Orion Properties Inc. Q4 FY2025 earnings call

• In 2025, completed over 900,000 square feet of leasing, with additional 183,000 square feet signed after year end. Weighted average lease term on new leases in 2025 was nearly 10 years. Cash rent spreads on fourth quarter renewals up for third straight quarter but down 7.1% for year. Leased rate improved 600 basis points to over 80% at year end, occupancy rate improved 500 basis points to 78.7% at year end. Lease rollover profile improved with scheduled lease expirations in 2026 totaling $11.4 million. • Accelerated portfolio improvement through disposition activity: sold 10 properties in 2025 for ~$81 million, subsequent to year end sold two more vacant properties and under contract for more sales. Dispositions will reduce estimated carry costs by $10.3 million annually. • Actively evaluating opportunities to recycle proceeds into acquisitions, focusing on dedicated use assets like medical, lab, R&D, flex, and government properties. Purchased Barilla Americas headquarters building in Northbrook, Illinois. • Reduced headcount by over 10% in 2025 and early 2026, estimating ~$1.8 million of annualized savings, but offset by inflation, SOX 404 audit fees, and legal expenses for activist investor.

For the fourth quarter of 2025 compared to 2024, total revenues were $35.2 million vs $38.4 million, core FFO was $0.19 per share vs $0.18 per share, adjusted EBITDA was $16.1 million vs $16.6 million. For full year 2025 compared to 2024, total revenues were $147.6 million vs $164.9 million, core FFO was $0.78 per share (included ~$0.09 per share from lease terminations) vs $1.01 per share (included $0.04 per share from lease terminations), adjusted EBITDA was $69 million vs $82.8 million. In 2025, over 900,000 square feet of leasing was completed, with weighted average lease term on new leases in 2025 averaging nearly 10 years. Dispositions in 2025 included selling 10 properties totaling over 960,000 square feet for ~$81 million, and subsequent to year end sold two more vacant properties and are under contract for more sales. At year end, ~35.8% of portfolio by annualized base rent was dedicated use assets vs 31.8% at end of 2024.

• 2026 core FFO expected to range from $0.69 to $0.76 per diluted share. • G&A expected to range from $19.8 million to $20.8 million, excluding noncash compensation, expected to be in line or slightly better than 2025. • Net debt to adjusted EBITDA expected to range from 6.5x to 7.3x. • Leasing momentum constructive in 2026 with over 1,000,000 square feet in discussion or documentation stages.

• Risks discussed in earnings release, Form 10-Ks, and other SEC filings, including those that could cause actual results to differ materially from estimates. • Uncertainties regarding the York Street joint venture, including the joint venture's inability to make loan principal prepayment and ongoing discussions with lenders. • Uncertainties regarding the Arch Street joint venture investments, leading to impairment of the investment and loan loss reserve.

Q: It seems like your leasing pipeline is almost two times higher relative to last quarter. Is that just an overall conviction that you are seeing in office leasing? Is the tide really turning a bit more positively here?

A: Good morning, Mitch. I think it is probably a little bit of both, frankly. Our portfolio is not very big, so the numbers can move pretty dramatically if we start to get some leasing momentum on one or two properties, which is exactly the case that has occurred from last quarter to this quarter. And I would characterize that leasing momentum that we have gotten as a result of the market improving somewhat. So I think it is a bit of both. But I would reemphasize that the number may be volatile quarter over quarter.

Q: And from a historical context, and I know that the track record is three, four years for you guys, when you look at your leasing pipeline and compare that to the success rate that you have had, maybe if you have thought about what the percentage is that you have seen historically in your ability to take the pipeline into a lease?

A: We have not calculated that specifically. But I will tell you, Mitch, that our success rate has improved very significantly over the past two years. I think, in 2023, you might remember, we only leased 230,000 square feet of space and we did not have any new leases. And in 2024, we did 1,100,000 square feet, and in 2025, we did 900,000 square feet, and 183,000 square feet so far this year, with a pretty strong pipeline. So I would say that our ability to turn inquiry into signed leases has really improved a lot. And I would say that the decision-making process at tenants has also shortened up quite significantly, where they are now looking at space, deciding it meets their needs, and then entering into lease negotiations with us.

Q: The Barilla transaction, was that a broker that brought it to you, was it a relationship, and I do understand some of the criteria as to why you consider it a stronghold or an investment, and maybe what percentage of the asset is office versus nontraditional or more like industrial space? If you could provide some context there.

A: Well, the transaction came to us through the broker. You know, it was brokered. It was a marketed transaction, so we saw it as well as other market participants. Stephanie Peacher works for us, she is the one who does acquisitions, and so she keeps a close eye on the market, and she brought that in from the brokerage community. The property itself contains the test kitchens and R&D facilities for the Barilla operations here in North America and South America as well, so very important. From a percentage perspective, about half, roughly, is their test and R&D, and half is office.

Q: Hey, good morning, guys, and thanks for taking the question. It is good to see you back in the market acquiring properties. How should we think about the pace of the remaining, I guess, vacant properties being disposed of throughout the year, and then what should we look for from you to go out and acquire more properties?

A: Yes, that is a great question. On the vacant property side, it is important to note that we had a huge amount of activity in 2025—obviously, 10 properties in 2025 and then two additional vacant properties in 2026—and then we have pending a couple of additional sales, our vacant land in Deerfield, Illinois. With respect to the pace of vacant sales in the future, we do not have that much vacancy left, but as we generate—as vacancy comes online, we are going to take a hard look, and we will make a judgment about whether or not we sell those properties or whether we hold them for lease-up. Some of the vacancy that we have now, we feel pretty confident about our ability to lease it up, so that is the primary focus. With respect to acquisitions, we have been very judicious. This is only our second acquisition since the spin. But we do want to recycle capital, and so when we have capital recycled from sale of either vacant properties or stabilized properties, both of which we did last year, we look at that capital, and we can allocate it towards debt repayment, we can allocate it towards our existing asset base for tenant improvements and leasing commissions and building improvements and the like, or we can allocate it towards acquisitions, all of which we expect to do during the course of this year.

Q: I guess just looking at the upcoming lease maturities, it looks like through 2028, there is a little under 46% that is scheduled to roll over. What kind of opportunity does this present to you in terms of being able to go out there and grow these cash spreads and generate that FFO growth?

A: Well, I think we do expect core FFO to grow meaningfully in the coming years as the portfolio stabilizes and as we rent stuff up. We have had, I would characterize it, which is I think reflective of the broader market, mixed renewal rent increases or decreases. Sometimes the market requires us to lower rents for renewal because that is just what the market will bear. But as we have seen at the end of last year, where we had three quarters in a row of increases in renewal rents, we hope that continues into 2026 and 2027 as the market gradually recovers. But I think it is going to be volatile quarter over quarter.