Q2 2026 Orion Properties Inc Earnings Call

August 7, 2026

Operator: Greetings. Welcome to Orion Properties' Q2 2026 Earnings Call. As a reminder, this conference is being recorded. I would now like to turn the call over to Paul Hughes, General Counsel. Thank you. You may begin.

Speaker #1: Greetings. Welcome to Orion Properties, second quarter of 2026 earnings call. As a reminder, this conference is being recorded. I would now like to turn the call over to Paul Hughes, General Counsel.

Speaker #1: Thank you. You may begin.

Paul C. Hughes: Thank you, and good morning, everyone. Yesterday, Orion released its results for the quarter ended 30 June 2026, filed its Form 10-Q with the Securities and Exchange Commission, and posted its earnings supplement to its website at onlreit.com. During the call today, we will be discussing Orion's guidance estimates for calendar year 2026 and other forward-looking statements, which are based on management's current expectations and are subject to certain risks that could cause actual results to differ materially from our estimates. These risks are discussed in our earnings release as well as in our Form 10-Q and other SEC filings. Orion undertakes no duty to update any forward-looking statements made during this call. We will also be discussing non-GAAP financial measures such as funds from operations, or FFO, and core funds from operations, or core FFO.

Paul Hughes: Thank you, and good morning, everyone. Yesterday, Orion released its results for the quarter ended 30 June 2026, filed its Form 10-Q with the Securities and Exchange Commission, and posted its earnings supplement to its website at onlreit.com. During the call today, we will be discussing Orion's guidance estimates for calendar year 2026 and other forward-looking statements, which are based on management's current expectations and are subject to certain risks that could cause actual results to differ materially from our estimates. These risks are discussed in our earnings release as well as in our Form 10-Q and other SEC filings. Orion undertakes no duty to update any forward-looking statements made during this call. We will also be discussing non-GAAP financial measures such as funds from operations, or FFO, and core funds from operations, or core FFO.

Speaker #2: Thank you, and good morning, everyone. Yesterday, Orion released its results for the quarter-ended June 30, 2026, filed as Form 10-Q with the Securities and Exchange Commission, and posted its earnings supplement to its website at ONLREIT.com.

Speaker #2: During a call today, we will be discussing Orion's guidance estimates for calendar year 2026 and other forward-looking statements, which are based on management's current expectations and are subject to certain risks that could cause actual results to differ materially from our estimates.

Speaker #2: These risks are discussed in our earnings release, as well as in our Form 10-Q and other SEC filings. And Orion undertakes no duty to update any forward-looking statements made during this call.

Speaker #2: We will also be discussing non-GAAP financial measures such as funds from operations or FFO and core funds from operations or core FFO. These non-GAAP financial measures are not a substitute for financial information presented in accordance with GAAP.

Paul C. Hughes: These non-GAAP financial measures are not a substitute for financial information presented in accordance with GAAP. Orion's earnings release and supplement include a reconciliation of our non-GAAP financial measures to the most directly comparable GAAP measure. Hosting the call today are Orion's Chief Executive Officer, Paul McDowell, and Chief Financial Officer, Gavin Brandon. Joining us for the Q&A session will be Chris Day, our Chief Operating Officer. With that, I will turn the call over to Paul McDowell.

Paul Hughes: These non-GAAP financial measures are not a substitute for financial information presented in accordance with GAAP. Orion's earnings release and supplement include a reconciliation of our non-GAAP financial measures to the most directly comparable GAAP measure. Hosting the call today are Orion's Chief Executive Officer, Paul McDowell, and Chief Financial Officer, Gavin Brandon. Joining us for the Q&A session will be Chris Day, our Chief Operating Officer. With that, I will turn the call over to Paul McDowell.

Speaker #2: And Orion's earnings release and supplement include a reconciliation of our non-GAAP financial measures to the most directly comparable GAAP measure. Posting the call today are Orion's Chief Executive Officer, Paul McDowell, and Chief Financial Officer, Gavin Brandon.

Speaker #2: Joining us for the Q&A session will be Chris Day, our Chief Operating Officer. With that, I will turn the call over to Paul McDowell.

Paul H. McDowell: Good morning, everyone, and thank you for joining us on Orion's second quarter earnings call. I will start with a few words on our continuing strategic options process that began in late January. Since that announcement, in concert with our financial advisors at Wells Fargo and J.P. Morgan, we have conducted a robust effort, including broad outreach to solicit proposals from interested parties. Those efforts have been supported by a virtual data room containing comprehensive property and corporate data for those participants that sign non-disclosure agreements. With several parties continuing to conduct diligence, we believe it is in shareholders' interest to see that work through to its reasonable conclusion rather than set arbitrary deadlines. Rest assured, we are moving as expeditiously as possible, although we can offer no assurance that this process will result in Orion concluding any particular transaction.

Paul McDowell: Good morning, everyone, and thank you for joining us on Orion's second quarter earnings call. I will start with a few words on our continuing strategic options process that began in late January. Since that announcement, in concert with our financial advisors at Wells Fargo and JPMorgan, we have conducted a robust effort, including broad outreach to solicit proposals from interested parties. Those efforts have been supported by a virtual data room containing comprehensive property and corporate data for those participants that sign non-disclosure agreements. With several parties continuing to conduct diligence, we believe it is in shareholders' interest to see that work through to its reasonable conclusion rather than set arbitrary deadlines. Rest assured, we are moving as expeditiously as possible, although we can offer no assurance that this process will result in Orion concluding any particular transaction.

Speaker #3: Good morning, everyone. And thank you for joining us on Orion's second quarter earnings call. I will start with a few words on our continuing strategic options process that began in late January.

Speaker #3: Since that announcement, in concert with our financial advisors at Wells Fargo and JPMorgan, we have conducted a robust effort, including broad outreach to solicit proposals from interested parties.

Speaker #3: Those efforts have been supported by a virtual data room containing comprehensive property and corporate data for those participants that sign non-disclosure agreements. With several parties continuing to conduct diligence, we believe it is in shareholders' interest to see that work through to its reasonable conclusion rather than set arbitrary deadlines.

Speaker #3: Rest assured, we are moving as expeditiously as possible—although we can offer no assurance that this process will result in Orion concluding any particular transaction.

