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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2025
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from__________ to __________
Commission File Number: 001-41812
Net Lease Office Properties
(Exact name of registrant as specified in its charter)

Maryland | 92-0887849
(State or other jurisdiction of incorporation) | (I.R.S. Employer Identification No.)
One Manhattan West, 395 9th Avenue, 58th Floor |
New York, | New York | 10001
(Address of principal executive offices) | (Zip Code)

Investor Relations (212) 492-1140
(844) 656-7348
(Registrant’s telephone numbers, including area code)
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading Symbol(s) |  | Name of each exchange on which registered
Common Shares of Beneficial Interest, par value $0.001 per share |  | NLOP |  | New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☐ | Accelerated filer | ☑ | Non-accelerated filer | ☐
Smaller reporting company | ☐ | Emerging growth company | ☑ |  |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
Registrant has 14,814,075 common shares of beneficial interest, $0.001 par value, outstanding at August 1, 2025.

INDEX

| Page No.
PART I — FINANCIAL INFORMATION |
Item 1. Financial Statements (Unaudited) |
| Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024 | 3
| Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2025 and 2024 | 4
| Consolidated Statements of Comprehensive (Loss) Income for the Three and Six Months Ended June 30, 2025 and 2024 | 5
| Consolidated Statements of Equity for the Three and Six Months Ended June 30, 2025 and 2024 | 6
| Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024 | 8
| Notes to Consolidated Financial Statements | 9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 23
Item 3. Quantitative and Qualitative Disclosures About Market Risk | 34
Item 4. Controls and Procedures | 36
PART II — OTHER INFORMATION |
Item 6. Exhibits | 37
Signatures | 38

Net Lease Office Properties 6/30/2025 10-Q – 1

Forward-Looking Statements
This Quarterly Report on Form 10-Q (this “Report”), including Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 2 of Part I of this Report, contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. These forward-looking statements include, but are not limited to, statements regarding: our corporate strategy and estimated or future economic performance and results, including our expectations surrounding the impact of the broader macroeconomic environment and the ability of tenants to pay rent, financial condition, liquidity, results of operations, and prospects; our future capital expenditure and leverage levels, debt service obligations, and plans to fund our liquidity needs, including our ability to sell or dispose of properties; prospective statements regarding our access to the capital markets; statements that we make regarding our ability to remain qualified for taxation as a real estate investment trust (“REIT”); and the impact of recently issued accounting pronouncements and regulatory activity.
These statements are based on the current expectations of our management. It is important to note that our actual results could be materially different from those projected in such forward-looking statements. There are a number of risks and uncertainties that could cause actual results to differ materially from these forward-looking statements. Other unknown or unpredictable risks or uncertainties, like the risks related to fluctuating interest rates, the impact of inflation and tariffs on our tenants and us, the effects of pandemics and global outbreaks of contagious diseases, and domestic or geopolitical crises, such as terrorism, military conflict, war or the perception that hostilities may be imminent, political instability or civil unrest, or other conflict, could also have material adverse effects on our business, financial condition, liquidity, results of operations, and prospects. You should exercise caution in relying on forward-looking statements as they involve known and unknown risks, uncertainties, and other factors that may materially affect our future results, performance, achievements, or transactions. Information on factors that could impact actual results and cause them to differ from what is anticipated in the forward-looking statements contained herein is included in this Report, as well as in our other filings with the Securities and Exchange Commission (“SEC”), including but not limited to those described in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 27, 2025 (the “2024 Annual Report”). Moreover, because we operate in a very competitive and rapidly changing environment, new risks are likely to emerge from time to time. Given these risks and uncertainties, potential investors are cautioned not to place undue reliance on these forward-looking statements as a prediction of future results, which speak only as of the date of this Report, unless noted otherwise. Except as required by federal securities laws and the rules and regulations of the SEC, we do not undertake to revise or update any forward-looking statements.
All references to “Notes” throughout the document refer to the footnotes to the consolidated financial statements of the registrant in Part I, Item 1. Financial Statements (Unaudited).
Net Lease Office Properties 6/30/2025 10-Q – 2

PART I — FINANCIAL INFORMATION
Item 1. Financial Statements.
NET LEASE OFFICE PROPERTIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share and per share amounts)

| June 30, 2025 |  | December 31, 2024
Assets |  |  |
Investments in real estate: |  |  |
Land, buildings and improvements | $ | 581,913 |  |  | $ | 730,345 |
In-place lease intangible assets and other | 191,977 |  |  | 209,968 |
Above-market rent intangible assets | 29,742 |  |  | 30,512 |
Investments in real estate | 803,632 |  |  | 970,825 |
Accumulated depreciation and amortization | (282,999) |  |  | (292,679) |
Assets held for sale, net | 61,868 |  |  | 29,297 |
Net investments in real estate | 582,501 |  |  | 707,443 |
Cash and cash equivalents | 54,146 |  |  | 25,121 |
Restricted cash | 2,043 |  |  | 43,305 |
Other assets, net | 29,965 |  |  | 29,200 |
Total assets (a) | $ | 668,655 |  |  | $ | 805,069 |
Liabilities and Equity |  |  |
Debt: |  |  |
Non-recourse mortgages, net | $ | 117,170 |  |  | $ | 111,259 |
NLOP Mezzanine Loan, net | — |  |  | 57,957 |
Debt, net | 117,170 |  |  | 169,216 |
Accounts payable, accrued expenses and other liabilities | 43,449 |  |  | 44,145 |
Below-market rent intangible liabilities, net | 3,985 |  |  | 6,305 |
Total liabilities (a) | 164,604 |  |  | 219,666 |
Commitments and contingencies (Note 9) |  |  |
Preferred stock, $0.001 par value, 5,000,000 shares authorized; none issued | — |  |  | — |
Common stock, $0.001 par value, 45,000,000 shares authorized; 14,814,075 and 14,814,075 shares, respectively, issued and outstanding | 15 |  |  | 15 |
Additional paid-in capital | 855,813 |  |  | 855,813 |
Distributions in excess of accumulated earnings | (315,491) |  |  | (234,443) |
Accumulated other comprehensive loss | (40,323) |  |  | (40,157) |
Total shareholders’ equity | 500,014 |  |  | 581,228 |
Noncontrolling interests | 4,037 |  |  | 4,175 |
Total equity | 504,051 |  |  | 585,403 |
Total liabilities and equity | $ | 668,655 |  |  | $ | 805,069 |

__________
(a)See Note 2 for details related to variable interest entities (“VIEs”).
See Notes to Consolidated Financial Statements.
Net Lease Office Properties 6/30/2025 10-Q – 3

NET LEASE OFFICE PROPERTIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except share and per share amounts)

| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Revenues |  |  |  |  |  |  |
Lease revenues | $ | 27,508 |  |  | $ | 35,149 |  |  | $ | 54,900 |  |  | $ | 73,463 |
Income from finance leases | — |  |  | — |  |  | — |  |  | 89 |
Other lease-related income | 1,666 |  |  | 3,880 |  |  | 3,487 |  |  | 9,484 |
| 29,174 |  |  | 39,029 |  |  | 58,387 |  |  | 83,036 |
Operating Expenses |  |  |  |  |  |  |
Impairment charges — real estate | 81,817 |  |  | 8,222 |  |  | 82,737 |  |  | 12,287 |
Depreciation and amortization | 9,687 |  |  | 15,122 |  |  | 19,412 |  |  | 33,092 |
Reimbursable tenant costs | 6,537 |  |  | 7,189 |  |  | 12,677 |  |  | 13,389 |
Property expenses, excluding reimbursable tenant costs | 2,244 |  |  | 2,652 |  |  | 4,699 |  |  | 4,903 |
General and administrative | 2,144 |  |  | 1,880 |  |  | 3,951 |  |  | 3,781 |
Asset management fees | 1,209 |  |  | 1,599 |  |  | 2,469 |  |  | 3,403 |
Other expenses | — |  |  | — |  |  | — |  |  | 16 |
| 103,638 |  |  | 36,664 |  |  | 125,945 |  |  | 70,871 |
Other Income and Expenses |  |  |  |  |  |  |
Interest expense | (4,400) |  |  | (27,798) |  |  | (10,146) |  |  | (48,598) |
(Loss) gain on sale of real estate, net | (3,251) |  |  | 37,723 |  |  | (4,259) |  |  | 21,947 |
Other gains and (losses) | 697 |  |  | 332 |  |  | 1,140 |  |  | (489) |
| (6,954) |  |  | 10,257 |  |  | (13,265) |  |  | (27,140) |
(Loss) income before income taxes | (81,418) |  |  | 12,622 |  |  | (80,823) |  |  | (14,975) |
Provision for income taxes | (100) |  |  | (149) |  |  | (182) |  |  | (373) |
Net (Loss) Income | (81,518) |  |  | 12,473 |  |  | (81,005) |  |  | (15,348) |
Net income attributable to noncontrolling interests | (22) |  |  | (22) |  |  | (43) |  |  | (43) |
Net (Loss) Income Attributable to NLOP | $ | (81,540) |  |  | $ | 12,451 |  |  | $ | (81,048) |  |  | $ | (15,391) |
Basic (Loss) Earnings Per Share | $ | (5.50) |  |  | $ | 0.84 |  |  | $ | (5.47) |  |  | $ | (1.04) |
Diluted (Loss) Earnings Per Share | $ | (5.50) |  |  | $ | 0.84 |  |  | $ | (5.47) |  |  | $ | (1.04) |
Weighted-Average Shares Outstanding |  |  |  |  |  |  |
Basic | 14,814,075 |  |  | 14,785,118 |  |  | 14,814,075 |  |  | 14,785,118 |
Diluted | 14,814,075 |  |  | 14,807,960 |  |  | 14,814,075 |  |  | 14,785,118 |

See Notes to Consolidated Financial Statements.
Net Lease Office Properties 6/30/2025 10-Q – 4

NET LEASE OFFICE PROPERTIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)
(in thousands)

| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Net (Loss) Income | $ | (81,518) |  |  | $ | 12,473 |  |  | $ | (81,005) |  |  | $ | (15,348) |
Other Comprehensive (Loss) Income |  |  |  |  |  |  |
Foreign currency translation adjustments | (569) |  |  | 4 |  |  | (166) |  |  | (2,226) |
Unrealized gain on derivative instruments | — |  |  | 572 |  |  | — |  |  | 784 |
| (569) |  |  | 576 |  |  | (166) |  |  | (1,442) |
Comprehensive (Loss) Income | (82,087) |  |  | 13,049 |  |  | (81,171) |  |  | (16,790) |
Amounts Attributable to Noncontrolling Interests |  |  |  |  |  |  |
Net income | (22) |  |  | (22) |  |  | (43) |  |  | (43) |
Comprehensive income attributable to noncontrolling interests | (22) |  |  | (22) |  |  | (43) |  |  | (43) |
Comprehensive (Loss) Income Attributable to NLOP | $ | (82,109) |  |  | $ | 13,027 |  |  | $ | (81,214) |  |  | $ | (16,833) |

See Notes to Consolidated Financial Statements.
Net Lease Office Properties 6/30/2025 10-Q – 5

NET LEASE OFFICE PROPERTIES
CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)
(in thousands, except share and per share amounts)

| Common Stock |  | Additional Paid-In Capital |  | Distributions in Excess of Accumulated Earnings |  | Accumulated Other Comprehensive Loss |  | Total Shareholders’ Equity |  | Noncontrolling Interests |  | Total Equity
| $0.001 Par Value |  |  |  |  |  |
| Shares |  | Amount |  |  |  |  |  |
Balance at April 1, 2025 | 14,814,075 |  |  | $ | 15 |  |  | $ | 855,813 |  |  | $ | (233,951) |  |  | $ | (39,754) |  |  | $ | 582,123 |  |  | $ | 4,106 |  |  | $ | 586,229 |
Net loss |  |  |  |  |  |  | (81,540) |  |  |  |  | (81,540) |  |  | 22 |  |  | (81,518) |
Distributions to noncontrolling interests |  |  |  |  |  |  |  |  |  |  | — |  |  | (91) |  |  | (91) |
Other comprehensive loss: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation adjustments |  |  |  |  |  |  |  |  | (569) |  |  | (569) |  |  |  |  | (569) |
Balance at June 30, 2025 | 14,814,075 |  |  | $ | 15 |  |  | $ | 855,813 |  |  | $ | (315,491) |  |  | $ | (40,323) |  |  | $ | 500,014 |  |  | $ | 4,037 |  |  | $ | 504,051 |

| Common Stock |  | Additional Paid-In Capital |  | Distributions in Excess of Accumulated Earnings |  | Accumulated Other Comprehensive Loss |  | Total Shareholders’ Equity |  | Noncontrolling Interests |  | Total Equity
| $0.001 Par Value |  |  |  |  |  |
| Shares |  | Amount |  |  |  |  |  |
Balance at April 1, 2024 | 14,785,118 |  |  | $ | 15 |  |  | $ | 855,641 |  |  | $ | (170,813) |  |  | $ | (37,618) |  |  | $ | 647,225 |  |  | $ | 4,382 |  |  | $ | 651,607 |
Net income |  |  |  |  |  |  | 12,451 |  |  |  |  | 12,451 |  |  | 22 |  |  | 12,473 |
Amortization of stock-based compensation expense |  |  |  |  | 75 |  |  |  |  |  |  | 75 |  |  |  |  | 75 |
Distributions to noncontrolling interests |  |  |  |  |  |  |  |  |  |  | — |  |  | (91) |  |  | (91) |
Other comprehensive income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unrealized gain on derivative instruments |  |  |  |  |  |  |  |  | 572 |  |  | 572 |  |  |  |  | 572 |
Foreign currency translation adjustments |  |  |  |  |  |  |  |  | 4 |  |  | 4 |  |  |  |  | 4 |
Balance at June 30, 2024 | 14,785,118 |  |  | $ | 15 |  |  | $ | 855,716 |  |  | $ | (158,362) |  |  | $ | (37,042) |  |  | $ | 660,327 |  |  | $ | 4,313 |  |  | $ | 664,640 |

(Continued)
Net Lease Office Properties 6/30/2025 10-Q – 6

NET LEASE OFFICE PROPERTIES
CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)
(Continued)
(in thousands, except share and per share amounts)

| Common Stock |  | Additional Paid-In Capital |  | Distributions in Excess of Accumulated Earnings |  | Accumulated Other Comprehensive Loss |  | Total Shareholders’ Equity |  | Noncontrolling Interests |  | Total Equity
| $0.001 Par Value |  |  |  |  |  |
| Shares |  | Amount |  |  |  |  |  |
Balance at January 1, 2025 | 14,814,075 |  |  | $ | 15 |  |  | $ | 855,813 |  |  | $ | (234,443) |  |  | $ | (40,157) |  |  | $ | 581,228 |  |  | $ | 4,175 |  |  | $ | 585,403 |
Net loss |  |  |  |  |  |  | (81,048) |  |  |  |  | (81,048) |  |  | 43 |  |  | (81,005) |
Distributions to noncontrolling interests |  |  |  |  |  |  |  |  |  |  | — |  |  | (181) |  |  | (181) |
Other comprehensive loss: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation adjustments |  |  |  |  |  |  |  |  | (166) |  |  | (166) |  |  |  |  | (166) |
Balance at June 30, 2025 | 14,814,075 |  |  | $ | 15 |  |  | $ | 855,813 |  |  | $ | (315,491) |  |  | $ | (40,323) |  |  | $ | 500,014 |  |  | $ | 4,037 |  |  | $ | 504,051 |

