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What changed in Net Lease Office Properties's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Net Lease Office Properties'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.

+162 added−218 removedSource: 10-K (2026-02-25) vs 10-K (2025-02-27)

Top changes in Net Lease Office Properties's 2025 10-K

162 paragraphs added · 218 removed · 131 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

47 edited+24 added−17 removed37 unchanged
Biggest changeFFO and AFFO were as follows (in thousands): Years Ended December 31, 2024 2023 Net loss attributable to NLOP $ (91,471) $ (131,746) Adjustments: Impairment charges — real estate 78,237 63,143 Depreciation and amortization of real property 56,696 74,998 (Gain) loss on sale of real estate, net (20,216) 3,608 Impairment charges — goodwill (a) — 62,456 Proportionate share of adjustments for noncontrolling interests (b) (207) (206) Total adjustments 114,510 203,999 FFO (as defined by NAREIT) attributable to NLOP 23,039 72,253 Adjustments: Amortization of deferred financing costs 31,446 7,672 Other (gains) and losses (c) 3,855 (337) Tax benefit — deferred and other (3,271) (1,200) Above- and below-market rent intangible lease amortization, net 3,003 4,335 Straight-line and other leasing and financing adjustments 2,314 (631) Other amortization and non-cash items 1,449 547 Stock-based compensation 250 2,904 Separation and distribution related costs and other (d) 16 8,446 Proportionate share of adjustments for noncontrolling interests (b) (53) (61) Total adjustments 39,009 21,675 AFFO attributable to NLOP $ 62,048 $ 93,928 Summary FFO (as defined by NAREIT) attributable to NLOP $ 23,039 $ 72,253 AFFO attributable to NLOP $ 62,048 $ 93,928 __________ (a) Amount for the year ended December 31, 2023 represents an impairment charge to reduce the carrying value of goodwill to zero, since the Company’s trading value as a public company subsequent to the completion of the Spin-Off resulted in a market capitalization that was significantly below the carrying value of our net assets ( Note 8 , Note 9 ).
Biggest changeFFO and AFFO were as follows (in thousands): Years Ended December 31, 2025 2024 Net loss attributable to NLOP $ (145,262) $ (91,471) Adjustments: Impairment charges — real estate (a) 140,814 78,237 Depreciation and amortization of real property 35,878 56,696 Loss (gain) on sale of real estate, net (b) 29,006 (20,216) Proportionate share of adjustments for noncontrolling interests (c) (207) (207) Total adjustments 205,491 114,510 FFO (as defined by NAREIT) attributable to NLOP 60,229 23,039 Adjustments: Amortization of deferred financing costs 4,970 31,446 Other (gains) and losses (d) 4,620 3,855 Straight-line and other leasing and financing adjustments 2,523 2,314 Above- and below-market rent intangible lease amortization, net 1,080 3,003 Other amortization and non-cash items 439 1,449 Tax benefit — deferred — (3,271) Stock-based compensation — 250 Separation and distribution related costs and other — 16 Proportionate share of adjustments for noncontrolling interests (c) (52) (53) Total adjustments 13,580 39,009 AFFO attributable to NLOP $ 73,809 $ 62,048 Summary FFO (as defined by NAREIT) attributable to NLOP $ 60,229 $ 23,039 AFFO attributable to NLOP $ 73,809 $ 62,048 __________ (a) Amount for the year ended December 31, 2025 represents impairment charges totaling $84.8 million recognized on the KBR property in Houston, Texas ( Note 8 ).
We do not use our FFO and AFFO measures as, nor should they be considered to be, alternatives to net income computed under GAAP, or as alternatives to net cash provided by operating activities computed under GAAP, or as indicators of our ability to fund our cash needs.
We do not use our FFO and AFFO measures as, nor should they be considered to be, alternatives to net income computed under GAAP, alternatives to net cash provided by operating activities computed under GAAP, or indicators of our ability to fund our cash needs.
Other Gains and (Losses) For the year ended December 31, 2024, other gains and (losses) of $(2.2) million were primarily comprised of (i) loss of ($3.2) million related to damages at a property, (ii) net realized and unrealized losses on our interest rate cap derivative of ($1.0) million ( Note 10 ), (iii) net realized and unrealized gains on foreign currency exchange rate movements of ($0.8) million, (iv) loss of ($0.3) million on extinguishment of debt, (v) interest income on our cash deposits of $2.3 million, and (vi) gain of $0.9 million related to a forfeited deposit on a potential disposition.
For the year ended December 31, 2024, other gains and (losses) of $(2.2) million primarily comprised (i) loss of $(3.2) million related to damages at a property, (ii) net realized and unrealized losses on our interest rate cap derivative of $(1.0) million ( Note 9 ), (iii) net realized and unrealized gains on foreign currency exchange rate movements of $(0.8) million, (iv) loss of $(0.3) million on extinguishment of debt, (v) interest income on our cash deposits of $2.3 million, and (vi) gain of $0.9 million related to a forfeited deposit on a potential disposition.
We believe that AFFO is a useful supplemental measure for investors to consider as we believe it will help them to better assess the sustainability of our operating performance without the potentially distorting impact of these short-term fluctuations. However, there are limits on the usefulness of AFFO to investors.
We believe that AFFO is a useful supplemental measure for investors to consider because we believe it will help them better assess the sustainability of our operating performance without the potentially distorting impact of these short-term fluctuations. However, there are limits on the usefulness of AFFO to investors.
Benefit from (Provision for) Income Taxes For the year ended December 31, 2024, we recognized a benefit from income taxes of $2.4 million, as compared to a provision for income taxes of $0.4 million for the year ended December 31, 2023, primarily due to the impact of an impairment charge recognized on an international property during 2024.
(Provision for) Benefit from Income Taxes For the year ended December 31, 2025, we recognized a provision for income taxes of $0.2 million, as compared to a benefit from income taxes of $2.4 million for the year ended December 31, 2024, primarily due to the impact of an impairment charge recognized on an international property during 2024.
We then measure the impairment loss as the excess of the carrying value of the property’s asset group over its estimated fair value. Supplemental Financial Measures In the real estate industry, analysts and investors employ certain non-GAAP supplemental financial measures in order to facilitate meaningful comparisons between periods and among peer companies.
We then measure the impairment loss as the excess of the carrying value of the property’s asset group over its estimated fair value, less costs to sell. Supplemental Financial Measures In the real estate industry, analysts and investors employ certain non-GAAP supplemental financial measures in order to facilitate meaningful comparisons between periods and among peer companies.
We exclude these items from GAAP net income to arrive at AFFO as they are not the primary drivers in our decision-making process and excluding these items provides investors a view of our portfolio performance over time and makes it more comparable to other REITs.
We exclude these items from GAAP net income to arrive at AFFO because they are not the primary drivers in our decision-making process and excluding these items provides investors with a view of our portfolio performance over time and makes it more comparable to other REITs.
Net Lease Office Properties 2024 10-K – 33 Impairments of Real Estate For real estate assets held for investment and related intangible assets in which an impairment indicator is identified, we follow a two-step process to determine whether an asset is impaired and to determine the amount of the charge.
Net Lease Office Properties 2025 10-K – 31 Impairments of Real Estate For real estate assets held for investment and related intangible assets in which an impairment indicator is identified, we follow a two-step process to determine whether an asset is impaired and to determine the amount of the charge.
The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt Net Lease Office Properties 2024 10-K – 24 out is irrevocable.
The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt Net Lease Office Properties 2025 10-K – 21 out is irrevocable.
AFFO also reflects adjustments for jointly owned Net Lease Office Properties 2024 10-K – 34 investments. We use AFFO as one measure of our operating performance when we formulate corporate goals and evaluate the effectiveness of our strategies.
AFFO also reflects adjustments for jointly owned Net Lease Office Properties 2025 10-K – 32 investments. We use AFFO as one measure of our operating performance when we formulate corporate goals and evaluate the effectiveness of our strategies.
Multiplying our jointly owned investment’s financial statement line items by our percentage ownership and adding or subtracting those amounts from our totals, as applicable, may not accurately depict the legal and economic implications of holding an ownership interest of less than 100% in our jointly owned investment.
Multiplying our jointly owned investment’s financial statement line items by our percentage ownership and adding or subtracting those amounts from our totals, as applicable, may not accurately depict the legal and economic implications of holding an ownership interest of less than 100% in our jointly owned investment. ABR — ABR represents contractual minimum annualized base rent for our properties.
Depreciation and Amortization For the year ended December 31, 2024 as compared to 2023, depreciation and amortization expense decreased by $18.3 million, primarily due to the impact of disposition activity, partially offset by accelerated amortization of intangible assets in connection with a lease restructuring.
Depreciation and Amortization For the year ended December 31, 2025 as compared to 2024, depreciation and amortization expense decreased by $20.8 million, primarily due to the impact of disposition activity and accelerated amortization of intangible assets in connection with a lease restructuring during the year ended December 31, 2024.
Net Lease Office Properties 2024 10-K – 32 Cash Requirements and Liquidity As of December 31, 2024, scheduled debt principal payments total $105.0 million during 2025 and $5.9 million during 2026 ( Note 11 ).
Net Lease Office Properties 2025 10-K – 30 Cash Requirements and Liquidity As of December 31, 2025, scheduled debt principal payments total $21.9 million during 2026 ( Note 10 ).
On a full consolidation basis, we report 100% of the assets, liabilities, revenues, and expenses of this investment that is deemed to be under our control, even if our ownership is less than 100%.
We refer to these metrics as pro rata metrics. We have one investment in which our economic ownership is less than 100%. On a full consolidation basis, we report 100% of the assets, liabilities, revenues, and expenses of this investment that is deemed to be under our control, even if our ownership is less than 100%.
Property Expenses, Excluding Reimbursable Tenant Costs For the year ended December 31, 2024 as compared to 2023, property expenses, excluding reimbursable tenant costs, increased by $2.3 million, primarily due to tenant vacancies during 2024 (which resulted in property expenses no longer being reimbursable).
Property Expenses, Excluding Reimbursable Tenant Costs For the year ended December 31, 2025 as compared to 2024, property expenses, excluding reimbursable tenant costs, decreased by $2.3 million, primarily due to the impact of disposition activity, partially offset by tenant vacancies (which resulted in property expenses no longer being reimbursable).
Net Lease Office Properties 2024 10-K – 31 Summary of Financing The table below summarizes our non-recourse mortgages, NLOP Mortgage Loan, and NLOP Mezzanine Loan (dollars in thousands): December 31, 2024 2023 Carrying Value Fixed rate: Non-recourse mortgages, net (a) $ 71,488 $ 125,038 NLOP Mezzanine Loan, net (a) 57,957 106,299 129,445 231,337 Variable rate: Non-recourse mortgages, net (a) 39,771 43,798 NLOP Mortgage Loan, net — Amount subject to interest rate cap (a) — 266,844 39,771 310,642 $ 169,216 $ 541,979 Percent of Total Debt Fixed rate 76 % 43 % Variable rate 24 % 57 % 100 % 100 % Weighted-Average Interest Rate at End of Year Fixed rate 9.0 % 9.4 % Variable rate 4.9 % 9.6 % Total debt 8.1 % 9.5 % ____________ (a) Aggregate debt balance includes unamortized discount, net, totaling $1.8 million and $21.6 million as of December 31, 2024 and 2023, respectively, and unamortized deferred financing costs totaling $1.0 million and $9.2 million as of December 31, 2024 and 2023, respectively.