Paul H. McDowell: Beyond the ongoing strategic review efforts, the team has continued to execute and deliver strong results against our business plan, which is reflected in our Q2 results. Our strategy remains centered on four priorities: Stabilizing the portfolio through increased leasing activity, the timely disposition of non-core assets, prudent leverage management, and selective capital recycling into dedicated use assets. As we have consistently communicated, we expect these efforts to drive core FFO per share growth in 2026 and beyond while maintaining prudent levels of leverage. So far this year, we have been successful on each of those priorities. From a leasing perspective, we have completed 673,000 square feet of leasing, including 202,000 square feet completed in the Q2 and 116,000 square feet after quarter end, including our first new lease at our Tulsa property.

Paul McDowell: Beyond the ongoing strategic review efforts, the team has continued to execute and deliver strong results against our business plan, which is reflected in our Q2 results. Our strategy remains centered on four priorities: Stabilizing the portfolio through increased leasing activity, the timely disposition of non-core assets, prudent leverage management, and selective capital recycling into dedicated use assets. As we have consistently communicated, we expect these efforts to drive core FFO per share growth in 2026 and beyond while maintaining prudent levels of leverage. So far this year, we have been successful on each of those priorities. From a leasing perspective, we have completed 673,000 sq ft of leasing, including 202,000 sq ft completed in the Q2 and 116,000 sq ft after quarter end, including our first new lease at our Tulsa property.

Speaker #3: Beyond the ongoing strategic review efforts, the team has continued to execute and deliver strong results against our business plan, which is reflected in our second quarter results.

Speaker #3: Our strategy remains centered on four priorities: stabilizing the portfolio through increased leasing activity, the timely disposition of non-core assets, prudent leverage management, and selective capital recycling into dedicated use assets.

Speaker #3: As we have consistently communicated, we expect these efforts to drive core FFO per share growth in 2026 and beyond, while maintaining prudent levels of leverage.

Speaker #3: So far this year, we have been successful on each of those priorities. From a leasing perspective, we have completed 673,000 square feet of leasing, including 202,000 square feet completed in the second quarter, and 116,000 square feet after quarter-end, including our first new lease at our Tulsa property.

Paul H. McDowell: The weighted average lease term for the consolidated portfolio stands at 6.2 years at the end of Q2, up from 5.5 years at the end of Q2 last year, continuing our steady improvement of this crucial metric. Cash rent spreads on Q2 renewals were down 7.7% when comparing ending rents in the current term to starting rents in the new term. However, rent spreads are up 2.1% when comparing current ending rents to new ending rents, driven by escalations over the new lease term. For the year-to-date period, cash rent spreads are very slightly down by 0.2% on renewals and up 7.1% when comparing current ending rents to new ending rents.

Paul McDowell: The weighted average lease term for the consolidated portfolio stands at 6.2 years at the end of Q2, up from 5.5 years at the end of Q2 last year, continuing our steady improvement of this crucial metric. Cash rent spreads on Q2 renewals were down 7.7% when comparing ending rents in the current term to starting rents in the new term. However, rent spreads are up 2.1% when comparing current ending rents to new ending rents, driven by escalations over the new lease term. For the year-to-date period, cash rent spreads are very slightly down by 0.2% on renewals and up 7.1% when comparing current ending rents to new ending rents.

Speaker #3: The weighted average lease term for the consolidated portfolio stands at 6.2 years at the end of the second quarter, up from 5.5 years at the end of the second quarter last year, continuing our steady improvement of this crucial metric.

Speaker #3: Cash rent spreads on second-quarter renewals were down 7.7% when comparing ending rents in the current term to starting rents in the new term. However, rent spreads are up 2.1% when comparing current ending rents to new ending rents.

Speaker #3: Driven by escalations over the new lease term. For the year-to-date period, cash rent spreads are very slightly down by 0.2% on renewals, and up 7.1% when comparing current ending rents to new ending rents.

Paul H. McDowell: Although volatile, leasing concessions are so far trending lower this year than last on a per square foot basis. Due to a few scheduled move-outs and select opportunistic dispositions, offset to some extent by our leasing efforts, our consolidated portfolio occupancy rate of 78.1% at the end of Q2 was down as expected from the end of Q1, but up from 76.8% at the end of Q2 of last year. As we have said many times, rent spreads and occupancy rates can and will be volatile from quarter-to-quarter given our largely single-tenant portfolio, though we remain positive about the overall trends, which continue to see steady improvement.

Paul McDowell: Although volatile, leasing concessions are so far trending lower this year than last on a per square foot basis. Due to a few scheduled move-outs and select opportunistic dispositions, offset to some extent by our leasing efforts, our consolidated portfolio occupancy rate of 78.1% at the end of Q2 was down as expected from the end of Q1, but up from 76.8% at the end of Q2 of last year. As we have said many times, rent spreads and occupancy rates can and will be volatile from quarter-to-quarter given our largely single-tenant portfolio, though we remain positive about the overall trends, which continue to see steady improvement.

Speaker #3: Although volatile, leasing concessions are so far trending lower this year than last on a per-square-foot basis. Due to a few scheduled move-outs and select opportunistic dispositions, offset to some extent by our leasing efforts, our consolidated portfolio occupancy rate of 78.1 percent at the end of the second quarter was down as expected from the end of the first quarter, but up from 76.8 percent at the end of the second quarter of last year.

Speaker #3: As we have said many times, rent spreads and occupancy rates can and will be volatile from quarter to quarter, given our largely singleton and portfolio, though we remain positive about the overall trends, which continue to see steady improvement.

Paul H. McDowell: Beyond the leasing completed year-to-date, our pipeline remains quite strong despite our smaller size at over 1.1 million square feet, or over 17% of the total portfolio that is in either discussion or documentation stage, including a substantial number of new long-term leases for currently vacant space and some full building renewals. As we look out, we continue to see improving demand for our assets, and we are working hard to move forward on executing as much leasing as possible. The key message is that we continue to be quite pleased with our leasing velocity so far this year.

Paul McDowell: Beyond the leasing completed year-to-date, our pipeline remains quite strong despite our smaller size at over 1.1 million sq ft, or over 17% of the total portfolio that is in either discussion or documentation stage, including a substantial number of new long-term leases for currently vacant space and some full building renewals. As we look out, we continue to see improving demand for our assets, and we are working hard to move forward on executing as much leasing as possible. The key message is that we continue to be quite pleased with our leasing velocity so far this year.

