Orion Office REIT Inc. Changes Name to Orion Properties and Reports Fourth Quarter and Full Year 2024 Results

- Completed 1.1 Million Square Feet of Leasing in 2024, Including 0.3 Million Square Feet in the Fourth Quarter -

- Acquired One 97,000 Square Foot Property in 2024 for $34.6 Million -

- Sold Two Vacant Properties in 2024 for $5.3 Million -

- Declares Dividend for First Quarter 2025 -

PHOENIX--(BUSINESS WIRE)--March 05, 2025-- 

Orion Office REIT Inc. $(ONL)$ ("Orion" or the "Company"), a fully-integrated real estate investment trust ("REIT") engaged in the ownership, acquisition and management of a diversified portfolio of single-tenant net lease office properties located across the United States, announced today a change in its corporate name to Orion Properties Inc., to better describe its broader investment strategy to shift its portfolio concentration over time away from traditional office properties, towards more dedicated use assets that have an office component. The Company's ticker symbol will remain "ONL." Consistent with the foregoing strategy, during September 2024, Orion acquired an approximately 97,000 square foot flex/laboratory/R&D facility in San Ramon, California for $34.6 million. As of December 31, 2024, approximately 31.8% of the Company's Annualized Base Rent was derived from properties it deemed dedicated use assets.

Orion also announced today its operating results for the fourth quarter and full year ended December 31, 2024.

Paul McDowell, Orion's Chief Executive Officer, commented, "We are proud of the team's success in leasing 1.1 million square feet across 12 different properties in 2024, which was four times the leasing volume we achieved in the prior year, and importantly, our leasing pipeline for 2025 continues to be robust. We are energized by the shift in strategy to increase our portfolio concentration over time toward more dedicated use assets such as flex, laboratory, medical and governmental. We believe this strategy will result in a more stable portfolio with higher renewal prospects, as tenants need the space to operate their business, therefore requiring employees to be in person at the property. As we look to execute on this strategy in the coming years, we intend to continue to execute on asset sale activity, adding to the almost 2.0 million square feet sold since our spin off. We have also made various changes to reduce G&A growth and expect to deliver approximately $1.0 million of annualized savings that will start to contribute in the second half of this year. We believe these savings, along with our ongoing efforts to reduce property carrying costs and a realigned dividend, will enable us to maintain the liquidity necessary to support our stabilized well-located portfolio with future leasing and required capital expenditures. As we look ahead, the improving leasing environment and the meaningful actions we have taken should enable Orion to stabilize Core FFO earnings this year and next with meaningful earnings and value growth in future years."

Fourth Quarter 2024 Financial and Operating Highlights

   -- Total revenues of $38.4 million 
 
   -- Net loss attributable to common stockholders of $(32.8) million, or 
      $(0.59) per share 
 
   -- Funds from Operations ("FFO") of $7.6 million, or $0.14 per diluted share 
 
   -- Core FFO of $10.2 million, or $0.18 per diluted share 
 
   -- EBITDA of $(5.8) million, EBITDAre of $16.4 million and Adjusted EBITDA 
      of $16.6 million 
 
   -- Net Debt to Annualized Most Recent Quarter Adjusted EBITDA of 7.57x 
 
   -- Sold one vacant property for a gross sales price of $3.2 million 

Full Year 2024 Financial and Operating Highlights

   -- Total revenues of $164.9 million 
 
   -- Net loss attributable to common stockholders of $(103.0) million, or 
      $(1.84) per share 
 
   -- FFO of $47.1 million, or $0.84 per diluted share 
 
   -- Core FFO of $56.8 million, or $1.01 per diluted share 
 
   -- EBITDA of $34.3 million, EBITDAre of $81.9 million and Adjusted EBITDA of 
      $82.8 million 
 
   -- Net Debt to Full Year Adjusted EBITDA of 6.06x 
 
   -- Acquired one property for a gross purchase price of $34.6 million 
 
   -- Sold two vacant properties for an aggregate gross sales price of $5.3 
      million 

Financial Results

During the fourth quarter 2024, the Company generated total revenues of $38.4 million, as compared to $43.8 million in the same quarter of 2023. The Company's net loss attributable to common stockholders was $(32.8) million, or $(0.59) per share, during the fourth quarter of 2024, as compared to $(16.2) million, or $(0.29) per share in the same quarter of 2023. Core FFO for the fourth quarter of 2024 was $10.2 million, or $0.18 per diluted share, as compared to $18.5 million, or $0.33 per diluted share in the same quarter of 2023.