Net Lease Office Properties 2025 10-K – 29 Summary of Financing The table below summarizes our non-recourse mortgages and NLOP Mezzanine Loan (dollars in thousands): December 31, 2025 2024 Carrying Value Fixed rate: Non-recourse mortgages, net (a) $ 21,900 $ 71,488 NLOP Mezzanine Loan, net (a) (b) — 57,957 21,900 129,445 Variable rate: Non-recourse mortgages, net (a) — 39,771 — 39,771 $ 21,900 $ 169,216 Percent of Total Debt Fixed rate 100 % 76 % Variable rate — % 24 % 100 % 100 % Weighted-Average Interest Rate at End of Year Fixed rate 7.0 % 9.0 % Variable rate — % 4.9 % Total debt 7.0 % 8.1 % ____________ (a) Aggregate debt balance includes unamortized discount, net, totaling $1.8 million and unamortized deferred financing costs totaling $1.0 million as of December 31, 2024.
Net Lease Office Properties 2024 10-K – 26 Portfolio The tables below represent information about our portfolio at December 31, 2024 on a pro rata basis. See Terms and Definitions below for a description of pro rata amounts and ABR.
This property was sold in January 2026 ( N ote 17 ). Net Lease Office Properties 2025 10-K – 24 Portfolio The tables below represent information about our portfolio at December 31, 2025 on a pro rata basis. See Terms and Definitions below for a description of pro rata amounts and ABR.
Net Cash Provided by Investing Activities — Net cash provided by investing activities increased by $270.1 million during 2024 as compared to 2023, primarily due to higher proceeds from dispositions ( Note 16 ).
Net Cash Provided by Investing Activities — Net cash provided by investing activities decreased by $89.5 million during 2025 as compared to 2024, primarily due to lower proceeds from dispositions ( Note 1 5 ).
Liquidity and Capital Resources Sources and Uses of Cash During the Year We use the cash flow generated from our investments primarily to meet our operating expenses, capital expenditures and debt service.
Net Lease Office Properties 2025 10-K – 28 Liquidity and Capital Resources Sources and Uses of Cash During the Year We use the cash flow generated from our investments primarily to meet our operating expenses, pay distributions to shareholders, make capital expenditures as necessary, and pay debt service.
Financial Highlights During the year ended December 31, 2024 and through the date of this Report, we completed the following (as further described in the consolidated financial statements): Dispositions • During the year ended December 31, 2024, we sold 14 properties for total proceeds, net of selling costs, of $320.1 million ( Note 16 ). • In April 2024, we disposed of two properties by transferring ownership to the respective mortgage lenders, in satisfaction of non-recourse mortgage loans encumbering the properties totaling $33.0 million ( Note 16 ).
Financial Highlights During the year ended December 31, 2025 and through the date of this Report, we completed the following (as further described in the consolidated financial statements): Dispositions • During the year ended December 31, 2025, we sold 14 properties for total proceeds, net of selling costs, of $198.6 million ( Note 1 5 ). • In September 2025, we disposed of our last international property by transferring ownership to a buyer, in satisfaction of the non-recourse mortgage loan encumbering the property for $45.7 million ( Note 1 5 ).
Portfolio Summary As of December 31, 2024 2023 ABR (in thousands) $ 88,124 $ 142,438 Number of properties 39 55 Number of tenants 43 59 Occupancy 85.2 % 97.0 % Weighted-average lease term (in years) 4.3 5.8 Leasable square footage (in thousands) (a) 5,613 8,379 __________ (a) Excludes 570,999 of operating square footage for a parking garage at a domestic property.
Portfolio Summary As of December 31, 2025 2024 ABR (in thousands) $ 54,122 $ 88,124 Number of properties 24 39 Number of tenants 26 43 Occupancy 79.0 % 85.2 % Weighted-average lease term (in years) 3.9 4.3 Leasable square footage (in thousands) (a) 3,375 5,613 __________ (a) Excludes 570,999 of operating square footage for a parking garage associated with the KBR property in Houston, Texas.
Summary Results (in thousands) Years Ended December 31, 2024 2023 Total revenues $ 142,247 $ 174,965 Net loss attributable to NLOP (91,471) (131,746) Dividends declared — 4,971 Net cash provided by operating activities (a) 71,859 70,966 Net cash provided by investing activities 297,749 27,693 Net cash used in financing activities (367,984) (36,778) Supplemental financial measures (b) : Funds from operations attributable to NLOP (FFO) 23,039 72,253 Adjusted funds from operations attributable to NLOP (AFFO) 62,048 93,928 __________ Net Lease Office Properties 2024 10-K – 25 (a) Amount for the year ended December 31, 2024 includes $10.3 million of proceeds from the sale of a net investment in sales-type lease ( Note 7 ).
Summary Results (in thousands) Years Ended December 31, 2025 2024 Total revenues $ 118,915 $ 142,247 Net loss attributable to NLOP (145,262) (91,471) Dividends declared 182,212 — Net cash provided by operating activities (a) 64,111 71,859 Net cash provided by investing activities 208,242 297,749 Net cash used in financing activities (218,885) (367,984) Supplemental financial measures (b) : Funds from operations attributable to NLOP (FFO) 60,229 23,039 Adjusted funds from operations attributable to NLOP (AFFO) 73,809 62,048 __________ (a) Amount for the year ended December 31, 2024 includes $10.3 million of proceeds from the sale of a net investment in sales-type lease ( Note 6 ).
FFO FFO decreased in 2024 as compared to 2023, primarily due to higher interest expense (including amortization of deferred financing costs) and the impact of disposition activity, partially offset by higher other lease-related income and Spin-Off costs recognized during 2023.
FFO FFO increased in 2025 as compared to 2024, primarily due to lower interest expense and higher other lease-related income, partially offset by the impact of disposition activity. AFFO AFFO increased in 2025 as compared to 2024, primarily due to lower interest expense and higher other lease-related income, partially offset by the impact of disposition activity.
These non-GAAP measures should be used in conjunction with net income as defined by GAAP. FFO and AFFO, or similarly titled measures disclosed by other REITs, may not be comparable to our FFO and AFFO measures. Net Lease Office Properties 2024 10-K – 36
FFO and AFFO, or similarly titled measures disclosed by other REITs, may not be comparable to our FFO and AFFO measures. Net Lease Office Properties 2025 10-K – 34
The following table summarizes the changes in cash flows for the periods presented (in thousands): Years Ended December 31, 2024 2023 Change Net cash provided by operating activities $ 71,859 $ 70,966 $ 893 Net cash provided by investing activities 297,749 27,693 270,056 Net cash used in financing activities (367,984) (36,778) (331,206) Net Cash Provided by Operating Activities — Net cash provided by operating activities increased by $0.9 million during 2024 as compared to 2023, primarily due to $10.3 million of proceeds received from the sale of a net investment in sales-type lease during 2024 ( Note 7 ) and Spin-Off related costs incurred during 2023 ( Note 1 ), substantially offset by the impact of dispositions.
The following table summarizes the changes in cash flows for the periods presented (in thousands): Years Ended December 31, 2025 2024 Change Net cash provided by operating activities $ 64,111 $ 71,859 $ (7,748) Net cash provided by investing activities 208,242 297,749 (89,507) Net cash used in financing activities (218,885) (367,984) 149,099 Net Cash Provided by Operating Activities — Net cash provided by operating activities decreased by $7.7 million during 2025 as compared to 2024, primarily due to the impact of disposition activity and $10.3 million of proceeds received from the sale of a net investment in sales-type lease during 2024 ( Note 6 ), partially offset by lower interest expense.
Debt Repayments • During the year ended December 31, 2024, we (i) fully repaid the NLOP Mortgage Loan, which had $288.9 million of outstanding principal as of December 31, 2023, and (ii) repaid $53.2 million of outstanding principal on the NLOP Mezzanine Loan, in each case using proceeds from certain dispositions, as well as cash flow from rent on our properties and other sources ( Note 11 ). • During the year ended December 31, 2024, we prepaid two non-recourse mortgage loans totaling $20.8 million, which had a weighted-average interest rate of 5.2% ( Note 11 ). • In February 2025, we repaid $3.3 million of outstanding principal on the NLOP Mezzanine Loan using excess cash ( Note 18 ).
Net Lease Office Properties 2025 10-K – 22 Financing • During the year ended December 31, 2025, we fully repaid the NLOP Mezzanine Loan, which had $61.1 million of outstanding principal as of December 31, 2024, using net proceeds from certain dispositions, as well as excess cash flow from operations and other sources, including the application of loan reserves ( Note 10 ). • During the year ended December 31, 2025, we repaid four non-recourse mortgage loans totaling $49.8 million with a weighted-average interest rate of 7.5% ( Note 10 ).
During the year ended December 31, 2024, we (i) fully repaid the NLOP Mortgage Loan, which had $288.9 million of outstanding principal as of December 31, 2023, and (ii) repaid $53.2 million of outstanding principal on the NLOP Mezzanine Loan, in each case using proceeds from certain dispositions, as well as cash flow from rent on our properties and other sources.
During the year ended December 31, 2025, we fully repaid the NLOP Mezzanine Loan, which had $61.1 million of outstanding principal as of December 31, 2024, using net proceeds from certain dispositions, as well as excess cash flow from operations and other sources, including the application of loan reserves ( Note 10 ).
Net Loss Attributable to NLOP Net loss attributable to NLOP decreased in 2024 as compared to 2023, primarily due to an impairment charge recognized on goodwill during 2023 and higher gain on sale of real estate, partially offset by higher interest expense and the impact of disposition activity.
Net Loss Attributable to NLOP Net loss attributable to NLOP increased in 2025 as compared to 2024, primarily due to higher impairment charges and higher loss on sale of real estate, partially offset by lower interest expense. See Note 8 for information on impairment charges recorded during the reporting period.
See Supplemental Financial Measures below for our definition of this non-GAAP measure and a reconciliation to its most directly comparable GAAP measure. Revenues Total revenues decreased in 2024 as compared to 2023, primarily due to the impact of disposition activity and tenant vacancies at certain properties, partially offset by higher other lease-related income.
Net Lease Office Properties 2025 10-K – 23 Revenues Total revenues decreased in 2025 as compared to 2024, primarily due to the impact of disposition activity and tenant vacancies at certain properties, partially offset by higher other lease-related income.
