Orion Properties Inc. Q1 FY2025 earnings call

• Leasing Activity: Over 450,000 square feet of leasing completed by May 6, 2025, including a 15.7-year lease for 46,000 sq ft in Parsippany and a 10-year lease for 160,000 sq ft in Buffalo. Initial rent spreads on renewals were off 18% in Q1, but down 5% overall and up 7% on average since the spin.
• Portfolio Plans: Occupancy expected to rise after 2025 as they lease vacant space and sell non-core properties. Sold 3 vacant properties totaling 287,000 sq ft for $19.1 million, with two additional properties under contract.
• Dedicated Use Assets: Shifting portfolio toward medical, lab, R&D flex, and non-CBD government properties, which have stronger renewal trends.
• Balance Sheet: Liquidity remained strong at $244.5 million as of May 5, 2025. Dividend of $0.02 per share declared for Q2 2025.
• G&A: Restructuring efforts to reduce G&A, with savings starting in Q3/Q4 2025.

In the first quarter of 2025, Orion Properties reported total revenues of $38 million, down from $47.2 million in the same quarter of 2024. Core FFO for the quarter was $10.7 million or $0.19 per share, compared to $20.4 million or $0.36 per share in Q1 2024. Adjusted EBITDA was $17.4 million versus $26.7 million in Q1 2024. The operating property occupancy rate was 74.3% at quarter end, the lease rate was 77.4%, and the weighted average lease term was 5.2 years. Approximately 32% of the portfolio by annualized base rent and 25% by square footage were dedicated use assets as of quarter end.

• Reaffirmed 2025 core FFO range of $0.61 to $0.70 per diluted share.
• G&A range of $19.5 million to $20.5 million.
• Net debt to adjusted EBITDA expected to range from 8 times to 8.8 times.
• Excluding non-cash compensation, 2025 G&A expected to be in line or slightly better than 2024.

• Macroeconomic uncertainty causing variability in leasing spreads.
• Tenant retention challenges, high tenant concessions, and rent pressure.
• Governmental uncertainty around DOGE affecting government-owned assets.

Q: Curious about tone of discussions with prospects and if you're seeing any sort of lengthening of the deal pipeline for leases?

A: Decision-making speed has been long since the market collapse, no big change noticed yet, but GSA had a 50-day delay in approval.

Q: Curious about opportunistic property sales?

A: Sold 3 vacant properties, two under contract, with brokers engaged for both vacant and occupied properties.

Q: What's happening with the former Walgreens assets?

A: Under agreement with institutional group marketing site, work to demolish existing office buildings, development expected in 2026, subject to due diligence and feasibility.