Speaker #3: Beyond the leasing completed year-to-date, our pipeline remains quite strong despite our smaller size, at over 1.1 million square feet, or over 17 percent of the total portfolio, that is in either discussion or documentation stage—including a substantial number of new long-term leases for currently vacant space and some full building renewals.

Speaker #3: And as we look out, we continue to see improving demand for our assets and we are working hard to move forward on executing as much leasing as possible.

Speaker #3: The key message is that we continue to be quite pleased with our leasing velocity so far this year. Turning to dispositions, we have been very successful this year, and we have primarily utilized proceeds from opportunistic asset sale activity to continue to deleverage, ending the quarter with net debt to annualized adjusted EBITDA at 5.4 times—almost a full turn better than last quarter and the same quarter a year ago.

Paul H. McDowell: Turning to dispositions, we have been very successful this year. We have primarily utilized the proceeds from opportunistic asset sale activity to continue to deleverage, ending the quarter with net debt to annualized adjusted EBITDA at 5.4x, almost a full turn better than last quarter and the same quarter a year ago. Specifically, during H1, we generated gross proceeds of almost $84 million on the sale of 4 properties, plus the 37.4 acre Deerfield, Illinois campus. The Q2 sales activity generated an aggregate gross sales price of $70.6 million and included 2 strategic dispositions, one of which was sold to the existing tenant at a 5.6% cash capitalization rate, and the other was a recently vacated asset sold to an adjacent user at an implied 5% cash capitalization rate on expiring rent.

Paul McDowell: Turning to dispositions, we have been very successful this year. We have primarily utilized the proceeds from opportunistic asset sale activity to continue to deleverage, ending the quarter with net debt to annualized adjusted EBITDA at 5.4x, almost a full turn better than last quarter and the same quarter a year ago. Specifically, during H1, we generated gross proceeds of almost $84 million on the sale of four properties, plus the 37.4 acre Deerfield, Illinois campus. The Q2 sales activity generated an aggregate gross sales price of $70.6 million and included two strategic dispositions, one of which was sold to the existing tenant at a 5.6% cash capitalization rate, and the other was a recently vacated asset sold to an adjacent user at an implied 5% cash capitalization rate on expiring rent.

Speaker #3: Specifically, during the first half of the year, we generated gross proceeds of almost $84 million on the sale of 4 properties plus the $37.4-acre Deerfield, Illinois campus.

Speaker #3: The second quarter sales activity generated an aggregate gross sales price of $70.6 million and included two strategic dispositions. One of which was sold to the existing tenant at a 5.6 percent cash capitalization rate, and the other was a recently vacated asset sold to an adjacent user at an implied 5 percent cash capitalization rate on expiring rent.

Paul H. McDowell: These sales have allowed us to repay roughly $61 million of debt, including over $35 million on our CMBS loan in the Q2. Our debt repayment and refinance efforts have also allowed us to steadily reduce interest expense by $700,000 for the Q2 and $1.6 million for the year-to-date period compared to the same periods in 2025. On another very positive note, the average sale price per square foot has steadily increased on the sale of vacant properties over the past year or so. These transactions continue to demonstrate our ability to monetize non-core assets and redeploy capital while improving the overall quality and durability of our remaining portfolio. Our continued focus on selling properties with difficult re-leasing prospects and high carrying costs has allowed us to continue to materially reduce property operating expenses.

Paul McDowell: These sales have allowed us to repay roughly $61 million of debt, including over $35 million on our CMBS loan in the Q2. Our debt repayment and refinance efforts have also allowed us to steadily reduce interest expense by $700,000 for the Q2 and $1.6 million for the year-to-date period compared to the same periods in 2025. On another very positive note, the average sale price per square foot has steadily increased on the sale of vacant properties over the past year or so. These transactions continue to demonstrate our ability to monetize non-core assets and redeploy capital while improving the overall quality and durability of our remaining portfolio. Our continued focus on selling properties with difficult re-leasing prospects and high carrying costs has allowed us to continue to materially reduce property operating expenses.

Speaker #3: These sales have allowed us to repay roughly $61 million of debt, including over $35 million on our CMBS loan in the second quarter. Our debt repayment and refinance efforts have also allowed us to steadily reduce interest expense by $700,000 for the second quarter and $1.6 million for the year-to-date period, compared to the same periods in 2025.

Speaker #3: On another very positive note, the average sale price per square foot has steadily increased on the sale of vacant properties over the past year or so.

Speaker #3: These transactions continue to demonstrate our ability to monetize non-core assets and redeploy capital while improving the overall quality and durability of our remaining portfolio.

Speaker #3: Our continued focus on selling properties with difficult re-leasing prospects and high carrying costs has allowed us to continue to materially reduce property operating expenses.

Paul H. McDowell: For example, our 2025 and 2026 vacant or near-term vacant property sales are estimated to save more than $12 million in annual carrying costs. These efforts have already contributed to an improvement in property operating costs of $3.4 million for the Q2 and $5.1 million for the year-to-date period compared to the same periods in 2025. We remain committed to shifting our portfolio concentration toward dedicated use assets where our tenants perform work that cannot be replicated from home or relocated to a generic office setting and away from traditional suburban office properties. These property types include medical, lab, R&D, flex, and government properties, all of which we already own.

Paul McDowell: For example, our 2025 and 2026 vacant or near-term vacant property sales are estimated to save more than $12 million in annual carrying costs. These efforts have already contributed to an improvement in property operating costs of $3.4 million for the Q2 and $5.1 million for the year-to-date period compared to the same periods in 2025. We remain committed to shifting our portfolio concentration toward dedicated use assets where our tenants perform work that cannot be replicated from home or relocated to a generic office setting and away from traditional suburban office properties. These property types include medical, lab, R&D, flex, and government properties, all of which we already own.

Speaker #3: For example, our 2025 and 2026 vacant or near-term vacant property sales are estimated to save more than $12 million in annual carrying costs. These efforts have already contributed to an improvement in property operating costs of 3.4 million for the second quarter and 5.1 million for the year-to-date period, compared to the same periods in 2025.

