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What changed in Orion Properties Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Orion Properties Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+371 added−398 removedSource: 10-K (2026-03-05) vs 10-K (2025-03-05)

Top changes in Orion Properties Inc.'s 2025 10-K

371 paragraphs added · 398 removed · 262 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

23 edited+7 added−10 removed24 unchanged
Biggest changeRisk Factors ” contained in this Annual Report on Form 10-K. • If global market and economic conditions deteriorate, our business, financial condition and results of operations could be materially adversely affected. • Changes in workplace practices and office space utilization, including remote and hybrid work arrangements, have reduced the demand for office space at our properties and may continue to do so. • Leases representing approximately 13.5% of our annualized base rent are scheduled to expire in 2025, and we could experience difficulties or delays renewing leases or re-leasing vacant space, which will increase our costs to operate and maintain such properties without receiving income. • Most of our properties depend upon a single tenant for all or a majority of their rental income; therefore, our financial condition, including our ability to make distributions to stockholders, may be adversely affected by the bankruptcy or insolvency, a downturn in the business, or a lease termination of such a single tenant. • We expect to continue to convert certain vacant properties to multi-tenant use, and cannot provide any assurance that the investments we make of time and capital to do so will increase the value of the subject properties. • Government budgetary pressures and priorities, and trends in government employment and office leasing may adversely impact our business. • Our partner in the Arch Street Joint Venture has not had access to sufficient liquidity to contribute its share of the capital requirements that have recently arisen, thereby exposing us to liabilities in excess of our share of the joint venture and other risks. • We may be unable to successfully execute on our strategy to shift our portfolio concentration over time away from traditional office properties, towards more dedicated use assets. • Competition for acquisitions may reduce the number of acquisition opportunities available to us and increase the costs of those acquisitions. • We may suffer adverse effects from acquisitions of commercial real estate properties. 7 Table of Contents • We face considerable competition in the leasing market and may be unable to renew existing leases or re-let space on terms similar to our existing leases, or we may expend significant capital in our efforts to re-lease space, which may adversely affect our business, financial condition and results of operations. • Tenant payment defaults may have a material adverse effect on our business, financial condition and results of operations. • Some of our leases provide tenants with the right to terminate their leases early, which may have a material adverse effect on our business, financial condition and results of operations. • We have a significant amount of indebtedness and may need to incur more in the future. • We have existing debt and refinancing risks that could have a material adverse effect on our business, financial condition and results of operations, including the risk that we will be unable to extend or refinance some or all of our debt. • Financial covenants could materially adversely affect our ability to conduct our business. • We depend on external sources of capital that are outside of our control, which may affect our ability to achieve our business strategies. • Our expenses may remain constant or increase, even if our revenues decrease, which may have a material adverse effect on our business, financial condition and results of operations. • Real estate property investments are illiquid.
Biggest changeRisk Factors ” contained in this Annual Report on Form 10-K. • If global market and economic conditions deteriorate, our business, financial condition and results of operations could be materially adversely affected. • Our strategic review process will be costly and time-consuming and may not result in our identification or completion of a strategic transaction, which could have an adverse effect on our stock price and our business. • Changes in workplace practices and office space utilization, including remote and hybrid work arrangements, have reduced the demand for office space at our properties and may continue to do so. • Leases representing approximately 10.2% of our annualized base rent are scheduled to expire in 2026, and we could experience difficulties or delays renewing leases or re-leasing vacant space, which will increase our costs to operate and maintain such properties without receiving income. • Most of our properties depend upon a single tenant for all or a majority of their rental income; therefore, our financial condition, including our ability to make distributions to stockholders, may be adversely affected by the bankruptcy or insolvency, a downturn in the business, or a lease termination of such a single tenant. 7 Table of Contents • We expect to continue to convert certain vacant properties to multi-tenant use, and cannot provide any assurance that the investments we make of time and capital to do so will increase the value of the subject properties. • Government budgetary pressures and priorities, and trends in government employment and office leasing may adversely impact our business. • We have made equity and member loan investments in the Arch Street Joint Venture which may not be recoverable. • We may be unable to successfully execute on our strategy to shift our portfolio concentration over time away from traditional office properties, towards more dedicated use assets. • Competition for acquisitions may reduce the number of acquisition opportunities available to us and increase the costs of those acquisitions. • We may suffer adverse effects from acquisitions of commercial real estate properties. • We face considerable competition in the leasing market and may be unable to renew existing leases or re-let space on terms similar to our existing leases, or we may expend significant capital in our efforts to re-lease space, which may adversely affect our business, financial condition and results of operations. • Tenant payment defaults may have a material adverse effect on our business, financial condition and results of operations. • Some of our leases provide tenants with the right to terminate their leases early, which may have a material adverse effect on our business, financial condition and results of operations. • We have a significant amount of indebtedness and may need to incur more in the future. • We have existing debt and refinancing risks that could have a material adverse effect on our business, financial condition and results of operations, including the risk that we will be unable to extend or refinance some or all of our debt, or that the lenders will not seek to enforce their remedies due to the existing payment default under the Arch Street Joint Venture mortgage notes. • Financial covenants could materially adversely affect our ability to conduct our business. • We depend on external sources of capital that are outside of our control, which may affect our ability to achieve our business strategies. • Our expenses may remain constant or increase, even if our revenues decrease, which may have a material adverse effect on our business, financial condition and results of operations. • Real estate property investments are illiquid.
(“VEREIT”) on November 1, 2021, Realty Income contributed the combined business comprising certain office real properties and related assets previously owned by subsidiaries of Realty Income, and certain office real properties and related assets previously owned by subsidiaries of VEREIT (the “Separation”), to the Company and its operating partnership, Orion Properties LP (“Orion OP”), and on November 12, 2021, effected a special distribution to the Company’s stockholders of all the outstanding shares of common stock of the Company (the “Distribution”).
(“VEREIT”) on November 1, 2021, Realty Income contributed the combined business comprising certain office real properties and related assets previously owned by subsidiaries of Realty Income, and certain office real properties and related assets previously owned by subsidiaries of VEREIT (the “Separation”), to the Company and its operating partnership, Orion Properties LP (“Orion OP”), and on November 12, 2021, effected a special distribution to Realty Income’s stockholders of all the outstanding shares of common stock of the Company (the “Distribution”).
We may not be able to dispose of properties when desired or on favorable terms. • Our assets may be subject to impairment charges. • Uninsured and underinsured losses may adversely affect our operations. • The obligations and requirements to which we are subject as a public company are extensive and will increase when we no longer qualify as an “emerging growth company.” • Our failure to maintain our qualification as a REIT for U.S. federal income tax purposes could have a material adverse effect on us.
We may not be able to dispose of properties when desired or on favorable terms. • Our assets may be subject to impairment charges. • Uninsured and underinsured losses may adversely affect our operations. • The obligations and requirements to which we are subject as a public company are extensive and will increase when we no longer qualify as an “emerging growth company.” • Our failure to maintain our qualification as a REIT for U.S. federal income tax purposes could have a material adverse effect on us. 8 Table of Contents
Additionally, we believe there are a variety of markets outside the Sun Belt which possess similar attractive characteristics and will benefit from similar trends. We will look to opportunistically emphasize both Sun Belt and other similar high-quality markets to the extent we are able to grow our portfolio. Net Lease Investment Characteristics.
Additionally, we believe there are a variety of markets outside the Sun Belt which possess similar attractive characteristics and will benefit 5 Table of Contents from similar trends. We will look to opportunistically emphasize both Sun Belt and other similar high-quality markets to the extent we are able to grow our portfolio. Net Lease Investment Characteristics.
Following the Distribution, we became an independent and publicly traded company, and our common stock, par value $0.001 per share, trades on the New York Stock Exchange (the “NYSE”) under the symbol “ONL.” The Company has elected to be taxed as a REIT for U.S. federal income tax purposes, commencing with its initial taxable year ended December 31, 2021.
Following the Distribution, we became an independent and publicly traded company, and our common stock, par value $0.001, trades on the New York Stock Exchange (the “NYSE”) under the symbol “ONL”. The Company has elected to be taxed as a REIT for U.S. federal income tax purposes, commencing with its initial taxable year ended December 31, 2021.
We also owned a 20% equity interest in the Arch Street Joint Venture which, as of December 31, 2024, owned a portfolio of six properties with an aggregate of 1.0 million leasable square feet located in six states with an occupancy rate of 100% and a weighted-average remaining lease term of 5.2 years.
We also owned a 20% equity interest in the Arch Street Joint Venture, which as of December 31, 2025, owned a portfolio of six properties with an aggregate of 1.0 million leasable square feet located in six states with an occupancy rate of 100% and a weighted average remaining lease term of 6.3 years.
Human Capital As of December 31, 2024, we had 40 employees. We value our employees and their individual and collective contributions to Orion in the furtherance of our corporate, operational, social, environmental and governance initiatives.
Human Capital As of December 31, 2025, we had 37 employees. We value our employees and their individual and collective contributions to Orion in the furtherance of our corporate, operational, social, environmental and governance initiatives.
Financing We employ prudent amounts of leverage and use debt as a means of providing additional funds for asset management and other general corporate purposes. We expect to use leverage prudently, assessing the appropriateness of new equity or debt capital based on market conditions, including reasonable assumptions regarding future cash flow, the creditworthiness of tenants and future rental rates.
Financing We use debt as a means of providing additional funds for asset management and other general corporate purposes. We believe we have used and expect to continue to use leverage prudently, assessing the appropriateness of new equity or debt capital based on market conditions, including reasonable assumptions regarding future cash flow, the creditworthiness of tenants and future rental rates.
We believe these markets will continue to benefit from an increasing number of corporate relocations from urban coastal markets to inland secondary markets, as companies and employees alike seek a lower cost of living, business-friendly tax and regulatory environments, less density, and better weather.
We possess a geographical preference for Sun Belt markets, which we believe will continue to benefit from an increasing number of corporate relocations from urban coastal markets to inland secondary markets, as companies and employees alike seek a lower cost of living, business-friendly tax and regulatory environments, less density, and better weather.
Including our proportionate share of leasable square feet and annualized base rent from the Arch Street Joint Venture, we owned an aggregate of 8.1 million leasable square feet with an occupancy rate of 73.7%, or 73.1% adjusted for two operating properties that are currently under agreements to be sold, and a weighted-average remaining lease term of 5.2 years as of December 31, 2024.
Including our proportionate share of leasable square feet and annualized base rent from the Arch Street Joint Venture, we owned an aggregate of 6.7 million leasable square feet with an occupancy rate of 78.7%, or 78.2% adjusted for one consolidated operating property and our proportionate share of the square footage of one Arch Street Joint Venture operating property that are currently under agreements to be sold, and a weighted average remaining lease term of 5.7 years as of December 31, 2025.
As of December 31, 2024, properties located in the following states accounted for over 10% of our annualized base rent: Geographic Concentration % of Total Annualized Base Rent Texas 16.5% New Jersey 12.5% As of December 31, 2024, tenants in the following industries accounted for over 10% of our annualized base rent: Tenant Industry Concentration % of Total Annualized Base Rent Government & Public Services 16.8% Health Care Equipment & Services 13.4% Financial Institutions 11.4% Capital Goods 11.0% 4 Table of Contents Investment Strategy We employ a proven, cycle-tested investment evaluation framework which serves as the lens through which we make capital allocation decisions.
As of December 31, 2025, properties located in the following states accounted for 10% or more of our annualized base rent: Geographic Concentration % of Total Annualized Base Rent Texas 18.9% New Jersey 13.4% New York 10.0% As of December 31, 2025, tenants in the following industries accounted for 10% or more of our annualized base rent: Tenant Industry Concentration % of Total Annualized Base Rent Government & Public Services 18.3% Health Care Equipment & Services 13.7% Capital Goods 10.8% Financial Institutions 10.0% Investment Strategy We employ a proven, cycle-tested investment evaluation framework which serves as the lens through which we make capital allocation decisions.
We intend to grow our portfolio by acquiring properties that fit the characteristics defined in our investment evaluation framework, including dedicated use assets that have an office component, through multiple sourcing channels, leveraging our management team’s extensive relationship network with an average of over 25 years of experience 5 Table of Contents transacting in the single-tenant net lease market.
External Growth. We intend to grow our portfolio by acquiring properties that fit the characteristics defined in our investment evaluation framework, including dedicated use assets that have an office component, through multiple sourcing channels, while leveraging our management team’s extensive relationship network and decades of experience transacting in the single-tenant net lease market.
Additionally, our proportionate share of the non-recourse mortgage notes associated with the Arch Street Joint Venture was $26.3 million as of December 31, 2024.
Additionally, our proportionate share of the non-recourse mortgage notes associated with the Arch Street Joint Venture was $25.8 million as of December 31, 2025 (the “Arch Street Joint Venture Mortgage Debt”).
Suburban Market Features. We primarily own commercial real properties located in suburban markets and seek to capitalize on de-urbanization trends amplified by the migration of millennials to the suburbs in the post-COVID environment. 39.2% of our annualized base rent as of December 31, 2024 was from Sun Belt markets.
Preferred Market Features. We primarily own commercial real properties located in suburban markets and seek to capitalize on de-urbanization trends amplified by the migration of millennials to the suburbs in the post-COVID environment.
Our experience is that these properties have greater tenant utilization and higher renewal probability, given their generally specialized uses and general inability for the tenant’s employees to conduct business at these sites on a remote or hybrid basis.
Our experience is that these properties have greater tenant utilization and higher renewal probability, given their generally specialized uses and general inability for the tenant’s employees to conduct business at these sites on a remote or hybrid basis. As of December 31, 2025, approximately 35.8% of our annualized base rent was derived from properties we deemed dedicated use assets.
As of December 31, 2024, we had $492.0 million of total consolidated debt outstanding, consisting of a $355.0 million fixed rate securitized mortgage note collateralized by 19 properties (the “CMBS Loan”), $119.0 million borrowed under our $350.0 million senior revolving credit facility (the “Revolving Facility”) and an $18.0 million fixed rate mortgage note on the San Ramon, California property we acquired in September 2024 (the “San Ramon Loan”).
As of December 31, 2025, we had $465.0 million of total consolidated debt outstanding, consisting of a $355.0 million fixed rate securitized mortgage loan collateralized by 19 properties (the “CMBS Loan”), $92.0 million borrowed under our $350.0 million senior revolving credit facility (the “Original Revolving Facility”) which was refinanced with a new $215.0 million senior secured revolving credit facility during February 2026 (the “New Revolving Facility”), and an $18.0 million fixed rate mortgage note secured by our San Ramon, California property (the “San Ramon Loan”).
As of December 31, 2024, we owned and operated 69 operating properties with an aggregate of 7.9 million leasable square feet located in 29 states with an occupancy rate of 73.0% and a weighted-average remaining lease term of 5.2 years.
Real Estate Portfolio As of December 31, 2025, we owned and operated 58 operating properties with an aggregate of 6.5 million leasable square feet located in 26 states with an occupancy rate of 78.1% and a weighted average remaining lease term of 5.6 years. As of December 31, 2025, we had eight properties designated as non-operating properties.
Competitive Strengths Our portfolio consists of high-quality, diversified properties with favorable exposure to investment-grade credit and is located in attractive suburban markets across the United States and leased primarily on a single-tenant net lease basis.
We believe our prudent leverage and liquidity will enable us to continue to make the capital investments needed to enhance the quality of our existing portfolio and stability of our cash flows, as well as opportunistically take advantage of high-quality acquisition opportunities as market conditions permit. 6 Table of Contents Competitive Strengths Our portfolio consists of high-quality, diversified properties with favorable exposure to investment-grade credit and is located in attractive suburban markets across the United States and leased primarily on a single-tenant net lease basis.
As of December 31, 2024, one tenant exceeded 10% of our annualized base rent: the General Services Administration at 16.3%. As of December 31, 2024, we had a total of 15 leases with the General Services Administration with a weighted average remaining lease term of 4.7 years.
As of December 31, 2025, we had a total of 15 leases with the General 4 Table of Contents Services Administration with a weighted average remaining lease term of 4.0 years and one lease with Merrill Lynch with a weighted average remaining lease term of 9.9 years.
Following completion of the merger transaction involving Realty Income and VEREIT, Inc.
The Company was initially formed as a wholly owned subsidiary of Realty Income Corporation (“Realty Income”). Following completion of the merger transaction involving Realty Income and VEREIT, Inc.
We believe proactive, in-house property management and leasing allows us to exercise greater control of operating and capital expenditures while improving propensity to renew and maximizing re-leasing spreads. 6 Table of Contents Regulations Compliance with various governmental regulations has an impact on our business, including our capital expenditures, earnings and competitive position, which can be material.
Our organization includes property managers and leasing professionals who maintain direct relationships and dialogue with our tenants and broker communities. We believe proactive, in-house property management and leasing allows us to exercise greater control of operating and capital expenditures while improving propensity to renew and maximizing re-leasing spreads.
Our portfolio is comprised of traditional office properties, as well as governmental, medical office, flex/laboratory and R&D and flex/industrial properties.