(b) Adjustments disclosed elsewhere in this reconciliation are on a consolidated basis. This adjustment reflects our FFO or AFFO on a pro rata basis. (c) Primarily comprised of gains and losses on extinguishment of debt and foreign currency transactions. Amount for the year ended December 31, 2024 includes a loss of $3.2 million related to damages at a property.
Amount for the year ended December 31, 2024 includes a loss of $3.2 million related to damages at a property. These amounts also include gains and losses on extinguishment of debt and foreign currency transactions.
During the next 12 months following December 31, 2024 and thereafter, we expect that our significant cash requirements will include: • making scheduled principal and balloon payments on our non-recourse mortgage debt obligations, totaling $110.8 million, with $105.0 million due during the next 12 months; • making scheduled interest payments on our non-recourse mortgage debt obligations (future interest payments total $5.3 million, with $5.1 million due during the next 12 months); • making scheduled principal payments on the NLOP Mezzanine Loan, totaling $61.1 million (no amounts are due during the next 12 months); • making scheduled interest payments on the NLOP Mezzanine Loan (future interest payments total $35.9 million, with $9.0 million due during the next 12 months); includes 4.5% payment-in-kind interest that we have the option to capitalize into the principal balance; • funding future capital commitments and tenant improvement allowances; and • other normal recurring operating expenses.
During the next 12 months following December 31, 2025 and thereafter, we expect that our significant cash requirements will include: • making scheduled principal and balloon payments on our non-recourse mortgage debt obligations, totaling $21.9 million, which are due during the next 12 months; • making scheduled interest payments on our non-recourse mortgage debt obligations, totaling $0.9 million, which are due during the next 12 months; and • other normal recurring operating expenses.
Operating Expenses Years Ended December 31, (in thousands) 2024 2023 Change Operating Expenses Impairment charges — real estate $ 78,237 $ 63,143 $ 15,094 Depreciation and amortization 56,696 74,998 (18,302) Reimbursable tenant costs 26,520 27,957 (1,437) Property expenses, excluding reimbursable tenant costs 10,901 8,642 2,259 General and administrative 7,502 13,610 (6,108) Asset management fees 6,243 1,245 4,998 Separation and distribution related costs and other 16 8,446 (8,430) Impairment charges — goodwill — 62,456 (62,456) $ 186,115 $ 260,497 $ (74,382) Impairment Charges — Real Estate Our impairment charges on real estate are described in Note 9 .
Net Lease Office Properties 2025 10-K – 26 Operating Expenses Years Ended December 31, (in thousands) 2025 2024 Change Operating Expenses Impairment charges — real estate $ 140,814 $ 78,237 $ 62,577 Depreciation and amortization 35,878 56,696 (20,818) Reimbursable tenant costs 22,451 26,520 (4,069) Property expenses, excluding reimbursable tenant costs 8,588 10,901 (2,313) General and administrative 7,309 7,502 (193) Asset management fees 4,577 6,243 (1,666) Separation and distribution related costs and other — 16 (16) $ 219,617 $ 186,115 $ 33,502 Impairment Charges — Real Estate Our impairment charges on real estate are described in Note 8 .
Income from Finance Leases For the year ended December 31, 2024 as compared to 2023, income from finance leases decreased by $1.1 million, primarily due to the reclassification of our remaining direct financing lease investment to operating lease during the third quarter of 2023, as well as the disposition of our remaining property classified as net investments in sales-type lease during the first quarter of 2024 ( Note 7 ).
Income from Finance Leases For the year ended December 31, 2025 as compared to 2024, income from finance leases increased by $0.5 million, primarily due to a reclassification of a net-lease asset to net investments in sales-type lease in the fourth quarter of 2025.
(d) Amount for the year ended December 31, 2023 is primarily comprised of costs related to the Spin-Off ( Note 1 ). Net Lease Office Properties 2024 10-K – 35 While we believe that FFO and AFFO are important supplemental measures, they should not be considered as alternatives to net income as an indication of a company’s operating performance.
Net Lease Office Properties 2025 10-K – 33 While we believe that FFO and AFFO are important supplemental measures, they should not be considered as alternatives to net income as an indication of a company’s operating performance. These non-GAAP measures should be used in conjunction with net income as defined by GAAP.
AFFO AFFO decreased in 2024 as compared to 2023, primarily due to the impact of disposition activity, partially offset by higher other lease-related income. Portfolio Overview Portfolio information is provided on a pro rata basis, unless otherwise noted below, to better illustrate the economic impact of our one jointly owned investment.
Portfolio Overview Portfolio information is provided on a pro rata basis, unless otherwise noted below, to better illustrate the economic impact of our one jointly owned investment. See Terms and Definitions below for a description of pro rata amounts.
ABR — ABR represents contractual minimum annualized base rent for our properties and reflects exchange rates as of December 31, 2024. If there is a rent abatement, we annualize the first monthly contractual base rent following the free rent period.
If there is a rent abatement, we annualize the first monthly contractual base rent following the free rent period.
Net Cash Used in Financing Activities — Net cash used in financing activities increased by $331.2 million during 2024 as compared to 2023, primarily due to higher payments of the NLOP Financing Arrangements and mortgage principal.
Net Cash Used in Financing Activities — Net cash used in financing activities decreased by $149.1 million during 2025 as compared to 2024, primarily due to lower payments of the NLOP Financing Arrangements and mortgage principal (following the full repayment of the NLOP Mortgage Loan during 2024 and full repayment of the NLOP Mezzanine Loan during 2025 ( Note 10 )), partially offset by $106.7 million of distributions paid during 2025.
Of this amount, $8.6 million, at then-current exchange rates, was held in foreign subsidiaries, and we could be subject to restrictions or significant costs should we decide to repatriate these amounts; and • unleveraged properties that had an aggregate asset carrying value of approximately $78.9 million at December 31, 2024, although there can be no assurance that we would be able to sell or obtain financing for these properties.
Cash Resources At December 31, 2025, our cash resources consisted of the following: • cash and cash equivalents totaling $119.6 million; and • unleveraged properties that had an aggregate asset carrying value of approximately $276.8 million at December 31, 2025, although there can be no assurance that we would be able to sell or obtain financing for these properties.
We believe, based on the results of these reviews, that these properties were in substantial compliance with federal, state, and foreign environmental statutes at the time the properties were acquired. In most instances where contamination has been identified, tenants are actively engaged in the remediation process and addressing identified conditions.
Environmental Obligations In connection with the purchase of many of our properties, we have required the sellers to perform environmental reviews. We believe, based on the results of these reviews, that these properties were in substantial compliance with federal, state, and foreign environmental statutes at the time the properties were acquired.
Net Lease Office Properties 2024 10-K – 29 Reimbursable Tenant Costs For the year ended December 31, 2024 as compared to 2023, reimbursable tenant costs decreased by $1.4 million, primarily due to the impact of dispositions, partially offset by higher insurance premiums paid on certain properties.
Reimbursable Tenant Costs For the year ended December 31, 2025 as compared to 2024, reimbursable tenant costs decreased by $4.1 million, primarily due to the impact of disposition activity, as well as lower real estate taxes and maintenance costs at certain properties.
Net Lease Office Properties 2024 10-K – 28 Results of Operations Revenues Years Ended December 31, (in thousands) 2024 2023 Change Revenues Lease revenues $ 128,857 $ 166,034 $ (37,177) Income from finance leases 89 1,189 (1,100) Other lease-related income 13,301 7,742 5,559 $ 142,247 $ 174,965 $ (32,718) Lease Revenues For the year ended December 31, 2024 as compared to 2023, lease revenues decreased by $37.2 million, primarily due to disposition activity, tenant vacancies at certain properties, and the anticipated reimbursement of $3.3 million of rent to a tenant since the tenant had to vacate a property during a period of maintenance (this reimbursement was formally agreed upon in February 2025 ( Note 18 )).
Results of Operations Revenues Years Ended December 31, (in thousands) 2025 2024 Change Revenues Lease revenues $ 99,262 $ 128,857 $ (29,595) Income from finance leases 610 89 521 Other lease-related income 19,043 13,301 5,742 $ 118,915 $ 142,247 $ (23,332) Lease Revenues For the year ended December 31, 2025 as compared to 2024, lease revenues decreased by $29.6 million, primarily due to disposition activity and tenant vacancies at certain properties.
Net Lease Office Properties 2024 10-K – 27 Lease Expirations (dollars in thousands) Year of Lease Expiration (a) Number of Leases Expiring Number of Tenants with Leases Expiring ABR ABR Percent Square Footage (b) Square Footage Percent 2025 13 12 $ 13,890 15.8 % 730,062 13.0 % 2026 7 7 6,014 6.8 % 369,460 6.6 % 2027 7 6 8,834 10.0 % 499,571 8.9 % 2028 5 4 8,628 9.8 % 371,447 6.6 % 2029 5 4 5,349 6.1 % 358,013 6.4 % 2030 7 6 34,484 39.1 % 1,772,623 31.6 % 2031 1 1 615 0.7 % 50,600 0.9 % 2032 2 2 3,692 4.2 % 257,008 4.6 % 2033 1 1 4,063 4.6 % 219,812 3.9 % 2035 1 1 2,010 2.3 % 120,147 2.1 % 2037 1 1 545 0.6 % 31,120 0.6 % Vacant — — — — % 833,297 14.8 % Total 50 $ 88,124 100.0 % 5,613,160 100.0 % __________ (a) Assumes tenants do not exercise any renewal options or purchase options.
Lease Expirations (dollars in thousands) Year of Lease Expiration (a) Number of Leases Expiring Number of Tenants with Leases Expiring ABR ABR Percent Square Footage (b) Square Footage Percent 2026 7 7 $ 6,188 11.4 % 409,351 12.1 % 2027 5 4 5,586 10.3 % 318,176 9.4 % 2028 6 5 8,745 16.2 % 371,471 11.0 % 2029 3 2 1,918 3.5 % 113,277 3.4 % 2030 5 5 27,375 50.6 % 1,175,257 34.8 % 2031 1 1 631 1.2 % 50,600 1.5 % 2035 1 1 2,050 3.8 % 120,147 3.6 % 2037 1 1 545 1.0 % 31,120 0.9 % 2041 1 1 1,084 2.0 % 75,286 2.3 % Vacant — — — — % 710,428 21.0 % Total 30 $ 54,122 100.0 % 3,375,113 100.0 % __________ (a) Assumes tenants do not exercise any renewal options or purchase options.
We believe that the ultimate resolution of any environmental matters should not have a material adverse effect on our financial condition, liquidity, or results of operations. We record environmental obligations within Accounts payable, accrued expenses and other liabilities in the consolidated financial statements. See Item 1A. Risk Factors for further discussion of potential environmental risks.
We record environmental obligations within Accounts payable, accrued expenses and other liabilities in the consolidated financial statements. See Item 1A. Risk Factors for further discussion of potential environmental risks. New Tax Legislation Effective July 4, 2025, certain changes to U.S. tax law were approved that may impact us and our shareholders.