Speaker #3: We remain committed to shifting our portfolio concentration toward dedicated use assets where our tenants perform work that cannot be replicated from home or relocated to a generic office setting, and away from traditional suburban office properties.

Speaker #3: These property types include medical, lab, R&D, flex, and government properties, all of which we already own. At quarter end, these dedicated use assets, or DUA, represent 38.7% of annualized base rent of our consolidated portfolio, compared to 37.1% at the end of last quarter and 32.6% at the end of the second quarter of 2025. This reflects our sales of traditional office assets and our purchase earlier this year of the Barilla DUA property.

Paul H. McDowell: At quarter-end, these dedicated use assets, or DUA, represent 38.7% of annualized base rent of our consolidated portfolio, compared to 37.1% at the end of last quarter and 32.6% at the end of the Q2 of 2025, reflecting our sales of traditional office assets and our purchase earlier this year of the Barilla DUA property. We expect this percentage to continue increasing over time through continued disposition activity of traditional office and targeted acquisitions of DUA properties. Before I close, I do want to take a moment to reflect on the very significant progress we have made at Orion. Over the past two years, we have averaged about 1 million square feet of leasing per year and are on track to lease about that much again this year.

Paul McDowell: At quarter-end, these dedicated use assets, or DUA, represent 38.7% of annualized base rent of our consolidated portfolio, compared to 37.1% at the end of last quarter and 32.6% at the end of the Q2 of 2025, reflecting our sales of traditional office assets and our purchase earlier this year of the Barilla DUA property. We expect this percentage to continue increasing over time through continued disposition activity of traditional office and targeted acquisitions of DUA properties. Before I close, I do want to take a moment to reflect on the very significant progress we have made at Orion. Over the past two years, we have averaged about 1 million sq ft of leasing per year and are on track to lease about that much again this year.

Speaker #3: We expect this percentage to continue increasing over time, through continued disposition activity of traditional office and targeted acquisitions of DUA properties. Before I close, I do want to take a moment to reflect on the very significant progress we have made at Orion.

Speaker #3: Over the past 2 years, we have averaged about $1 million square feet of leasing per year, and are on track to lease about that much again this year.

Paul H. McDowell: We have sold 39 properties since our spin, totaling more than 4.2 million square feet, reducing property operating expenses by millions per year. We continue to work to manage overhead, significantly reducing head count over the past two years, including at the executive level. We successfully refinanced and extended both our revolving debt and our CMBS debt this year. We continue to manage leverage and have steadily reduced debt by $183 million since the spin. These combined efforts are showing up in our key metrics such as WALT, occupancy, net debt to adjusted EBITDA, and G&A, all of which are improved over the same period a year ago. Finally, we have significant confidence in our ability to meaningfully grow core FFO from here.

Paul McDowell: We have sold 39 properties since our spin, totaling more than 4.2 million sq ft, reducing property operating expenses by millions per year. We continue to work to manage overhead, significantly reducing head count over the past two years, including at the executive level. We successfully refinanced and extended both our revolving debt and our CMBS debt this year. We continue to manage leverage and have steadily reduced debt by $183 million since the spin. These combined efforts are showing up in our key metrics such as WALT, occupancy, net debt to adjusted EBITDA, and G&A, all of which are improved over the same period a year ago. Finally, we have significant confidence in our ability to meaningfully grow core FFO from here.

Speaker #3: We have sold 39 properties since our spin, totaling more than 4.2 million square feet, reducing property operating expenses by millions per year. We continue to work to manage overhead, significantly reducing headcount over the past two years, including at the executive level.

Speaker #3: We successfully refinanced and extended both our revolving debt and our CMBS debt this year. We continue to manage leverage and have steadily reduced debt by $183 million since the spin.

Speaker #3: These combined efforts are showing up in our key metrics, such as WALT, occupancy, net debt to adjusted EBITDA, and G&A, all of which are improved over the same period a year ago.

Speaker #3: Finally, we have significant confidence in our ability to meaningfully grow core FFO from here. For the balance of 2026, our operational focus remains on improving portfolio quality, lengthening WALT, renewing tenants, filling or selling vacant space, and prudently managing expenses and leverage as we work to maximize Orion's value for investors, and potential strategic partners.

Paul H. McDowell: For the balance of 2026, our operational focus remains on improving portfolio quality, lengthening WALT, renewing tenants, filling or selling vacant space, and prudently managing expenses and leverage as we work to maximize Orion's value for investors and potential strategic partners. I firmly believe that if we continue to execute on our business plan, the market will finally begin to recognize the meaningful intrinsic value of this company that is not reflected in our current discounted valuation. With that, I will turn the call over to Gavin.

Paul McDowell: For the balance of 2026, our operational focus remains on improving portfolio quality, lengthening WALT, renewing tenants, filling or selling vacant space, and prudently managing expenses and leverage as we work to maximize Orion's value for investors and potential strategic partners. I firmly believe that if we continue to execute on our business plan, the market will finally begin to recognize the meaningful intrinsic value of this company that is not reflected in our current discounted valuation. With that, I will turn the call over to Gavin.

Speaker #3: I firmly believe that if we continue to execute on our business plan, the market will finally begin to recognize the meaningful intrinsic value of this company that is not reflected in our current discounted valuation.

Speaker #3: With that, I will turn the call over to Gavin.

Gavin B. Brandon: Thanks, Paul. For Q2 2026 compared to Q2 2025, Orion had total revenues of $34.3 million compared to $37.3 million. Net income was $24.6 million or $0.43 per share in Q2 2026 and included a gain of $28.8 million, primarily related from the opportunistic sell of two of our operating properties during the quarter. This non-recurring gain does not impact our core FFO results, which were $11.8 million or $0.20 per share, basically flat compared to Q2 2025. Adjusted EBITDA was $17.2 million versus $18 million in Q2 2025. G&A in Q2 improved to $4.6 million compared to $4.8 million in Q2 2025, as we benefited from the decision to continue to lower headcount through attrition and other means.

Gavin Brandon: Thanks, Paul. For Q2 2026 compared to Q2 2025, Orion had total revenues of $34.3 million compared to $37.3 million. Net income was $24.6 million or $0.43 per share in Q2 2026 and included a gain of $28.8 million, primarily related from the opportunistic sell of two of our operating properties during the quarter. This non-recurring gain does not impact our core FFO results, which were $11.8 million or $0.20 per share, basically flat compared to Q2 2025. Adjusted EBITDA was $17.2 million versus $18 million in Q2 2025. G&A in Q2 improved to $4.6 million compared to $4.8 million in Q2 2025, as we benefited from the decision to continue to lower headcount through attrition and other means.