| Common Stock |  | Additional Paid-In Capital |  | Distributions in Excess of Accumulated Earnings |  | Accumulated Other Comprehensive Loss |  | Total Shareholders’ Equity |  | Noncontrolling Interests |  | Total Equity
| $0.001 Par Value |  |  |  |  |  |
| Shares |  | Amount |  |  |  |  |  |
Balance at January 1, 2024 | 14,620,919 |  |  | $ | 15 |  |  | $ | 855,554 |  |  | $ | (142,960) |  |  | $ | (35,600) |  |  | $ | 677,009 |  |  | $ | 4,421 |  |  | $ | 681,430 |
Net loss |  |  |  |  |  |  | (15,391) |  |  |  |  | (15,391) |  |  | 43 |  |  | (15,348) |
Shares issued | 164,199 |  |  | — |  |  | 12 |  |  | (11) |  |  |  |  | 1 |  |  |  |  | 1 |
Amortization of stock-based compensation expense |  |  |  |  | 150 |  |  |  |  |  |  | 150 |  |  |  |  | 150 |
Distributions to noncontrolling interests |  |  |  |  |  |  |  |  |  |  | — |  |  | (151) |  |  | (151) |
Other comprehensive loss: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation adjustments |  |  |  |  |  |  |  |  | (2,226) |  |  | (2,226) |  |  |  |  | (2,226) |
Unrealized gain on derivative instruments |  |  |  |  |  |  |  |  | 784 |  |  | 784 |  |  |  |  | 784 |
Balance at June 30, 2024 | 14,785,118 |  |  | $ | 15 |  |  | $ | 855,716 |  |  | $ | (158,362) |  |  | $ | (37,042) |  |  | $ | 660,327 |  |  | $ | 4,313 |  |  | $ | 664,640 |

See Notes to Consolidated Financial Statements.
Net Lease Office Properties 6/30/2025 10-Q – 7

NET LEASE OFFICE PROPERTIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)

| Six Months Ended June 30,
| 2025 |  | 2024
Cash Flows — Operating Activities |  |  |
Net loss | $ | (81,005) |  |  | $ | (15,348) |
Adjustments to net loss: |  |  |
Impairment charges — real estate | 82,737 |  |  | 12,287 |
Depreciation and amortization, including intangible assets and deferred financing costs | 23,079 |  |  | 54,679 |
Loss (gain) on sale of real estate, net | 4,259 |  |  | (21,947) |
Straight-line rent adjustments | 1,249 |  |  | 1,510 |
Amortization of rent-related intangibles and deferred rental revenue | (1,196) |  |  | (5,778) |
Net realized and unrealized losses on extinguishment of debt, foreign currency exchange rate movements, and other | 803 |  |  | 2,579 |
Deferred income tax benefit | — |  |  | (306) |
Stock-based compensation expense | — |  |  | 150 |
Net changes in other operating assets and liabilities | (4,098) |  |  | 2,917 |
Proceeds from sales of net investments in sales-type leases | — |  |  | 10,341 |
Net Cash Provided by Operating Activities | 25,828 |  |  | 41,084 |
Cash Flows — Investing Activities |  |  |
Proceeds from sales of real estate | 25,427 |  |  | 184,855 |
Funding for real estate construction, redevelopments, and other capital expenditures on real estate | (2,684) |  |  | (7,312) |
Value added taxes refunded in connection with sale of real estate | (37) |  |  | — |
Net Cash Provided by Investing Activities | 22,706 |  |  | 177,543 |
Cash Flows — Financing Activities |  |  |
Payments of mortgage principal and other debt instruments | (61,307) |  |  | (203,968) |
Distributions to noncontrolling interests | (181) |  |  | (151) |
Other financing activities, net | (8) |  |  | 11 |
Dividends paid | — |  |  | (1,071) |
Net Cash Used in Financing Activities | (61,496) |  |  | (205,179) |
Change in Cash and Cash Equivalents and Restricted Cash During the Period |  |  |
Effect of exchange rate changes on cash and cash equivalents and restricted cash | 725 |  |  | (570) |
Net (decrease) increase in cash and cash equivalents and restricted cash | (12,237) |  |  | 12,878 |
Cash and cash equivalents and restricted cash, beginning of period | 68,426 |  |  | 67,829 |
Cash and cash equivalents and restricted cash, end of period | $ | 56,189 |  |  | $ | 80,707 |

See Notes to Consolidated Financial Statements.
Net Lease Office Properties 6/30/2025 10-Q – 8

NET LEASE OFFICE PROPERTIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1. Business and Organization
Net Lease Office Properties (“NLOP” or the “Company”) is a publicly-traded REIT that owns a diversified portfolio of office properties that are primarily leased to corporate tenants on a single-tenant, net-lease basis. Our net leases generally specify a base rent with rent increases and require the tenant to pay substantially all costs associated with operating and maintaining the property. Certain wholly-owned affiliates of W. P. Carey Inc. (“WPC”) (our “Advisor”) externally manage NLOP pursuant to certain advisory agreements (the “NLOP Advisory Agreements”).
Our common shares are listed on the New York Stock Exchange under the ticker symbol “NLOP.”
NLOP was initially formed when, pursuant to the terms of a separation and distribution agreement, WPC spun off a portfolio of 59 office assets into a separate publicly-traded company (the “Spin-Off”). To accomplish this Spin-Off, WPC formed a Maryland real estate investment trust, NLOP, on October 21, 2022, to own the 59 office assets. On November 1, 2023, WPC completed the Spin-Off, contributing 59 office properties to NLOP. The Spin-Off was accomplished via a pro rata dividend of 1 NLOP common share for every 15 shares of WPC common stock outstanding.
We elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code (the “Code”) effective as of November 1, 2023.
As of June 30, 2025, NLOP’s portfolio was comprised of full or partial ownership interests in 36 properties, net leased to 39 corporate tenants, totaling approximately 5.9 million leasable square feet (including 0.6 million of operating square footage for a parking garage at a domestic property), with a weighted-average lease term of 4.0 years.
NLOP operates as one segment, and through its subsidiaries, owns, operates, and finances office buildings. Our business is characterized as owning a diversified portfolio of office properties that are primarily leased to corporate tenants on a single-tenant, net-lease basis. These economic characteristics are similar across various geographic locations and industries in which our tenants operate and therefore considered one operating segment. Our consolidated operating results, including net income, are regularly reviewed, in the aggregate, by our chief operating decision maker (“CODM”) to evaluate performance and allocate resources, which can be found on our consolidated financial statements.
Our revenues are largely derived from the long-term leases that we execute with tenants. These revenues are classified as either Lease revenues (Note 4) or Income from finance leases (Note 4) in accordance with Accounting Standards Codification (“ASC”) 842, Leases.
Our operating expenses are regularly reviewed by our CODM. All expenses are reviewed, but our CODM is regularly provided with the following significant expenses, which are included in our consolidated financial statements and require no additional disaggregation: Property expenses, excluding reimbursable tenant costs, General and administrative expenses, Asset management fees, Interest expense, and Provision for income taxes.
Note 2. Basis of Presentation
Basis of Presentation
Our interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not necessarily include all information and footnotes necessary for a complete statement of our consolidated financial position, results of operations, and cash flows in accordance with generally accepted accounting principles in the United States (“GAAP”). In the opinion of management, the unaudited financial information for the interim periods presented in this Report reflects all normal and recurring adjustments necessary for a fair presentation of financial position, results of operations, and cash flows. Our interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements and accompanying notes for the year ended December 31, 2024, which are included in the 2024 Annual Report, as certain disclosures that would substantially duplicate those contained in the audited consolidated financial statements have not been included in this Report. Operating results for interim periods are not necessarily indicative of operating results for an entire year.
Net Lease Office Properties 6/30/2025 10-Q – 9