Our portfolio is comprised of traditional office properties, as well as governmental, medical office, flex/laboratory and R&D and flex/industrial properties. As part of our investment strategy, we intend to shift our portfolio concentration over time away from traditional office properties, towards more dedicated use assets with specialized uses that include an office component.
As part of our asset management efforts, we expect to increase the quality and desirability of our portfolio by continuing to make capital investments in our properties to add amenities and to create more modern floor plans configured to optimize collaboration and enhance employee productivity. External Growth.
As part of our asset management efforts, we expect to increase the quality and desirability of our portfolio by continuing to make select capital investments in our properties to add tenant amenities ( e.g. , cafe, lounge, gym, conference center) or other building features intended to augment the asset’s attractiveness to its marketplace of commercial users and/or the incumbent occupant.
Removed
On March 5, 2025, we changed our name from Orion Office REIT Inc. to Orion Properties Inc. to better describe our broader investment strategy to shift our portfolio concentration over time away from traditional office properties, towards more dedicated use assets that have an office component.
Added
Cooperation Agreement and Strategic Review Process On January 26, 2026, we entered into a cooperation agreement (the “Cooperation Agreement”) with one of our stockholders, The Kawa Fund Limited and its affiliate, Kawa Capital Management, Inc. (collectively, “Kawa”).
Removed
We define dedicated use assets as those that include a substantial specialized use component such as government, medical, laboratory and research and development, and flex operations, and would therefore not be considered traditional office properties. Orion was initially formed as a wholly-owned subsidiary of Realty Income Corporation (“Realty Income”).
Added
Also on January 26, 2026, pursuant to the Cooperation Agreement, we commenced a review of strategic options for the Company, which review may include, without limitation, the consideration of potential acquisition and merger targets, the potential sale of the Company and continuing to operate as an independent publicly traded entity.
Removed
Consistent with the foregoing capital recycling strategy, during the year ended December 31, 2024, we acquired an approximately 97,000 square foot flex/laboratory and R&D facility in San Ramon, California for a gross purchase price of $34.6 million. The property is fully leased to a high credit quality tenant through August 2039.
Added
The Cooperation Agreement does not obligate the Company to pursue or consummate any such transaction or require our Board of Directors to take any action that it determines in good faith is inconsistent with its duties under applicable law. The Cooperation Agreement contains customary standstill and non-disparagement provisions and will terminate on September 1, 2026.
Removed
As of December 31, 2024, approximately 31.8% of our annualized base rent was derived from properties we deemed dedicated use assets.
Added
Pursuant to the Cooperation Agreement, Kawa withdrew its notice of intent to nominate director candidates for election to our Board of Directors at our 2026 annual meeting of stockholders, and Kawa must cause all shares of common stock pursuant to which it has the sole or shared power to direct the voting to be present for quorum purposes at our 2026 annual meeting of stockholders and to refrain from “withholding” or voting “against” the directors nominated by our Board of Directors for election at such annual meeting.
Removed
In November 2022, we established an “at the market” offering program for our common stock (the “ATM Program”), although we have not utilized this program to sell any shares of our common stock to date.
Added
As of December 31, 2025, two tenants accounted for 10% or more of our annualized base rent: the General Services Administration at 17.8% and Merrill Lynch at 10.0%.
Removed
Pursuant to the ATM Program, we may from time to time offer and sell shares of our common stock, having an aggregate offering price of up to $100.0 million.
Added
See “Management’s Discussion and Analysis of Results of Operations and Financial Condition - Liquidity and Capital Resources” for additional information about our debt obligations, including the New Revolving Facility, a recent amendment entered into with respect to the CMBS Loan and the Arch Street Joint Venture Mortgage Debt.
Removed
Such offers or sales of shares of our common stock may be made in privately negotiated transactions, including block trades, brokers’ transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act, including sales made directly on the NYSE, or through forward transactions under separate master forward sale confirmations and related supplemental confirmations for the sale of shares of our common stock on a forward basis.
Added
Regulations Compliance with various governmental regulations has an impact on our business, including our capital expenditures, earnings and competitive position, which can be material.
Removed
In May 2024, in connection with the election of our option to extend the maturity of the Revolving Facility to May 12, 2026, we agreed to reduce the borrowing capacity of the Revolving Facility to $350.0 million from $425.0 million and to certain financial covenant changes.
Removed
We believe our prudent leverage and liquidity will enable us to continue to make the capital investments needed to enhance the quality of our existing portfolio and stability of our cash flows, as well as opportunistically take advantage of high-quality acquisition opportunities as market conditions permit.
Removed
Our organization includes property managers and leasing professionals who maintain direct relationships and dialogue with our tenants and broker communities.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

79 edited+27 added−33 removed184 unchanged
Biggest changeDuring February 2025, we made an additional member loan of $8.3 million when our partner was unable to contribute its share of leasing costs related to a lease extension that was completed for one of the properties in the Arch Street Joint Venture portfolio.
Biggest changeThese member loans were made to fund certain capital requirements of the joint venture when our partner in the Arch Street Joint Venture did not have access to sufficient liquidity to contribute its share of capital call obligations, including with respect to a principal paydown the Arch Street Joint Venture was required to make during November 2024 to extend the maturity date of the non-recourse mortgage notes and leasing costs the Arch Street Joint Venture was required to fund in February 2025 to extend the lease at one of the joint venture properties.
Also, our government tenants’ desire to reconfigure leased office space to manage utilization per employee may require us to spend significant amounts for tenant improvements, and tenant relocations are often more prevalent in those circumstances. Compared to our historical experience with government tenants, the government tenants’ leasing decisions and strategies may be less predictable.
Also, our government tenants’ desire to reconfigure leased office space to manage utilization per employee may require us to spend significant amounts for tenant improvements, and tenant relocations are often more prevalent in those circumstances. Compared to our historical experience with government tenants, the current government tenants’ leasing decisions and strategies may be less predictable.
While these sale transactions can result in higher sale valuations, they also normally require us as seller to bear a portion of the buyer’s redevelopment risk through longer due diligence periods during which we remain responsible for carrying costs of the property and the buyer may terminate the transaction.
While these sale transactions can result in higher sale valuations, they also may require us as seller to bear a portion of the buyer’s redevelopment risk through longer due diligence periods during which we remain responsible for carrying costs of the property and the buyer may terminate the transaction.
We do not expect our cash flows from operations alone to be sufficient to fund our future capital investments and, therefore, we will be dependent upon our ability to access third-party sources of capital, including the Revolving Facility and other sources of debt and equity capital.
We do not expect our cash flows from operations alone to be sufficient to fund our future capital investments and, therefore, we will be dependent upon our ability to access third-party sources of capital, including the New Revolving Facility and other sources of debt and equity capital.
Under the credit agreement governing the Revolving Facility, our dividends may not exceed the greater of (1) 100% of our adjusted funds available for distribution (as defined in the credit agreement), and (2) the amount required for us to maintain our qualification as a REIT.
Under the credit agreement governing the New Revolving Facility, our dividends may not exceed the greater of (1) 100% of our adjusted funds available for distribution (as defined in the credit agreement), and (2) the amount required for us to maintain our qualification as a REIT.
Our multi-tenant properties are subject to a variety of risks not typically encountered in real estate properties that are operated by or for a single tenant, which could materially adversely affect the value of our investment, including: • conversion to multi-tenant use will require us to make significant investment in the subject property, such as to create common areas, separate building systems, construct new demising walls and corridors and install restrooms and access points; • in order to attract high quality anchor tenants, we may be required to install and guarantee the full operation of significant amenities like cafeterias and gyms and the cost to operate these amenities may not be recoverable particularly if the building is not fully occupied; and 9 Table of Contents • multi-tenant properties generally require greater landlord responsibility to manage and operate the properties and bear the associated costs, which will place added burden on our property management team and will result in costs that may not be recoverable from the tenants.
Our multi-tenant properties are subject to a variety of risks not typically encountered in real estate properties that are operated by or for a single tenant, which could materially adversely affect the value of our investment, including: • conversion to multi-tenant use will require us to make significant investment in the subject property, such as to create common areas, separate building systems, construct new demising walls and corridors and install restrooms and access points; • in order to attract high quality anchor tenants, we may be required to install and guarantee the full operation of significant amenities like cafeterias and gyms and the cost to operate these amenities may not be recoverable particularly if the building is not fully occupied; and • multi-tenant properties generally require greater landlord responsibility to manage and operate the properties and bear the associated costs, which will place added burden on our property management team and will result in costs that may not be recoverable from the tenants.
The credit agreement governing the Revolving Facility and the CMBS Loan each contain various financial and other covenants, including, with respect to the Revolving Facility, various financial covenants and other covenants restricting, subject to certain exceptions, liens, investments, mergers, asset sales, and the payment of certain dividends and share repurchases.
The credit agreement governing the New Revolving Facility and the CMBS Loan each contain various financial and other covenants, including, with respect to the Revolving Facility, various financial covenants and other covenants restricting, subject to certain exceptions, liens, investments, mergers, asset sales, and the payment of certain dividends and share repurchases.
The Revolving Facility contains cross-default provisions that give the lenders the right to declare a default if we are in default resulting in (or permitting the) acceleration of other debt under other loans in excess of certain amounts.
The New Revolving Facility contains cross-default provisions that give the lenders the right to declare a default if we are in default resulting in (or permitting the) acceleration of other debt under other loans in excess of certain amounts.
While we plan to monitor the aggregate value of the securities of our taxable REIT subsidiaries and intend to conduct our affairs so that such securities will represent less than 20% of the value of our total assets, there can be no assurance that we will be able to comply with the taxable REIT subsidiary limitation or avoid the application of the 100% excise tax discussed above in all market conditions.
While we plan to monitor the aggregate value of the securities of our taxable REIT subsidiaries and intend to conduct our affairs so that such securities will represent less than 25% of the value of our total assets, there can be no assurance that we will be able to comply with the taxable REIT subsidiary limitation or avoid the application of the 100% excise tax discussed above in all market conditions.
The real property taxes on our properties may increase as property tax rates change and as those properties are assessed or reassessed by tax authorities.
The real estate taxes on our properties may increase as property tax rates change and as those properties are assessed or reassessed by tax authorities.
As a result of the indebtedness we incur, we are, and expect to be, subject to the risks normally associated with debt financing including: • that we will be unable to extend, refinance or repay our debt as it becomes due or increase the availability of overall debt on terms as favorable as those of our existing debt, or at all; 14 Table of Contents • that interest rates may rise; • that our cash flow could be insufficient to make required payments of principal and interest; • that required payments on mortgages and on our other debt are not reduced if the economic performance of any property declines; • that debt service obligations will reduce funds available for distribution to our stockholders; • that any default on our debt, due to noncompliance with financial covenants or otherwise, could result in acceleration of those obligations; • that we may be unable to extend, refinance or repay the debt as it becomes due; and • that if our degree of leverage is viewed unfavorably by lenders or potential joint venture partners, it could affect our ability to obtain additional financing.
As a result of the indebtedness we incur, we are, and expect to be, subject to the risks normally associated with debt financing including: • that we will be unable to extend, refinance or repay our debt as it becomes due or increase the availability of overall debt on terms as favorable as those of our existing debt, or at all; • that interest rates may rise; • that our cash flow could be insufficient to make required payments of principal and interest; • that required payments on mortgages and on our other debt are not reduced if the economic performance of any property declines; • that debt service obligations will reduce funds available for distribution to our stockholders; 15 Table of Contents • that any default on our debt, due to non-compliance with financial covenants or otherwise, could result in acceleration of those obligations; • that we may be unable to extend, refinance or repay the debt as it becomes due; and • that if our degree of leverage is viewed unfavorably by lenders or potential joint venture partners, it could affect our ability to obtain additional financing.
The Revolving Facility may limit our ability to pay dividends on our common stock, including repurchasing shares of our common stock.
The New Revolving Facility may limit our ability to pay dividends on our common stock, including repurchasing shares of our common stock.
Although we do not intend to hold any properties that would be characterized as inventory held for sale to customers in the ordinary course of our business, such characterization is a factual determination and no guarantee can be given that the IRS would agree with our characterization of our properties or that we will always be able to make use of the available safe harbors.
Although we do not intend to hold any properties that would be characterized as inventory held for sale to customers in the ordinary course of our business, such characterization is a factual determination and no guarantee can 22 Table of Contents be given that the IRS would agree with our characterization of our properties or that we will always be able to make use of the available safe harbors.
These risks include: • changes in supply of or demand for office properties in our market or sub-markets; • competition for tenants in our market or sub-markets; • the ongoing need for capital improvements; • increased operating costs, which may not necessarily be offset by increased rents, including insurance premiums, utilities, real estate taxes, capital expenditures and repair and maintenance costs, due to inflation and other factors; • changes in tax, real estate and zoning laws; • changes in governmental rules and fiscal policies; • inability of tenants to pay rent; 12 Table of Contents • competition from the development of new space in our market or sub-markets and the quality of competition, such as the attractiveness of our properties as compared to our competitors’ properties based on considerations such as convenience of location, rental rates, amenities and safety record; and • civil unrest, acts of war, terrorism, adverse political conditions, acts of God, including earthquakes, hurricanes and other natural disasters (which may result in uninsured losses) and other factors beyond our control.
These risks include: • changes in supply of or demand for properties in our market or sub-markets; • competition for tenants in our market or sub-markets; • the ongoing need for capital improvements; • increased operating costs, which may not necessarily be offset by increased rents, including insurance premiums, utilities, real estate taxes, capital expenditures and repair and maintenance costs, due to inflation and other factors; • changes in tax, real estate and zoning laws; • changes in governmental rules and fiscal policies; • inability of tenants to pay rent; • competition from the development of new space in our market or sub-markets and the quality of competition, such as the attractiveness of our properties as compared to our competitors’ properties based on considerations such as convenience of location, rental rates, amenities and safety record; and • civil unrest, rumors or threats of war, terrorism, adverse political conditions, acts of God, including earthquakes, hurricanes and other natural disasters (which may result in uninsured losses) and other factors beyond our control.
The issuance of a substantial number of shares of our common stock in the open market or the issuance of a substantial number of shares of our common stock upon the exercise of the warrants granted to affiliates of Arch Street Capital Partners in connection with the Distribution or the exchange of OP units or other securities exchangeable or convertible into shares of our common stock, or the perception that such issuances might occur, could adversely affect the per share trading price of our common stock.
The issuance of a substantial number of shares of 24 Table of Contents our common stock in the open market or the issuance of a substantial number of shares of our common stock upon the exercise of the warrants granted to affiliates of Arch Street Capital Partners in connection with the Distribution or the exchange of OP units or other securities exchangeable or convertible into shares of our common stock, or the perception that such issuances might occur, could adversely affect the per share trading price of our common stock.
If we are able to obtain additional financing, such financing could further raise our borrowing costs and adversely impact our ability to satisfy our obligations under our indebtedness, which may have a material adverse effect on our business, financial condition and results of operations. In addition, our charter and bylaws do not limit the amount of indebtedness we may incur.
If we are able to obtain additional financing, such financing could further raise our borrowing costs and adversely impact our ability to satisfy our obligations under our indebtedness, which may have a material adverse effect on our business, financial condition and results of operations. 14 Table of Contents In addition, our charter and bylaws do not limit the amount of indebtedness we may incur.
We may incur costs to convert properties to multi-tenant use and to operate multi-tenant properties that may not be recoverable and we cannot provide any assurance that our decision to convert properties to multi-tenant will increase the value of the subject properties. Government budgetary pressures and priorities, and trends in government employment and office leasing may adversely impact our business.
We may incur costs to convert properties to multi-tenant use and to operate multi-tenant properties that may not be recoverable and we cannot provide any assurance that our decision to convert properties to multi-tenant will increase the value of the subject properties. 10 Table of Contents Government budgetary pressures and priorities, and trends in government employment and office leasing may adversely impact our business.
In addition, 16 Table of Contents compliance with these requirements, including new requirements or stricter interpretation of existing requirements, may require us, or our tenants, to incur significant expenditures. We do not know whether existing requirements will change or whether future requirements, including any requirements that may emerge from pending or future climate change regulations or legislation, will develop.
In addition, compliance with these requirements, including new requirements or stricter interpretation of existing requirements, may require us, or our tenants, to incur significant expenditures. We do not know whether existing requirements will change or whether future requirements, including any requirements that may emerge from pending or future climate change regulations or legislation, will develop.
If our competitors offer space at rental rates below current market rates or below the rental rates we currently charge our tenants, we may lose potential tenants, and we may be pressured to reduce our rental rates below those we currently charge, or may not be able to increase rates to market rates, in order to retain tenants upon expiration of their existing leases.
If our competitors offer space at rental rates below current market rates or below the rental rates we currently charge our tenants, we may lose potential tenants, and we may be pressured to reduce our rental rates below those we currently charge, or 13 Table of Contents may not be able to increase rates to market rates, in order to retain tenants upon expiration of their existing leases.
We have incurred debt pursuant to the Revolving Facility and the CMBS Loan.
We have incurred debt pursuant to the New Revolving Facility and the CMBS Loan.
These risks include potential operational interruptions, fraudulent transfer of assets or unauthorized access to and exposure of valuable and confidential data, ransom costs, increased cybersecurity protection and insurance costs, litigation and remediation costs and damage to our relationships with our tenants, among other things.