Speaker #2: Thanks, Paul. For the second quarter of 2026, compared to the second quarter of 2025, Orion had total revenues of $34.3 million, compared to $37.3 million.

Speaker #2: Net income was $24.6 million, or $43 cents per share, in the second quarter of 2026, and included a gain of $28.8 million primarily related from the opportunistic sell of 2 of our operating properties during the quarter.

Speaker #2: This non-recurring gain does not impact our core FFO results, which were 11.8 million or 20 cents per share, basically flat compared to the same quarter in 2025.

Speaker #2: Adjusted EBITDA was $17.2 million, versus $18 million in the same quarter of 2025. G&A in the second quarter improved to $4.6 million compared to $4.8 million in the same quarter of 2025, as we benefited from the decision to continue to lower headcount through attrition and other means.

Gavin B. Brandon: G&A expense includes the ongoing costs related to the strategic review, which we equate to approximately $100,000 in Q2 2026 and $200,000 year to date. CapEx and leasing costs in Q2 were $8.9 million, compared to $15.6 million in Q2 2025. As we have previously discussed, CapEx timing is dependent on when leases are executed and work is completed on properties. Turning to the balance sheet, our net debt to annualized adjusted EBITDA was 5.4x at quarter end, compared to 6.4x at the end of Q2 2025. As of 30 June, we had total liquidity of approximately $177 million, comprised of $63.5 million of cash and cash equivalents and restricted cash, and $113 million of available capacity under our credit facility revolver.

Gavin Brandon: G&A expense includes the ongoing costs related to the strategic review, which we equate to approximately $100,000 in Q2 2026 and $200,000 year to date. CapEx and leasing costs in Q2 were $8.9 million, compared to $15.6 million in Q2 2025. As we have previously discussed, CapEx timing is dependent on when leases are executed and work is completed on properties. Turning to the balance sheet, our net debt to annualized adjusted EBITDA was 5.4x at quarter end, compared to 6.4x at the end of Q2 2025. As of 30 June, we had total liquidity of approximately $177 million, comprised of $63.5 million of cash and cash equivalents and restricted cash, and $113 million of available capacity under our credit facility revolver.

Speaker #2: G&A expense includes the ongoing cost related to the strategic review, which we equate to approximately $100,000 in the second quarter of 2026 and $200,000 year-to-date.

Speaker #2: Capex and leasing costs in the second quarter were $8.9 million, compared to $15.6 million in the same quarter of 2025. As we have previously discussed, capex timing is dependent on when leases are executed and work is completed on properties.

Speaker #2: Turning to the balance sheet, our net debt to annualized adjusted EBITDA was $5.4 times that quarter end, compared to $6.4 times at the end of the second quarter of 2025.

Speaker #2: As of June 30, we had total liquidity of approximately $177 million, comprised of $63.5 million of cash and cash equivalents, including restricted cash, and $113 million of available capacity under our credit facility revolver.

Gavin B. Brandon: Given our strong efforts to sell non-core and select operating properties, we have significantly lowered debt outstanding and extended maturities. We ended the quarter with $436.6 million of outstanding debt, compared to $483 million a year ago, excluding our proportionate share of the unconsolidated joint ventures debt. Our next significant maturity is not until February 2028, which we have an option to extend until February 2029. Our net debt to gross real estate assets was 27.9% at the end of the quarter, compared to 29.5% a year ago. On 5 August, Orion's Board of Directors declared a quarterly cash dividend of $0.02 per share for Q3 2026, payable on 15 October 2026 to stockholders on record as of 30 September 2026. Moving to our outlook for 2026.

Gavin Brandon: Given our strong efforts to sell non-core and select operating properties, we have significantly lowered debt outstanding and extended maturities. We ended the quarter with $436.6 million of outstanding debt, compared to $483 million a year ago, excluding our proportionate share of the unconsolidated joint ventures debt. Our next significant maturity is not until February 2028, which we have an option to extend until February 2029. Our net debt to gross real estate assets was 27.9% at the end of the quarter, compared to 29.5% a year ago. On 5 August, Orion's Board of Directors declared a quarterly cash dividend of $0.02 per share for Q3 2026, payable on 15 October 2026 to stockholders on record as of 30 September 2026. Moving to our outlook for 2026.

Speaker #2: Given our strong efforts to sell non-core and select operating properties, we have significantly lowered debt outstanding and extended maturities, we ended the quarter with $436.6 million of outstanding debt compared to $483 million a year ago, excluding a proportionate share of the unconsolidated joint ventures debt.

Speaker #2: Our next significant maturity is not until February of 2028, which we have an option to extend until February 2029. Our net debt to gross real estate assets was $27.9 percent at the end of the quarter, compared to $29.5 percent a year ago.

Speaker #2: On August 5, Orion's board of directors declared a quarterly cash dividend of $0.02 per share for the third quarter of 2026, payable on October 15, 2026, to stockholders on record as of September 30, 2026.

Speaker #2: Moving to our outlook for 2026, we are narrowing and raising the range for our core FFO, lowering the range for our net debt to adjusted EBITDA, and reaffirming our expectations for G&A.

Gavin B. Brandon: We are narrowing and raising the range for our core FFO, lowering the range for our net debt to adjusted EBITDA, and reaffirming our expectations for G&A. Core FFO for the year is now expected to range from $0.72 to $0.77 per diluted share, up from our previously affirmed range of $0.69 to $0.76 per diluted share. Net debt to adjusted EBITDA is now expected to range from 6 to 6.8 times, down from our previous range of 6.5 to 7.3 times. These improvements in our guidance for the year are driven by several factors, including recurring items such as actively reducing operating expenses and improved leasing expectations, as well as one-time items such as lease termination income and property tax appeals and refunds. Our G&A range is $19.8 million to $20.8 million is unchanged. With that, we'll open the line for questions. Operator?