During the full year 2024, the Company generated total revenues of $164.9 million, as compared to $195.0 million in 2023. The Company's net loss attributable to common stockholders was $(103.0) million, or $(1.84) per share, during the full year 2024, as compared to $(57.3) million, or $(1.02) per share in 2023. Core FFO during the full year 2024 was $56.8 million, or $1.01 per diluted share, as compared to $94.8 million, or $1.68 per diluted share in 2023.

Leasing Activity

During the fourth quarter 2024, the Company entered into the following lease transactions (square feet in thousands):

 
Location     New Lease or  Square Feet     Term       Expected    New Expected 
               Renewal                              Commencement   Expiration 
                                                    or Previous 
                                                     Expiration 
-----------  ------------  -----------  ----------  ------------  ------------ 
Providence,   New Lease        136      11.0 years   April 2025    March 2036 
Rhode 
Island 
Urbana,        Renewal         116      13.0 years  August 2026   August 2039 
Maryland 
The           New Lease         2       3.3 years    April 2025   August 2028 
Woodlands, 
Texas 
 

For the full year 2024, the Company entered into new leases and lease renewals for 1.1 million square feet across 12 different properties, which is more than four times the 261,000 square feet of leasing activity the Company completed during 2023.

During February 2025, the Company's Unconsolidated Joint Venture with an affiliate of Arch Street Capital Partners, LLC (the "Arch Street Joint Venture"), entered into a 10.0-year lease renewal for 163,000 square feet at one of its properties. As described further under "Arch Street Joint Venture" below, the Company made a member loan to the Arch Street Joint Venture to fund leasing costs for this lease transaction.

Acquisition Activity

For the full year 2024, the Company acquired one 97,000 square foot flex/laboratory/R&D facility in San Ramon, California for $34.6 million. The property is fully leased to a single tenant with a remaining term of 15.0 years as of the acquisition date.

Disposition Activity

During the fourth quarter of 2024, the Company closed on one vacant property disposition for 68,000 square feet and a gross sales price of $3.2 million. For the full year 2024, the Company closed on two vacant property dispositions for a total of 164,000 square feet and an aggregate gross sales price of $5.3 million.

As of March 5, 2025, the Company also has agreements in place to sell two Operating Properties and one Non-Operating Property for an aggregate gross sales price of $35.9 million. The Company's 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 receipt of governmental approvals, and therefore, we cannot provide any assurance the transactions will close on the agreed upon price or other terms, or at all.

Real Estate Portfolio

As of December 31, 2024, the Company's real estate portfolio consisted of 69 Operating Properties as well as a 20% ownership interest in the Arch Street Joint Venture, comprising six properties. The Company's Occupancy Rate was 73.7%, with 74.4% of Annualized Base Rent derived from Investment-Grade Tenants, and the portfolio's Weighted Average Remaining Lease Term was 5.2 years. The Company's Occupancy Rate was 73.1% adjusted for two Operating Properties that are currently under agreement to be sold.

As of December 31, 2024, the Arch Street Joint Venture owned six real estate properties which had an Occupancy Rate of 100%, with 40.3% of Annualized Base Rent derived from Investment-Grade Tenants and a Weighted Average Remaining Lease Term of 5.2 years.

General and Administrative Restructure

Together with our corporate rebranding and strategy shift, we have made various changes to our general and administrative costs such as restructuring the composition of the team and responsibilities to streamline operations and more efficiently manage general and administrative expenses.

One of these changes is the retirement of Gary Landriau, our Chief Investment Officer, effective June 30, 2025. It is our intention to reallocate his responsibilities with the team already in place and we do not plan to replace the position. In order to allow for a smooth transition, Gary will remain in a consulting role with Orion until January 31, 2026. We also plan to make additional changes to further streamline our efficiency and team through the year, but none will be as impactful financially as the approximately $1.0 million of annualized savings upon Gary's retirement.

Arch Street Joint Venture

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