Notes to Consolidated Financial Statements (Unaudited)
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in our consolidated financial statements and the accompanying notes. Actual results could differ from those estimates.
Basis of Consolidation
Our consolidated financial statements reflect all of our accounts, including those of our controlled subsidiaries. The portions of equity in consolidated subsidiaries that are not attributable, directly or indirectly, to us are presented as noncontrolling interests. All significant intercompany accounts and transactions have been eliminated.
When we obtain an economic interest in an entity, we evaluate the entity to determine if it should be deemed a VIE and, if so, whether we are the primary beneficiary and are therefore required to consolidate the entity. There have been no significant changes in our VIE policies from what was disclosed in the 2024 Annual Report.
At both June 30, 2025 and December 31, 2024, we considered one entity to be a VIE (given certain decision-making rights each partner has in accordance with the partnership agreement), which we consolidated, as we are considered the primary beneficiary. The following table presents a summary of selected financial data of the consolidated VIE included in our consolidated balance sheets (in thousands):

| June 30, 2025 |  | December 31, 2024
Land, buildings and improvements | $ | 37,917 |  |  | $ | 37,917 |
In-place lease intangible assets and other | 9,685 |  |  | 9,685 |
Above-market rent intangible assets | 4,338 |  |  | 4,338 |
Accumulated depreciation and amortization | (7,567) |  |  | (6,271) |
Total assets | 45,975 |  |  | 47,197 |
Total liabilities | $ | 308 |  |  | $ | 304 |

Cash and Cash Equivalents and Restricted Cash
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets to the consolidated statements of cash flows (in thousands):

| June 30, 2025 |  | December 31, 2024
Cash and cash equivalents | $ | 54,146 |  |  | $ | 25,121 |
Restricted cash (a) | 2,043 |  |  | 43,305 |
Total cash and cash equivalents and restricted cash | $ | 56,189 |  |  | $ | 68,426 |

__________
(a)Amount as of December 31, 2024 includes approximately $41.7 million related to certain reserve requirements pursuant to the NLOP Financing Arrangements (Note 8). In April 2025, we fully repaid the NLOP Mezzanine Loan and are no longer subject to such reserve requirements (Note 8).
Earnings Per Share
Basic earnings per share is calculated by dividing net income available to common shareholders by the weighted-average number of shares of common shares outstanding during the period. Diluted earnings per share reflects potentially dilutive securities using the treasury stock method, except when the effect would be anti-dilutive. For the three and six months ended June 30, 2025, there were no potentially dilutive securities. Therefore, basic (loss) earnings per share equals diluted (loss) earnings per share for the three and six months ended June 30, 2025. For the six months ended June 30, 2024, we recognized net loss. Therefore, all potentially dilutive securities were antidilutive and accordingly, basic net loss per share equals diluted net loss per share for the six months ended June 30, 2024.
Net Lease Office Properties 6/30/2025 10-Q – 10

Notes to Consolidated Financial Statements (Unaudited)
Foreign Currency Translation and Transaction Gains and Losses
As of June 30, 2025, we owned an international real estate investment in Norway, for which the primary functional currency is the Norwegian krone. We perform the translation from this currency to the U.S. dollar for assets and liabilities using current exchange rates in effect at the balance sheet date and for revenue and expense accounts using the average exchange rate during the month in which the transaction occurs. We report the gains and losses resulting from such translation as a component of other comprehensive income in equity. These translation gains and losses are reclassified out of foreign currency translation adjustments (within Accumulated other comprehensive loss in the consolidated balance sheets) and released to net income (within Loss on sale of real estate, net, in the consolidated statements of operations) when we have exited from all investments in the related currency. During the six months ended June 30, 2025, we exited all investments denominated in euros (Note 10, Note 12).
Recent Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires public companies to annually (i) disclose specific categories in the rate reconciliation disclosure and (ii) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pre-tax income or loss by the applicable statutory income tax rate). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state, and local jurisdictions, among other changes. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements.
Note 3. Agreements and Transactions with Related Parties
Advisory Agreements
Pursuant to the NLOP Advisory Agreements, which we entered into on November 1, 2023, our Advisor provides us with strategic management services, including asset management, property disposition support, and various related services. We pay our Advisor an asset management fee that was initially set at an annual amount of $7.5 million and is being proportionately reduced each month following the disposition of each portfolio property. In addition, we reimburse our Advisor a base administrative amount of approximately $4.0 million annually, for certain administrative services, including day-to-day management services, investor relations, accounting, tax, legal, and other administrative matters.
The following tables present a summary of fees we paid and expenses we reimbursed to our Advisor in accordance with the terms of the NLOP Advisory Agreements (in thousands):

| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Asset management fees (a) | $ | 1,209 |  |  | $ | 1,599 |  |  | $ | 2,469 |  |  | $ | 3,403 |
Administrative reimbursements (b) | 1,000 |  |  | 1,000 |  |  | 2,000 |  |  | 2,000 |
| $ | 2,209 |  |  | $ | 2,599 |  |  | $ | 4,469 |  |  | $ | 5,403 |

__________
(a)Included within Asset management fees in the consolidated statements of operations.
(b)Included within General and administrative expenses in the consolidated statements of operations.
The following table presents a summary of amounts due to affiliates, which are included within Accounts payable, accrued expenses and other liabilities in the consolidated financial statements (in thousands):

| June 30, 2025 |  | December 31, 2024
Asset management fees payable | $ | 412 |  |  | $ | 469 |
Administrative reimbursements payable and other | 373 |  |  | 366 |
| $ | 785 |  |  | $ | 835 |

Net Lease Office Properties 6/30/2025 10-Q – 11

Notes to Consolidated Financial Statements (Unaudited)
Other Transactions with Related Parties
Captive Insurance Company
Under the NLOP Advisory Agreements, our Advisor manages the insurance for our real property portfolio as part of its property insurance program. In March 2025, our Advisor formed a wholly owned captive insurance company, which commenced operations in May 2025 and insures a portion of the North American real property portfolios of each of WPC and us. We pay insurance premiums to all the insurance companies in the property insurance program, including the Advisor’s captive insurance company, which in turn will pay out claims in respect of our properties on a pro rata basis.
During the six months ended June 30, 2025, we paid property insurance premiums totaling $3.2 million, of which $0.7 million was paid to our Advisor, covering the annual period commencing May 1, 2025. We amortize the insurance premiums over the policy period, which is reflected in Reimbursable tenant costs and Property expenses, excluding reimbursable tenant costs in our consolidated statements of operations.
Other
At June 30, 2025, we owned an interest in one jointly owned investment in real estate, with the remaining interest held by a third party. We consolidate this investment.
Note 4. Land, Buildings and Improvements, Finance Receivables and Assets Held for Sale
Land, Buildings and Improvements
Land and buildings leased to others, which are subject to operating leases, and real estate under construction, are summarized as follows (in thousands):

| June 30, 2025 |  | December 31, 2024
Land | $ | 71,078 |  |  | $ | 94,123 |
Buildings and improvements | 509,582 |  |  | 635,775 |
Real estate under construction | 1,253 |  |  | 447 |
Less: Accumulated depreciation | (142,876) |  |  | (152,067) |
| $ | 439,037 |  |  | $ | 578,278 |

During the six months ended June 30, 2025, we recognized impairment charges on three properties, which reduced the carrying value of Land, buildings and improvements by $82.7 million (Note 6).
During the six months ended June 30, 2025, the U.S. dollar weakened against the Norwegian krone. As a result of this fluctuation in foreign currency exchange rates, the carrying value of our Land, buildings and improvements increased by $3.2 million from December 31, 2024 to June 30, 2025.
Depreciation expense, including the effect of foreign currency translation, on our buildings and improvements subject to operating leases was $4.3 million and $6.1 million for the three months ended June 30, 2025 and 2024, respectively, and $8.6 million and $13.3 million for the six months ended June 30, 2025 and 2024, respectively.
During the six months ended June 30, 2025, we capitalized accrued costs of $0.9 million within Land, buildings and improvements for capital expenditures.
Dispositions of Properties
During the six months ended June 30, 2025, we disposed of three properties, which were classified as Land, buildings and improvements. As a result, the carrying value of our Land, buildings and improvements decreased by $24.8 million from December 31, 2024 to June 30, 2025 (Note 12).
Net Lease Office Properties 6/30/2025 10-Q – 12