(b) Excludes 570,999 of operating square footage for a parking garage at a domestic property. Terms and Definitions Pro Rata Metrics —The portfolio information above contains certain metrics prepared on a pro rata basis. We refer to these metrics as pro rata metrics. We have one investment in which our economic ownership is less than 100%.
(b) Excludes 570,999 of operating square footage for a parking garage associated with the KBR property in Houston, Texas. This property was sold in January 2026 ( Note 17 ). Net Lease Office Properties 2025 10-K – 25 Terms and Definitions Pro Rata Metrics —The portfolio information above contains certain metrics prepared on a pro rata basis.
Net Lease Office Properties 2024 10-K – 30 For the year ended December 31, 2024 as compared to 2023, interest expense increased by $25.3 million, primarily due to the $455.0 million of NLOP Financing Arrangements that were funded on November 1, 2023 ( Note 11 ).
For the year ended December 31, 2025 as compared to 2024, interest expense decreased by $55.2 million, primarily due to repayments of our debt since January 1, 2024 ( Note 10 ).
Since our NLOP Mortgage Loan was fully repaid during 2024 and we repaid $53.2 million of outstanding principal on the NLOP Mezzanine Loan during 2024, we expect Interest expense to be lower in future periods.
Interest Expense Interest expense comprises interest on Non-recourse mortgages, our NLOP Mortgage Loan, and our NLOP Mezzanine Loan. Our NLOP Mortgage Loan was fully repaid in December 2024 and our NLOP Mezzanine Loan was fully repaid in April 2025 ( Note 10 ).
For the year ended December 31, 2024 as compared to 2023, general and administrative expenses decreased by $6.1 million, primarily since 2024 and the last two months of 2023 represent actual direct expenses incurred (including $4.0 million and $0.7 million of administrative reimbursements paid to our Advisor during 2024 and 2023, respectively ( Note 5 )), compared to the allocation of expenses described above for the first ten months of 2023.
General and Administrative For the year ended December 31, 2025 as compared to 2024, general and administrative expenses decreased by $0.2 million, primarily due to lower professional fees.
Removed
References herein to “emerging growth company” have the meaning associated with it in the JOBS Act.
Added
References herein to “emerging growth company” have the meaning associated with it in the JOBS Act. Significant Developments Dispositions In January 2026, we sold the KBR property located in Houston, Texas, for gross proceeds of $66.0 million ( Note 17 ). KBR was our largest tenant by ABR as of December 31, 2025.
Removed
See Terms and Definitions below for a description of pro rata amounts.
Added
In January 2026, we sold a property located in Venice, California, for gross proceeds of $39.6 million ( Note 17 ). In February 2026, we sold a property located in Martinsville, Virginia, for gross proceeds of $3.9 million ( Note 17 ).
Removed
Top Ten Tenants by ABR (dollars in thousands) Tenant/Lease Guarantor State/Country ABR ABR Percent Square Footage (a) Number of Properties Weighted-Average Lease Term (Years) KBR, Inc. Texas $ 20,156 22.9 % 913,713 1 5.5 JPMorgan Chase Bank, N.A.
Added
In February 2026, we sold a property located in Raleigh, North Carolina, for gross proceeds of $8.7 million ( Note 17 ). Special Cash Distribution In January 2026, our Board of Trustees declared a special cash distribution of $6.75 per share, totaling approximately $100.0 million.
Removed
Florida, Texas 9,069 10.3 % 666,869 3 4.4 Siemens AS (b) Norway 4,198 4.8 % 165,905 1 1.0 Pharmaceutical Product Development, LLC North Carolina 4,063 4.6 % 219,812 1 8.9 Omnicom Group, Inc. California 3,961 4.5 % 120,000 1 3.7 R.R.
Added
The distribution was paid on February 17, 2026 to shareholders of record as of January 30, 2026 ( Note 17 ).
Removed
Donnelley & Sons Company Illinois 3,393 3.9 % 167,215 1 2.7 Board of Regents, State of Iowa Iowa 3,254 3.7 % 191,700 1 5.8 Bankers Financial Corporation Florida 3,228 3.6 % 111,357 1 0.6 Google, LLC California 2,930 3.3 % 67,681 1 5.8 Northrop Grumman Systems Corporation Minnesota 2,679 3.0 % 191,336 1 4.9 Total $ 56,931 64.6 % 2,815,588 12 4.7 __________ (a) Excludes 570,999 of operating square footage for a parking garage at a domestic property.
Added
Leasing Activity • In September 2025, we entered into a lease termination agreement with a tenant at a property located in Oak Creek, Wisconsin, to terminate the lease on October 31, 2025 (the previous lease expiration date was May 31, 2032).
Removed
(b) ABR amounts are subject to fluctuations in foreign currency exchange rates.
Added
In connection with the agreement, the tenant paid us a lease termination fee of $13.0 million, which was recognized within Other lease-related income in our consolidated statements of operations during the year ended December 31, 2025. This property was sold in December 2025 ( Note 5 ).
Removed
Other Lease-Related Income Other lease-related income is described in Note 6 .
Added
Special Cash Distributions • In August 2025, our Board of Trustees declared a special cash distribution of $3.10 per share, totaling approximately $45.9 million.
Removed
General and Administrative Prior to the Spin-Off on November 1, 2023 ( Note 1 ), general and administrative expenses were allocated to NLOP based on the relative percentage of annualized based rent of NLOP. The amounts allocated are not necessarily indicative of the actual amount of indirect expenses that would have been recorded had NLOP been a separate independent entity.
Added
The distribution was paid on September 3, 2025 to shareholders of record as of August 18, 2025 ( Note 1 2 ). • In November 2025, our Board of Trustees declared a special cash distribution of $4.10 per share, totaling approximately $60.7 million.
Removed
Asset Management Fees Upon completion of the Spin-Off on November 1, 2023 ( Note 1 ), we began paying asset management fees to our Advisor, which totaled $6.2 million and $1.2 million during the years ended December 31, 2024 and 2023, respectively ( Note 5 ).
Added
The distribution was paid on December 19, 2025 to shareholders of record as of December 4, 2025 ( Note 1 2 ). • In December 2025, our Board of Trustees declared a special cash distribution of $5.10 per share, totaling approximately $75.6 million.
Removed
Separation and Distribution Related Costs and Other For the year ended December 31, 2023, separation and distribution related costs and other are comprised of costs related to the Spin-Off, which closed on November 1, 2023 ( Note 1 ). Impairment Charges — Goodwill Our impairment charges on goodwill are described in Note 9 .
Added
The distribution was paid on January 20, 2026 to shareholders of record as of January 2, 2026 ( Note 1 2 ). • Future special cash distributions will be at the discretion of our Board of Trustees and will depend upon, among other things, our actual and anticipated results of operations and liquidity, which will be affected by various factors, including the timely receipt of rental income from our portfolio; the timing of and proceeds from asset sales; our operating expenses (including management fees); capital expenditures for our portfolio; our current intention to maintain our qualification as a REIT; and other factors which may be outside of our control.
Removed
Other Income and Expenses, and Benefit from (Provision for) Income Taxes Years Ended December 31, (in thousands) 2024 2023 Change Other Income and Expenses Interest expense $ (67,962) $ (42,613) $ (25,349) Gain (loss) on sale of real estate, net 20,216 (3,608) 23,824 Other gains and (losses) (2,154) 456 (2,610) Benefit from (provision for) income taxes 2,382 (425) 2,807 $ (47,518) $ (46,190) $ (1,328) Interest Expense Interest expense is comprised of interest on Non-recourse mortgages, our NLOP Mortgage Loan, and our NLOP Mezzanine Loan, as well as interest expense on Parent Debt (as defined in Note 11 ) specific to NLOP properties and that was allocated to NLOP based on the relative percentage of unencumbered net investment in real estate of each property compared to WPC (prior to the Spin-Off).
Added
There can be no assurance as to the amount or timing of future distributions.
Removed
The amounts allocated to Parent Debt in the accompanying audited consolidated financial statements are not necessarily indicative of the actual amount of interest expense that would have been recorded had NLOP been a separate independent entity during the applicable periods.
Added
See Supplemental Financial Measures below for our definition of this non-GAAP measure and a reconciliation to its most directly comparable GAAP measure.
Removed
Gain (Loss) on Sale of Real Estate, Net Gain (loss) on sale of real estate, net, consists of gain (loss) on the sale of properties that were (i) disposed of or (ii) subject to a purchase agreement resulting in a lease modification, during the reporting period, as more fully described in Note 6 , Note 7 , and Note 16 .
Added
Top Ten Tenants by ABR (dollars in thousands) Tenant State/Country ABR ABR Percent Square Footage (a) Number of Properties Weighted-Average Lease Term (Years) KBR (a) (b) Texas $ 20,158 37.2 % 913,713 1 4.5 Iowa Board of Regents Iowa 4,056 7.5 % 191,700 1 4.8 Omnicom California 3,961 7.3 % 120,000 1 2.7 RRD Illinois 3,461 6.4 % 167,215 1 1.7 Google (b) California 3,108 5.7 % 67,681 1 4.8 Intuit Texas 2,577 4.8 % 166,033 1 0.5 Grande Communications Texas 2,407 4.5 % 134,009 5 2.7 Cenlar FSB Pennsylvania 2,105 3.9 % 105,584 1 2.5 iHeart Communications Texas 2,050 3.8 % 120,147 1 9.1 Arbella Insurance Massachusetts 1,850 3.4 % 132,160 1 1.4 Total $ 45,733 84.5 % 2,118,242 14 3.9 __________ (a) Excludes 570,999 of operating square footage for a parking garage associated with the KBR property in Houston, Texas.
Removed
For the year ended December 31, 2023, other gains and (losses) of $0.5 million were primarily comprised of net realized and unrealized losses on foreign currency exchange rate movements.
Added
(b) These properties were sold in January 2026 ( Note 17 ).
Removed
In connection with the Spin-Off, we and certain of our wholly-owned subsidiaries entered into the NLOP Financing Arrangements, comprised of the NLOP Mortgage Loan and NLOP Mezzanine Loan, as discussed in Note 1 1 .
Added
We also disposed of a property classified as net investments in sales-type lease during the first quarter of 2024 ( Note 6 ). Other Lease-Related Income Other lease-related income is described in Note 5 .
Removed
At December 31, 2024, we had $61.1 million total principal outstanding on the NLOP Mezzanine Loan. In February 2025, we repaid $3.3 million of outstanding principal on the NLOP Mezzanine Loan using excess cash ( Note 18 ). Cash Resources At December 31, 2024, our cash resources consisted of the following: • cash and cash equivalents totaling $25.1 million.
Added
Asset Management Fees Asset management fees paid to our Advisor are calculated based on the ABR of properties in our portfolio and are being proportionately reduced following the disposition of each portfolio property ( Note 4 ).
