Orion Properties Inc. — Second Quarter 2026 Earnings Summary

Financial Performance

• Total revenues for the quarter ended June 30, 2026, were $34.3 million, down from $37.3 million in the same quarter of 2025.
• Net income attributable to common stockholders was $24.6 million ($0.43 basic, $0.42 diluted per share), compared to a net loss of $25.1 million ($0.45 per share) in the prior year quarter.
• Funds from Operations (FFO) were $9.2 million ($0.16 diluted per share), compared to $8.9 million ($0.16 diluted per share) in the prior year quarter.
• Core FFO was $11.8 million ($0.20 diluted per share), compared to $11.5 million ($0.20 diluted per share) in the prior year quarter.
• EBITDA was $45.5 million, EBITDAre was $16.7 million, and Adjusted EBITDA was $17.2 million for the quarter.
• Net Debt to Annualized Most Recent Quarter Adjusted EBITDA was 5.4x.
• Net income increase was primarily driven by a $27.9 million increase in gains on dispositions and a $19.5 million decrease in impairment charges versus the prior year.

Guidance and Future Outlook

• Raised 2026 Core FFO per share guidance range to $0.72 – $0.77 from the previous $0.69 – $0.76.
• Lowered 2026 Net Debt to Adjusted EBITDA guidance range to 6.0x – 6.8x from the previous 6.5x – 7.3x.
• Maintained 2026 General and Administrative Expense guidance at $19.8 million – $20.8 million.
• Guidance assumes Net Debt to Adjusted EBITDA of 6.0x – 6.8x and G&A expenses of $19.8 million – $20.8 million.

Business Segments and Product Lines

• Completed 673,000 square feet of leasing year-to-date, including 202,000 square feet in Q2 and 116,000 square feet subsequent to quarter end.
• Sold four properties and the 37.4-acre Deerfield, IL campus year-to-date for $83.7 million; closed on two operating properties and the Deerfield campus in Q2 for $70.6 million.
• Acquired fee simple interest in one parcel in Lincoln, Nebraska for $0.6 million, reclassifying $2.1 million from below-market right-of-use assets to land.
• Portfolio as of June 30, 2026, consisted of 57 Operating Properties with 78.1% occupancy and a 6.2-year weighted average remaining lease term.
• 69.1% of Annualized Base Rent ($108.0 million) was derived from Investment-Grade Tenants; 38.7% from Dedicated Use Assets (DUAs).
• Subsequent to quarter end, completed new leases in Plano, TX (19,000 sq ft), Tulsa, OK (28,000 sq ft), and a renewal in Salem, OR (69,000 sq ft).

Market and Competitive Landscape

• The company is shifting portfolio concentration away from traditional office properties toward Dedicated Use Assets.
• Strategic options review process remains ongoing, including potential acquisition, merger, or sale of the company.
• Pending sale of one property leased to the US Government for $3.4 million is subject to conditions outside company control.

Risks and Challenges

• Unconsolidated Joint Venture (OAP/VER Venture, LLC) mortgage debt of $125.6 million (as of Aug 6, 2026) experienced a payment default at maturity in February 2026.
• Lenders have issued a default notice and intend to seek a sale of the six joint venture properties; a proposed sale was terminated, and the loan went back into default on August 1, 2026.
• Company has written down its investment in the Unconsolidated Joint Venture to zero and recorded a full loan loss reserve on its $5.5 million Member Loan.
• No further losses from the joint venture are recognized until the venture generates net income exceeding previously recognized losses.
• Risks include interest rate increases, inflation, tenant credit risk, office space oversupply, and the potential for the strategic review process to disrupt operations or divert management attention.

Management Commentary and Tone

• CEO Paul McDowell stated the company is executing on a strategy to stabilize the portfolio and build on leasing momentum.
• Management highlighted progress toward sustainable Core FFO per share growth through disposition and debt reduction efforts.
• The company remains committed to maximizing stockholder value while actively evaluating strategic options.

Other Key Points

• Declared a quarterly cash dividend of $0.02 per share for Q3 2026, payable October 15, 2026, to stockholders of record as of September 30, 2026.
• Reduced debt obligations by $60.7 million in Q2, including $35.7 million on the CMBS loan.
• Liquidity as of June 30, 2026, was $176.5 million, comprising $63.5 million in cash/restricted cash and $113.0 million available on the credit facility revolver.
• Principal outstanding debt was $436.6 million, consisting of a $316.6 million CMBS loan, $102.0 million credit facility revolver, and $18.0 million San Ramon loan.
• The credit facility revolver bears interest at SOFR plus 2.75% with a maturity of February 18, 2028, subject to extension options.
• The CMBS loan is fixed at 4.971% with a maturity of February 11, 2029, subject to extension options.
• Beginning January 1, 2026, the company no longer includes the proportionate share of the Unconsolidated Joint Venture's financial metrics in its non-GAAP results due to the suspension of equity method accounting.