Notes to Consolidated Financial Statements (Unaudited)
Real Estate Under Construction
During the six months ended June 30, 2025, we capitalized $0.8 million of real estate under construction related to a capital project at a property.
Leases
Operating Lease Income
Lease income related to operating leases recognized and included in the consolidated statements of operations is as follows (in thousands):

| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Lease income — fixed | $ | 20,052 |  |  | $ | 27,182 |  |  | $ | 40,559 |  |  | $ | 58,544 |
Lease income — variable (a) | 7,456 |  |  | 7,967 |  |  | 14,341 |  |  | 14,919 |
Total operating lease income | $ | 27,508 |  |  | $ | 35,149 |  |  | $ | 54,900 |  |  | $ | 73,463 |

__________
(a)Includes (i) rent increases based on changes in the U.S. Consumer Price Index (CPI) and other comparable indices and (ii) reimbursements for property taxes, insurance, and common area maintenance services.
Other Lease-Related Income
Other lease-related income on our consolidated statements of operations included lease termination income of $0.9 million and $3.1 million for the three months ended June 30, 2025 and 2024, respectively, and $1.7 million and $7.8 million for the six months ended June 30, 2025 and 2024, respectively.
In addition, other lease-related income on our consolidated statements of operations included income from a parking garage attached to one of our net-leased properties totaling $0.5 million for both three months ended June 30, 2025 and 2024, and $1.0 million for both the six months ended June 30, 2025 and 2024.
Finance Receivables
During the first quarter of 2024, we sold a property classified as net investments in sales-type leases. Earnings from our net investments in sales-type leases were included in Income from finance leases in the consolidated financial statements, and totaled less than $0.1 million for the six months ended June 30, 2024. We had no net investments in finance leases as of June 30, 2025 and December 31, 2024.
Assets and Liabilities Held for Sale
Below is a summary of our properties held for sale (in thousands):

| June 30, 2025 |  | December 31, 2024
Land, buildings and improvements | $ | 63,501 |  |  | $ | 31,066 |
In-place lease intangible assets and other | 20,933 |  |  | 3,891 |
Above-market rent intangible assets | 2,323 |  |  | 1,382 |
Accumulated depreciation and amortization | (24,889) |  |  | (7,042) |
Assets held for sale, net | $ | 61,868 |  |  | $ | 29,297 |
Below-market rent intangible liabilities, net (a) | $ | 1,351 |  |  | $ | — |

__________
(a)Included within Accounts payable, accrued expenses and other liabilities on our consolidated balance sheets.
Net Lease Office Properties 6/30/2025 10-Q – 13

Notes to Consolidated Financial Statements (Unaudited)
As of June 30, 2025 and December 31, 2024, we had three and one properties, respectively, classified as held for sale. The estimated purchase price for one of these properties was lowered during the second quarter of 2025. As a result, we recognized a loss on sale of real estate of $3.4 million during the three and six months ended June 30, 2025, reflecting the updated estimated purchase price, in accordance with ASC 360, Property, Plant, and Equipment. One of these properties was sold in July 2025 (Note 1 3).
Note 5. Intangible Assets and Liabilities
In-place lease intangibles, at cost are included in In-place lease intangible assets and other in the consolidated financial statements. Above-market rent intangibles, at cost are included in Above-market rent intangible assets in the consolidated financial statements. Accumulated amortization of in-place lease and above-market rent intangibles is included in Accumulated depreciation and amortization in the consolidated financial statements. Below-market rent intangibles are included in Below-market rent intangible liabilities, net in the consolidated financial statements.
Intangible assets and liabilities are summarized as follows (in thousands):

| June 30, 2025 |  | December 31, 2024
| Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount
Finite-Lived Intangible Assets |  |  |  |  |  |  |  |  |  |  |
In-place lease | $ | 190,054 |  |  | $ | (121,177) |  |  | $ | 68,877 |  |  | $ | 207,988 |  |  | $ | (123,040) |  |  | $ | 84,948 |
Above-market rent | 29,742 |  |  | (18,946) |  |  | 10,796 |  |  | 30,512 |  |  | (17,572) |  |  | 12,940 |
Total intangible assets | $ | 219,796 |  |  | $ | (140,123) |  |  | $ | 79,673 |  |  | $ | 238,500 |  |  | $ | (140,612) |  |  | $ | 97,888 |
Finite-Lived Intangible Liabilities |  |  |  |  |  |  |  |  |  |  |
Below-market rent | $ | (14,824) |  |  | $ | 10,839 |  |  | $ | (3,985) |  |  | $ | (18,856) |  |  | $ | 12,551 |  |  | $ | (6,305) |
Total intangible liabilities | $ | (14,824) |  |  | $ | 10,839 |  |  | $ | (3,985) |  |  | $ | (18,856) |  |  | $ | 12,551 |  |  | $ | (6,305) |

Net amortization of intangibles, including the effect of foreign currency translation, was $5.5 million and $9.8 million for the three months ended June 30, 2025 and 2024, respectively, and $10.9 million and $21.5 million for the six months ended June 30, 2025 and 2024, respectively. Amortization of below-market rent and above-market rent intangibles is recorded as an adjustment to Lease revenues and amortization of in-place lease intangibles is included in Depreciation and amortization.
Note 6. Fair Value Measurements
The fair value of an asset is defined as the exit price, which is the amount that would either be received when an asset is sold or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance establishes a three-tier fair value hierarchy based on the inputs used in measuring fair value. These tiers are: Level 1, for which quoted market prices for identical instruments are available in active markets, such as money market funds and U.S. Treasury securities; Level 2, for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument, such as certain derivative instruments including interest rate caps; and Level 3, for securities that do not fall into Level 1 or Level 2 and for which little or no market data exists, therefore requiring us to develop our own assumptions.
Items Measured at Fair Value on a Recurring Basis
The methods and assumptions described below were used to estimate the fair value of each class of financial instrument. For significant Level 3 items, we have also provided the unobservable inputs.
Derivative Assets — Our derivative assets, which are included in Other assets, net in the consolidated financial statements, are comprised of interest rate caps (Note 7).
Net Lease Office Properties 6/30/2025 10-Q – 14

Notes to Consolidated Financial Statements (Unaudited)
The valuation of our derivative instruments is determined using a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves, spot and forward rates, and implied volatilities. We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative instruments for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. These derivative instruments were classified as Level 2 as these instruments are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market.
Our material financial instruments had the following carrying values and fair values as of the dates shown (dollars in thousands):

|  |  | June 30, 2025 |  | December 31, 2024
| Level |  | Carrying Value |  | Fair Value |  | Carrying Value |  | Fair Value
Non-recourse mortgages, net (a) (b) | 3 |  | $ | 117,170 |  |  | $ | 94,552 |  |  | $ | 111,259 |  |  | $ | 91,642 |
NLOP Mezzanine Loan, net (a) (b) (c) (d) | 3 |  | — |  |  | — |  |  | 57,957 |  |  | 61,753 |