These risks include potential operational interruptions, fraudulent transfer of assets or unauthorized access to and exposure of valuable and confidential data, ransom costs, increased cybersecurity protection and insurance costs, litigation and remediation costs and damage to our relationships with our tenants, 18 Table of Contents among other things.
Failure to hedge effectively against such interest rate changes may have a material adverse effect on our business, financial condition and results of operations. 19 Table of Contents We may amend our investment strategy and business policies without stockholder approval.
Failure to hedge effectively against such interest rate changes may have a material adverse effect on our business, financial condition and results of operations. We may amend our investment strategy and business policies without stockholder approval.
We may not be 11 Table of Contents successful in executing our strategy of shifting our portfolio concentration over time towards more dedicated use assets, and whether or not we are successful in executing such strategy, we may not achieve our objective of increasing the value of our portfolio.
We may not be successful in executing our strategy of shifting our portfolio concentration over time towards more dedicated use assets, and whether or not we are successful in executing such strategy, we may not achieve our objective of increasing the value of our portfolio.
We are subject to the risk of rising interest rates, including that our borrowing costs may increase and we may be unable to extend or refinance our debt obligations on favorable terms or at all.
We are subject to the risk of increases in interest rates, including that our borrowing costs may increase and we may be unable to extend or refinance our debt obligations on favorable terms or at all.
We compete with a number of other owners and operators of office properties to renew leases with our existing tenants and to attract new tenants.
We compete with a number of other owners and operators of competitive properties to renew leases with our existing tenants and to attract new tenants.
The foregoing could adversely affect occupancy and our ability to develop, sell or borrow against any affected property and could require us to make significant unanticipated expenditures that may have a material adverse effect on our business, financial condition and results of operations. We are subject to risks associated with climate change.
The foregoing could adversely affect occupancy and our ability to lease, sell or borrow against any affected property and could require us to make significant unanticipated expenditures that may have a material adverse effect on our business, financial condition and results of operations. 17 Table of Contents We are subject to risks associated with climate change.
Taxable REIT subsidiaries that we own or may form will pay federal, state and local income tax on their taxable income, and their after-tax net income will be available for distribution to us but will not be required to be distributed to us, unless 21 Table of Contents necessary to maintain our REIT qualification.
Taxable REIT subsidiaries that we own or may form will pay federal, state and local income tax on their taxable income, and their after-tax net income will be available for distribution to us but will not be required to be distributed to us, unless necessary to maintain our REIT qualification.
These ownership limitations in our charter are common in REIT governing documents and are intended to provide added assurance of compliance with the tax law requirements, and to minimize administrative burdens.
These ownership limitations in our charter are common in REIT governing documents and are intended to provide added assurance of compliance with the tax law requirements, and to 23 Table of Contents minimize administrative burdens.
If we fail to maintain our qualification as a REIT or lose our REIT status, we will face significant tax consequences that would substantially reduce our cash available for distribution to our stockholders for each of the years involved because: • we would not be allowed a deduction for dividends paid to stockholders in computing our taxable income and would be subject to regular U.S. federal corporate income tax; • we could be subject to increased state and local taxes; and • unless we are entitled to relief under applicable statutory provisions, we could not elect to be taxed as a REIT for four taxable years following the year during which we were disqualified. 20 Table of Contents Any such corporate tax liability could be substantial and would reduce our cash available for, among other things, our operations and distributions to stockholders.
If we fail to maintain our qualification as 20 Table of Contents a REIT or lose our REIT status, we will face significant tax consequences that would substantially reduce our cash available for distribution to our stockholders for each of the years involved because: • we would not be allowed a deduction for dividends paid to stockholders in computing our taxable income and would be subject to regular U.S. federal corporate income tax; • we could be subject to increased state and local taxes; and • unless we are entitled to relief under applicable statutory provisions, we could not elect to be taxed as a REIT for four taxable years following the year during which we were disqualified.
There can be no assurance that we will be able to obtain the capital necessary to fund the investments we will be required to make in our existing portfolio or to acquire new properties on terms 15 Table of Contents favorable to us or at all.
There can be no assurance that we will be able to obtain the capital necessary to fund the investments we will be required to make in our existing portfolio or to acquire new properties on terms favorable to us or at all.
While the majority of our leases are under a net lease structure, some or all of such property taxes may not be collectible from our tenants, and for our vacant properties, we are unable to recover property taxes from any tenants.
While the majority of our leases are under a net lease structure, some or all of such real estate taxes may not be collectible from our tenants, and for our vacant properties, we are unable to recover real estate taxes from any former tenants.
We are dependent upon the Revolving Facility, which is a fully recourse borrowing facility guaranteed in full by us, for liquidity to execute our business strategies, and our CMBS Loan provides cross-collateralized financing for a total of 19 properties in our portfolio, and therefore the lender will have recourse to any and all of the assets that secure the debt in the event we default.
We are dependent upon the New Revolving Facility, which is a fully recourse borrowing facility secured by our ownership interest in 28 of our properties and related collateral and guaranteed in full by us, for liquidity to execute our business strategies, and our CMBS Loan provides cross-collateralized financing for a total of 19 properties in our portfolio, and therefore the lender will have recourse to any and all of the assets that secure the debt in the event we default.
If our tenants elect to terminate their leases early, it may have a material adverse effect on our business, financial condition and results of operations. 13 Table of Contents We have a significant amount of indebtedness and may need to incur more in the future. As of December 31, 2024, we had approximately $492.0 million of total outstanding consolidated indebtedness.
If our tenants elect to terminate their leases early, it may have a material adverse effect on our business, financial condition and results of operations. We have a significant amount of indebtedness and may need to incur more in the future. As of December 31, 2025, we had approximately $465.0 million of total outstanding consolidated indebtedness.
Leases representing approximately 13.5% of our annualized base rent are scheduled to expire in 2025 and we could experience difficulties or delays renewing leases or re-leasing vacant space, which will increase our costs to operate and maintain such properties without receiving income.
Leases representing approximately 10.2% of our annualized base rent are scheduled to expire in 2026 and we could experience difficulties or delays renewing leases or re-leasing vacant space, which will increase our costs to operate and maintain such properties without receiving income.
We believe that by doing so we will increase that value of our portfolio, as it is our experience that dedicated use assets have greater tenant utilization and higher renewal probability. As of December 31, 2024, our portfolio was comprised of 75.0% and 68.2% traditional office properties, calculated based on rentable square feet and annualized base rent, respectively.
We believe that by doing so we will increase that value of our portfolio, as it is our experience that dedicated use assets have greater tenant utilization and higher renewal probability. As of December 31, 2025, our portfolio was comprised of 70.1% and 64.2% traditional office properties, calculated based on rentable square feet and annualized base rent, respectively.
As a result, if revenues drop, we may not be able to reduce our expenses accordingly, which may have a material adverse effect on our business, financial condition and results of operations. Property taxes may increase without notice.
As a result, if revenues drop, we may not be able to reduce our expenses accordingly, which may have a material adverse effect on our business, financial condition and results of operations. 16 Table of Contents Real estate taxes may increase without notice.
Leases representing approximately 13.5% of our annualized base rent are scheduled to expire in 2025, and as of December 31, 2024, our portfolio, including our proportionate share of properties owned by the Arch Street Joint Venture, had a weighted average lease term of 5.2 years, and had 11 vacant operating properties, with an aggregate 1.7 million square feet, including six properties, with an aggregate of 0.6 million square feet, that have remained vacant for over one year.
Leases representing approximately 10.2% of our annualized base rent are scheduled to expire in 2026, and as of December 31, 2025, our portfolio, including our proportionate share of properties owned by the Arch Street Joint Venture, had a weighted average lease term of 5.7 years, and had five vacant operating properties, with an aggregate 0.5 million square feet, including four operating properties, with an aggregate of 0.4 million square feet, that have remained vacant for over one year.
In order to increase the percentage of dedicated use assets in our portfolio, we will need to acquire additional dedicated use assets and/or dispose of traditional office properties.
In order to increase the percentage of dedicated use assets in our portfolio, we intend to acquire additional dedicated use assets and dispose of traditional office properties.
During the year ended December 31, 2024, most of our rental revenue was from our properties leased to single tenants. The value of our single tenant properties is materially dependent on the performance of those tenants under their respective leases. These tenants face competition within their industries and other factors that could reduce their ability to pay us rent.
Most of our rental revenue is from our properties leased to single tenants. The value of our single tenant properties is materially dependent on the performance of those tenants under their respective leases. Our tenants face competition within their industries and other factors that could reduce their ability to pay us rent.
These acquisitions may entail risks in addition to those we face with acquisitions in more familiar regions, such as our not sufficiently anticipating conditions or trends in a new market and therefore not being able to operate the acquired property profitably.
We may pursue selective acquisitions of properties in regions where we have not previously owned properties. These acquisitions may entail risks in addition to those we face with acquisitions in more familiar regions, such as our not sufficiently anticipating conditions or trends in a new market and therefore not being able to operate the acquired property profitably.
For example, the increased adoption of and 8 Table of Contents familiarity with remote and hybrid work practices has resulted in decreased demand for and utilization of office space.
For example, the increased acceptance of and familiarity with remote and hybrid work practices has resulted in decreased demand for and utilization of office space.
Weak economic conditions generally, sustained uncertainty about global economic conditions, a tightening of credit markets, business layoffs, downsizing, industry slowdowns and other similar factors that affect our tenants have negatively impacted commercial real estate fundamentals and may continue to do so, which has resulted and may continue to result in lower occupancy, lower rental rates and declining values in our real estate portfolio.
Weak economic conditions generally, sustained uncertainty about global economic conditions, a tightening of credit markets, business layoffs, downsizing, industry slowdowns and other similar factors that affect our tenants could negatively impact commercial real estate fundamentals and may result in lower occupancy, lower rental rates and declining values in our real estate portfolio.
During the year ended December 31, 2023, one tenant exercised an early termination option, which resulted in the partial termination of approximately 30,000 square feet under an approximately 200,000 square foot lease in the year ended December 31, 2023.
During the year ended December 31, 2024, one tenant exercised an early termination option which resulted in the partial termination of approximately 30,000 square feet under an approximately 127,000 square foot lease effective in May 2025.
Accordingly, competition for acquisitions may limit our opportunities to grow our business, which may have a material adverse effect on our business, financial condition and results of operations. We may suffer adverse effects from acquisitions of commercial real estate properties. We intend to pursue acquisitions of additional commercial real estate properties as part of our business strategy.
Accordingly, competition for acquisitions may limit our opportunities to grow our business, which may have a material adverse effect on our business, financial condition and results of operations. 12 Table of Contents We may suffer adverse effects from acquisitions of commercial real estate properties.
Both the subsidiary and the REIT must jointly elect to treat the subsidiary as a taxable REIT subsidiary. A corporation of which a taxable REIT subsidiary directly or indirectly owns more than 35% of the voting power or value of the stock will automatically be treated as a taxable REIT subsidiary.
A corporation of which a taxable REIT subsidiary directly or indirectly owns more than 35% of the voting power or value of the stock will automatically be treated as a taxable REIT subsidiary.
The authorization and issuance of a new class of capital stock could have the effect of delaying or preventing someone from taking control of us, even if a change in control were in our stockholders’ best interests, which could have a material adverse effect on our business, financial condition and results of operations. 23 Table of Contents Maryland law may limit the ability of a third party to acquire control of us.
The authorization and issuance of a new class of capital stock could have the effect of delaying or preventing someone from taking control of us, even if a change in control were in our stockholders’ best interests, which could have a material adverse effect on our business, financial condition and results of operations.
The operating costs and capital expenditures associated with meeting new and evolving regulatory and legal requirements and tenant preferences, including those related to reporting and managing greenhouse gas emissions, could negatively impact our financial results.
The operating costs and capital expenditures associated with meeting new and evolving regulatory and legal requirements and tenant preferences, including those related to reporting and managing greenhouse gas emissions, could negatively impact our financial results. Compliance or failure to comply with the Americans with Disabilities Act could result in substantial costs.
Acquisitions of commercial properties entail risks, such as 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 fail to perform as expected. We may pursue selective acquisitions of properties in regions where we have not previously owned properties.
We intend to pursue acquisitions of additional commercial real estate properties as part of our business strategy. Acquisitions of commercial properties entail risks, such as 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 fail to perform as expected.
Also, the failure of any subsidiary partnerships or limited liability company to qualify as a disregarded entity or partnership for applicable income tax purposes could cause it to become subject to federal and state corporate income tax, which would reduce significantly the amount of cash available for debt service and for distribution to its partners or members, including us.
Also, the failure of any subsidiary partnerships or limited liability company to qualify as a disregarded entity or partnership for applicable income tax purposes could cause it to become subject to federal and state corporate income tax, which would reduce significantly the amount of cash available for debt service and for distribution to its partners or members, including us. 21 Table of Contents Any taxable REIT subsidiaries owned by us are subject to corporate-level taxes and our dealings with our taxable REIT subsidiaries may be subject to 100% excise tax.
The financial covenants under the Revolving Facility are discussed in the section in this report entitled “Management’s Discussion and Analysis of Results of Operations and Financial Condition – Liquidity and Capital Resources – Credit Agreements – Revolving Facility Covenants”. The CMBS Loan includes a minimum debt yield test of 8.0%.
The financial covenants under the New Revolving Facility are discussed in the section in this report entitled “Management’s Discussion and Analysis of Results of Operations and Financial Condition – Liquidity and Capital Resources – Credit Agreements – Revolving Facility Covenants”.
The Maryland General Corporation Law (the “MGCL”) provides protection for Maryland corporations against unsolicited takeovers by limiting, among other things, the duties of the directors in unsolicited takeover situations.
Maryland law may limit the ability of a third party to acquire control of us. The Maryland General Corporation Law (the “MGCL”) provides protection for Maryland corporations against unsolicited takeovers by limiting, among other things, the duties of the directors in unsolicited takeover situations.
If substantial office space reconfiguration is required, a tenant may explore other office space and find it more advantageous to relocate than to renew its lease and renovate the existing space.
If a tenant wants to reduce its leasing footprint or substantial office space reconfiguration is required, such tenant may explore other 9 Table of Contents office space and find it more advantageous to relocate than to renew its lease and downsize or renovate the existing space.
To the extent we suffer such losses with respect to these loans, it could adversely affect our business, financial condition and results of operations. We, our tenants and our properties are subject to various federal, state and local regulatory requirements, such as environmental laws, state and local fire and safety requirements, building codes and land use regulations.
Our inability to respond rapidly to changes in the performance of our investments could adversely affect our business, financial condition and results of operations. We, our tenants and our properties are subject to various federal, state and local regulatory requirements, such as environmental laws, state and local fire and safety requirements, building codes and land use regulations.
Overall, no more than 20% of the gross value of a REIT’s assets may consist of stock or securities of one or more taxable REIT subsidiaries.
Overall, no more than 25% (20% for tax years beginning before January 1, 2026) of the gross value of a REIT’s assets may consist of stock or securities of one or more taxable REIT subsidiaries.
We are invested in the Arch Street Joint Venture where we own a 20% minority, non-controlling interest and our partner owns the remaining 80% interest.
We have made equity and member loan investments in the Arch Street Joint Venture which may not be recoverable. We are invested in the Arch Street Joint Venture where we own a 20% minority, non-controlling interest and our partner owns the remaining 80% interest.
McDowell or other key personnel may have a material adverse effect on our business, financial condition and results of operations. No assurance can be given that we will be able to retain key employees, which may have a material adverse effect on our business, financial condition and results of operations.
No assurance can be given that we will be able to retain key employees, which may have a material adverse effect on our business, financial condition and results of operations. 19 Table of Contents Failure to hedge effectively against interest rate changes may have a material adverse effect on our business, financial condition and results of operations.
We have existing debt and refinancing risks that could have a material adverse effect on our business, financial condition and results of operations, including the risk that we will be unable to extend or refinance some or all of our debt.
We have existing debt and refinancing risks that could have a material adverse effect on our business, financial condition and results of operations, including the risk that we will be unable to extend or refinance some or all of our debt, or that the lenders will not seek to enforce their remedies due to the existing payment default under the Arch Street Joint Venture mortgage notes.
Interest and principal are payable monthly solely out of the excess 10 Table of Contents cash from the joint venture after payment of property operating expenses, interest and principal on the Arch Street mortgage notes and other joint venture expenses and excess proceeds from the sale of any of the joint venture properties.
Our member loan to the Arch Street Joint Venture is non-recourse and unsecured, structurally subordinate to the Arch Street Joint Venture Mortgage Debt, and interest and principal are payable monthly solely out of the excess cash from the joint venture after payment of property operating expenses, interest and principal on the Arch Street Joint Venture Mortgage Debt and other joint venture expenses and excess proceeds from the sale of any of the joint venture properties.
Our ability to arrange additional financing will depend on, among other factors, our financial position and performance, as well as prevailing market conditions and other factors beyond our control.
Our ability to arrange additional financing will depend on, among other factors, the lender’s view of the quality of our portfolio, including tenant credit quality and weighted average lease term, our financial position and performance, as well as prevailing market conditions and other factors beyond our control.