Gavin Brandon: We are narrowing and raising the range for our core FFO, lowering the range for our net debt to adjusted EBITDA, and reaffirming our expectations for G&A. Core FFO for the year is now expected to range from $0.72 to $0.77 per diluted share, up from our previously affirmed range of $0.69 to $0.76 per diluted share. Net debt to adjusted EBITDA is now expected to range from 6 to 6.8 times, down from our previous range of 6.5 to 7.3 times. These improvements in our guidance for the year are driven by several factors, including recurring items such as actively reducing operating expenses and improved leasing expectations, as well as one-time items such as lease termination income and property tax appeals and refunds. Our G&A range is $19.8 million to $20.8 million is unchanged. With that, we'll open the line for questions. Operator?

Speaker #2: Core FFO for the year is now expected to range from $72 cents to $77 cents per diluted share, up from our previously affirmed range of $69 cents to $76 cents per diluted share, net debt to adjusted EBITDA is now expected to range from $6 to $6.8 times down from our previous range of $6.5 to $7.3 times.

Speaker #2: These improvements in our guidance for the year are driven by several factors, including recurring items such as actively reducing operating expenses and improved leasing expectations, as well as one-time items such as lease termination income and property tax appeals and refunds.

Speaker #2: Our G&A range is $19.8 million to $20.8 million is unchanged. With that, we'll open the line for questions. Operator?

Operator: Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue, and for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Mitch Germain with Citizens JMP. Please proceed.

Speaker #1: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Speaker #1: You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker #1: Our first question is from Mitch Jermaine with Citizens JMP. Please proceed.

Mitch Germain: Congrats on the quarter. One asset for sale today, it seems like I'm curious about your decision to potentially sell an asset leased to the government, which kind of meets your criteria for the existing portfolio.

Speaker #3: Congrats on the quarter. One asset for sale today, it seems like, I'm curious about your decision to potentially sell an asset leased to the government, which is kind of meets your criteria for the existing portfolio.

Chris H. Day: Hey, Mitch, this is Chris. Thanks for dialing in. The asset that we're under contract to sell, it's one where the government's looking to downsize on that asset. Plus, it's in a very remote area, and it's one that we analyzed the disposition of it and thought that that's the best overall outcome for that asset.

Chris Day: Hey, Mitch, this is Chris. Thanks for dialing in. The asset that we're under contract to sell, it's one where the government's looking to downsize on that asset. Plus, it's in a very remote area, and it's one that we analyzed the disposition of it and thought that that's the best overall outcome for that asset.

Speaker #3: Hey Mitch, this is Chris. Thanks for dialing in. The asset that we're under contract to sell is one where the government's looking to downsize on that asset.

Speaker #3: So there is some risk around the government tenancy in that one asset, plus it's in a very remote area, and it's one that we analyzed the disposition of it and thought that that's the best overall outcome for that asset.

Mitch Germain: That's super helpful. There are four vacant assets in the portfolio. It's pretty amazing. I think at one point you had 11 or 12. Tell me about the decision and process that you guys go through regarding either to sell or to re-lease.

Speaker #3: That's super helpful. There are four vacant assets in the portfolio. It's pretty amazing; I think, at one point, you had 11 or 12. Tell me about the decision and process that you guys go through regarding either selling or releasing.

Chris H. Day: Yeah, Mitch, it's been a pretty consistent process. It's evolved over time, as you might imagine. We sort of look really hard at the asset and say, Is this an asset that we think it's worth putting money into and leasing up over time? Or is this an asset that's going to cost us either a lot of money to re-tenant or really just doesn't have, in our view, the long-term demand factors present? We've obviously sold a lot of vacant assets, but we've also been pretty successful in leasing some assets up. For example, we thought it made sense to put money into our asset in Parsippany, New Jersey. We put that money in. That asset is leasing up pretty well. I think the same is true with our Buffalo property. We looked at that property and thought, That's a Class A building in downtown Buffalo.

Paul McDowell: Yeah, Mitch, it's been a pretty consistent process. It's evolved over time, as you might imagine. We sort of look really hard at the asset and say, Is this an asset that we think it's worth putting money into and leasing up over time? Or is this an asset that's going to cost us either a lot of money to re-tenant or really just doesn't have, in our view, the long-term demand factors present? We've obviously sold a lot of vacant assets, but we've also been pretty successful in leasing some assets up. For example, we thought it made sense to put money into our asset in Parsippany, New Jersey. We put that money in. That asset is leasing up pretty well. I think the same is true with our Buffalo property. We looked at that property and thought, That's a Class A building in downtown Buffalo.

Speaker #4: Yeah. I mean, Mitch, it's been a pretty consistent process. That is, and it's involved over time, as you might imagine. But we sort of look really hard at the asset and say, "Is this an asset that we think it's worth putting money into and leasing up over time, or is this an asset that's going to cost us either a lot of money to retain it or really just doesn't have in our view the long-term demand factors present?" So we've obviously sold a lot of vacant assets, but we've also been pretty successful in leasing some assets up.

Speaker #4: For example, we thought it made sense to put money into our asset in Parsippany, New Jersey, we put that money in, that asset is leasing up pretty well.

Speaker #4: I think the same is true with our Buffalo property. We looked at that property and thought that's a class A building in downtown Buffalo.

Chris H. Day: We think we can lease that up. We've migrated our tenant, Ingram Micro, into that building, and we've got some strong momentum on leasing in the building from other tenants. We feel good about that. It's sort of an ongoing and dynamic process. We're fortunate in that we have moved most of the vacant properties off our balance sheet. We have a few left, some we have quite a bit of confidence about leasing up. For example, the Tulsa property, we just put our first lease into that property. Others, we're sort of evaluating whether we think in the long term we're going to get leasing momentum or not.

Paul McDowell: We think we can lease that up. We've migrated our tenant, Ingram Micro, into that building, and we've got some strong momentum on leasing in the building from other tenants. We feel good about that. It's sort of an ongoing and dynamic process. We're fortunate in that we have moved most of the vacant properties off our balance sheet. We have a few left, some we have quite a bit of confidence about leasing up. For example, the Tulsa property, we just put our first lease into that property. Others, we're sort of evaluating whether we think in the long term we're going to get leasing momentum or not.

Speaker #4: We think we can lease that up. We've migrated our tenant, Ingram Micro, into that building, and we've got some strong momentum on leasing in the building from other tenants.