__________
(a)The carrying value of Non-recourse mortgages, net includes unamortized premium of $0.1 million and $0.4 million at June 30, 2025 and December 31, 2024, respectively. The carrying value of the NLOP Mezzanine Loan, net (Note 8) includes unamortized discount of $2.2 million at December 31, 2024.
(b)We determined the estimated fair value of our non-recourse mortgage loans and NLOP Mezzanine Loan using a discounted cash flow model that estimates the present value of the future loan payments by discounting such payments at current estimated market interest rates. The estimated market interest rates consider interest rate risk and the value of the underlying collateral, which includes quality of the collateral, the credit quality of the tenant/obligor, and the time until maturity.
(c)The carrying value of the NLOP Mezzanine Loan, net (Note 8) includes unamortized deferred financing costs of $1.0 million at December 31, 2024.
(d)In April 2025, we fully repaid the NLOP Mezzanine Loan (Note 8).
We estimated that our other financial assets and liabilities had fair values that approximated their carrying values at both June 30, 2025 and December 31, 2024.
Items Measured at Fair Value on a Non-Recurring Basis (Including Impairment Charges)
We periodically assess whether there are any indicators that the value of our real estate investments may be impaired or that their carrying value may not be recoverable. There have been no significant changes in our impairment policies from what was disclosed in the 2024 Annual Report.
The following table presents information about assets for which we recorded an impairment charge and that were measured at fair value on a non-recurring basis (in thousands):

| Three Months Ended June 30,
| 2025 |  | 2024
| Fair Value Measurements |  | Impairment Charges |  | Fair Value Measurements |  | Impairment Charges
Impairment Charges |  |  |  |  |  |  |
Real estate | $ | 97,768 |  |  | $ | 81,817 |  |  | $ | 74,754 |  |  | $ | 8,222 |
|  |  | $ | 81,817 |  |  |  |  | $ | 8,222 |

| Six Months Ended June 30,
| 2025 |  | 2024
| Fair Value Measurements |  | Impairment Charges |  | Fair Value Measurements |  | Impairment Charges
Impairment Charges |  |  |  |  |  |  |
Real estate | $ | 113,938 |  |  | $ | 82,737 |  |  | $ | 88,464 |  |  | $ | 12,287 |
|  |  | $ | 82,737 |  |  |  |  | $ | 12,287 |

Net Lease Office Properties 6/30/2025 10-Q – 15

Notes to Consolidated Financial Statements (Unaudited)
Impairment charges, and their related triggering events and fair value measurements, recognized during the three and six months ended June 30, 2025 and 2024, were as follows:
Real Estate
The impairment charges described below are reflected within Impairment charges — real estate in our consolidated statements of operations.
2025 — During the three and six months ended June 30, 2025, we recognized an impairment charge of $81.6 million on a property in Houston, Texas, leased to KBR, Inc. After performing a strategic review of the asset at the direction of our Board of Trustees during the second quarter of 2025, we commenced sale efforts for the property. As a result, this met our likely disposition impairment trigger event in accordance with ASC 360, Property, Plant, and Equipment, at which time we determined that the carrying value of the asset was not fully recoverable. The impairment charge reflects the excess of the asset’s carrying amount over its current estimated fair value, which is $73.2 million and may change as we progress with our disposition process. The fair value was determined based on valuation techniques consistent with ASC 820, Fair Value Measurement, which factored in current market conditions, existing lease terms, and assumptions about the highest and best use of the asset, using the following unobservable inputs:
•Cash flow discount rate of 10%;
•Residual value discount rate of 10%; and
•Investor required return of 15%.
Although these circumstances met our likely disposition trigger, there can be no assurances that we will sell the asset for its estimated fair value. As a result, to the extent additional impairment triggers arise in the future, the asset will be tested for recoverability.
Additionally, during the three and six months ended June 30, 2025, we recognized impairment charges totaling $0.3 million and $1.2 million on one and two properties, respectively, in order to reduce their carrying values to their estimated fair values, which approximated their estimated selling prices. One of these properties was sold in May 2025 and one was sold in July 2025 (Note 13).
2024 — During the three and six months ended June 30, 2024, we recognized impairment charges totaling $8.2 million on two properties and $12.3 million on four properties, respectively, in order to reduce their carrying values to their estimated fair values, which approximated their estimated selling prices. Three of these properties were sold in 2024 and one was sold in March 2025.
Note 7. Risk Management and Use of Derivative Financial Instruments
Risk Management
In the normal course of our ongoing business operations, we encounter economic risk. There are four main components of economic risk that impact us: interest rate risk, credit risk, market risk, and foreign currency risk. We are primarily subject to interest rate risk on our interest-bearing liabilities, including our unhedged variable-rate non-recourse mortgage loans. Credit risk is the risk of default on our operations and our tenants’ inability or unwillingness to make contractually required payments. Market risk includes changes in the value of our properties and related loans, due to changes in interest rates or other market factors. We own investments in the United States and Europe and are subject to risks associated with fluctuating foreign currency exchange rates.
Net Lease Office Properties 6/30/2025 10-Q – 16

Notes to Consolidated Financial Statements (Unaudited)
Derivative Financial Instruments
There have been no significant changes in our derivative financial instrument policies from what was disclosed in the 2024 Annual Report. At both June 30, 2025 and December 31, 2024, no cash collateral had been posted nor received for any of our derivative positions.
The following table sets forth certain information regarding our derivative instruments (in thousands):

|  |  |  | Asset Derivatives Fair Value at |  |
Derivatives Not Designated as Hedging Instruments |  | Balance Sheet Location |  | June 30, 2025 |  | December 31, 2024 |  |  |  |
Interest rate cap |  | Other assets, net |  | $ | — |  |  | $ | 10 |  |  |  |  |
Total derivatives |  |  |  | $ | — |  |  | $ | 10 |  |  |  |  |

The following tables present the impact of our derivative instruments in the consolidated financial statements (in thousands):

|  | Amount of Gain (Loss) Recognized on Derivatives in Other Comprehensive Income (Loss)
|  | Three Months Ended June 30, |  | Six Months Ended June 30,
Derivatives in Cash Flow Hedging Relationships |  | 2025 |  | 2024 |  | 2025 |  | 2024
Interest rate cap |  | $ | — |  |  | $ | 572 |  |  | $ | — |  |  | $ | 784 |
Total |  | $ | — |  |  | $ | 572 |  |  | $ | — |  |  | $ | 784 |

|  |  |  | Amount of Gain (Loss) on Derivatives Reclassified from Other Comprehensive Income (Loss)
Derivatives in Cash Flow Hedging Relationships |  | Location of Gain (Loss) Recognized in Income |  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2025 |  | 2024 |  | 2025 |  | 2024
Interest rate cap |  | Other gains and (losses) |  | $ | — |  |  | $ | (539) |  |  | $ | — |  |  | $ | (539) |
Interest rate cap |  | Interest expense |  | — |  |  | (166) |  |  | — |  |  | (381) |
Total |  |  |  | $ | — |  |  | $ | (705) |  |  | $ | — |  |  | $ | (920) |

Amounts reported in Other comprehensive (loss) income related to interest rate derivative contracts were reclassified to Interest expense as interest was incurred on our variable-rate debt.

|  |  |  | Amount of Gain (Loss) on Derivatives Recognized in Income
Derivatives in Cash Flow Hedging Relationships |  | Location of Gain (Loss) Recognized in Income |  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2025 |  | 2024 |  | 2025 |  | 2024
Interest rate cap |  | Interest expense |  | $ | — |  |  | $ | (15) |  |  | $ | — |  |  | $ | (17) |
Derivatives Not in Cash Flow Hedging Relationships |  |  |  |  |  |  |  |  |  |
Interest rate cap |  | Other gains and (losses) |  | — |  |  | — |  |  | (10) |  |  | — |
Total |  |  |  | $ | — |  |  | $ | (15) |  |  | $ | (10) |  |  | $ | (17) |

See below for information on our purposes for entering into derivative instruments.
Interest Rate Caps
We are exposed to the impact of interest rate changes primarily through our borrowing activities. We have obtained, and may in the future obtain, variable-rate debt (our NLOP Financing Arrangements (Note 8)), and, as a result, we have entered into, and may continue to enter into, interest rate cap agreements with counterparties. Interest rate caps limit the effective borrowing rate of variable-rate debt obligations. Our objective in using these derivatives is to limit our exposure to interest rate movements.
During the third quarter of 2024, we de-designated our interest rate cap as a hedging instrument, since we determined that the derivative is no longer highly effective, given mismatches between the hedged notional of the interest rate cap versus the outstanding principal on the NLOP Mortgage Loan (which was fully repaid during 2024 and is defined in Note 8). The maturity date of this interest rate cap is November 2025.
Net Lease Office Properties 6/30/2025 10-Q – 17