Persistent remote and hybrid work practices have also reduced space utilization at many of our government properties. These factors have reduced the demand for government leased space, and may continue to do so. The Trump Administration’s initiative to dramatically cut government spending introduces additional uncertainty for our portfolio of properties leased to the United States Government.
Persistent remote and hybrid work practices have also reduced space utilization at many of our government properties. These factors have reduced the demand for government leased space, may continue to do so and may make it more likely the United States Government terminates the applicable lease at expiration.
Compliance or failure to comply with the Americans with Disabilities Act could result in substantial costs. Our properties must comply with the Americans with Disabilities Act (the “ADA”) and any equivalent state or local laws, to the extent that our properties are public accommodations as defined under such laws.
Our properties must comply with the Americans with Disabilities Act (the “ADA”) and any equivalent state or local laws, to the extent that our properties are public accommodations as defined under such laws. Under the ADA, all public accommodations must meet federal requirements related to access and use by disabled persons.
Future issuances of shares of our common stock may be dilutive to existing stockholders, which may have a material adverse effect on our business, financial condition and results of operations. 24 Table of Contents Future offerings of debt securities, which would be senior to our common stock upon liquidation, or preferred equity securities which may be senior to our common stock for purposes of dividends or upon liquidation, may materially adversely affect the per share trading price of our common stock.
Future offerings of debt securities, which would be senior to our common stock upon liquidation, or preferred equity securities which may be senior to our common stock for purposes of dividends or upon liquidation, may materially adversely affect the per share trading price of our common stock.
Also, the law relating to the tax treatment of other entities, or an investment in other entities, could change, making an investment in such other entities more attractive relative to an investment in a REIT. 22 Table of Contents Risks Related to an Investment in Our Common Stock Limitations on the ownership of our common stock and other provisions of our charter may preclude the acquisition or change of control of our Company.
Risks Related to an Investment in Our Common Stock Limitations on the ownership of our common stock and other provisions of our charter may preclude the acquisition or change of control of our Company.
Efforts to manage space utilization rates and reduce government spending may result in the government tenants exercising early termination rights under our leases, vacating our properties upon expiration of our leases in order to relocate, or renewing their leases for less space than they currently occupy.
As of December 31, 2025, approximately 72,000 of our occupied square feet leased to the GSA were within periods during which the tenant has the right to terminate their space without a termination fee, or “non-firm terms.” Efforts to manage space utilization rates and reduce government spending may result in the government tenants exercising early termination rights under our leases, vacating our properties upon expiration of our leases in order to relocate, or renewing their leases for less space than they currently occupy.
Tenants’ evolving preferences regarding office space configuration either in response to the COVID-19 pandemic or for other reasons, may impact their space requirements and also has required and may continue to require us to spend increased amounts for tenant improvements.
Remote and hybrid work practices may continue to persist, which may cause the trends impacting our leasing efforts to continue or even accelerate. Tenants’ evolving preferences regarding office space configuration may impact their space requirements and also has required and may continue to require us to spend increased amounts for tenant improvements.
Our ability to determine the strategy with respect to properties we own through the Arch Street Joint Venture is materially limited compared to acquisitions we make directly, including with respect to leasing, disposition and joint venture opportunities (including if such actions are necessary to maintain compliance with our debt commitments).
Our ability to determine the strategy with respect to properties we own through the Arch Street Joint Venture is materially limited compared to acquisitions we make directly, including with respect to leasing, disposition, financing and liquidation decisions (including if such actions are necessary to maintain compliance with our debt commitments). 11 Table of Contents We also may enter into future joint ventures pursuant to which we will not be able to exercise sole decision-making authority regarding the properties owned through such joint ventures or similar ownership structure.
There can be no assurance that our efforts to maintain the security and integrity of our information technology networks and related systems will be effective.
There can be no assurance that our efforts to maintain the security and integrity of our information technology networks and related systems will be effective. A security breach involving our information technology networks and related systems could disrupt our operations in numerous ways that may have a material adverse effect on our business, financial condition and results of operations.
Failure to hedge effectively against interest rate changes may have a material adverse effect on our business, financial condition and results of operations.
McDowell or other key personnel may have a material adverse effect on our business, financial condition and results of operations.
In addition, if we fail to maintain our qualification as a REIT, we will not be required to make distributions to our stockholders.
Any such corporate tax liability could be substantial and would reduce our cash available for, among other things, our operations and distributions to stockholders. In addition, if we fail to maintain our qualification as a REIT, we will not be required to make distributions to our stockholders.
A security breach involving our information technology networks and related systems could disrupt our operations in numerous ways that may have a material adverse effect on our business, financial condition and results of operations. 18 Table of Contents The obligations and requirements to which we are subject as a public company are extensive and will increase when we no longer qualify as an “emerging growth company.” As a public company, we are subject to the reporting requirements of the U.S.
The obligations and requirements to which we are subject as a public company are extensive and will increase when we no longer qualify as an “emerging growth company.” As a public company, we are subject to the reporting requirements of the U.S.
We have both fixed and variable rate indebtedness and may incur additional indebtedness in the future, including borrowings under our Revolving Facility. Our Revolving Facility under which we had $119.0 million borrowed as of December 31, 2024 is scheduled to mature in May 2026, and our $355.0 million CMBS Loan is scheduled to mature in February 2027.
We have both fixed and variable rate indebtedness and may incur additional indebtedness in the future, including borrowings under our New Revolving Facility.
As of December 31, 2024, 11.2% of our occupied square footage was subject to early termination provisions. During the year ended December 31, 2024, one tenant exercised an early termination option which will result in the partial termination of approximately 30,000 square feet under an approximately 127,000 square foot lease in the year ending December 31, 2025.
As of December 31, 2025, 12.3% of our occupied square footage was subject to early termination provisions. There were no tenant-exercised early lease termination options during the year ended December 31, 2025.
During November 2024, our joint venture partner was unable to contribute its proportionate share of the capital required to pay down $3.4 million of principal on the Arch Street Joint Venture non-recourse mortgage notes to satisfy the 60% loan-to-value condition to extend the maturity date of such debt.
Due to the capital constraints of our joint venture partner, the Arch Street Joint Venture has been unable to make an approximately $16.0 million principal prepayment on the Arch Street Joint Venture Mortgage Debt to satisfy the 60% loan-to-value condition to extend the maturity date until November 27, 2026.
Competition for acquisitions may reduce the number of acquisition opportunities available to us and increase the costs of those acquisitions. We may acquire properties if market conditions permit and we are presented with an attractive opportunity to do so.
Competition for acquisitions may reduce the number of acquisition opportunities available to us and increase the costs of those acquisitions. We intend to pursue acquisitions of additional commercial real estate properties as part of our business strategy.
The Arch Street Joint Venture may be unable to satisfy the extension conditions, and we cannot provide any assurance the Arch Street Joint Venture will be able to satisfy the extension conditions or otherwise extend or refinance the mortgage notes.
We cannot provide any assurance that the Arch Street Joint Venture will be able to satisfy the loan-to-value condition or otherwise extend or refinance this debt obligation or that the lenders will not seek to enforce their remedies due to the existing payment default.
Our partner in the Arch Street Joint Venture did not have access to sufficient liquidity to contribute its share of capital call obligations that have recently arisen, and this issue may continue to the extent additional partner capital is required in the future.
Our partner in the Arch Street Joint Venture may continue to be unable to contribute its share of capital requirements of the Arch Street Joint Venture.
Any taxable REIT subsidiaries owned by us are subject to corporate-level taxes and our dealings with our taxable REIT subsidiaries may be subject to 100% excise tax. A REIT may own up to 100% of the stock of one or more taxable REIT subsidiaries.
A REIT may own up to 100% of the stock of one or more taxable REIT subsidiaries. Both the subsidiary and the REIT must jointly elect to treat the subsidiary as a taxable REIT subsidiary.
Following the Arch Street Joint Venture’s exercise of the first extension option and satisfaction of the related conditions in November 2024, the non-recourse mortgage notes associated with the Arch Street Joint Venture of $131.6 million as of December 31, 2024 are scheduled to mature on November 27, 2025, and the Arch Street Joint Venture has one remaining one-year option to extend the maturity until November 27, 2026.
We may be required to make significant principal repayments to extend or refinance our debt obligations. The non-recourse mortgage notes associated with the Arch Street Joint Venture were scheduled to mature on November 27, 2025, subject to one remaining one-year borrower option to extend the maturity until November 27, 2026.
As a result, we made a member loan to the Arch Street Joint Venture in the amount of $1.4 million. As of December 31, 2024, the outstanding principal associated with the Arch Street Joint Venture mortgage notes was $131.6 million, and our proportionate share was $26.3 million.
As of December 31, 2025, the carrying value of our equity investment in the Arch Street Joint Venture before the impairment loss described below was $10.8 million and we had member loans outstanding to the Arch Street Joint Venture in the principal amount of $6.6 million.
Removed
Remote and hybrid work practices may continue to persist, which may cause the trends impacting our leasing efforts to continue or even accelerate.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

6 edited+1 added−0 removed11 unchanged
Biggest changeThese updates include quarterly updates to the board with respect to material cyber events and a twice per annum cybersecurity program review covering topics such as cybersecurity strategy, assessment, risks, notable events and governance. We also conduct an annual enterprise risk assessment through which it identifies and assesses material risks to the Company, including both cyber and non-cyber risks.
Biggest changeCompany management, including members of the Risk Committee, provides regular updates to the Board of Directors regarding material matters with respect to the Company, including cyber matters. These updates include quarterly updates to the board with respect to material cyber events and a semi-annual cybersecurity program review covering topics such as cybersecurity strategy, assessment, risks, notable events and governance.
Additionally, as part of its processes for assessing, identifying and managing risks from cybersecurity threats, we intend to periodically conduct maturity and other external cybersecurity assessments to evaluate its cybersecurity maturity and enhance its cybersecurity capabilities. Our internal auditors also perform annual inquiries and risk assessments into cybersecurity practices and potential incidents.
Additionally, as part of our processes for assessing, identifying and managing risks from cybersecurity threats, we intend to periodically conduct maturity and other external cybersecurity assessments to evaluate our cybersecurity maturity and enhance our cybersecurity capabilities. Our internal auditors also perform annual inquiries and risk assessments into cybersecurity practices and potential incidents.
We have established a risk committee (the “Risk Committee”) comprised of members of senior management whose responsibilities include identifying, assessing, and managing enterprise-level and material risks to the Company, including strategic, financial, credit, market, liquidity, security, property, information technology (“IT”), cyber, legal, regulatory, and reputational risks.
We have established a risk committee (the “Risk Committee”) comprised of members of senior management whose responsibilities include identifying, assessing, and 25 Table of Contents managing enterprise-level and material risks to the Company, including strategic, financial, credit, market, liquidity, security, property, information technology (“IT”), cyber, legal, regulatory, and reputational risks.
We have processes to oversee and identify material risks from cybersecurity threats associated with its use of third-party service providers. Such processes include evaluating service providers to ensure coverage of key cybersecurity risks have appropriate mitigations. We also monitor for threats impacting key service providers and assesses identified threats for potential impacts to services, data, and systems.
We have processes to oversee and identify material risks from cybersecurity threats associated with our use of third-party service providers. Such processes include evaluating service providers to ensure key cybersecurity risks have appropriate mitigations. We also monitor for threats impacting key service providers and assess identified threats for potential impacts to services, data, and systems. 26 Table of Contents
This assessment is reviewed and discussed with the Board of Directors. We have developed policies and procedures with regard to cyber incident responses which policies and procedures are based on key components of the National Institute of Standards and Technology Cybersecurity Framework, together with other best practices.
We have developed policies and procedures with regard to cyber incident responses which policies and procedures are based on key components of the National Institute of Standards and Technology Cybersecurity Framework, together with other best practices.
He has served in this role since our inception in November 2021 and has more than 16 years of experience overseeing cybersecurity strategy, cybersecurity and technology risk management, engineering of security technology, overseeing managed security service providers and IT governance at other publicly traded companies and holds industry-standard certifications with respect to cybersecurity risk management. 25 Table of Contents Company management, including members of the Risk Committee, provides regular updates to the Board of Directors regarding material matters with respect to the Company, including cyber matters.
He has served in this role since our inception in November 2021 and has more than 18 years of experience overseeing cybersecurity strategy, cybersecurity and technology risk management, engineering of security technology, overseeing managed security service providers and IT governance at other publicly traded companies and holds industry-standard certifications with respect to cybersecurity risk management.
Added
We also conduct an annual enterprise risk assessment through which we identify and assess material risks to the Company, including both cyber and non-cyber risks. This assessment is reviewed and discussed with the Board of Directors.

Item 2. Properties

Properties — owned and leased real estate

6 edited+1 added−1 removed0 unchanged
Biggest changeTenant Industry Diversification The following table sets forth certain information regarding the tenant industry concentrations in our operating property portfolio, including our proportionate share of square feet and annualized base rent from properties owned by the Arch Street Joint Venture, as of December 31, 2024 (dollars and square feet in thousands): Industry Number of Leases (1) Occupied Square Feet % of Total Rentable Square Feet Annualized Base Rent % of Total Annualized Base Rent Government & Public Services 17 769 9.5 % $ 20,179 16.8 % Health Care Equipment & Services 10 846 10.4 % 16,158 13.4 % Financial Institutions 2 546 6.7 % 13,772 11.4 % Capital Goods 10 846 10.4 % 13,207 11.0 % Consumer Durables & Apparel 3 375 4.6 % 8,971 7.5 % Materials 5 462 5.7 % 8,378 7.0 % Telecommunication Services 5 420 5.2 % 7,202 6.0 % Energy 1 309 3.8 % 5,866 4.9 % Commercial & Professional Services 10 281 3.5 % 5,516 4.6 % Software & Services 3 263 3.3 % 5,056 4.2 % Top Ten Tenant Industries 66 5,117 63.1 % 104,305 86.8 % Remaining Tenant Industries: Transportation 4 279 3.5 % 4,536 3.8 % Media & Entertainment 2 264 3.3 % 3,803 3.2 % Insurance 1 116 1.4 % 3,671 3.0 % Retailing 3 157 1.9 % 3,368 2.8 % Utilities 1 25 0.3 % 394 0.3 % Restaurant 4 15 0.2 % 168 0.1 % Real Estate 1 2 — % 48 — % Total 82 5,975 73.7 % $ 120,293 100.0 % ____________________________________ (1) The Company has certain operating properties that are subject to multiple leases. 27 Table of Contents Geographic Diversification The following table sets forth certain information regarding the geographic concentrations (by state) in our operating property portfolio, including our proportionate share of square feet and annualized base rent from properties owned by the Arch Street Joint Venture, as of December 31, 2024 (dollars and square feet in thousands): Location Number of Properties Rentable Square Feet % of Total Rentable Square Feet Annualized Base Rent % of Total Annualized Base Rent Texas 15 1,352 16.7 % $ 19,910 16.5 % New Jersey 3 714 8.8 % 15,023 12.5 % Kentucky 2 458 5.6 % 10,470 8.7 % Colorado 4 452 5.6 % 8,581 7.1 % California 4 341 4.2 % 8,144 6.8 % Oklahoma 3 585 7.2 % 7,017 5.8 % New York 6 781 9.6 % 6,151 5.1 % Maryland 2 236 2.9 % 4,756 4.0 % Tennessee 4 240 3.0 % 4,708 3.9 % Georgia 3 284 3.5 % 4,669 3.9 % Top Ten States 46 5,443 67.1 % 89,429 74.3 % Remaining States: Virginia 2 240 3.0 % 4,623 3.8 % Missouri 2 207 2.5 % 2,981 2.5 % South Carolina 1 64 0.8 % 2,513 2.1 % Ohio 2 169 2.1 % 2,463 2.0 % Rhode Island 2 206 2.5 % 2,446 2.0 % Wisconsin 1 155 1.9 % 2,357 2.0 % Illinois 2 163 2.0 % 2,240 1.9 % Iowa 2 92 1.1 % 2,001 1.7 % West Virginia 1 63 0.8 % 1,457 1.2 % Nebraska 2 180 2.2 % 1,411 1.2 % Pennsylvania 2 233 2.9 % 1,345 1.1 % Oregon 1 69 0.9 % 1,165 1.0 % Kansas 2 196 2.4 % 1,075 0.9 % Massachusetts 2 378 4.7 % 742 0.6 % Idaho 1 35 0.4 % 741 0.6 % Indiana 1 83 1.0 % 581 0.5 % Minnesota 1 39 0.5 % 493 0.4 % Florida 1 6 0.1 % 230 0.2 % Arizona 1 91 1.1 % — — % Total 75 8,112 100.0 % $ 120,293 100.0 % 28 Table of Contents Tenant Diversification The following table sets forth certain information regarding tenants comprising over one percent of annualized base rent in our operating property portfolio, including our proportionate share of square feet and annualized base rent from properties owned by the Arch Street Joint Venture, as of December 31, 2024 (dollars and square feet in thousands): Tenant Number of Leases Occupied Square Feet % of Total Rentable Square Feet Annualized Base Rent % of Total Annualized Base Rent General Services Administration 15 725 8.9 % $ 19,631 16.3 % Bank of America 1 482 5.9 % 11,260 9.4 % Coterra Energy 1 309 3.8 % 5,866 4.9 % Cigna/Express Scripts 2 274 3.4 % 4,770 4.0 % MDC Holdings Inc. 1 144 1.8 % 4,473 3.7 % T-Mobile 3 217 2.7 % 4,065 3.4 % Charter Communications 2 264 3.3 % 3,803 3.2 % Banner Life Insurance 1 116 1.4 % 3,670 3.1 % Encompass Health 1 65 0.8 % 3,575 3.0 % Collins Aerospace 1 207 2.6 % 3,440 2.9 % Top Ten Tenants 28 2,803 34.6 % 64,553 53.9 % Remaining Tenants: Home Depot/HD Supply 2 153 1.9 % 3,292 2.7 % AT&T 1 203 2.5 % 3,137 2.6 % Ingram Micro 1 170 2.1 % 2,985 2.5 % Linde 1 175 2.2 % 2,800 2.3 % Maximus 2 168 2.1 % 2,610 2.2 % Citigroup 1 64 0.8 % 2,513 2.1 % Hasbro 1 136 1.7 % 2,446 2.0 % Valent U.S.A. 1 97 1.2 % 2,417 2.0 % CVS/Aetna 1 127 1.6 % 2,403 2.0 % GE Vernova 1 152 1.9 % 2,055 1.7 % Pulte Mortgage 1 95 1.2 % 2,053 1.7 % NetJets 1 140 1.7 % 2,015 1.7 % Elementis 1 66 0.8 % 1,980 1.6 % Day Pitney 1 56 0.7 % 1,783 1.5 % FedEx 1 90 1.1 % 1,744 1.4 % AGCO 1 126 1.6 % 1,607 1.3 % Intermec 1 81 1.0 % 1,503 1.2 % Abbott Laboratories 1 131 1.6 % 1,412 1.2 % Becton Dickinson 1 72 0.9 % 1,397 1.2 % Ifm Efector 1 45 0.6 % 1,345 1.1 % Peraton 1 33 0.4 % 1,184 1.0 % Total 51 5,183 64.2 % $ 109,234 90.9 % 29 Table of Contents Lease Expirations The following table sets forth certain information regarding scheduled lease expirations in our operating property portfolio, including our proportionate share of square feet and annualized base rent from properties owned by the Arch Street Joint Venture, as of December 31, 2024 (dollars and square feet in thousands): Year of Expiration Number of Leases Expiring (1) Occupied Square Feet % of Total Rentable Square Feet Annualized Base Rent % of Total Annualized Base Rent 2025 9 859 10.6 % $ 16,200 13.5 % 2026 15 688 8.5 % 15,572 12.9 % 2027 13 973 12.0 % 16,524 13.7 % 2028 12 992 12.2 % 21,091 17.5 % 2029 5 398 4.9 % 6,174 5.1 % 2030 6 214 2.7 % 7,094 5.9 % 2031 1 11 0.1 % 431 0.4 % 2032 3 300 3.7 % 3,875 3.2 % 2033 3 358 4.4 % 6,364 5.3 % 2034 4 172 2.1 % 2,532 2.1 % Thereafter 11 1,010 12.5 % 24,436 20.4 % Total 82 5,975 73.7 % $ 120,293 100.0 % ____________________________________ (1) The Company has certain operating properties that are subject to multiple leases.