Speaker #4: So we feel good about that. It's sort of an ongoing and dynamic process, but we're fortunate in that we have moved most of the vacant properties off our balance sheet.

Speaker #4: And we have a few left, some we have quite a bit of confidence about leasing up. For example, the Tulsa property we just put our first lease into that property, and others were sort of evaluating whether we think in the long term we're going to get leasing momentum or not.

Mitch Germain: Got you. 57 assets, 6.4 million square feet. What percentage would you characterize to be kind of non-core at this point?

Mitch Germain: Got you. 57 assets, 6.4 million sq ft. What percentage would you characterize to be kind of non-core at this point?

Speaker #3: Got you. $57 assets, $6.4 million square feet. What percentage would you characterize to be kind of non-core at this point?

Speaker #4: It's hard to sort of we make that judgment based upon our expectations for long-term leases. I would say it's just a few percent at this stage, we feel pretty confident about the assets we have left.

Chris H. Day: We make that judgment based upon our expectations for long-term leases. I would say it's just a few percent at this stage. We feel pretty confident about the assets we have left, and our ability to keep those properties leased or to lease them up if they are vacant or become vacant. We're always going to look at it. We may have some vacant sales over the course of the year, but we just have to see how leasing shapes up.

Paul McDowell: We make that judgment based upon our expectations for long-term leases. I would say it's just a few percent at this stage. We feel pretty confident about the assets we have left, and our ability to keep those properties leased or to lease them up if they are vacant or become vacant. We're always going to look at it. We may have some vacant sales over the course of the year, but we just have to see how leasing shapes up.

Speaker #4: And our ability to keep those properties leased or to lease up them, lease them up if they are vacant or become vacant, we're always going to look at it.

Speaker #4: We may have some vacant sales over the course of the year, but we just have to see how leasing shapes up.

Mitch Germain: Great. Last one from me. Paul, I really truly appreciate the color and perspective you're providing regarding your strategic review. Not so many management teams are as transparent regarding the process. To that end, will there be a formal announcement? Obviously, if something happens, we'll know, but will there be a formal announcement if you decide to continue to operate? Is that the plan here?

Speaker #3: Great. Last one from me. Paul, I really, truly appreciate you calling your perspective, you're providing regarding your strategic review, not so many management teams are as transparent regarding the process.

Speaker #3: To that end, will there be a formal announcement? I mean, obviously, if something happens, we'll know, but will there be a formal announcement if you decide to continue to operate?

Speaker #3: Is that the plan here?

Paul H. McDowell: Yeah. Mitch, thank you very much for the transparency. We want to be as transparent as we possibly can be. We know this process has been going on for a long time. We don't control a lot of the timing. We're interacting with third parties, and they control the timing to some degree. We're trying to move as expeditiously as possible. When we come to a conclusion of the process, whatever that is, we will make an announcement. We're just not there yet, and when we do get there, we'll let everyone know. That includes if we decide to move forward with our independent business plan.

Paul McDowell: Yeah. Mitch, thank you very much for the transparency. We want to be as transparent as we possibly can be. We know this process has been going on for a long time. We don't control a lot of the timing. We're interacting with third parties, and they control the timing to some degree. We're trying to move as expeditiously as possible. When we come to a conclusion of the process, whatever that is, we will make an announcement. We're just not there yet, and when we do get there, we'll let everyone know. That includes if we decide to move forward with our independent business plan.

Speaker #4: Yeah. I mean, look, Rich, I mean, look, Mitch, thank you very much for the transparency. We want to be as transparent as we possibly can be.

Speaker #4: We know this process has been going on for a long time. We don't control a lot of the timing. We're interacting with third parties, and they control the timing to some degree.

Speaker #4: So, we're trying to move as expeditiously as possible. When we come to a conclusion on the process, whatever that is, we will make an announcement.

Speaker #4: We're just not there yet, and when we do get there, we'll let everyone know. And that includes if we decide to move forward with our independent business plan.

Mitch Germain: Thank you.

Speaker #3: Thank you.

Operator: As a reminder, just star one on your telephone keypad if you would like to ask a question. We will just pause for a brief moment to poll for questions. There are no further questions at this time. I would like to turn the floor back over to Paul McDowell. Actually, we do have a question, I'm sorry, from Matthew Erdner with JonesTrading. Please proceed.

Speaker #1: As a reminder, to star 1 on your telephone keypad. If you would like to ask a question, we will just pause for a brief moment to pull for questions.

Speaker #1: There are no further questions at this time. I would like to turn the floor back over to Paul McDowell. Actually, we do have a question.

Speaker #1: I'm sorry. From Matthew Erdner with Jones Trading. Please proceed.

Matthew Erdner: Hey, guys. Apologies, I thought I had dialed in. Thanks for taking the question.

Speaker #5: Hey, guys. Apologies—I thought I had dialed in. Thanks for taking the question, and congrats on the continued progress. I thought you had a really good quarter.

Chris H. Day: Yeah, no problem.

Paul McDowell: Yeah, no problem.

Matthew Erdner: Congrats on the continued progress. I thought you guys had a really good quarter. I guess following up on kind of the portfolio, you said you had a few percentage left. Piggybacking on that, what percentage are you looking to get those dedicated use assets to in kind of the near term and then over the long term, call it three to five years out?

Speaker #5: So I guess following up on kind of the portfolio, you said you had a few percentage left. Kind of piggybacking on that, what percentage are you looking to get those dedicated used assets to?

Speaker #5: And kind of the near term, and then over the long term, call it three to five years out?

Chris H. Day: It's a good question. I think a lot of it, when you think about the longer-term component, that is the 3 to 5 years out, that will be dependent to some degree on our access to outside capital. At the moment, our share price doesn't support that, we have to work within our existing portfolio.

Paul McDowell: It's a good question. I think a lot of it, when you think about the longer-term component, that is the 3 to 5 years out, that will be dependent to some degree on our access to outside capital. At the moment, our share price doesn't support that, we have to work within our existing portfolio.

Speaker #4: It's a good question. And I think a lot of it, when you think about the longer-term component, that is the three to five years out, that will be dependent to some degree on our access to outside capital.

Speaker #4: At the moment, our share price doesn't support that, so we have to work within our existing portfolio. So to the extent we're working within our existing portfolio, the progress will be steady but incremental.

