently in 2023 than it was in 2022. See “Definitions” above for further details.

Information set forth herein includes “forward-looking statements” which reflect the Company's expectations and projections regarding future events and plans, future financial condition, results of operations, liquidity and business, including leasing and occupancy, acquisitions, dispositions, rent receipts, the payment of future dividends, the Company’s growth and the impact of the coronavirus (COVID-19) on the Company's business. Generally, the words "anticipates," "assumes," "believes," "continues," "could," "estimates," "expects," "goals," "intends," "may," "plans," "projects," "seeks," "should," "targets," "will," "guidance", variations of such words and similar expressions identify forward-looking statements. These forward-looking statements are based on information currently available to the Company and involve a number of known and unknown assumptions and risks, uncertainties and other factors, which may be difficult to predict and beyond the Company's control, that could cause actual events and plans or could cause the Company's business, financial condition, liquidity and results of operations to differ materially from those expressed or implied in the forward-looking statements. Further, information regarding historical rent collections should not serve as an indication of future rent collections.

•the risk of rising interest rates, including that our borrowing costs may increase and we may be unable to refinance our debt obligations on favorable terms and in a timely manner, or at all;

•the risk of inflation, including that our operating costs, such as insurance premiums, utilities, real estate taxes, capital expenditures and repair and maintenance costs, may rise;

•conditions associated with the global market, including an oversupply of office space, tenant credit risk and general economic conditions;

•the ongoing impact of the COVID-19 pandemic or any future pandemic or outbreak of a highly infectious or contagious disease or fear of such pandemics or outbreaks, on our business, operating results, financial condition and prospects, which is highly uncertain and cannot be predicted with confidence, including the impact on the U.S. economy and changes in tenant behavior that may continue to adversely affect the use of and demand for office space;

•our ability to acquire new properties and sell non-core assets on favorable terms and in a timely manner, or at all;

•our ability to comply with the terms of our credit agreements or to meet the debt obligations on certain of our properties;

•our ability to access the capital markets to raise additional equity or refinance maturing debt on favorable terms and in a timely manner, or at all;

•changes in the real estate industry and in performance of the financial markets and interest rates and our ability to effectively hedge against interest rate changes;

•the risk of tenants defaulting on their lease obligations, which is heightened due to our focus on single tenant properties;

•our ability to renew leases with existing tenants or re-let vacant space to new tenants on favorable terms and in a timely manner, or at all;

•the cost of rent concessions, tenant improvement allowances and leasing commissions;

•the potential for termination of existing leases pursuant to tenant termination rights;

•the amount, growth and relative inelasticity of our expenses;

•risks associated with the ownership and development of real property;

•risks accompanying the management of OAP/VER Venture, LLC (the “Arch Street Joint Venture”), our unconsolidated joint venture, in which we hold a non-controlling ownership interest;

•our ability to close pending real estate transactions, which may be subject to conditions that are outside of our control;

•risks associated with acquisitions, including 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 will fail to perform as expected;

•risks associated with the fact that we have a limited operating history and our future performance is difficult to predict;

•our properties may be subject to impairment charges;

•risks resulting from losses in excess or insured limits or uninsured losses;

•risks associated with the potential volatility of our common stock; and

•the risk that we may fail to maintain our qualification as a REIT

Additional factors that may affect future results are contained in the Company's filings with the SEC, which are available at the SEC’s website at www.sec.gov. The Company disclaims any obligation to publicly update or revise any forward-looking statements, whether as a result of changes in underlying assumptions or factors, new information, future events or otherwise, except as required by law.

Orion is a real estate company incorporated in the state of Maryland on July 1, 2021, which has been operating in a manner so as to qualify and has elected to be taxed as a real estate investment trust ("REIT") for U.S. federal income tax purposes, commencing with our initial taxable year ended December 31, 2021.