Removed
Certain amounts disclosed above are based on the applicable foreign currency exchange rate at December 31, 2024. Environmental Obligations In connection with the purchase of many of our properties, we have required the sellers to perform environmental reviews.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

61 edited+5 added−62 removed127 unchanged
Biggest changeHigh geographic concentration of our properties could magnify the effects of adverse economic or regulatory developments in such geographic areas on our operations and financial condition. As of December 31, 2024, 39.4% of our portfolio (as a percentage of ABR) was located in Texas, representing the highest concentration of our assets, and 10.1% was located in Minnesota.
Biggest changeAdditionally, a default by a single or major tenant could impact the resale value of our properties which could result in future impairments. High geographic concentration of our properties could magnify the effects of adverse economic or regulatory developments in such geographic areas on our operations and financial condition.
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.
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.
As a result, we are, and expect to be, subject to the risks normally associated with debt financing including: • that interest rates may rise; • that our cash flow will be insufficient to make required payments of principal and interest; • that we will be unable to refinance some or all of our debt or increase the availability of overall debt on terms as favorable as those of our existing debt, or at all; • that any refinancing will not be on terms as favorable as those of our existing debt; • 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 shareholders; • 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 refinance or repay the debt as it becomes due; and • that if our degree of leverage is viewed unfavorably by lenders, it could affect our ability to obtain additional financing.
As a result, we are, and expect to be, subject to the risks normally associated with debt financing including: • that interest rates may rise; • that our cash flow will be insufficient to make required payments of principal and interest; • that we will be unable to refinance some or all of our debt or increase the availability of overall debt on terms as favorable as those of our existing debt, or at all; • that any refinancing will not be on terms as favorable as those of our existing debt; • that required payments on mortgages are not reduced if the economic performance of any property declines; • that debt service obligations will reduce funds available for distribution to our shareholders; • 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 refinance or repay the debt as it becomes due; and • that if our degree of leverage is viewed unfavorably by lenders, it could affect our ability to obtain additional financing.
We may not be able to dispose of properties when desired or on favorable terms. Real estate investments are relatively illiquid. Our ability to quickly sell or exchange any of our properties in response to changes in economic and other conditions will be limited.
Real estate property investments are illiquid. We may not be able to dispose of properties when desired or on favorable terms. Real estate investments are relatively illiquid. Our ability to quickly sell or exchange any of our properties in response to changes in economic and other conditions will be limited.
Our Declaration of Trust initially divides our Board into three classes. The initial terms of the first, second and third classes will expire at the first, second and third annual meetings of shareholders, respectively, held following the Spin-Off. Initially, shareholders will elect only one class of trustees each year.
Our Declaration of Trust initially divides our Board into three classes. The initial terms of the second and third classes will expire at the second and third annual meetings of shareholders, respectively, held following the Spin-Off. Initially, shareholders will elect only one class of trustees each year.
Our ability to manage our assets is also subject to federal bankruptcy laws, state laws that limit creditors’ rights and remedies available to real property owners to collect delinquent rents and international laws.
Our ability to manage our assets is also subject to federal bankruptcy laws, state laws that limit creditors’ rights and remedies available to real property owners to collect delinquent rents.
Net Lease Office Properties 2024 10-K – 6 We depend on significant tenants, and the majority 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 shareholders, may be adversely affected by the bankruptcy or insolvency, a downturn in the business, or a lease termination of such a single tenant.
Net Lease Office Properties 2025 10-K – 6 We depend on significant tenants, and the majority 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 shareholders, may be adversely affected by the bankruptcy or insolvency, a downturn in the business, or a lease termination of such a single tenant.
In addition, as of December 31, 2024, the majority of our ABR 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.
In addition, as of December 31, 2025, the majority of our ABR 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.
Any adverse developments in the economy or real estate market in the areas in which we concentrate or any decrease in demand for office space resulting from regulatory or business environment in the areas in which we concentrate could impact our ability to generate revenues sufficient to meet our operating expenses or other obligations, which could have an adverse effect on our financial condition, results of operations, liquidity and ability to pay distributions to our shareholders.
Any adverse developments in the economy or real estate market in the areas in which we concentrate or any decrease in demand for office space resulting from regulatory or business environment in the areas in which we concentrate could result in future impairments or impact our ability to generate revenues sufficient to meet our operating expenses or other obligations, which could have an adverse effect on our financial condition, results of operations, liquidity and ability to pay distributions to our shareholders.
Our Advisor performs services for us in connection with the management and leasing of our properties, and the administration of our other investments. Pursuant to the Advisory Agreement, we pay our Advisor cash fees for these services. The payment of these fees will reduce the amount of cash available for distribution to our shareholders.
Our Advisor performs services for us in connection with the management and leasing of our properties. Pursuant to the Advisory Agreement, we pay our Advisor cash fees for these services. The payment of these fees will reduce the amount of cash available for distribution to our shareholders.
Therefore, our Advisor and its affiliates have potential conflicts of interest in their dealings with us, including, but not limited to, in the following circumstances: • agreements between us and our Advisor, including agreements regarding compensation, are not negotiated on an arm’s-length basis, as would occur if the agreements were with unaffiliated third parties; and • the negotiation or termination of the NLOP Advisory Agreements and other agreements with our Advisor and its affiliates.
Therefore, our Advisor and its affiliates have potential conflicts of interest in their dealings with us, including, but not limited to, in the following circumstances: • agreements between us and our Advisor, including agreements regarding compensation, are not negotiated on an arm’s-length basis, as would occur if the agreements were with unaffiliated third parties; and • the negotiation or termination of the NLOP Advisory Agreements and other agreements with our Advisor and its affiliates, such as with our Advisor’s captive insurance subsidiary.
Certain provisions contained in our Declaration of Trust and the NLOP Financing Arrangements may have the effect of discouraging a third party from making an acquisition proposal for us and may thereby inhibit a change of control.
Certain provisions contained in our Declaration of Trust may have the effect of discouraging a third party from making an acquisition proposal for us and may thereby inhibit a change of control.
After such five-year period, a business combination with an interested shareholder must be: (a) recommended by our Board of the trust, and (b) approved by the affirmative vote of at least (i) 80% of the trust’s outstanding shares entitled to vote and (ii) two-thirds of the trust’s outstanding shares entitled to vote which are not held by the interested shareholder with whom the business combination is to be effected, unless, among other things, the trust’s common shareholders receive a “fair price” (as defined by the statute) for their shares and the consideration is received in cash or in the same form as previously paid by the interested shareholder for his or her shares.
After such five-year period, a business combination with an interested shareholder must be: (a) recommended by our Board of the trust, and (b) approved by the affirmative vote of at least (i) 80% of the trust’s outstanding shares entitled to vote and (ii) two-thirds of the trust’s outstanding shares entitled to vote which are not held by the interested shareholder with whom the business combination is to be effected, unless, among other Net Lease Office Properties 2025 10-K – 15 things, the trust’s common shareholders receive a “fair price” (as defined by the statute) for their shares and the consideration is received in cash or in the same form as previously paid by the interested shareholder for his or her shares.
The Maryland Business Combination Act (Title 3, Subtitle 6 of the Maryland General Corporation Law (the “MGCL”)) (the “Business Combination Act”) imposes conditions and restrictions on certain “business combinations” (including, among other transactions, a merger, consolidation, share exchange, or, in certain circumstances, an asset transfer or issuance of equity Net Lease Office Properties 2024 10-K – 17 securities) between a Maryland real estate investment trust and certain persons who beneficially own at least 10% of the corporation’s stock or affiliates of such persons (an “interested shareholder”).
The Maryland Business Combination Act (Title 3, Subtitle 6 of the Maryland General Corporation Law (the “MGCL”)) (the “Business Combination Act”) imposes conditions and restrictions on certain “business combinations” (including, among other transactions, a merger, consolidation, share exchange, or, in certain circumstances, an asset transfer or issuance of equity securities) between a Maryland real estate investment trust and certain persons who beneficially own at least 10% of the corporation’s stock or affiliates of such persons (an “interested shareholder”).
In particular, the increased adoption of and familiarity with remote work practices, and the increase in tenants seeking to sublease their leased office space, as well as tenant uncertainty regarding office space needs given evolving remote and hybrid working trends which began with the COVID-19 pandemic, resulted in decreased demand for office space in certain places and certain types of properties.
In particular, the increased adoption of and familiarity with remote work practices, and the increase in tenants seeking to sublease their leased office space, as well as tenant uncertainty regarding office space needs given evolving remote and hybrid working trends, resulted in decreased demand for office space in certain places and certain types of properties.
Our access to third-party sources of capital depends on a number of factors, including general market conditions, the market’s view of the quality of our assets, the market’s perception of our growth potential (and the terms of our existing financing arrangements), our current debt levels and our current and expected future earnings.
Our access to third-party sources of capital depends on a number of factors, including general market conditions, the market’s view of the quality of our assets, the market’s perception of our growth potential, our current debt levels and our current and expected future earnings.
Even though we qualify for taxation as a REIT, we are subject to certain (i) federal, state, local, and foreign taxes on our income and assets; (ii) taxes on any undistributed income and state, local, or foreign income; and (iii) franchise, property, and transfer taxes.
Even though we qualify for taxation as a REIT, we are subject to certain (i) taxes on our income and assets at a federal, state, local, and, through 2025, foreign level; (ii) taxes on any undistributed income and state, local, or, through 2025, foreign income; and (iii) franchise, property, and transfer taxes.
As of December 31, 2024, approximately 22.6% of our ABR was comprised by tenants with leases expiring in the next two years. We derive our net income primarily from rent received from our tenants, and our profitability is significantly dependent upon ability to minimize vacancies in our properties and ensure our tenants timely pay rent at an attractive rate.
As of December 31, 2025, approximately 21.7% of our ABR was comprised by tenants with leases expiring in the next two years. We derive our net income primarily from rent received from our tenants, and our profitability is significantly dependent upon ability to minimize vacancies in our properties and ensure our tenants timely pay rent at an attractive rate.
As a result, the price of our common shares may decrease as market interest rates increase, which may have a material adverse effect on our business, financial condition and results of operations.
As a result, the price of our common shares may decrease as market interest rates increase, which may have a material adverse effect on our business, financial condition and results of operations. We may change our dividend policy.
If our tenants decide not to renew their leases, terminate early or default on their lease, or if we fail to find suitable tenants to lease our vacant properties, we may not be able to re-lease the space or may experience delays in finding suitable replacement tenants and may be in default under the NLOP Mezzanine Loan.
If our tenants decide not to renew their leases, terminate early or default on their lease, or if we fail to find suitable tenants to lease our vacant properties, we may not be able to re-lease the space or may experience delays in finding suitable replacement tenants.
If we are able to obtain additional financing and if we received credit ratings, these credit ratings could be adversely affected, which could further raise our Net Lease Office Properties 2024 10-K – 9 borrowing costs and further limit our future access to capital and 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.
If we are able to obtain additional financing and if we received credit ratings, these credit ratings could be adversely affected, which could further raise our borrowing costs and further limit our future access to capital and 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.