Paul H. McDowell: To the extent we're working within our existing portfolio, the progress will be steady but incremental. As we recycle capital, we'll resell assets and we might occasionally buy DUA assets. We'll slowly build that up over time. To the extent we get access to outside capital, we would expect that transition to occur much more rapidly.

Paul McDowell: To the extent we're working within our existing portfolio, the progress will be steady but incremental. As we recycle capital, we'll resell assets and we might occasionally buy DUA assets. We'll slowly build that up over time. To the extent we get access to outside capital, we would expect that transition to occur much more rapidly.

Speaker #4: As we recycle capital, we'll resell assets, and we might occasionally buy DUA assets. So we'll slowly build that up over time. To the extent we get access to outside capital, we would expect that transition to occur much more rapidly.

Matthew Erdner: Got it.

Paul H. McDowell: The longer-term goals, of course, are to have well more than a majority of the portfolio in DUA assets. The timing of that is yet to be determined.

Paul McDowell: The longer-term goals, of course, are to have well more than a majority of the portfolio in DUA assets. The timing of that is yet to be determined.

Speaker #4: So the longer-term goals are, of course, to have well more than a majority of the portfolio in DUA assets the timing of that is yet to be determined.

Matthew Erdner: Perfect. I appreciate the color there. I know that the CapEx is kind of a chunky number and can bounce around from quarter to quarter, but do you guys have any idea of what you are expecting across the remainder of the year?

Speaker #5: Perfect. I appreciate the color there. And then I know that the CapEx is kind of a chunky number and can bounce around from quarter to quarter, but do you guys have any idea of what you are expecting kind of across the remainder of the year?

Paul H. McDowell: Yes. Just hang on just one second. Okay. Yeah. So far this year, we've spent about, call it $27 million in CapEx, and we use that term broadly, meaning that includes building and site updates that we've done to update our buildings, tenant improvements and lease incentives, and leasing commissions. It's a pretty volatile number because we don't know when tenants are going to draw down on existing obligations that we have, which is disclosed in our 10-Q. We expect for the remainder of the year, that total number of additional CapEx from here could range from anywhere from $30 to 40 million.

Paul McDowell: Yes. Just hang on just one second. Okay. Yeah. So far this year, we've spent about, call it $27 million in CapEx, and we use that term broadly, meaning that includes building and site updates that we've done to update our buildings, tenant improvements and lease incentives, and leasing commissions. It's a pretty volatile number because we don't know when tenants are going to draw down on existing obligations that we have, which is disclosed in our 10-Q. We expect for the remainder of the year, that total number of additional CapEx from here could range from anywhere from $30 to 40 million.

Speaker #4: Yeah. Just hang on. Just one second. Okay. Yeah. So, so far this year, we've spent about, call it, $27 million in CapEx. And that's—I use that term broadly—meaning that includes building and site updates that we've done to update our buildings, tenant improvements and lease incentives, and then leasing commissions.

Speaker #4: It's a pretty volatile number because we don't know when tenants are going to draw down on existing obligations that we have, which is disclosed in our 10Q.

Speaker #4: We expect for the remainder of the year that number could range that total number of additional CapEx from here could range from anywhere from 30 to 40 million dollars.

Matthew Erdner: Okay. Got it. That's helpful.

Speaker #5: Okay. Got it. That's helpful.

Paul H. McDowell: We've modeled that in, this is an expectation. Our guidance incorporates those expectations.

Paul McDowell: We've modeled that in, this is an expectation. Our guidance incorporates those expectations.

Speaker #4: And we've modeled that in, so this is an expectation. Our guidance incorporates those expectations.

Matthew Erdner: Okay, perfect. That's very helpful. Then you talked a little bit about Tulsa starting to lease up. It's good to see somebody go in there. How are discussions going for the remainder of that building, and what's your confidence level there to kind of strengthen the occupancy at that specific site?

Speaker #5: Okay. Perfect. That's very helpful. And then you talked a little bit about Tulsa starting to lease up. It's good to see somebody go in there.

Speaker #5: How are discussions going for the remainder of that building? And what's your confidence level there to kind of strengthen the occupancy at that specific site?

Paul H. McDowell: Yeah, I think our confidence is relatively high. It's a very high-quality building in downtown Tulsa. There's not a lot of competing product of that quality. Sort of if you're looking for Class A space, we're the ones you go to look to. We've got one lease done, and we're in discussion on at least one more of relatively significant size. We sort of feel pretty good about that over time.

Paul McDowell: Yeah, I think our confidence is relatively high. It's a very high-quality building in downtown Tulsa. There's not a lot of competing product of that quality. Sort of if you're looking for Class A space, we're the ones you go to look to. We've got one lease done, and we're in discussion on at least one more of relatively significant size. We sort of feel pretty good about that over time.

Speaker #4: Yeah. I mean, I think our confidence is relatively high. It's a very high-quality building. It's a very high-quality building, a downtown Tulsa. There's not a lot of competing product of that quality.

Speaker #4: So, sort of, if you're looking for class A space, we're the ones you go to. We've got one lease done, and we're in discussion on at least one more of relatively significant size.

Speaker #4: So we've sort of feel pretty good about that over time.

Matthew Erdner: Awesome. That's great. Well, thank you guys for taking the questions and sneaking me in last minute.

Speaker #5: Awesome. That's great. Well, thank you guys for taking the questions and sneaking me in last minute.

Paul H. McDowell: No problem.

Paul McDowell: No problem.

Matthew Erdner: Appreciate it.

Speaker #4: No problem.

Paul H. McDowell: Thank you very much.

Paul McDowell: Thank you very much.

Speaker #5: Appreciate it.

Speaker #4: Thank you very much.

Operator: I would now like to turn the floor back over to Paul McDowell for closing comments.

Speaker #1: I would now like to turn the floor back over to Paul McDowell for closing comments.

Paul H. McDowell: Thank you everyone for joining us on the call, and we look forward to updating you again at our Q3 call in the fall.

Paul McDowell: Thank you everyone for joining us on the call, and we look forward to updating you again at our Q3 call in the fall.

Speaker #3: Thank you, everyone, for joining us on the call. And we look forward to updating you again at our third quarter call in the fall.

Operator: Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.

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