Biggest changeTenant Industry Diversification The following table sets forth certain information regarding the tenant industry concentrations in our operating property portfolio, including our proportionate share of square feet and annualized base rent from properties owned by the Arch Street Joint Venture, as of December 31, 2025 (dollars and square feet in thousands): Industry Number of Leases (1) Occupied Square Feet % of Total Rentable Square Feet Annualized Base Rent % of Total Annualized Base Rent Government & Public Services 17 768 11.4 % $ 20,381 18.3 % Health Care Equipment & Services 10 748 11.1 % 15,233 13.7 % Capital Goods 9 714 10.6 % 12,015 10.8 % Financial Institutions 1 482 7.2 % 11,136 10.0 % Software & Services 4 422 6.3 % 9,986 9.0 % Materials 5 463 6.9 % 8,581 7.7 % Telecommunication Services 4 419 6.2 % 7,511 6.7 % Commercial & Professional Services 10 281 4.2 % 5,613 5.0 % Consumer Durables & Apparel 1 145 2.2 % 4,562 4.1 % Transportation 4 279 4.1 % 4,457 4.0 % Top Ten Tenant Industries 65 4,721 70.2 % 99,475 89.3 % Remaining Tenant Industries: Media & Entertainment 2 264 3.9 % 3,902 3.5 % Insurance 1 116 1.7 % 3,762 3.4 % Retailing 3 157 2.3 % 3,526 3.2 % Utilities 1 26 0.4 % 394 0.4 % Restaurant 4 15 0.2 % 172 0.2 % Real Estate 1 2 — % 49 — % Total 77 5,301 78.7 % $ 111,280 100.0 % ____________________________________ (1) The Company has certain operating properties that are subject to multiple leases. 27 Table of Contents Geographic Diversification The following table sets forth certain information regarding the geographic concentrations (by state) in our operating property portfolio, including our proportionate share of square feet and annualized base rent from properties owned by the Arch Street Joint Venture, as of December 31, 2025 (dollars and square feet in thousands): Location Number of Properties Rentable Square Feet % of Total Rentable Square Feet Annualized Base Rent % of Total Annualized Base Rent Texas 15 1,351 20.1 % $ 21,083 18.9 % New Jersey 3 714 10.6 % 14,927 13.4 % New York 6 766 11.4 % 11,102 10.0 % Kentucky 2 458 6.8 % 10,538 9.5 % Colorado 3 392 5.8 % 6,679 6.0 % California 3 214 3.2 % 5,990 5.4 % Maryland 2 236 3.5 % 4,870 4.4 % Virginia 2 240 3.6 % 4,726 4.2 % Georgia 3 284 4.2 % 4,704 4.2 % Tennessee 4 240 3.6 % 4,623 4.2 % Top Ten States 43 4,895 72.8 % 89,242 80.2 % Remaining States: Missouri 2 207 3.1 % 3,033 2.7 % Ohio 2 169 2.5 % 2,497 2.2 % Wisconsin 1 155 2.3 % 2,416 2.2 % Rhode Island 1 136 2.0 % 2,209 2.0 % Iowa 2 92 1.4 % 2,046 1.8 % West Virginia 1 63 0.9 % 1,463 1.3 % Pennsylvania 1 45 0.7 % 1,375 1.2 % Oregon 1 69 1.0 % 1,188 1.1 % Kansas 1 90 1.3 % 1,107 1.0 % Nebraska 1 150 2.2 % 913 0.8 % Illinois 1 33 0.5 % 844 0.8 % Massachusetts 1 50 0.7 % 757 0.7 % Idaho 1 35 0.5 % 741 0.7 % Indiana 1 83 1.2 % 592 0.5 % Minnesota 1 39 0.6 % 505 0.5 % Florida 1 6 0.1 % 247 0.2 % Oklahoma 1 330 4.9 % 105 0.1 % Arizona 1 90 1.3 % — — % Total 64 6,737 100.0 % $ 111,280 100.0 % 28 Table of Contents Tenant Diversification The following table sets forth certain information regarding tenants comprising over one percent of annualized base rent in our operating property portfolio, including our proportionate share of square feet and annualized base rent from properties owned by the Arch Street Joint Venture, as of December 31, 2025 (dollars and square feet in thousands): Tenant Number of Leases Occupied Square Feet % of Total Rentable Square Feet Annualized Base Rent % of Total Annualized Base Rent General Services Administration 15 724 10.7 % $ 19,821 17.8 % Merrill Lynch 1 482 7.2 % 11,136 10.0 % Ingram Micro 2 330 4.9 % 7,860 7.1 % Cigna/Express Scripts 2 275 4.1 % 4,866 4.4 % Sekisui House U.S. 1 145 2.2 % 4,562 4.1 % T-Mobile 3 216 3.2 % 4,128 3.7 % Charter Communications 2 264 3.9 % 3,902 3.5 % Banner Life Insurance 1 116 1.7 % 3,762 3.4 % Encompass Health 1 65 1.0 % 3,646 3.3 % Collins Aerospace 1 207 3.1 % 3,513 3.2 % Top Ten Tenants 29 2,824 42.0 % 67,196 60.5 % Remaining Tenants: Home Depot/HD Supply 2 153 2.3 % 3,448 3.1 % AT&T 1 203 3.0 % 3,383 3.0 % Linde 1 175 2.6 % 2,886 2.6 % Maximus 2 168 2.5 % 2,673 2.4 % Valent U.S.A. 1 97 1.4 % 2,510 2.3 % Brown University Health 1 136 2.0 % 2,209 2.0 % GE Vernova 1 152 2.3 % 2,117 1.9 % NetJets 1 140 2.1 % 2,040 1.8 % Elementis 1 66 1.0 % 1,980 1.8 % Day Pitney 1 56 0.8 % 1,811 1.6 % FedEx 1 90 1.3 % 1,623 1.5 % AGCO 1 126 1.9 % 1,606 1.4 % Intermec 1 81 1.2 % 1,545 1.4 % Becton Dickinson 1 73 1.1 % 1,425 1.3 % Ifm Efector 1 45 0.7 % 1,375 1.2 % Peraton 1 33 0.5 % 1,213 1.1 % Ineos Pigments 1 120 1.8 % 1,108 1.0 % Change Healthcare Operations 1 55 0.8 % 1,097 1.0 % Total 49 4,793 71.3 % $ 103,245 92.9 % 29 Table of Contents Lease Expirations The following table sets forth certain information regarding scheduled lease expirations in our operating property portfolio, including our proportionate share of square feet and annualized base rent from properties owned by the Arch Street Joint Venture, as of December 31, 2025 (dollars and square feet in thousands): Year of Expiration Number of Leases Expiring (1) Occupied Square Feet % of Total Rentable Square Feet Annualized Base Rent % of Total Annualized Base Rent 2026 11 519 7.7 % $ 11,390 10.2 % 2027 11 891 13.2 % 14,106 12.7 % 2028 13 1,112 16.5 % 25,560 23.0 % 2029 6 401 6.0 % 6,362 5.7 % 2030 7 241 3.6 % 7,803 7.0 % 2031 2 18 0.3 % 570 0.5 % 2032 3 174 2.6 % 2,621 2.3 % 2033 3 211 3.1 % 3,901 3.5 % 2034 5 242 3.6 % 3,760 3.4 % 2035 4 640 9.5 % 14,422 13.0 % Thereafter 12 852 12.6 % 20,785 18.7 % Total 77 5,301 78.7 % $ 111,280 100.0 % ____________________________________ (1) The Company has certain operating properties that are subject to multiple leases.
Including the Company’s proportionate share of leasable square feet and annualized base rent from the Arch Street Joint Venture, it owned an aggregate of 8.1 million leasable square feet, with an occupancy rate of 73.7%, or 73.1% adjusted for two operating properties that are currently under agreements to be sold, and a weighted-average remaining lease term of 5.2 years as of December 31, 2024.
Including the Company’s proportionate share of leasable square feet and annualized base rent from the Arch Street Joint Venture, it owned an aggregate of 6.7 million leasable square feet, with an occupancy rate of 78.7%, or 78.2% adjusted for one consolidated operating property and its proportionate share of the square footage of one Arch Street Joint Venture operating property that are currently under agreements to be sold, and a weighted average remaining lease term of 5.7 years as of December 31, 2025.
Item 2. Properties. The Company leases its corporate office space, including its corporate headquarters, which is located in Phoenix, Arizona. As of December 31, 2024, the Company owned 69 operating properties with an aggregate of 7.9 million leasable square feet located in 29 states, with an occupancy rate of 73.0% and a weighted-average remaining lease term of 5.2 years.
Item 2. Properties. The Company leases its corporate office space, including its corporate headquarters, which is located in Phoenix, Arizona. As of December 31, 2025, the Company owned 58 operating properties with an aggregate of 6.5 million leasable square feet located in 26 states with an occupancy rate of 78.1% and a weighted average remaining lease term of 5.6 years.
Operating Property Type The following table sets forth certain information regarding property types in our operating property portfolio, including our proportionate share of square feet and annualized base rent from properties owned by the Arch Street Joint Venture, as of December 31, 2024 (dollars and square feet in thousands): Property Type Number of Properties Rentable Square Feet % of Total Rentable Square Feet Annualized Base Rent % of Total Annualized Base Rent Traditional Office 46 6,081 75.0 % 82,001 68.2 % Governmental 16 789 9.7 % 20,269 16.8 % Flex/Industrial 7 819 10.1 % 8,238 6.8 % Flex/Laboratory and R&D 4 268 3.3 % 6,210 5.2 % Medical Office 2 155 1.9 % 3,575 3.0 % Total 75 8,112 100.0 % 120,293 100.0 % Item 3.
Operating Property Type The following table sets forth certain information regarding property types in our operating property portfolio, including our proportionate share of square feet and annualized base rent from properties owned by the Arch Street Joint Venture, as of December 31, 2025 (dollars and square feet in thousands): Property Type Number of Properties Rentable Square Feet % of Total Rentable Square Feet Annualized Base Rent % of Total Annualized Base Rent Traditional Office 36 4,724 70.1 % 71,507 64.2 % Governmental 17 938 13.9 % 21,346 19.2 % Flex/Industrial 5 652 9.7 % 8,437 7.6 % Flex/Laboratory and R&D 4 268 4.0 % 6,344 5.7 % Medical Office 2 155 2.3 % 3,646 3.3 % Total 64 6,737 100.0 % 111,280 100.0 % Item 3.
Legal Proceedings. As of December 31, 2024, we are not a party to, and none of our properties are subject to, any material pending legal proceedings.
Legal Proceedings. As of December 31, 2025, we are not a party to, and none of our properties are subject to, any material pending legal proceedings. Item 4. Mine Safety Disclosures. Not applicable. 30 Table of Contents PART II
See Schedule III – Real Estate and Accumulated Depreciation for more information about the Company’s properties and see Note 6 – Debt, Net for more information about mortgages and other indebtedness related to the Company’s properties. 26 Table of Contents During the year ended December 31, 2024, we split the properties located in Amherst, New York and Denver, Colorado, each containing two buildings, into four separate properties for reporting purposes.
See Schedule III – Real Estate and Accumulated Depreciation for more information about the Company’s properties and see Note 6 – Debt, Net for more information about mortgages and other indebtedness related to the Company’s properties.
Removed
Also during the year ended December 31, 2024, we commenced classifying certain of our properties which are being repositioned, redeveloped, developed or held for sale as non-operating properties rather than operating properties, resulting in seven properties being removed from the presentation of the Company’s portfolio of operating properties as of December 31, 2024.
Added
As of December 31, 2025, the Company had eight properties designated as non-operating properties.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+1 added−5 removed6 unchanged
Biggest changeThe Company did not purchase any shares under the Share Repurchase Program during the three months ended December 31, 2024. Since inception of the Share Repurchase Program, the Company has repurchased approximately 0.9 million shares of common stock, at a weighted average price of $5.46 for an aggregate purchase price of $5.0 million.
Biggest changeWhile the Share Repurchase Program was active, the Company repurchased approximately 0.9 million shares of common stock, at a weighted average price of $5.46 for an aggregate purchase price of $5.0 million. Item 6. [Reserved]
Stock Price Performance Graph Set forth below is a line graph comparing the cumulative total stockholder return on the Company’s common stock, based on the market price of the common stock and assuming reinvestment of dividends, with the Russell 2000 Index and the FTSE National Association of Real Estate Investment Trusts All Equity Office REITs Index (“FTSE Nareit All Equity Office REITs Index”) for the period commencing November 15, 2021 and ending December 31, 2024.
Stock Price Performance Graph Set forth below is a line graph comparing the cumulative total stockholder return on the Company’s common stock, based on the market price of the common stock and assuming reinvestment of dividends, with the Russell 2000 Index and the FTSE National Association of Real Estate Investment Trusts All Equity Office REITs Index (“FTSE Nareit All Equity Office REITs Index”) for the period commencing November 15, 2021 and ending December 31, 2025.
On March 4, 2025, the Company’s Board of Directors declared a quarterly cash dividend of $0.02 per share for the first quarter of 2025, payable on April 15, 2025 to stockholders of record as of March 31, 2025, representing a new annualized dividend rate of $0.08 per share.
On March 4, 2026, the Company’s Board of Directors declared a quarterly cash dividend of $0.02 per share for the first quarter of 2026, payable on April 15, 2026 to stockholders of record as of March 31, 2026. As of February 27, 2026, the Company had approximately 8,363 stockholders of record of its common stock.
The Company’s Board of Directors declared and paid a quarterly cash dividend of $0.10 per share for each of the four quarters of 2024.
The Company’s Board of Directors declared and paid a quarterly cash dividend of $0.02 per share for each of the four quarters of 2025 (record dates March 31, 2025, June 30, 2025, September 30, 2025 and December 31, 2025).
Removed
This change in dividend policy will enable us to retain approximately $17.9 million of cash annually. The new policy is also consistent with our strategy shift as we seek the lowest cost of funds to maintain and grow existing tenancy, continue to shift towards more dedicated use assets and efficiently refinance our debt obligations as they come due.