Notes to Consolidated Financial Statements (Unaudited)
The interest rate caps that our consolidated subsidiaries had outstanding at June 30, 2025 are summarized as follows (currency in thousands):

Interest Rate Derivatives |  | Number of Instruments |  | Notional Amount |  | Fair Value at June 30, 2025
Not Designated as Cash Flow Hedging Instruments |  |  |  |  |  |  |
Interest rate cap |  | 1 |  | 150,904 |  | USD |  | $ | — |
|  |  |  |  |  |  | $ | — |

Credit Risk-Related Contingent Features
We measure our credit exposure on a counterparty basis as the net positive aggregate estimated fair value of our derivatives, net of any collateral received. No collateral was received as of June 30, 2025. At June 30, 2025, both our total credit exposure and the maximum exposure to any single counterparty was less than $0.1 million.
Note 8. Debt
Debt Facility
As of December 31, 2024, we had a mezzanine loan facility with an original principal balance of $120.0 million maturing on November 9, 2028 (the “NLOP Mezzanine Loan”). This mezzanine loan was originally part of the “NLOP Financing Arrangements,” which also included a senior secured mortgage loan that was fully repaid during the year ended December 31, 2024 (the “NLOP Mortgage Loan”), using proceeds from certain dispositions, as well as cash flow from rent on our properties and other sources.
During the six months ended June 30, 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.
Non-Recourse Mortgages
Non-recourse mortgages consist of mortgage notes payable, which are collateralized by the assignment of real estate properties. At June 30, 2025, our non-recourse mortgage notes payable encumbered six properties, with an aggregate weighted-average interest rate of 6.4% (fixed-rate and variable-rate non-recourse mortgage notes payable were 7.4% and 4.9%, respectively), and maturity dates ranging from July 2025 to July 2026.
The non-recourse mortgage loan encumbering our property located in Norway with a principal balance outstanding of $45.5 million and a maturity date of December 2025 is in a loan-to-value covenant breach as of June 30, 2025, and the lender has the right to commence foreclosure proceedings. As of date of this Report, the lender has not exercised such a right.
The non-recourse mortgage loan encumbering a domestic property with a principal balance outstanding of $25.2 million was not repaid on its maturity date of January 6, 2025, and the lender has the right to commence foreclosure proceedings. As of the date of this Report, the lender has not exercised such a right. This loan has accrued default interest at an annual rate of 5.0% since the original maturity date, in addition to the base interest rate of 4.2%.
Foreign Currency Exchange Rate Impact
During the six months ended June 30, 2025, the U.S. dollar weakened against the Norwegian krone, resulting in an increase of $4.9 million in the aggregate carrying value of our Non-recourse mortgages, net from December 31, 2024 to June 30, 2025.
Net Lease Office Properties 6/30/2025 10-Q – 18

Notes to Consolidated Financial Statements (Unaudited)
Scheduled Mortgage Debt Principal Payments
Scheduled mortgage debt principal payments as of June 30, 2025 are as follows (in thousands):

Years Ending December 31, |  | Total
2025 (remainder) |  | $ | 80,525 |
2026 |  | 36,577 |
2027 |  | — |
2028 |  | — |
2029 |  | — |
Total principal payments |  | 117,102 |
Unamortized premium, net |  | 68 |
Total |  | $ | 117,170 |

Certain amounts in the table above are based on the applicable foreign currency exchange rate at June 30, 2025.
Note 9. Commitments and Contingencies
At June 30, 2025, we were not involved in any material litigation. 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.
Note 10. Stock-Based Compensation and Equity
Stock-Based Compensation
We maintain a stock-based compensation plan, which is more fully described in the 2024 Annual Report. The total compensation expense for awards issued under this plan was less than $0.1 million and $0.2 million for the three and six months ended June 30, 2024, respectively, which was included in General and administrative expenses in the consolidated financial statements. There were no stock-based compensation awards outstanding as of June 30, 2025 and December 31, 2024.

Equity
Common Shares
During the fourth quarter of 2023, our Board of Trustees declared a dividend of $0.34 per share, which was paid on January 29, 2024 to shareholders of record as of December 18, 2023. Shareholders had the option to elect to receive their dividend in the form of cash or additional NLOP shares, with the aggregate amount of cash distributed by NLOP limited to a maximum of 20% of the total dividend. The total number of shares issued in the share dividend was 164,199 shares. Cash paid in connection with the share dividend totaled $1.1 million, which includes cash paid in lieu of fractional shares.
Earnings Per Share
The following table summarizes basic and diluted earnings (dollars in thousands):

| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Net (loss) income — basic and diluted | $ | (81,540) |  |  | $ | 12,451 |  |  | $ | (81,048) |  |  | $ | (15,391) |
Weighted-average shares outstanding – basic | 14,814,075 |  |  | 14,785,118 |  |  | 14,814,075 |  |  | 14,785,118 |
Effect of dilutive securities | — |  |  | 22,842 |  |  | — |  |  | — |
Weighted-average shares outstanding – diluted | 14,814,075 |  |  | 14,807,960 |  |  | 14,814,075 |  |  | 14,785,118 |

Net Lease Office Properties 6/30/2025 10-Q – 19

Notes to Consolidated Financial Statements (Unaudited)
For the three and six months ended June 30, 2025, there were no potentially dilutive securities. Therefore, basic net income per share equals diluted net income per share for the three and six months ended June 30, 2025. For the three months ended June 30, 2024, diluted earnings per share reflects potentially dilutive securities using the treasury stock method. For the six months ended June 30, 2024, we recognized net loss. Therefore, all potentially dilutive securities were antidilutive and accordingly, basic net loss per share equals diluted net loss per share for the six months ended June 30, 2024.
Reclassifications Out of Accumulated Other Comprehensive Loss
The following tables present a reconciliation of changes in Accumulated other comprehensive loss by component for the periods presented (in thousands):

|  |  | Three Months Ended June 30, 2025
|  |  | Foreign Currency Translation Adjustments |  | Total
Beginning balance |  |  | $ | (39,754) |  |  | $ | (39,754) |
Net current period other comprehensive loss |  |  | (569) |  |  | (569) |
Ending balance |  |  | $ | (40,323) |  |  | $ | (40,323) |

| Three Months Ended June 30, 2024
| Gains and (Losses) on Derivative Instruments |  | Foreign Currency Translation Adjustments |  | Total
Beginning balance | $ | (979) |  |  | $ | (36,639) |  |  | $ | (37,618) |
Other comprehensive loss before reclassifications | (133) |  |  | 4 |  |  | (129) |
Amounts reclassified from accumulated other comprehensive loss to: |  |  |  |  |
Other gains and (losses) | 539 |  |  | — |  |  | 539 |
Interest expense | 166 |  |  | — |  |  | 166 |
Total | 705 |  |  | — |  |  | 705 |
Net current period other comprehensive income | 572 |  |  | 4 |  |  | 576 |
Ending balance | $ | (407) |  |  | $ | (36,635) |  |  | $ | (37,042) |

|  |  | Six Months Ended June 30, 2025
|  |  | Foreign Currency Translation Adjustments |  | Total
Beginning balance |  |  | $ | (40,157) |  |  | $ | (40,157) |
Other comprehensive loss before reclassifications |  |  | (1,279) |  |  | (1,279) |
Amounts reclassified from accumulated other comprehensive loss to: |  |  |  |  |
(Loss) gain on sale of real estate, net (Note 12) |  |  | 1,113 |  |  | 1,113 |
Total |  |  | 1,113 |  |  | 1,113 |
Net current period other comprehensive loss |  |  | (166) |  |  | (166) |
Ending balance |  |  | $ | (40,323) |  |  | $ | (40,323) |