We have existing debt and refinancing risks that could affect our cost of operations. At December 31, 2024, fixed-rate debt comprises 76% of our debt and variable-rate debt comprises 24%. We may incur additional fixed and variable-rate indebtedness in the future.
We have existing debt and refinancing risks that could affect our cost of operations. At December 31, 2025, fixed-rate debt comprises 100% of our debt. We may incur additional fixed and variable-rate indebtedness in the future.
Future dividends will be declared and paid at the discretion of our Board, and the amount and timing of dividends will depend upon cash generated by operating activities, our business, financial condition, results of operations, capital requirements, annual distribution requirements under the REIT provisions of the Code, limitations in our debt agreements and such other factors as our Board deems relevant.
Future dividends will be declared and paid at the discretion of our Board, and the amount and timing of dividends will depend upon proceeds from asset sales, cash generated by operating activities, our business, financial condition, results of operations, capital requirements, annual distribution requirements under the REIT provisions of the Code, and such other factors as our Board deems relevant.
Similarly, we are insured against the risk of direct physical damage in amounts we believe to be adequate to reimburse us, on a replacement cost basis, for costs incurred to repair or rebuild each property, including loss of rental income during the reconstruction period.
Similarly, we are insured against the risk of direct physical damage in amounts we believe to be adequate to reimburse us, on a replacement cost basis, for costs incurred to repair or rebuild each property, including loss of Net Lease Office Properties 2025 10-K – 8 rental income during the reconstruction period.
Net Lease Office Properties 2024 10-K – 14 If certain of our (or any of our subsidiary REITs’) subsidiaries, including our operating company, fail to qualify as partnerships or disregarded entities for federal income tax purposes, we (or any of our subsidiary REITs) could cease to qualify as a REIT and suffer other adverse consequences.
If certain of our (or any of our subsidiary REITs’) subsidiaries, including our operating company, fail to qualify as partnerships or disregarded entities for federal income tax purposes, we (or any of our subsidiary REITs) could cease to qualify as a REIT and suffer other adverse consequences.
The value of our properties and our business, operating results, financial condition and prospects may continue to be materially adversely impacted by the negative trends impacting the office property market.
The value of our properties and our business, operating Net Lease Office Properties 2025 10-K – 5 results, financial condition and prospects may continue to be materially adversely impacted by the negative trends impacting the office property market.
Defaults under future sale agreements may delay or reduce the cash we receive pursuant to any future sale agreements. In connection with any sales of our assets, we will seek to enter into binding sales agreements for any such sales.
Net Lease Office Properties 2025 10-K – 10 Defaults under future sale agreements may delay or reduce the cash we receive pursuant to any future sale agreements. In connection with any sales of our assets, we will seek to enter into binding sales agreements for any such sales.
Additional rules with respect to certain capital gain distributions will apply to non-U.S. shareholders that own more than 10% of our common shares. Net Lease Office Properties 2024 10-K – 19 Item 1B. Unresolved Staff Comments. None.
Additional rules with respect to certain capital gain distributions will apply to non-U.S. shareholders that own more than 10% of our common shares. Item 1B. Unresolved Staff Comments. None.
The primary risks that could directly result Net Lease Office Properties 2024 10-K – 13 from the occurrence of a cyber incident include operational interruption, damage to our relationship with our tenants, expensive remediation efforts, liability exposure under federal and state law, and private data exposure.
The primary risks that could directly result from the occurrence of a cyber incident include operational interruption, damage to our relationship with our tenants, expensive remediation efforts, liability exposure under federal and state law, and private data exposure.
We are susceptible to adverse developments in the economic or regulatory environments of the geographic areas in which we concentrate, such as business layoffs or downsizing, industry slowdowns, relocations of businesses, increases in real estate and other taxes or costs of complying with governmental regulations.
However, the properties leased to KBR and Google were sold in January 2026. We are susceptible to adverse developments in the economic or regulatory environments of the geographic areas in which we concentrate, such as business layoffs or downsizing, industry slowdowns, relocations of businesses, increases in real estate and other taxes or costs of complying with governmental regulations.
If a tenant experiences a downturn in its business or other types of financial distress, it may be unable to make timely rental payments. If lease defaults occur, we may experience delays in enforcing our rights as landlord. As of December 31, 2024, our portfolio had a WALT of 4.3 years, and no properties were fully vacant.
If a tenant experiences a downturn in its business or other types of financial distress, it may be unable to make timely rental payments. If lease defaults occur, we may experience delays in enforcing our rights as landlord. As of December 31, 2025, our portfolio had a WALT of 3.9 years.
The occurrence of cyber incidents, or a deficiency in our Advisor’s cybersecurity, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships, all of which could negatively impact our financial results.
Net Lease Office Properties 2025 10-K – 11 The occurrence of cyber incidents, or a deficiency in our Advisor’s cybersecurity, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships, all of which could negatively impact our financial results.
Because of this distribution requirement, we may not be able to fund all future capital needs from income from operations. As a result, we may rely on third-party sources of capital, including collateralized debt (both construction financing and permanent debt) and equity issuances, although our ability to obtain additional third-party financing may be limited due to the NLOP Financing Arrangements.
Because of this distribution requirement, we may not be able to fund all future capital needs from income from operations. As a result, we may rely on third-party sources of capital, including collateralized debt (both construction financing and permanent debt) and equity issuances.
Net Lease Office Properties 2024 10-K – 15 We have made and intend to continue to make distributions to our shareholders to comply with the distribution requirements of the Code as well as to reduce our exposure to federal income taxes and the non-deductible excise tax.
We have made and intend to continue to make distributions to our shareholders to comply with the distribution requirements of the Code as well as to reduce our exposure to federal income taxes and the non-deductible excise tax.
In addition, in connection with executing our business strategies going forward, we expect to need to invest in our current portfolio and we may elect to finance these endeavors by incurring additional indebtedness.
In connection with executing our business strategies going forward, we may need to invest in our current portfolio and we could elect to finance these endeavors by incurring additional indebtedness depending on various factors.
Provisions of our Declaration of Trust are designed to assist us in maintaining our qualification as a REIT under the Code by preventing concentrated ownership of our shares that might jeopardize REIT qualification.
Provisions of our Declaration of Trust are designed to Net Lease Office Properties 2025 10-K – 14 assist us in maintaining our qualification as a REIT under the Code by preventing concentrated ownership of our shares that might jeopardize REIT qualification.
The Net Lease Office Properties 2024 10-K – 5 changes in work habits and reduced demand for office space have also resulted in adverse capital markets and financing conditions for office properties.
The changes in work habits and reduced demand for office space have also resulted in adverse capital markets and financing conditions for office properties.
Not more than 25% of the value of our total assets may be represented by securities (including securities of TRSs), other than those securities includable in the 75% asset test, and not more than 20% of the value of our total assets may be represented by securities of TRSs.
Not more than 25% of the value of our total assets may be represented by securities (including securities of TRSs), other than those securities includable in the 75% asset test, and not more than 20% for taxable years through December 31, 2025 and 25% for subsequent taxable years of the value of our total assets may be represented by securities of TRSs.
Legislative or other actions affecting REITs could have a negative effect on us or our investors. The rules dealing with federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Department of the Treasury.
These distribution requirements are equally applicable to any subsidiary REIT in which we invest. Legislative or other actions affecting REITs could have a negative effect on us or our investors. The rules dealing with federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Department of the Treasury.
Such adverse economic and geopolitical conditions may be due to, among other issues, inflation and interest rates, volatility in the public equity and debt markets, and international economic and other conditions, including pandemics, geopolitical instability (such as the war in Ukraine, rising tensions between China and Taiwan and the conflict in the Middle East), tariffs, sanctions and other conditions beyond our control.
Such adverse economic and geopolitical conditions may be due to, among other issues, inflation and interest rates, volatility in the public equity and debt markets, and international economic and other conditions, including pandemics, geopolitical instability, tariffs, sanctions and other conditions beyond our control.
A REIT’s net income from prohibited transactions is subject to a 100% penalty tax. In general, prohibited transactions are sales or other dispositions of property, other than foreclosure property, held primarily for sale to customers in the ordinary course of business, unless certain safe harbor exceptions apply.
In general, prohibited transactions are sales or other dispositions of property, other than foreclosure property, held primarily for sale to customers in the ordinary course of business, unless certain safe harbor exceptions apply.
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. 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.
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.
In addition, we could be required to pay an excise or penalty tax under certain circumstances in order to utilize one or more relief provisions under the Code to maintain qualification for taxation as a REIT, which could be significant in amount.
In addition, we could be required to pay an excise or penalty tax under certain circumstances in order to utilize one or more relief provisions under the Code to maintain qualification for taxation as a REIT, which could be significant in amount. Any of these taxes would decrease our earnings and our cash available for distributions to shareholders.
Under such circumstances, the insurance proceeds we receive might not be adequate to restore our economic position with respect to such property, which may have a material adverse effect on our business, financial condition and results of operations.
Under such circumstances, the insurance proceeds we receive might not be adequate to restore our economic position with respect to such property, which may have a material adverse effect on our business, financial condition and results of operations. We cannot make any guaranty as to the future financial viability of the insurers that underwrite the policies maintained by our tenants.
While office occupancy has generally improved since the end of the pandemic, it remains below pre-pandemic levels in certain places and for certain classes of office properties.
While office occupancy has generally improved in the past few years, it remains below historical levels in certain places and for certain classes of office properties.
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. Because we invest in properties located outside the United States, we are exposed to additional risks.
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. Uninsured and underinsured losses may adversely affect our operations.
Net Lease Office Properties 2024 10-K – 16 Risks Related to an Investment in Our Common Shares Limitations on the ownership of our common shares and other provisions of our Declaration of Trust and the NLOP Financing Arrangements may preclude the acquisition or change of control of our company.
Risks Related to an Investment in Our Common Shares Limitations on the ownership of our common shares and other provisions of our Declaration of Trust may preclude the acquisition or change of control of our company.
The determination of various factual matters and circumstances not entirely within our control may affect our ability to qualify as a REIT. In order to qualify as a REIT, we must satisfy a number of requirements, including requirements regarding the ownership of our common shares, requirements regarding the composition of our assets and gross income.
In order to qualify as a REIT, we must satisfy a number of requirements, including requirements regarding the ownership of our common shares, requirements regarding the composition of our assets and gross income.
We will incur increased costs as a result of operating as a public company. If we fail to maintain proper and effective internal controls, our ability to produce accurate and timely financial statements could be impaired, which could result in sanctions or other penalties that would harm our business.
Net Lease Office Properties 2025 10-K – 16 If we fail to maintain proper and effective internal controls, our ability to produce accurate and timely financial statements could be impaired, which could result in sanctions or other penalties that would harm our business.
The interest rate and foreign exchange rate hedge instruments we may use to manage some of our exposure to interest rate and foreign exchange rate volatility involve risk, such as the risk that counterparties may fail to honor their obligations under these arrangements.