 

Trading Symbol: ONL

 

Stock Exchange Listing: New York Stock Exchange

 

						December 31, 2022						September 30, 2022						June 30, 2022						March 31, 2022						December 31, 2021
Assets
Real estate investments, at cost:
Land						$	238,225					$	243,726					$	250,724					$	254,786					$	250,194
Buildings, fixtures and improvements						1,128,400						1,137,177						1,208,475						1,231,469						1,231,551
Total real estate investments, at cost						1,366,625						1,380,903						1,459,199						1,486,255						1,481,745
Less: accumulated depreciation						133,379						126,097						138,642						137,217						128,109
Total real estate investments, net						1,233,246						1,254,806						1,320,557						1,349,038						1,353,636
Accounts receivable, net						21,641						21,923						25,731						22,032						17,916
Intangible lease assets, net						202,832						223,528						247,722						272,623						298,107
Cash and cash equivalents						20,638						23,282						19,300						18,585						29,318
Real estate assets held for sale, net						2,502						6,383						9,402						—						—
Other assets, net						90,214						91,632						91,208						92,671						60,501
Total assets						$	1,571,073					$	1,621,554					$	1,713,920					$	1,754,949					$	1,759,478
Liabilities and Equity
Bridge facility, net						$	—					$	—					$	—					$	—					$	354,357
Mortgages payable, net						352,167						351,994						351,820						351,648						—
Credit facility term loan, net						173,815						173,478						173,133						172,793						172,490
Credit facility revolver						—						31,000						71,000						91,000						90,000
Accounts payable and accrued expenses						26,161						22,038						16,855						17,929						17,379
Below-market lease liabilities, net						14,068						15,611						17,381						18,993						20,609
Distributions payable						5,664						5,664						5,663						5,663						—
Other liabilities, net						23,340						21,085						20,341						19,897						16,355
Total liabilities						595,215						620,870						656,193						677,923						671,190
Common stock						57						57						57						57						57
Additional paid-in capital						1,147,014						1,146,431						1,145,987						1,145,548						1,145,278
Accumulated other comprehensive income						6,308						7,057						5,851						4,356						299
Accumulated deficit						(178,910)						(154,273)						(95,562)						(74,328)						(58,715)
Total stockholders' equity						974,469						999,272						1,056,333						1,075,633						1,086,919
Non-controlling interest						1,389						1,412						1,394						1,393						1,369
Total equity						975,858						1,000,684						1,057,727						1,077,026						1,088,288
Total liabilities and equity						$	1,571,073					$	1,621,554					$	1,713,920					$	1,754,949					$	1,759,478

Statements of Operations (unaudited, in thousands, except per share data)

						Year Ended						Three Months Ended
						December 31, 2022						December 31, 2022						September 30, 2022						June 30, 2022						March 31, 2022
Revenues:
Rental						$	207,353					$	50,097					$	51,580					$	52,659					$	53,017
Fee income from unconsolidated joint venture						765						197						189						190						189
Total revenues						208,118						50,294						51,769						52,849						53,206
Operating expenses:
Property operating						61,519						15,746						15,303						15,156						15,314
General and administrative						15,908						4,428						4,672						3,291						3,517
Depreciation and amortization						131,367						30,493						32,693						33,828						34,353
Impairments						66,359						12,198						44,801						7,758						1,602
Transaction related						675						277						194						141						63
Spin related						964						—						—						208						756
Total operating expenses						276,792						63,142						97,663						60,382						55,605
Other (expense) income:
Interest expense, net						(30,171)						(7,553)						(7,904)						(7,867)						(6,847)
Gain on disposition of real estate assets						2,352						1,293						1,059						—						—
Loss on extinguishment of debt, net						(468)						—						—						—						(468)
Other income, net						223						105						31						48						39
Equity in loss of unconsolidated joint venture						(524)						(272)						(157)						(54)						(41)
Total other (expenses) income, net						(28,588)						(6,427)						(6,971)						(7,873)						(7,317)
Loss before taxes						(97,262)						(19,275)						(52,865)						(15,406)						(9,716)
Provision for income taxes						(212)						282						(164)						(164)						(166)
Net loss						(97,474)						(18,993)						(53,029)						(15,570)						(9,882)
Net income attributable to non-controlling interest						(20)						23						(18)						(1)						(24)
Net loss attributable to common stockholders						$	(97,494)					$	(18,970)					$	(53,047)					$	(15,571)					$	(9,906)
Weighted-average shares outstanding - basic and diluted						56,632						56,644						56,635						56,629						56,626
Basic and diluted net loss per share attributable to common stockholders						$	(1.72)					$	(0.33)					$	(0.94)					$	(0.27)					$	(0.17)