Added
The Company did not purchase any shares under the Share Repurchase Program during the three months ended December 31, 2025, and the Share Repurchase Program expired by its terms on December 31, 2025.
Removed
As of February 28, 2025, the Company had approximately 8,986 stockholders of record of its common stock.
Removed
Repurchases may be made through open market purchases, privately negotiated transactions, structured or derivative transactions, including accelerated stock repurchase transactions, or other methods of acquiring shares in accordance with applicable securities laws and other legal requirements. The Share Repurchase Program does not obligate the Company to make any repurchases at a specific time or in a specific situation.
Removed
Repurchases are subject to prevailing market conditions, the trading price of the Company’s common stock, the Company’s liquidity and anticipated liquidity needs, financial performance and other conditions. Shares of common stock repurchased by the Company under the Share Repurchase Program, if any, will be returned to the status of authorized but unissued shares of common stock.
Removed
As of December 31, 2024, the approximate dollar value of shares that remain available for repurchase under the Share Repurchase Program was $45.0 million. Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

133 edited+72 added−87 removed71 unchanged
Biggest changeDuring the periods indicated below, we entered into new and renewal leases as summarized in the following tables (dollars and square feet in thousands): Year Ended December 31, 2024 New Leases Renewals Total Number of leases 6 9 15 Rentable square feet leased 287 799 1,086 Weighted average rental rate change (cash basis) (1) (2) (9.7) % (6.6) % (7.0) % Tenant rent concessions and leasing costs (3) $ 27,268 $ 19,607 $ 46,875 Tenant rent concessions and leasing costs per rentable square foot (4) $ 94.86 $ 24.54 $ 43.14 Weighted average lease term (by rentable square feet) (years) (5) 10.5 6.9 7.9 Tenant rent concessions and leasing costs per rentable square foot per year $ 9.00 $ 3.55 $ 5.48 Year Ended December 31, 2023 New Leases Renewals Total Number of leases 4 5 9 Rentable square feet leased 21 240 261 Weighted average rental rate change (cash basis) (1) (2) (19.8) % 6.8 % 5.3 % Tenant rent concessions and leasing costs (3) $ 932 $ 3,211 $ 4,143 Tenant rent concessions and leasing costs per rentable square foot (4) $ 44.30 $ 13.36 $ 15.85 Weighted average lease term (by rentable square feet) (years) (5) 8.1 9.1 9.0 Tenant rent concessions and leasing costs per rentable square foot per year $ 5.45 $ 1.47 $ 1.76 ____________________________________ (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 fixed 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 fixed contractually obligated reimbursements by the applicable tenants, which may include estimates) as of the expiration date of the prior lease term.
Biggest change(3) 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 fixed 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 fixed contractually obligated reimbursements by the applicable tenants, which may include estimates) as of the expiration date of the prior lease term.
We have agreed to provide rent concessions to tenants and incur leasing costs with respect to our properties, including amounts paid directly to tenants to improve their space and/or building systems, or tenant improvement allowances, landlord agreements to perform and pay for certain improvements, and leasing commissions.
We have agreed to provide rent concessions to tenants and incur leasing costs with respect to our properties, including amounts paid directly to tenants to improve their space and/or building systems, or tenant improvement allowances, landlord agreements to perform and pay for certain improvements, and leasing commissions.
The actual amount we pay for tenant improvement allowances may be lower than the amount agreed upon in the applicable lease and will depend upon the tenant’s use of the capital on the agreed upon timeline.
The actual amount we pay for tenant improvement allowances may be lower than the amount agreed upon in the applicable lease and will depend upon the tenant’s use of the capital on the agreed upon timeline.
We generally believe we will be able to satisfy these liquidity needs by a combination of cash flows from operations, borrowings under the Revolving Facility, proceeds from real estate dispositions, new borrowings such as bank term loans or other secured or unsecured debt, and issuances of equity securities.
We generally believe we will be able to satisfy these liquidity needs by a combination of cash flows from operations, borrowings under the New Revolving Facility, proceeds from real estate dispositions, new borrowings such as bank term loans or other secured or unsecured debt, and issuances of equity securities.
(“VEREIT”) on November 1, 2021, Realty Income contributed the combined business comprising certain office real properties and related assets previously owned by subsidiaries of Realty Income, and certain office real properties and related assets previously owned by subsidiaries of VEREIT (the “Separation”), to the Company and its operating partnership, Orion Properties LP (“Orion OP”), and on November 12, 2021, effected a special distribution to its stockholders of all the outstanding shares of common stock of the Company (the “Distribution”).
(“VEREIT”) on November 1, 2021, Realty Income contributed the combined business comprising certain office real properties and related assets previously owned by subsidiaries of Realty Income, and certain office real properties and related assets previously owned by subsidiaries of VEREIT (the “Separation”), to the Company and its operating partnership, Orion Properties LP (“Orion OP”), and on November 12, 2021, effected a special distribution to Realty Income’s stockholders of all the outstanding shares of common stock of the Company (the “Distribution”).
The Revolving Facility also includes customary events of default, the occurrence of which, following any applicable grace period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations of Orion OP under the Revolving Facility to be immediately due and payable and foreclose on the collateral securing the Revolving Facility.
The New Revolving Facility also includes customary events of default, the occurrence of which, following any applicable grace period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations of Orion OP under the New Revolving Facility to be immediately due and payable and foreclose on the collateral securing the New Revolving Facility.
We believe that our principal sources of short-term liquidity, which are our cash and cash equivalents on hand, cash flows from operations, proceeds from real estate dispositions, and borrowings under the Revolving Facility, are sufficient to meet our liquidity needs for the next twelve months.
We believe that our principal sources of short-term liquidity, which are our cash and cash equivalents on hand, cash flows from operations, proceeds from real estate dispositions, and borrowings under the New Revolving Facility are sufficient to meet our liquidity needs for the next twelve months.
The utilization and demand for office space continue to face headwinds and the duration and ultimate impact of current trends on the demands for office space at our properties remains uncertain and subject to change.
The utilization and demand for office space continue to face headwinds and the duration and ultimate impact of current trends on the demand for office space at our properties remains uncertain and subject to change.
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. The table below presents a reconciliation of FFO and Core FFO to net loss attributable to common stockholders, the most directly comparable U.S.
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. 46 Table of Contents The table below presents a reconciliation of FFO and Core FFO to net loss attributable to common stockholders, the most directly comparable U.S.
(3) Landlord work represents specific improvements agreed to within the lease agreement to be performed by us, as landlord, as a new non-recurring obligation and in order to induce the tenant to enter into a new lease or lease renewal or extension. Outstanding commitments for reimbursable and non-reimbursable landlord work amounts include estimates and are subject to change.
(4) Landlord work represents specific improvements agreed to within the lease agreement to be performed by us, as landlord, as a new non-recurring obligation and in order to induce the tenant to enter into a new lease or lease renewal or extension. Outstanding commitments for reimbursable and non-reimbursable landlord work amounts include estimates and are subject to change.
As of December 31, 2024, the Company was in compliance with these financial covenants. The Mortgage Borrowers and the Company also provided a customary environmental indemnity agreement, pursuant to which the Mortgage Borrowers and the Company agreed to protect, defend, indemnify, release and hold harmless the Lender from and against certain environmental liabilities relating to the Mortgaged Properties.
As of December 31, 2025, the Company was in compliance with these financial covenants. The Mortgage Borrowers and the Company also provided a customary environmental indemnity agreement, pursuant to which the Mortgage Borrowers and the Company agreed to protect, defend, indemnify, release and hold harmless the Lender from and against certain environmental liabilities relating to the Mortgaged Properties.
In connection with the CMBS Loan Agreement, the Company (as the guarantor) delivered a customary non-recourse carveout guaranty to the Lender (the “Guaranty”), under which the Company guaranteed the obligations and liabilities of the Mortgage Borrowers to the Lender with respect to certain non-recourse carveout events and the circumstances under which the CMBS Loan will be fully recourse to the Mortgage Borrowers, and which includes requirements for the Company to maintain a 50 Table of Contents net worth of no less than $355.0 million and liquid assets of no less than $10.0 million, in each case, exclusive of the values of the collateral for the CMBS Loan.
In connection with the CMBS Loan Agreement, the Company (as the guarantor) delivered a customary non-recourse carveout guaranty to the Lender (the “Guaranty”), under which the Company guaranteed the obligations and liabilities of the Mortgage Borrowers to the Lender with respect to certain non-recourse carveout events and the circumstances under which the CMBS Loan will be fully recourse to the Mortgage Borrowers, and which includes requirements for the Company to maintain a net worth of no less than $355.0 million and liquid assets of no less than $10.0 million, in each case, exclusive of the values of the collateral for the CMBS Loan.
Following the Distribution, we became an independent and publicly traded company, and our common stock, par value $0.001, trades on the New York Stock Exchange (the “NYSE”) under the symbol “ONL.” The Company has elected to be taxed as a REIT for U.S. federal income tax purposes, commencing with its initial taxable year ended December 31, 2021.
Following the Distribution, we became an independent and publicly traded company, and our common stock, par value $0.001, trades on the New York Stock Exchange (the “NYSE”) under the symbol “ONL”. The Company has elected to be taxed as a REIT for U.S. federal income tax purposes, commencing with its initial taxable year ended December 31, 2021.
Basis of Presentation The consolidated financial statements of the Company for the years ended December 31, 2024, 2023 and 2022, include the accounts of the Company and its consolidated subsidiaries, including Orion OP, and a consolidated joint venture. All intercompany transactions have been eliminated upon consolidation.
Basis of Presentation The consolidated financial statements of the Company for the years ended December 31, 2025, 2024 and 2023, include the accounts of the Company and its consolidated subsidiaries, including Orion OP, and a consolidated joint venture. All intercompany transactions have been eliminated upon consolidation.
As such, we are eligible to take advantage of certain exemptions from various reporting requirements that apply to other public 35 Table of Contents companies that are not emerging growth companies, including compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and the requirements to hold a non-binding advisory vote on executive compensation and any golden parachute payments not previously approved.
As such, we are eligible to take advantage of certain exemptions from various reporting requirements that apply to other public companies that are not emerging growth companies, including compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and the requirements to hold a non-binding advisory vote on executive compensation and any golden parachute payments not previously approved.
Future Lease Expirations For a tabular summary of scheduled lease expirations in our property portfolio as of December 31, 2024, see the Lease Expirations table under “Item 2. Properties” in this Annual Report on Form 10-K.
Future Lease Expirations For a tabular summary of scheduled lease expirations in our property portfolio as of December 31, 2025, see the Lease Expirations table under “Item 2. Properties” in this Annual Report on Form 10-K.
The San Ramon Loan Agreement also includes customary events of default, the occurrence of which, following any applicable grace period, would permit the Lender to, among other things, declare the principal, accrued interest and other obligations of the San Ramon Borrower to be immediately due and payable and foreclose on the San Ramon Property.
The San Ramon Loan Agreement also includes customary events of default, the occurrence of which, following any applicable grace period, would permit the Lender 52 Table of Contents to, among other things, declare the principal, accrued interest and other obligations of the San Ramon Borrower to be immediately due and payable and foreclose on the San Ramon Property.
Pursuant to the Universal Shelf, 52 Table of Contents the Company is able to offer and sell from time to time in multiple transactions, up to $750.0 million of the Company’s securities, including through “at the market” offering programs or firm commitment underwritten offerings.
Pursuant to the Universal Shelf, the Company is able to offer and sell from time to time in multiple transactions, up to $750.0 million of the Company’s securities, including through “at the market” offering programs or firm commitment underwritten offerings.
If our judgment or interpretation of the facts and circumstances relating to the various transactions had been different, it is possible that different accounting estimates would have been applied, thus resulting in a different presentation of the financial statements.
If our judgment or interpretation of the facts and circumstances relating to the various transactions had been different, it is possible 36 Table of Contents that different accounting estimates would have been applied, thus resulting in a different presentation of the financial statements.
Further, releases of individual properties are permitted in connection with an arm’s length third party sale upon repayment of the Release Price (as defined in the CMBS Loan Agreement) for the applicable individual property and subject to payment of the applicable yield maintenance premium and the satisfaction of other terms and conditions set forth in the CMBS Loan Agreement.
Further, releases of individual properties are permitted in connection with an arm’s length third party sale upon repayment of the Release Price (as defined in the CMBS Loan Agreement) for the applicable individual property and subject to the satisfaction of other terms and conditions set forth in the CMBS Loan Agreement.
We provided a member loan to the Arch Street Joint Venture of $1.4 million in connection with the partial repayment of the Arch Street Joint Venture mortgage notes to satisfy the maximum 60% loan-to-value extension condition.
During November 2024, we provided a member loan to the Arch Street Joint Venture of $1.4 million in connection with the partial repayment of the Arch Street Joint Venture mortgage notes to satisfy the maximum 60% loan-to-value extension condition.
These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Management believes that we have made these estimates and assumptions in an appropriate manner and in a way that accurately reflects our financial condition.
These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Management believes that it has made these estimates and assumptions in an appropriate manner and in a way that accurately reflects our financial condition.
The timing of our cash outlay for tenant improvement allowances is significantly uncertain and will depend upon the applicable tenant’s schedule for the improvements and corresponding use of capital, if any. We estimate that the foregoing rent concessions and leasing costs will be funded between 2025 and 2039.
The timing of our cash outlay for tenant improvement allowances is significantly uncertain and will depend upon the applicable tenant’s schedule for the improvements and corresponding use of capital, if any. We estimate that the foregoing rent concessions and leasing costs will be funded between 2026 and 2041.
For all of these reasons, we believe FFO and Core FFO, in addition to net income (loss), as defined by U.S. 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.
For all of these reasons, we believe FFO and Core FFO, in addition to net income (loss), as determined under U.S. 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.
Pursuant to the second amendment described above, if, on any day, Orion OP has unrestricted cash and cash equivalents in excess of $25.0 million (excluding amounts that are then designated for application or use and are subsequently used for such purposes within 30 days), Orion OP will use such excess amount to prepay loans under the Revolving Facility, without premium or penalty and without any reduction in the lenders’ commitment under the Revolving Facility.
If, on any day, Orion OP has unrestricted cash and cash equivalents in excess of $25.0 million (excluding amounts that are then designated for application or use and are subsequently used for such purposes within 30 days), Orion OP will use such excess amount to prepay loans under the New Revolving Facility, without premium or penalty and without any reduction in the lenders’ commitment under the New Revolving Facility.
The impairment charges of $47.6 million in the year ended December 31, 2024 include a total of 12 properties and the charges were incurred primarily with respect to real estate assets sold or expected to be sold and reflect management’s estimates of lease renewal probability, timing and terms of such renewals, carrying costs for vacant properties, sale probability and estimates of sale proceeds.
The impairment charges of $99.4 million in the year ended December 31, 2025 include a total of 12 properties and the charges were incurred primarily with respect to real estate assets sold or expected to be sold and reflect management’s estimates of lease renewal probability, timing and terms of such renewals, carrying costs for vacant properties, sale probability and estimates of sale proceeds.
We also owned a 20% equity interest in the Arch Street Joint Venture, which as of December 31, 2024, owned a portfolio of six properties with an aggregate of 1.0 million leasable square feet located in six states with an occupancy rate of 100% and a weighted-average remaining lease term of 5.2 years.
We also owned a 20% equity interest in the Arch Street Joint Venture, which as of December 31, 2025, owned a portfolio of six properties with an aggregate of 1.0 million leasable square feet located in six states with an occupancy rate of 100% and a weighted average remaining lease term of 6.3 years.
Additionally, other companies may utilize different assumptions or estimates that may impact comparability of our 36 Table of Contents results of operations to those of companies in similar businesses.
Additionally, other companies may utilize different assumptions or estimates that may impact comparability of our results of operations to those of companies in similar businesses.
Results of Operations Comparison of the year ended December 31, 2024 to the year ended December 31, 2023 (dollars in thousands) The results of operations discussed in this section include the accounts of the Company and its consolidated subsidiaries for the years ended December 31, 2024 and 2023.
Results of Operations Comparison of the year ended December 31, 2025 to the year ended December 31, 2024 The results of operations discussed in this section include the accounts of the Company and its consolidated subsidiaries for the years ended December 31, 2025 and 2024.
GAAP measure. 39 Table of Contents Leasing Activity and Capital Expenditures We remain highly focused on leasing activity, given the 5.2 year weighted-average remaining lease term and the significant lease maturities which will occur across the portfolio over the next few years.
GAAP measure. Leasing Activity and Capital Expenditures We remain highly focused on leasing activity, given the 5.7 year weighted average remaining lease term and the significant lease maturities which will occur across the portfolio over the next few years.
Since the onset of the COVID-19 pandemic, the office leasing market has experienced significantly reduced demand for space and changes in space usage as tenants seek to attract employees back to the office, in newer, renovated properties with more amenities.
The COVID-19 pandemic and its aftermath has significantly reduced demand for office space and changes in space usage in the office leasing market, as tenants seek to attract employees back to the office, in newer, renovated properties with more amenities.