Failure to hedge effectively against interest rate changes may have a material adverse effect on our business, financial condition and results of operations. The interest rate instruments we may use to manage some of our exposure to interest rate volatility involve risk, such as the risk that counterparties may fail to honor their obligations under these arrangements.
We depend on external sources of capital that are outside of our control, which may affect our ability to pursue strategic opportunities, refinance or repay our indebtedness and make distributions to our shareholders.
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 depend on external sources of capital that are outside of our control, which may affect our ability to pursue strategic opportunities, refinance or repay our indebtedness and make distributions to our shareholders.
If any of our subsidiary REITs fail to qualify as a REIT, such failure could jeopardize our qualification as a REIT unless such failure was subject to relief under U.S. federal income tax laws. Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations.
If any of our subsidiary REITs fail to qualify as a REIT, such failure could jeopardize our qualification as a REIT unless such failure was subject to relief under U.S. federal income tax laws.
We will also incur additional costs involved in Net Lease Office Properties 2024 10-K – 12 locating a new buyer and negotiating a new sale agreement for any such sale. If we incur these additional costs, potential distributions to our shareholders would be reduced.
We will also incur additional costs involved in locating a new buyer and negotiating a new sale agreement for any such sale. If we incur these additional costs, potential distributions to our shareholders would be reduced. Shareholder litigation related to any disposition strategy could result in substantial costs and distract our Board and Advisor.
Shareholder litigation related to any disposition strategy could result in substantial costs and distract our Board and Advisor. Historically, extraordinary corporate actions by a company, such as disposition strategies, often lead to securities class action lawsuits being filed against that company.
Historically, extraordinary corporate actions by a company, such as disposition strategies, often lead to securities class action lawsuits being filed against that company.
As Net Lease Office Properties 2024 10-K – 7 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. Real estate property investments are illiquid.
Additionally, 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. 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.
Remote working arrangements for personnel in response to the pandemic changed work practices in a manner that has negatively impacted us and our business.
Ongoing remote and hybrid working trends may continue to materially adversely impact the value of our properties and our business, operating results, financial condition and prospects. Remote and hybrid working arrangements for personnel changed work practices in a manner that has negatively impacted us and our business.
There can be no assurance, however, that we will be able to comply with the above limitations or to avoid application of the 100% excise tax discussed above. The tax imposed on REITs engaging in “prohibited transactions” may limit our ability to engage in transactions which would be treated as sales for federal income tax purposes.
There can be no assurance, however, that we will be able to comply with the above limitations or to avoid application of the 100% excise tax discussed above.
Our Board may permit us to incur additional debt and would do so, for example, if it were necessary to maintain our status as a REIT.
Net Lease Office Properties 2025 10-K – 9 Our governing documents do not limit the amount of indebtedness we may incur and we may become more highly leveraged. Our Board may permit us to incur debt and would do so, for example, if it were necessary to maintain our status as a REIT.
Future issuances of our common Net Lease Office Properties 2024 10-K – 18 shares may be dilutive to existing shareholders, which may have a material adverse effect on our business, financial condition and results of operations.
Net Lease Office Properties 2025 10-K – 7 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.
As of December 31, 2024, our top tenant in our portfolio (by ABR) represented approximately 22.9% of ABR, our three largest tenants in our portfolio (by ABR) represented approximately 38.0% of ABR, and our ten largest tenants in our portfolio (by ABR) represented approximately 64.6% of ABR.
As of December 31, 2025, our top tenant in our portfolio (by ABR), KBR, represented approximately 37.2% of ABR, our three largest tenants in our portfolio (by ABR) represented approximately 52.0% of ABR, and our ten largest tenants in our portfolio (by ABR) represented approximately 84.5% of ABR. However, the property leased to KBR was sold in January 2026.
Risks Related to Financing and Our Indebtedness We have a significant amount of indebtedness and may need to incur more in the future. As of December 31, 2024, net of capitalized financing costs, we had approximately $169.2 million of total outstanding indebtedness.
The insurance companies in our property insurance program include our Advisor’s captive insurance and we cannot make any guaranty that such captive insurance company will be adequately funded. Risks Related to Financing and Our Indebtedness We may need to incur more debt in the future. As of December 31, 2025, we had approximately $21.9 million of total outstanding indebtedness.
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The ongoing remote working trends that began with the impact of the novel coronavirus (the “COVID-19 pandemic”), may continue to materially adversely impact the value of our properties and our business, operating results, financial condition and prospects.
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As of December 31, 2025, 53.5% of our portfolio (as a percentage of ABR) was located in Texas (including 37.2% for our property leased to our tenant, KBR), representing the highest concentration of our assets, and 13.1% was located in California (including 5.7% for our property leased to our tenant, Google).
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Additionally, 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.
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Net Lease Office Properties 2025 10-K – 12 Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations. The determination of various factual matters and circumstances not entirely within our control may affect our ability to qualify as a REIT.
Removed
We have invested in two properties located outside the United States. At December 31, 2024, our real estate properties located outside of the United States represented 5.6% of our ABR. These investments may be affected by factors particular to the local jurisdiction where the property is located and may expose us to additional risks.
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Net Lease Office Properties 2025 10-K – 13 The tax imposed on REITs engaging in “prohibited transactions” may limit our ability to engage in transactions which would be treated as sales for federal income tax purposes. A REIT’s net income from prohibited transactions is subject to a 100% penalty tax.
Removed
Our Advisor may engage third-party asset managers in international jurisdictions to monitor compliance with legal requirements and lending agreements. If our Advisor fails to properly mitigate such additional risks, it could result in operational failures, governmental sanctions, or other liabilities.
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Neither our Declaration of Trust nor the Maryland REIT law requires shareholder approval for a sale of all or substantially all of our properties. We may sell all or substantially all of our remaining properties in the future, and may do so pursuant to a plan of liquidation.
Removed
We are also subject to potential fluctuations in exchange rates between the euro or Norwegian krone and the U.S. dollar because we translate revenue denominated in euros or Norwegian kroner into U.S. dollars for our financial statements.
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In the event the Board determines in the future to sell all or substantially all of NLOP’s assets, potentially including pursuant to a plan of liquidation, the Board may take this action under Maryland law without shareholder approval and such approval is not required in our Declaration of Trust.
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Our results of our foreign operations are adversely affected by a stronger U.S. dollar relative to foreign currencies (i.e., absent other Net Lease Office Properties 2024 10-K – 8 considerations, a stronger U.S. dollar will reduce both our revenues and our expenses), which may in turn adversely affect the price of our common shares.
Removed
We may be materially adversely affected by laws, regulations or other issues related to climate change as well as by potential physical impacts related to climate change. We are subject to laws and regulations related to climate change. For example, the State of California has enacted new climate change disclosure requirements, including emissions requirements.
Removed
Regulations and other expectations are not uniform, and may be inconsistently interpreted or applied, which can increase the complexity and costs of compliance as well as any associated litigation or enforcement risks.
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We are currently assessing our obligations under these laws and regulations, but we expect that compliance with these laws and regulations could result in substantial compliance costs, retrofit costs and construction costs, including monitoring and reporting costs and capital expenditures for environmental control facilities and other new equipment.
Removed
We also expect that over time we will likely need to be prepared to contend with overlapping, yet distinct, climate-related disclosure requirements in multiple jurisdictions. Noncompliance with these laws or regulations may result in potential cost increases, litigation, fines, penalties, brand or reputational damage, loss of tenants, lower valuation and higher investor activism activities.
Removed
We cannot predict how future laws and regulations, or future interpretations of current laws and regulations related to climate change will affect our business, financial condition and results of operations. Uninsured and underinsured losses may adversely affect our operations.
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We may not be able to secure additional financing on favorable terms, or at all, to meet our capital needs.
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In connection with the Spin-Off, we entered into the NLOP Financing Arrangements; however, we may require additional capital to implement our business plan, respond to business opportunities, challenges or unforeseen circumstances and may determine to engage in equity or debt financings, refinance the NLOP Mezzanine Loan or enter into new credit facilities.
Removed
If we are unable to refinance or repay the debt as it becomes due or obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to support our business plan and to respond to business challenges could be limited.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeHowever, there can be no assurance that our cybersecurity efforts and measures will be effective or that attempted cybersecurity incidents or disruptions would not be successful or damaging. See Item 1A.
Biggest changeCybersecurity Risks As of December 31, 2025, we have not had any known instances of material cybersecurity incidents, including third-party incidents, during any of the last three fiscal years. However, there can be no assurance that our cybersecurity efforts and measures will be effective or that attempted cybersecurity incidents or disruptions would not be successful or damaging. See Item 1A.
Our Advisor has also engaged a managed security provider to manage a supply chain defense subscription that will help obtain visibility into cybersecurity risks across third party vendors by proactively identifying, prioritizing, and driving remediation for cyber risks posed by critical business partners.
Our Advisor has also engaged a managed security provider to manage a supply chain defense subscription that will help obtain visibility into cybersecurity risks across high-risk third party vendors by proactively identifying, prioritizing, and driving remediation for cyber risks posed by critical business partners.
Our Audit Committee reviews our enterprise risk and cybersecurity risks. It also reviews the steps our Advisor has taken to protect against threats to our information systems and security and receives updates on cybersecurity on a quarterly basis.
Our Audit Committee reviews our cybersecurity risks. It also reviews the steps our Advisor has taken to protect against threats to our information systems and security and receives updates on cybersecurity on a quarterly basis.
They may include returning affected systems to an operationally ready state and confirming that the affected systems are functioning normally. Our Advisor has relationships with a number of third party service providers to assist with cybersecurity containment and remediation efforts, including outside legal counsel, vendors and external insurance brokers.
They may include returning affected systems to an operationally ready state and confirming that the affected systems are functioning normally. Net Lease Office Properties 2025 10-K – 18 Our Advisor has relationships with a number of third party service providers to assist with cybersecurity containment and remediation efforts, including outside legal counsel, vendors and external insurance brokers.
Our Advisor’s internal audit team evaluates and monitors Net Lease Office Properties 2024 10-K – 20 our internal controls over systems access in an effort to mitigate information security risks that may result from unauthorized access to systems and data. Third-party vendors are vetted through our Advisor’s service delivery program to ensure they have an established cybersecurity program.
Our Advisor’s internal audit team evaluates and monitors our internal controls over systems access in an effort to mitigate information security risks that may result from unauthorized access to systems and data. Third-party vendors are vetted through our Advisor’s service delivery program to ensure they have an established cybersecurity program.
Our Advisor’s information technology team is led by its Chief Information Officer who reports to its Chief Financial Officer and has extensive experience working with information security systems.
Net Lease Office Properties 2025 10-K – 17 Our Advisor’s information technology team is led by its Chief Information Officer who reports to its Chief Financial Officer and has extensive experience working with information security systems.
In the event of a cybersecurity incident, the incident response team is responsible for following the steps outlined in our Advisor’s incident response plan, including notifying our Audit Committee and Board, as appropriate. Cybersecurity Risks As of December 31, 2024, we are not aware of any instances of material cybersecurity incidents that impacted the Company in the last three years.