Funds From Operations (FFO), Core Funds From Operations (Core FFO) and Funds Available for Distribution (FAD) (unaudited, in thousands, except per share data)

						Year Ended						Three Months Ended
						December 31, 2022						December 31, 2022						September 30, 2022						June 30, 2022						March 31, 2022
Net loss						$	(97,494)					$	(18,970)					$	(53,047)					$	(15,571)					$	(9,906)
Depreciation and amortization of real estate assets						131,297						30,475						32,674						33,811						34,337
Gain on disposition of real estate assets						(2,352)						(1,293)						(1,059)						—						—
Impairment of real estate						66,359						12,198						44,801						7,758						1,602
Proportionate share of Unconsolidated Joint Venture adjustments for items above, as applicable						1,847						465						460						461						461
FFO attributable to common stockholders						$	99,657					$	22,875					$	23,829					$	26,459					$	26,494
Adjustments:
Transaction related expenses						675						277						194						141						63
Spin related expenses						964						—						—						208						756
Loss on extinguishment of debt, net						468						—						—						—						468
Core funds from operations attributable to common stockholders						$	101,764					$	23,152					$	24,023					$	26,808					$	27,781
Adjustments:
Amortization of deferred financing costs						4,363						1,068						1,067						1,057						1,171
Amortization of above and below market leases, net						(1,207)						(260)						(312)						(315)						(320)
Amortization of deferred lease incentives						116						80						36						—						—
Straight-line rental revenue						769						2,911						(699)						(547)						(896)
Equity-based compensation						1,756						603						444						439						270
Equity in loss of Unconsolidated Joint Venture						524						272						157						54						41
Capital expenditures and leasing costs						(14,624)						(6,112)						(3,730)						(2,381)						(2,401)
Other adjustments, net						263						74						63						63						63
Proportionate share of Unconsolidated Joint Venture adjustments for the items above, as applicable						(52)						(25)						(31)						(5)						9
Funds available for distribution						$	93,672					$	21,763					$	21,018					$	25,173					$	25,718
Weighted-average shares outstanding - basic and diluted						56,632						56,644						56,635						56,629						56,626
FFO attributable to common stockholders per share						$	1.76					$	0.40					$	0.42					$	0.47					$	0.47
Core FFO attributable to common stockholders per share						$	1.80					$	0.41					$	0.42					$	0.47					$	0.49
FAD per share						$	1.65					$	0.38					$	0.37					$	0.44					$	0.45

(1) The credit facility revolver matures on November 12, 2024 and had no outstanding draws as of December 31, 2022.

(1)Refer to the Statements of Operations section for interest expense calculated in accordance with GAAP and to the Definitions section for the required reconciliation to the most directly comparable GAAP financial measure.

(2)Refer to the Statements of Operations section for net income calculated in accordance with GAAP and to the EBITDAre and Adjusted EBITDA section for the required reconciliation to the most directly comparable GAAP financial measure.

(1)Refer to the Balance Sheets section for total debt and real estate investments, at cost calculated in accordance with GAAP and to the Definitions section for the required reconciliation to the most directly comparable GAAP financial measure.

(2)Adjusted EBITDA for the year ended December 31, 2022 has not been annualized for the purpose of this calculation. Adjusted EBITDA for the quarters ended September 30, 2022, June 30, 2022 and March 31, 2022 has been annualized for the purpose of this calculation.

The following is a summary of financial covenants for the Company's credit facility term loan and credit facility revolver as defined and calculated per the terms of the facility's credit agreement. These calculations are presented to investors to show the Company's compliance with the financial covenants and are not measures of our liquidity or performance. As of December 31, 2022, the Company believes it is in compliance with these covenants based on the covenant limits and calculations in place at that time.

(1)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 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 contractually obligated reimbursements by the applicable tenants, which may include estimates) as of the expiration date of the prior lease term. If a space has been vacant for more than 12 months prior to the execution of a new lease, the lease will be excluded from this calculation.

(2)Excludes one new lease for approximately 41,000 square feet of space that had been vacant for more than 12 months at the time the new lease was executed.

(3)Includes commitments for tenant improvement allowances and base building allowances, leasing commissions and free rent (includes estimates of property operating expenses, where applicable).

(1)Represents the remaining lease term from the date of sale.