Executive Summary The Company is a real estate investment trust that owns and operates primarily single tenant office properties in suburban locations leased to high credit quality tenants. Our largest tenant as measured by annualized base rent is the United States Government, representing 16.3% of our annualized base rent as of December 31, 2024.
Executive Summary We are a real estate investment trust that owns and operates primarily single tenant office properties in suburban locations leased to high credit quality tenants. Our largest tenant as measured by annualized base rent is the United States Government, representing 17.8% of our annualized base rent as of December 31, 2025.
Upon the scheduled expiration of the interest rate swap agreements, we entered into interest rate collar agreements on a total notional amount of $60.0 million to hedge against interest rate volatility on the Revolving Facility.
We entered into interest rate collar agreements on a total notional amount of $60.0 million to hedge against interest rate volatility on the Original Revolving Facility.
As of December 31, 2024, approximately 31.8% of our annualized base rent was derived from properties we deemed dedicated use assets, compared to 27.7% as of December 31, 2023.
As of December 31, 2025, approximately 35.8% of our annualized base rent was derived from properties we deemed dedicated use assets, compared to 31.8% as of December 31, 2024.
We have experienced significant lease expirations over the last few years, including 1.3 million square feet during the year ended December 31, 2024. This has resulted in declines in both our revenues and earnings since our spin-off from Realty Income.
We have experienced significant lease expirations and contractions over the last few years, including 681,000 square feet during the year ended December 31, 2025. This has resulted in declines in both our revenues and earnings since our spin-off from Realty Income.
Including our proportionate share of leasable square feet and annualized base rent from the Arch Street Joint Venture, we owned an aggregate of 8.1 million leasable square feet with an occupancy rate of 73.7%, or 73.1% adjusted for two operating properties that are currently under agreements to be sold, and a weighted-average remaining lease term of 5.2 years, as of December 31, 2024.
Including our proportionate share of leasable square feet and annualized base rent from the Arch Street Joint Venture, we owned an aggregate of 6.7 million leasable square feet with an occupancy rate of 78.7%, or 78.2% adjusted for one consolidated operating property and our proportionate share of one Arch Street Joint Venture operating property that are currently under agreements to be sold, and a weighted average remaining lease term of 5.7 years, as of December 31, 2025.
As a result, our net income and ability to pay dividends to stockholders could be materially adversely affected.
As a result of the above factors, our net income and ability to pay dividends to stockholders could be materially adversely affected.
The following is a summary of the interest rate and scheduled maturities of our consolidated debt obligations as of December 31, 2024 (in thousands): Weighted-Average Interest Rate (1) Weighted-Average Years to Maturity Principal Amounts Due During the Years Ending December 31, Total 2025 2026 2027 Thereafter Credit facility revolver (2) 7.66 % 1.4 $ 119,000 $ — $ 119,000 $ — — Mortgages payable (3) (4) 5.02 % 2.3 373,000 — — 355,000 18,000 Total $ 492,000 $ — $ 119,000 $ 355,000 $ 18,000 ____________________________________ (1) The weighted-average interest rate represents the interest rate in effect as of December 31, 2024.
The following is a summary of the interest rate and scheduled maturities of our consolidated debt obligations as of December 31, 2025 (in thousands): Weighted Average Interest Rate (1) Weighted Average Years to Maturity Principal Amounts Due During the Years Ending December 31, Total 2026 2027 Thereafter Original Revolving Facility (2) (3) 7.01% 0.4 $ 92,000 $ 92,000 $ — — Mortgages payable (4) (5) 5.02% 1.3 373,000 — 355,000 18,000 Total $ 465,000 $ 92,000 $ 355,000 $ 18,000 ____________________________________ (1) The weighted average interest rate represents the interest rate in effect as of December 31, 2025.
The Company’s average debt outstanding was $481.5 million for the year ended December 31, 2024 compared to $500.5 million during the same period in 2023. The Company’s weighted-average interest rate on its debt obligations was 5.85% for the year ended December 31, 2024 and 4.66% for the same period in 2023.
The Company’s average debt outstanding was $478.5 million for the year ended December 31, 2025 compared to $481.5 million during the same period in 2024. The Company’s weighted average interest rate on its debt obligations was 5.62% for the year ended December 31, 2025 and 5.85% for the same period in 2024.
(2) Excludes four new leases for approximately 149,000 square feet and two new leases for approximately 7,000 square feet for the years ended December 31, 2024 and 2023, respectively, that had been or will be vacant for more than 12 months at the time the new lease commences.
(4) Excludes five new leases for approximately 239,000 square feet and four new leases for approximately 149,000 square feet for the years ended December 31, 2025 and 2024, respectively, that had been or will be vacant for more than 12 months at the time the new lease commences.
On March 4, 2025, the Company’s Board of Directors declared a quarterly cash dividend of $0.02 per share for the first quarter of 2025, payable on April 15, 2025 to stockholders of record as of March 31, 2025, representing a new annualized dividend rate of $0.08 per share.
On March 4, 2026, the Company’s Board of Directors declared a quarterly cash dividend of $0.02 per share for the first quarter of 2026, payable on April 15, 2026 to stockholders of record as of March 31, 2026.
(2) Includes interest rate margin of 3.25% plus SOFR adjustment of 0.10%. As of December 31, 2024, a total of $60.0 million of the debt outstanding under the Revolving Facility was subject to interest rate collar agreements to hedge against interest rate volatility.
(2) Includes interest rate margin of 3.25% plus SOFR adjustment of 0.10%. As of December 31, 2025, a total of $75.0 million of the debt outstanding under the Original Revolving Facility was subject to an interest rate collar agreement to hedge against interest rate volatility.
During the periods indicated below, amounts capitalized by the Company for capital expenditures were as follows (in thousands): Year Ended December 31, 2024 2023 2022 Lease related costs (1) $ 10,058 $ 1,405 $ 4,362 Lease incentives (2) 656 2,431 1,810 Building, fixtures and improvements (3) 13,354 17,476 8,452 Total capital expenditures $ 24,068 $ 21,312 $ 14,624 ____________________________________ (1) Lease related costs generally include lease commissions paid in connection with the execution of new and/or renewed leases.
During the periods indicated below, amounts capitalized by the Company for capital expenditures were as follows (in thousands): Year Ended December 31, 2025 2024 2023 Lease related costs (1) $ 7,317 $ 10,058 $ 1,405 Lease incentives (2) 3,146 656 2,431 Building, fixtures and improvements (3) 49,510 13,354 17,476 Total capital expenditures $ 59,973 $ 24,068 $ 21,312 ____________________________________ (1) Lease related costs generally include lease commissions paid in connection with the execution of new and/or renewed leases.
(“Nareit”), an industry trade group, has promulgated a supplemental performance measure known as funds from operations (“FFO”), which we believe to be an appropriate supplemental performance measure to reflect the operating performance of the Company. FFO is not equivalent to our net income (loss) as determined under U.S. GAAP.
(“Nareit”), an industry trade group, 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 the Company. FFO is not equivalent to our net income (loss) as determined under U.S. GAAP. Nareit defines FFO as net income (loss) computed in accordance with U.S.
If more value is attributed to land, depreciation expense is lower than if more value is attributed to buildings, fixtures and improvements. • Intangible lease assets and liabilities can be significantly affected by estimates, including market rent, lease term (including renewal options at rental rates below estimated market rental rates), carrying costs of the property during a hypothetical expected lease-up period, and current market conditions and costs, including tenant improvement allowances and rent concessions. • If any financing is assumed, we determine whether such financing is above-market or below-market based upon comparison to similar financing terms for similar investment properties.
If more value is attributed to land, depreciation expense is lower than if more value is attributed to buildings, fixtures and improvements. • Intangible lease assets and liabilities can be significantly affected by estimates, including market rent, lease term (including renewal options at rental rates below estimated market rental rates), carrying costs of the property during a hypothetical expected lease-up period, and current market conditions and costs, including tenant improvement allowances and rent concessions. • If any financing is assumed, we determine whether such financing is above-market or below-market based upon comparison to similar financing terms for similar investment properties. 37 Table of Contents Recently Issued Accounting Pronouncements Recently issued accounting pronouncements are described in Note 2 – Summary of Significant Accounting Policies to our consolidated financial statements.
For example, leases representing approximately 13.5% and 12.9% of our annualized base rent are scheduled to expire during 2025 and 2026, respectively, and we may be unable to renew leases or find replacement tenants.
For example, leases representing approximately 10.2% and 12.7% of our annualized base rent are scheduled to expire during 2026 and 2027, respectively, and we may be unable to renew leases or find replacement tenants.
The San Ramon Loan requires monthly payments of interest only and all principal is due at maturity and is generally not freely prepayable by the San Ramon Borrower until December 2026, and thereafter without payment of certain prepayment premiums and costs.
The San Ramon Loan bears interest at a fixed rate of 5.90% and matures on December 1, 2031. The San Ramon Loan requires monthly payments of interest only and all principal is due at maturity and is generally not freely prepayable by the San Ramon Borrower until December 2026, and thereafter without payment of certain prepayment premiums and costs.
During the year ended December 31, 2024, the Company’s Board of Directors declared quarterly cash dividends on shares of the Company’s common stock as follows: Declaration Date Record Date Paid Date Distributions Per Share February 27, 2024 March 29, 2024 April 15, 2024 $0.10 May 7, 2024 June 28, 2024 July 15, 2024 $0.10 August 7, 2024 September 30, 2024 October 15, 2024 $0.10 November 6, 2024 December 31, 2024 January 15, 2025 $0.10 On March 4, 2025, the Company’s Board of Directors declared a quarterly cash dividend of $0.02 per share for the first quarter of 2025, payable on April 15, 2025 to stockholders of record as of March 31, 2025, representing a new annualized dividend rate of $0.08 per share.
During the year ended December 31, 2025, the Company’s Board of Directors declared quarterly cash dividends on shares of the Company’s common stock as follows: Declaration Date Record Date Paid Date Distributions Per Share March 4, 2025 March 31, 2025 April 15, 2025 $0.02 May 6, 2025 June 30, 2025 July 15, 2025 $0.02 August 5, 2025 September 30, 2025 October 15, 2025 $0.02 November 5, 2025 December 31, 2025 January 15, 2026 $0.02 53 Table of Contents On March 4, 2026, the Company’s Board of Directors declared a quarterly cash dividend of $0.02 per share for the first quarter of 2026, payable on April 15, 2026 to stockholders of record as of March 31, 2026.
Under the agreements, the benchmark rate for the Revolving Facility will float between 5.50% per annum and 4.20% per annum on $25.0 million, and 5.50% per annum and 4.035% per annum on $35.0 million, effective from November 13, 2023 until May 12, 2025.
Under the agreements, the benchmark rate for the Original Revolving Facility floated between no higher than 5.50% and no lower than 4.20% on $25.0 million, and no higher than 5.50% and no lower than 4.035% on $35.0 million, effective from November 13, 2023 until May 12, 2025.
Under the agreements, the benchmark rate for the Revolving Facility will float between 5.50% per annum and 4.20% per annum on $25.0 million, and 5.50% per annum and 4.035% per annum on $35.0 million, effective from November 13, 2023 until May 12, 2025.
Under the agreements, the benchmark rate for the Original Revolving Facility floated between no higher than 5.50% and no lower than 4.20% on $25.0 million, and no higher than 5.50% and no lower than 4.035% on $35.0 million, effective from November 13, 2023 until May 12, 2025.
As of December 31, 2024, 63.3%, 31.6% and 5.1% of our properties by rentable square feet were classified as class A, class B and class C, respectively, as determined primarily by the most recent appraisals of the properties .
As of December 31, 2025, 69.7%, 24.2% and 6.1% of our properties by rentable square feet were classified as class A, class B and class C, respectively, as determined primarily by the most recent appraisals of the properties .
In addition to FFO, we use Core FFO as a non-GAAP supplemental financial performance measure to evaluate the operating performance of the Company.
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.
Universal Shelf Registration Statement On November 2, 2022, the Company filed a universal shelf registration statement on Form S-3 (the “Universal Shelf”) with the SEC, and the Universal Shelf was declared effective by the SEC on November 14, 2022.
Universal Shelf Registration Statement On November 10, 2025, the Company filed a new universal shelf registration statement on Form S-3 (the “Universal Shelf”), and the Universal Shelf was declared effective by the SEC on November 28, 2025.
Proceeds from the sale of real estate assets are expected to be redeployed to fund capital investment into our existing portfolio to further enhance the quality of our portfolio and stability of our cash flows, selective acquisitions and other general corporate purposes. During the year ended December 31, 2024, we took certain steps to strengthen our balance sheet.
Proceeds from the sale of real estate assets are expected to be redeployed to fund capital investment into our existing portfolio to further enhance the quality of our portfolio and stability of our cash flows, selective acquisitions and other general corporate purposes.
As of December 31, 2024, Orion OP was in compliance with these financial covenants. The Revolving Facility includes customary representations and warranties of us and Orion OP, which must be true and correct in all material respects as a condition to future extensions of credit under the Revolving Facility.
Consistent with the Original Revolving Facility, the New Revolving Facility includes customary representations and warranties of the Company and Orion OP, which must be true and correct in all material respects as a condition to future extensions of credit under the New Revolving Facility.
The CMBS Loan is secured by, among other things, first priority mortgages and deeds of trust granted by the Mortgage Borrowers and encumbering the Mortgaged Properties. The CMBS Loan is generally not freely prepayable by the Mortgage Borrowers without payment of certain prepayment premiums and costs.
The CMBS Loan is secured by, among other things, first priority mortgages and deeds of trust granted by the Mortgage Borrowers and encumbering the Mortgaged Properties.
M anagement uses these non-GAAP financial measures in our internal analysis of results and believes these measures are useful to investors for the reasons explained below. These non-GAAP financial measures should not be considered as substitutes for any measures derived in accordance with U.S. GAAP.
Non-GAAP Measures Our results are presented in accordance with U.S. GAAP. We also disclose certain non-GAAP measures, as discussed further below. M anagement uses these non-GAAP financial measures in our internal analysis of results and believes these measures are useful to investors for the reasons explained below.
The Company did not repurchase any shares under the Share Repurchase Program during the year ended December 31, 2024. During the year ended December 31, 2023, the Company repurchased approximately 0.9 million shares of common stock in multiple open market transactions, at a weighted average share price of $5.46 for an aggregate purchase price of $5.0 million.
While the Share Repurchase Program was active, the Company repurchased approximately 0.9 million shares of common stock in multiple open market transactions, at a weighted average share price of $5.46 for an aggregate purchase price of $5.0 million.
Deteriorating office fundamentals, high interest rates and market sentiment towards the office sector may restrict our access to, and increase our cost of, capital as we seek to extend, refinance or repay our debts.
Deteriorating office fundamentals, high interest rates, market sentiment towards the office sector and recent changes in United States trade policy and the imposition of new tariffs may adversely impact us or our lenders or restrict our access to, and increase our cost of, capital as we seek to extend, refinance or repay our debts.
Investment-grade tenants are those with a credit rating of BBB- or higher by Standard & Poor’s Financial Services LLC or a credit rating of Baa3 or higher by Moody’s Investor Service, Inc. The ratings may reflect those assigned by Standard & Poor’s Financial Services LLC or Moody’s Investor Service, Inc. to the lease guarantor or the parent company, as applicable.
Investment-grade tenants are those with a credit rating of BBB- or higher by Standard & Poor’s Financial Services LLC or a credit rating of Baa3 or higher by Moody’s Investor Service, Inc.
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, amortization of deferred financing costs, amortization of deferred lease incentives, net, equity-based compensation, amortization of premiums and discounts on debt, net and gains or losses on extinguishment of swaps and/or debt, and our proportionate share of Core FFO adjustments related to the unconsolidated joint venture. 45 Table of Contents 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 a substantially similar 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.
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, amortization of deferred financing costs, amortization of deferred lease incentives, net, equity-based compensation, amortization of premiums and discounts on debt, net and gains or losses on extinguishment of swaps and/or debt, and our proportionate share of Core FFO adjustments related to the unconsolidated joint venture.
The CMBS Loan may be prepaid in whole, but not in part, except as provided in the loan agreement governing the CMBS Loan (the “CMBS Loan Agreement”), at any time, subject to the payment of a yield maintenance premium and the satisfaction of other terms and conditions set forth in the CMBS Loan Agreement.
The CMBS Loan may be prepaid in whole, but not in part, at any time, upon the satisfaction of certain terms and conditions set forth in the loan agreement governing the CMBS Loan (the “CMBS Loan Agreement”).
(5) Based on annualized base rent of our real estate portfolio, including the Company’s proportionate share of annualized base rent for properties owned by the Arch Street Joint Venture, as of December 31, 2024.
(3) Leased rate equals the sum of leased square feet divided by rentable square feet of operating properties. (4) Based on annualized base rent of our real estate portfolio, including the Company’s proportionate share of annualized base rent for properties owned by the Arch Street Joint Venture, as of December 31, 2025.
The CMBS Loan Agreement also includes customary events of default, the occurrence of which, following any applicable grace period, would permit the Lender to, among other things, declare the principal, accrued interest and other obligations of the Mortgage Borrowers to be immediately due and payable and foreclose on the Mortgaged Properties.