In the event of a cybersecurity incident, the incident response team is responsible for following the steps outlined in our Advisor’s incident response plan, including notifying our Audit Committee and Board, as appropriate.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings. Various claims and lawsuits arising in the normal course of business are pending against us. The results of these proceedings are not expected to have a material adverse effect on our consolidated financial position or results of operations. Net Lease Office Properties 2024 10-K – 21
Biggest changeItem 3. Legal Proceedings. Various claims and lawsuits arising in the normal course of business are pending against us. The results of these proceedings are not expected to have a material adverse effect on our consolidated financial position or results of operations.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDividends Dividends paid by NLOP will be authorized and determined by our Board, in its sole discretion, and will be dependent upon a number of factors. In general, we expect to pay dividends as necessary to maintain our REIT qualification and if we have excess cash available from disposition proceeds.
Biggest changeDividends Dividends paid by NLOP will be authorized and determined by our Board, in its sole discretion, and will be dependent upon a number of factors. In general, we expect to pay dividends if and when we have excess cash available from disposition proceeds and as necessary to maintain our REIT qualification.
The graph assumes a $100 investment on November 2, 2023 (the date our common shares began trading on the NYSE), and its relative performance is tracked through December 31, 2024, together with the reinvestment of all dividends. The comparisons are based on historical data and are not indicative of, nor intended to forecast, the future performance of our common shares.
The graph assumes a $100 investment on November 2, 2023 (the date our common shares began trading on the NYSE), and its relative performance is tracked through December 31, 2025, together with the reinvestment of all dividends. The comparisons are based on historical data and are not indicative of, nor intended to forecast, the future performance of our common shares.
At November 2, 2023 At December 31, 2023 At December 31, 2024 Net Lease Office Properties $ 100.00 $ 179.61 $ 303.34 S&P 500 Index 100.00 110.81 138.53 MSCI US REIT Index 100.00 116.83 127.06 The share price performance included in this graph is not indicative of future share price performance.
At November 2, 2023 At December 31, 2023 At December 31, 2024 At December 31, 2025 Net Lease Office Properties $ 100.00 $ 179.61 $ 303.34 $ 321.17 S&P 500 Index 100.00 110.81 138.53 163.30 MSCI US REIT Index 100.00 116.83 127.06 130.80 The share price performance included in this graph is not indicative of future share price performance.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common shares are listed on the NYSE under the ticker symbol “NLOP.” At February 21, 2025 there were 7,217 registered holders of record of our common shares. This figure does not reflect the beneficial ownership of shares of our common shares.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common shares are listed on the NYSE under the ticker symbol “NLOP.” At February 20, 2026 there were 6,830 registered holders of record of our common shares. This figure does not reflect the beneficial ownership of shares of our common shares.
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In addition, the credit agreements for our NLOP Financing Arrangements ( Note 11 ) contain covenants that limit the amount of distributions that we can pay, as discussed in Item 1A. Risk Factors . Refer to Note 13 for information on the tax treatment of our dividends.
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Refer to Note 1 2 for information on the tax treatment of our dividends.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changePlease see our Annual Report on Form 10-K for the year ended December 31, 2023 for discussion of our financial condition and results of operations for the year ended December 31, 2022. Refer to
Biggest changePlease see our Annual Report on Form 10-K for the year ended December 31, 2024 for discussion of our financial condition and results of operations for the year ended December 31, 2023. Refer to
Item 6. Reserved Net Lease Office Properties 2024 10-K – 23 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Item 6. Reserved Net Lease Office Properties 2025 10-K – 20 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 7. Management's Discussion & Analysis

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

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Biggest changeTenant/Lease Information At December 31, 2024, our tenants/leases had the following characteristics: • Number of tenants — 43; • Investment grade tenants as a percentage of total ABR — 25%; • Implied investment grade tenants as a percentage of total ABR — 20%; • Weighted-average lease term (“WALT”) — 4.3 years; • 94.8% of our leases as a percentage of total ABR provide rent adjustments as follows: ◦ Fixed — 70.3% ◦ Consumer Price Index (“CPI”) and similar — 24.3% ◦ Other — 0.2% Human Capital We have no employees.
Biggest changeTenant/Lease Information At December 31, 2025, our tenants/leases had the following characteristics: • Number of tenants — 26; • Investment grade tenants as a percentage of total ABR — 20%; • Implied investment grade tenants as a percentage of total ABR — 11%; • Weighted-average lease term (“WALT”) — 3.9 years; • 91.6% of our leases as a percentage of total ABR provide rent adjustments as follows: ◦ Fixed — 76.0% ◦ Consumer Price Index (“CPI”) and similar — 15.3% ◦ Other — 0.3% Human Capital We have no employees.
We are providing our website address solely for the information of investors and do not intend for it to be an active link. We do not intend to incorporate the information contained on our website into this Report or other documents filed with or furnished to the SEC. Net Lease Office Properties 2024 10-K – 4
We are providing our website address solely for the information of investors and do not intend for it to be an active link. We do not intend to incorporate the information contained on our website into this Report or other documents filed with or furnished to the SEC. Net Lease Office Properties 2025 10-K – 4

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeFor the year ended December 31, 2024, our consolidated portfolio had the following significant characteristics in excess of 10%, based on the percentage of our consolidated total revenues: • 94% related to domestic operations, which included concentrations of 36% and 19% in Texas and Minnesota, respectively. Net Lease Office Properties 2024 10-K – 38
Biggest changeNet Lease Office Properties 2025 10-K – 35 For the year ended December 31, 2025, our consolidated portfolio had the following significant characteristics in excess of 10%, based on the percentage of our consolidated total revenues: • 27% related to our tenant KBR, 13% related to our tenant Master Lock (including a lease termination fee of $13.0 million received during the year ended December 31, 2025 ( Note 5 )), and 12% related to our tenant JPMorgan Chase; we sold the KBR property in January 2026 ( Note 17 ) and we sold the properties leased to Master Lock and JPMorgan Chase during 2025 ( Note 15 ); and • 97% related to domestic operations, which included concentrations of 41%, 13%, and 11% in Texas, Wisconsin, and Minnesota, respectively.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Market Risk Market risk is the exposure to loss resulting from changes in interest rates, foreign currency exchange rates, and equity prices. The primary market risks that we are exposed to are interest rate risk and foreign currency exchange risk.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Market Risk Market risk is the exposure to loss resulting from changes in interest rates, foreign currency exchange rates, and equity prices. The primary market risk that we are exposed to is interest rate risk.
We have borrowed funds at a combination of fixed and variable rates. Interest rate fluctuations will generally not affect future earnings or cash flows on fixed rate debt unless such debt matures or is otherwise terminated. However, interest rate changes will affect the fair value of fixed rate instruments.
We have borrowed funds at a combination of fixed and variable rates. Interest rate fluctuations will generally not affect future earnings or cash flows on fixed-rate debt unless such debt matures or is otherwise terminated. However, interest rate changes will affect the fair value of fixed-rate instruments. At December 31, 2025, fixed-rate debt comprises 100% of our debt.
We are also exposed to further market risk as a result of tenant concentrations in certain industries and/or geographic regions, since adverse market factors can affect the ability of tenants in a particular industry/region to meet their respective lease obligations.
We are also exposed to further market risk as a result of tenant concentrations in certain industries and/or geographic regions, since adverse market factors can affect the ability of tenants in a particular industry/region to meet their respective lease obligations. In order to manage this risk, we view our collective tenant roster as a portfolio and monitor its diversification.
We have entered into, and may continue to enter into, interest rate cap agreements with counterparties related to certain of our variable-rate debt. See Note 10 for additional information on our interest rate caps. At December 31, 2024, fixed-rate debt comprises 76% of our debt and variable-rate debt comprises 24%.
We have entered into, and may continue to enter into, interest rate cap agreements with counterparties related to variable-rate debt. See Note 9 for additional information on our interest rate caps. Our debt obligations are more fully described in Note 10 and Liquidity and Capital Resources — Summary of Financing in Item 7 above.
In order to manage this risk, we view our collective tenant roster as a portfolio and we attempt to diversify such portfolio so that we are not overexposed to a particular industry or geographic region. Interest Rate Risk The values of our real estate and related fixed-rate debt obligations are subject to fluctuations based on changes in interest rates.
Interest Rate Risk The values of our real estate and related fixed-rate debt obligations are subject to fluctuations based on changes in interest rates.
The following table presents principal cash flows based upon expected maturity dates of our debt obligations outstanding at December 31, 2024 (in thousands): 2025 2026 2027 2028 2029 Total Fair Value Fixed-rate debt (a) $ 66,092 $ 5,882 $ — $ 61,141 $ — $ 133,115 $ 128,237 Variable-rate debt (a) $ 38,867 $ — $ — $ — $ — $ 38,867 $ 25,158 __________ (a) Amounts are based on the exchange rate at December 31, 2024, as applicable.
The following table presents principal cash flows based upon expected maturity dates of our debt obligations outstanding at December 31, 2025 (in thousands): 2026 2027 2028 2029 2030 Total Fair Value Fixed-rate debt $ 21,900 $ — $ — $ — $ — $ 21,900 $ 21,900 Foreign Currency Exchange Rate Risk We sold all of our international investments during the year ended December 31, 2025 ( Note 3 , Note 1 5 ).
Removed
Movements in interest rates on variable rate debt could change future earnings and cash flows, but not significantly affect the fair value of the debt. However, changes in required risk premiums would result in changes in the fair value of variable rate instruments.
Added
Net Lease Office Properties 2025 10-K – 36
Removed
Our debt obligations are more fully described in Note 11 and Liquidity and Capital Resources — Summary of Financing in Item 7 above.
Removed
Annual interest expense on our variable-rate debt at December 31, 2024 would increase or decrease by $0.4 million, for each respective 1% change in annual interest rates.
Removed
Net Lease Office Properties 2024 10-K – 37 Foreign Currency Exchange Rate Risk We own international investments in Europe, and as a result are subject to risk from the effects of exchange rate movements in the Norwegian krone and euro, which may affect future costs and cash flows.
Removed
We have obtained, and may in the future obtain, non-recourse mortgage financing in the local currency. Volatile market conditions arising from macroeconomic factors, may result in significant fluctuations in foreign currency exchange rates.
Removed
To the extent that currency fluctuations increase or decrease rental revenues, as translated to U.S. dollars, the change in debt service (comprised of principal and interest, excluding balloon payments), as translated to U.S. dollars, will partially offset the effect of fluctuations in revenue and, to some extent, mitigate the risk from changes in foreign currency exchange rates.
Removed
We estimate that, for a 1% increase or decrease in the exchange rate between the Norwegian krone or euro and the U.S. dollar, there would be a corresponding change in the projected estimated cash flow (scheduled future rental revenues, net of scheduled future debt service payments for the next 12 months) for our consolidated foreign operations at December 31, 2024 of $0.1 million for both currencies.

Other NLOP 10-K year-over-year comparisons