The CMBS Loan Agreement also includes customary events of default, the occurrence of which, following any applicable grace period, would permit the Lender to, among other things, declare the principal, accrued interest and other obligations of the Mortgage Borrowers to be immediately due and payable and foreclose on the Mortgaged Properties. 51 Table of Contents Loan Extension and Modification Agreement On February 17, 2026, the Company, through certain of its subsidiaries (the “Mortgage Borrowers”), entered into a loan extension and modification agreement with the lender under the CMBS Loan (“Loan Modification Agreement”).
Revenues The table below sets forth, for the periods presented, revenue information and the dollar amount change year over year (in thousands): Year Ended December 31, 2024 2023 2024 vs 2023 Increase/(Decrease) Rental $ 164,055 $ 194,241 $ (30,186) Fee income from unconsolidated joint venture 807 800 7 Total revenues $ 164,862 $ 195,041 $ (30,179) 42 Table of Contents Rental The decrease in rental revenue of $30.2 million during the year ended December 31, 2024 as compared to the same period in 2023 was primarily due to the decrease in our overall occupied square footage from scheduled expiration of leases totaling $26.8 million in rental revenues and the impact from property dispositions of $8.4 million during the year ended December 31, 2024.
Revenues The table below sets forth, for the periods presented, revenue information and the dollar amount change year over year (in thousands): Year Ended December 31, 2025 2024 2025 vs 2024 Increase/(Decrease) Rental $ 146,827 $ 164,055 $ (17,228) Fee income from unconsolidated joint venture 820 807 13 Total revenues $ 147,647 $ 164,862 $ (17,215) Rental The decrease in rental revenue of $17.2 million during the year ended December 31, 2025 as compared to the same period in 2024 was primarily due to the impact of decreasing overall occupied square footage from expiration of leases totaling $20.9 million.
The mortgage notes have a variable interest rate and during the 12-month extension term the spread on a SOFR (the secured overnight financing rate as administered by the Federal Reserve Bank of New York) loan is 2.60% per annum (increased from 1.60% per annum), and in the cased of a base rate loan, the spread is unchanged at 0.50% per annum.
The Arch Street Joint Venture mortgage notes have a variable interest rate and the spread on a SOFR (the secured overnight financing rate as administered by the Federal Reserve Bank of New York) loan is 2.60%, and the spread on a base rate loan is 0.50%.
Property operating expenses increased $4.4 million during the year ended December 31, 2024 as compared to the same period in 2023.
Impairments Impairments increased $51.8 million during the year ended December 31, 2025 as compared to the same period in 2024.
Upon the scheduled expiration of the interest rate swap agreements, we entered into interest rate collar agreements on a total notional amount of $60.0 million to hedge against interest rate volatility on the Revolving Facility.
Upon the scheduled expiration of the interest rate collar agreements, we entered into a new interest rate collar agreement to hedge against interest rate volatility on the Original Revolving Facility and subsequently the New Revolving Facility.
During the year ended December 31, 2024, office leasing market conditions began to improve and we completed the highest volume of lease renewals and new leases since our inception with approximately 1.1 million square feet, compared to approximately 0.3 million square feet during the year ended December 31, 2023, and 0.8 million during the year ended December 31, 2022.
During the year ended December 31, 2025, office leasing market conditions continued to improve and we completed approximately 0.9 million square feet of new and renewed leases, compared to approximately 1.1 million square feet and 0.3 million square feet during the years ended December 31, 2024 and December 31, 2023, respectively.
The following table shows the property statistics of our operating properties as of the periods indicated below, including our proportionate share of the applicable statistics of the properties owned by the Arch Street Joint Venture: December 31, 2024 December 31, 2023 Portfolio Metrics Operating properties (1) 69 75 Arch Street Joint Venture properties 6 6 Rentable square feet (in thousands) (1) (2) 8,112 8,884 Annualized base rent (in thousands) $120,293 $141,293 Occupancy rate (3) 73.7% 80.4% Leased rate (4) 74.7% 80.4% Investment-grade tenants (5) 74.4% 70.6% Weighted-average remaining lease term (in years) 5.2 4.0 ____________________________________ (1) During the year ended December 31, 2024, we split the properties located in Amherst, New York and Denver, Colorado, each containing two buildings, into four separate properties for reporting purposes.
The following table shows the property statistics of our operating properties as of the dates indicated below, including our proportionate share of the applicable statistics of the properties owned by the Arch Street Joint Venture: December 31, 2025 December 31, 2024 Portfolio Metrics Operating properties 58 69 Arch Street Joint Venture properties 6 6 Non-Operating properties 8 7 Rentable square feet (in thousands) (1) 6,737 8,112 Annualized base rent (in thousands) $111,280 $120,293 Occupancy rate (2) 78.7% 73.7% Leased rate (3) 80.7% 74.7% Investment-grade tenants (4) 66.7% 74.4% Weighted average remaining lease term (in years) 5.7 5.2 ____________________________________ (1) Represents leasable square feet of operating properties and the Company’s proportionate share of leasable square feet of properties owned by the Arch Street Joint Venture.
Interest and principal are payable monthly solely out of the excess cash from the joint venture after payment of property operating expenses, interest and principal on the Arch Street mortgage notes and other joint venture expenses and excess proceeds from the sale of any of the joint venture properties. 47 Table of Contents Our principal liquidity needs beyond the next twelve months are to: (i) extend, refinance or repay debt at or prior to maturity; (ii) pay dividends to our stockholders; (iii) fund capital expenditures and leasing costs at properties we own; and (iv) fund new acquisitions.
Liquidity and Capital Resources General Our principal liquidity needs for the next twelve months are to: (i) fund operating expenses; (ii) pay interest on our debt; (iii) pay dividends to our stockholders; (iv) fund capital expenditures and leasing costs at properties we own; (v) fund capital contributions to the Arch Street Joint Venture; (vi) fund new acquisitions and (vii) extend, refinance or repay debt at or prior to maturity.
We expect our overall debt levels to increase as we continue to re-invest in our property portfolio and execute on our shift in portfolio concentration away from traditional office properties.
We expect our overall debt levels to increase as we continue to re-invest in our property portfolio and execute on our shift in portfolio concentration away from traditional office properties. We are also exposed to changes in market interest rates on our floating rate borrowings, including those under our New Revolving Facility.
Operating Performance In addition, management uses the following financial metrics to assess our operating performance (in thousands, except per share amounts): Year Ended December 31, 2024 2023 2022 Financial Metrics Total revenues $ 164,862 $ 195,041 $ 208,118 Net loss attributable to common stockholders $ (103,012) $ (57,302) $ (97,494) Basic and diluted net loss per share attributable to common stockholders $ (1.84) $ (1.02) $ (1.72) FFO attributable to common stockholders (1) $ 47,078 $ 86,641 $ 99,657 FFO attributable to common stockholders per diluted share (1) $ 0.84 $ 1.54 $ 1.76 Core FFO attributable to common stockholders (1) $ 56,755 $ 94,770 $ 108,178 Core FFO attributable to common stockholders per diluted share (1) $ 1.01 $ 1.68 $ 1.91 ____________________________________ (1) See the Non-GAAP Measures section below for descriptions of our non-GAAP measures and reconciliations to the most comparable U.S.
The ratings may reflect those assigned by Standard & Poor’s Financial Services LLC or Moody’s Investor Service, Inc. to the lease guarantor or the parent company, as applicable. 39 Table of Contents Operating Performance In addition, management uses the following financial metrics to assess our operating performance (in thousands, except per share amounts): Year Ended December 31, 2025 2024 2023 Financial Metrics Total revenues $ 147,647 $ 164,862 $ 195,041 Net loss attributable to common stockholders $ (139,309) $ (103,012) $ (57,302) Basic and diluted net loss per share attributable to common stockholders $ (2.48) $ (1.84) $ (1.02) FFO attributable to common stockholders (1) $ 24,323 $ 47,078 $ 86,641 FFO attributable to common stockholders per diluted share (1) $ 0.43 $ 0.84 $ 1.54 Core FFO attributable to common stockholders (1) $ 43,676 $ 56,755 $ 94,770 Core FFO attributable to common stockholders per diluted share (1) $ 0.78 $ 1.01 $ 1.68 ____________________________________ (1) See the Non-GAAP Measures section below for descriptions of our non-GAAP measures and reconciliations to the most comparable U.S.
In the current office environment, class B and class C properties generally have been experiencing reduced demand and lea se or sell at discounts to class A properties and our tenants and prospective new tenants across our portfolio sometimes compare the cost and the value of leasing space in our property to the value of newer space with more amenities asking higher rent in other properties in the market.
As of December 31, 2025, our class B and class C properties collectively included the following 10% or greater geographic concentrations and property type concentrations as measured by rentable square feet: Geographic Concentration % of Rentable Square Feet Texas 25.5 % California 10.5 % Property Type % of Rentable Square Feet Traditional Office 56.4 % Flex/Industrial 21.8 % Governmental 14.4 % In the current office environment, class B and class C properties generally have been experiencing reduced demand and lea se or sell at discounts to class A properties and our tenants and prospective new tenants across our portfolio sometimes compare the cost and the value of leasing space in our property to the value of newer space with more amenities asking higher rent in other properties in the market.
During March 2022, Wells Fargo effected a securitization of the CMBS Loan. The CMBS Loan bears interest at a fixed rate of 4.971% per annum and matures on February 11, 2027. The CMBS Loan requires monthly payments of interest only and all principal is due at maturity. The proceeds of the CMBS Loan were used to repay the Bridge Facility.
During March 2022, Wells Fargo effected a securitization of the CMBS Loan. The CMBS Loan bears interest at a fixed rate of 4.971% and upon issuance was scheduled to mature on February 11, 2027. The CMBS Loan requires monthly payments of interest only and, except as described below under “Loan Extension and Modification Agreement”, all principal is due at maturity.
As of December 31, 2024, the outstanding principal associated with the Arch Street Joint Venture mortgage notes was $131.6 million, and our proportionate share was $26.3 million. • During February 2025, we made an additional member loan of $8.3 million to fund leasing costs related to a lease extension that was completed for one of the properties in the Arch Street Joint Venture portfolio.
The property is fully leased to a single tenant through December 2036. • During February 2025, we made an additional member loan of $8.3 million to fund leasing costs related to a lease extension that was completed for one of the properties in the Arch Street Joint Venture portfolio.
Loss on extinguishment of debt, net Loss on extinguishment of debt, net during the year ended December 31, 2024 related to the proportionate write off of deferred financing costs due to the reduction of the borrowing capacity of the Revolving Facility of $75.0 million in connection with the Third Amendment to the Credit Agreement defined below and discussed in Note 6 – Debt, Net.
Loss on extinguishment of debt, net Loss on extinguishment of debt, net during the year ended December 31, 2024 related to the proportionate write off of deferred financing costs due to the $75.0 million permanent reduction of the borrowing capacity of the Original Revolving Facility. There were no such costs incurred during the year ended December 31, 2025.
We continued our efforts to divest of vacancies by closing on the sale of two properties totaling approximately 164,000 square feet for an aggregate gross sales price of $5.3 million during the year ended December 31, 2024.
We continued our efforts to divest of vacancies and non-core properties by selling 10 properties totaling approximately 1.0 million square feet for an aggregate gross sales price of $80.7 million during the year ended December 31, 2025.
Distributions We have elected to be taxed as a REIT for U.S. federal income tax purposes beginning with our taxable year ended December 31, 2021. We intend to make distributions to our stockholders to satisfy the requirements to maintain our qualification as a REIT.
As of December 31, 2025, the weighted average effective interest rate of the Original Revolving Facility was 7.01%. Distributions We have elected to be taxed as a REIT for U.S. federal income tax purposes beginning with our taxable year ended December 31, 2021.
Our ability to extend, refinance or repay debt, raise capital and/or sell assets will be affected by various factors existing at the relevant time, such as capital and credit market conditions, the state of the national and regional economies, commercial real estate market conditions, available interest rate levels, the lease terms for and equity in and value of any related collateral, our financial condition and the operating history of the collateral, if any.
Our ability to extend, refinance or repay debt, raise capital and/or sell assets will be affected by various factors existing at the relevant time, such as capital and credit market conditions, the state of the national and regional economies, commercial real estate market conditions, available interest rate levels, the lease terms for and equity in and value of any related collateral, our financial condition and the operating history of the collateral, if any. 48 Table of Contents Credit Agreements Summary As of December 31, 2025, we had $465.0 million of total consolidated debt outstanding, consisting of a $355.0 million fixed rate mortgage note collateralized by 19 properties (the “CMBS Loan”), $92.0 million borrowed under the Original Revolving Facility and an $18.0 million fixed rate mortgage note secured by our San Ramon, California property (the “San Ramon Loan”).

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThese amounts were determined by considering the impact of hypothetical interest rate changes on our borrowing costs and assume no other changes in our capital structure. 54 Table of Contents Credit Risk Concentrations of credit risk arise when a number of tenants are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations, including those to the Company, to be similarly affected by changes in economic conditions.
Biggest changeCredit Risk Concentrations of credit risk arise when a number of tenants are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations, including those to the Company, to be similarly affected by changes in economic conditions.
As of December 31, 2024, our outstanding derivative agreements had a fair value that resulted in net liabilities of less than $0.1 million. See Note 7 – Derivatives and Hedging Activities to our consolidated financial statements for further discussion.
As of December 31, 2025, our outstanding derivative agreements had a fair value that resulted in net liabilities of less than $0.1 million. See Note 7 – Derivatives and Hedging Activities to our consolidated financial statements for further discussion.
The sensitivity analysis related to our variable-rate debt assumes an immediate 100 basis point move in interest rates from December 31, 2024 levels and excludes the impact of the derivative instrument, with all other variables held constant.
The sensitivity analysis related to our variable-rate debt assumes an immediate 100 basis point move in interest rates from December 31, 2025 levels and excludes the impact of the derivative instrument, with all other variables held constant.
A 100 basis point increase or decrease in variable interest rates would result in a decrease or increase in the fair value of our variable-rate debt of less than $0.1 million and would increase or decrease our interest expense by $1.2 million annually.
A 100 basis point increase or decrease in variable interest rates would result in a decrease or increase in the fair value of our variable-rate debt of less than $0.1 million and would increase or decrease our interest expense by $0.9 million annually.
As the information presented above includes only those exposures that existed as of December 31, 2024, it does not consider exposures or positions arising after that date. The information presented herein has limited predictive value.
As the information presented above includes only those exposures that existed as of December 31, 2025, it does not consider exposures or positions arising after that date. The information presented herein has limited predictive value.
The sensitivity analysis related to our fixed-rate debt assumes an immediate 100 basis point move in interest rates from December 31, 2024 levels, with all other variables held constant. A 100 basis point increase in market interest rates would result in a decrease in the fair value of our fixed-rate debt of $7.2 million.
The sensitivity analysis related to our fixed-rate debt assumes an immediate 100 basis point move in interest rates from December 31, 2025 levels, with all other variables held constant. A 100 basis point increase in market interest rates would result in a decrease in the fair value of our fixed-rate debt of $4.4 million.
As a result, we are subject to the potential impact of rising interest rates, which could negatively impact our results of operations and cash flows.
As a result, we are subject to the potential impact of increases in interest rates, which could negatively impact our results of operations and cash flows.
Interest Rate Risk As of December 31, 2024, our debt included fixed-rate debt, with a fair value and carrying value of $352.5 million and $373.0 million, respectively. Changes in market interest rates on our fixed-rate debt impact the fair value of the debt, but they have no impact on interest incurred or cash flow.
Interest Rate Risk As of December 31, 2025, our debt included fixed-rate debt, with a fair value and carrying value of $365.9 million and $373.0 million, respectively. Changes in market interest rates on our fixed-rate debt impact the fair value of the debt, but they have no impact on interest incurred or cash flow.
A 100 basis point decrease in market interest rates would result in an increase in the fair value of our fixed-rate debt of $7.5 million. As of December 31, 2024, our debt included variable-rate debt, with a fair value and carrying value of $119.0 million.
A 100 basis point decrease in market interest rates would result in an increase in the fair value of our fixed-rate debt of $4.5 million. As of December 31, 2025, our debt included variable-rate debt, with a fair value and carrying value of $92.0 million.
As of December 31, 2024, the Company had interest rate collar agreements in place on a total notional amount of $60.0 million to hedge against interest rate volatility on the Revolving Facility. See Note 6 – Debt, Net to our consolidated financial statements.
As of December 31, 2025, the Company had interest rate collar agreements in place on a total notional amount of $75.0 million to hedge against interest rate volatility on the Original Revolving Facility and subsequently the New Revolving Facility. See Note 6 – Debt, Net to our consolidated financial statements.
Future actual realized gains or losses with respect to interest rate fluctuations will depend on cumulative exposures, hedging strategies employed and the magnitude of the fluctuations.
Future actual realized gains or losses with respect to interest rate fluctuations will depend on cumulative exposures, hedging strategies employed and the magnitude of the fluctuations. 55 Table of Contents These amounts were determined by considering the impact of hypothetical interest rate changes on our borrowing costs and assume no other changes in our capital structure.

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