Net Lease Office Properties 6/30/2025 10-Q – 20

Notes to Consolidated Financial Statements (Unaudited)

| Six Months Ended June 30, 2024
| Gains and (Losses) on Derivative Instruments |  | Foreign Currency Translation Adjustments |  | Total
Beginning balance | $ | (1,191) |  |  | $ | (34,409) |  |  | $ | (35,600) |
Other comprehensive loss before reclassifications | (136) |  |  | (2,226) |  |  | (2,362) |
Amounts reclassified from accumulated other comprehensive loss to: |  |  |  |  |
Other gains and (losses) | 539 |  |  | — |  |  | 539 |
Interest expense | 381 |  |  | — |  |  | 381 |
Total | 920 |  |  | — |  |  | 920 |
Net current period other comprehensive loss | 784 |  |  | (2,226) |  |  | (1,442) |
Ending balance | $ | (407) |  |  | $ | (36,635) |  |  | $ | (37,042) |

See Note 7 for additional information on our derivatives activity recognized within Other comprehensive (loss) income for the periods presented.
Note 11. Income Taxes
We elected to be taxed as a REIT under Section 856 through 860 of the Code effective as of November 1, 2023. In order to maintain our qualification as a REIT, we are required, among other things, to distribute at least 90% of our REIT net taxable income to our stockholders and meet certain tests regarding the nature of our income and assets. As a REIT, we are not subject to federal income taxes on our income and gains that we distribute to our stockholders as long as we satisfy certain requirements, principally relating to the nature of our income and the level of our distributions, as well as other factors. We believe that we have operated, and we intend to continue to operate, in a manner that allows us to continue to qualify as a REIT. We conduct business in the United States and Europe, and as a result, we or one or more of our subsidiaries file income tax returns in the United States federal jurisdiction and various state, local, and foreign jurisdictions. We have not included any provisions for federal income taxes related to the REIT in the accompanying consolidated financial statements for the three and six months ended June 30, 2025 and 2024.
Current income tax expense was $0.1 million and $0.3 million for the three months ended June 30, 2025 and 2024, respectively, and $0.2 million and $0.7 million for the six months ended June 30, 2025 and 2024, respectively.
Deferred income tax benefit was $0.2 million and $0.3 million for the three and six months ended June 30, 2024, respectively. No such benefit was recorded for the three and six months ended June 30, 2025.
Note 12. Property Dispositions
Our property dispositions are also discussed in Note 4.
2025 — During the three and six months ended June 30, 2025, we sold one and three properties, respectively, for total proceeds, net of selling costs, of $16.3 million and $25.4 million, respectively, and recognized net gains (losses) on these sales totaling $0.1 million and $(0.9) million, respectively. In connection with the sale of a property in Poland in March 2025, and in accordance with ASC 830-30-40, Foreign Currency Matters, we reclassified an aggregate of $1.1 million of net foreign currency translation losses from Accumulated other comprehensive loss to Loss on sale of real estate, net (as an increase to Loss on sale of real estate, net), since the sale represented a disposal of all of our investments denominated in euros (Note 2, Note 10).
2024 — During the three and six months ended June 30, 2024, we sold four and six properties, respectively, for total proceeds, net of selling costs, of $152.4 million and $195.2 million, respectively, and recognized a net loss on these sales totaling $40.0 million and $24.2 million, respectively (inclusive of income taxes totaling $0.1 million recognized upon sale during the six months ended June 30, 2024).
Net Lease Office Properties 6/30/2025 10-Q – 21

Notes to Consolidated Financial Statements (Unaudited)
In April 2024, we transferred ownership of a property in Warrenville, Illinois, and the related non-recourse mortgage loan, which had an aggregate net asset carrying value of approximately $19.3 million and mortgage principal outstanding of $19.8 million, respectively, on the date of transfer, to the mortgage lender, resulting in a net loss of $1.0 million (we also wrote off $1.4 million of working capital).
In April 2024, we transferred ownership of a property in Tempe, Arizona, and the related non-recourse mortgage loan, which had an aggregate net asset carrying value of approximately $13.3 million and mortgage principal outstanding of $13.2 million, respectively, on the date of transfer, to the mortgage lender, resulting in a net loss of $1.3 million (we also wrote off $1.2 million of working capital).
Note 13. Subsequent Events
Dispositions
In July 2025, we sold a property located in Tampa, Florida, for gross proceeds of $25.2 million. This property was classified as held for sale as of June 30, 2025 (Note 4).
Special Cash Distribution
In August 2025, our Board of Trustees declared a special cash distribution of $3.10 per share, totaling approximately $45.9 million. The distribution is payable on September 3, 2025 to shareholders of record as of August 18, 2025.
Net Lease Office Properties 6/30/2025 10-Q – 22

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to assist in understanding our financial statements and the reasons for changes in certain key components of our financial statements from period to period. This item also provides our perspective on our financial position and liquidity, as well as certain other factors that may affect our future results. Our Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the 2024 Annual Report and subsequent reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Refer to Item 1 of the 2024 Annual Report for a description of our business.
Emerging Growth Company
NLOP is an “emerging growth company,” as defined in Section 2(a) of the U.S. Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, reduced disclosure obligations regarding executive compensation in NLOP’s periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation, and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. 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 out is irrevocable. NLOP has elected to take advantage of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, NLOP, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of NLOP’s financial statements with certain other public companies difficult or impossible because of the potential differences in accounting standards used.
NLOP will remain an emerging growth company until the earlier of: (i) the last day of the fiscal year (a) following the fifth anniversary of the closing of the Spin-Off, (b) in which NLOP has total annual gross revenue of at least $1.235 billion, or (c) in which NLOP is deemed to be a large accelerated filer, which means the market value of the common equity of NLOP that is held by non-affiliates exceeds $700 million as of the last business day of its most recently completed second fiscal quarter; and (ii) the date on which NLOP has issued more than $1.00 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” have the meaning associated with it in the JOBS Act.
Financial Highlights
During the six months ended June 30, 2025 and through the date of this Report, we completed the following (as further described in the consolidated financial statements):
Dispositions
•During the six months ended June 30, 2025, we sold three properties for total proceeds, net of selling costs, of $25.4 million (Note 1 2).
•In July 2025, we sold one property for gross proceeds of $25.2 million. This property was classified as held for sale as of June 30, 2025 (Note 13).
Financing
•During the six months ended June 30, 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 8).
Net Lease Office Properties 6/30/2025 10-Q – 23

Special Cash Distribution
•In August 2025, our Board of Trustees declared a special cash distribution of $3.10 per share, totaling approximately $45.9 million. The distribution is payable on September 3, 2025 to shareholders of record as of August 18, 2025 (Note 13). 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. There can be no assurance as to the amount or timing of future distributions.
Summary Results
(in thousands)

| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Total revenues | $ | 29,174 |  |  | $ | 39,029 |  |  | $ | 58,387 |  |  | $ | 83,036 |
Net (loss) income attributable to NLOP | (81,540) |  |  | 12,451 |  |  | (81,048) |  |  | (15,391) |
Net cash provided by operating activities (a) |  |  |  |  | 25,828 |  |  | 41,084 |
Net cash provided by investing activities |  |  |  |  | 22,706 |  |  | 177,543 |
Net cash used in financing activities |  |  |  |  | (61,496) |  |  | (205,179) |
Supplemental financial measures (b): |  |  |  |  |  |  |
Funds from operations attributable to NLOP (FFO) | 13,164 |  |  | (1,979) |  |  | 25,257 |  |  | 7,938 |
Adjusted funds from operations attributable to NLOP (AFFO) | 16,909 |  |  | 17,402 |  |  | 31,874 |  |  | 37,416 |

__________
(a)Amount for the six months ended June 30, 2024 includes $10.3 million of proceeds from the sale of a net investment in sales-type lease. Such proceeds are included within Net cash provided by operating activities in accordance with ASC 842, Leases.
(b)We consider Funds from operations (“FFO”) and Adjusted funds from operations (“AFFO”), supplemental measures that are not defined by GAAP (a “non-GAAP measure”), to be important measures in the evaluation of our operating performance. 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 for the three and six months ended June 30, 2025 as compared to the same periods in 2024, primarily due to the impact of disposition activity, tenant vacancies at certain properties, and lower other lease-related income.
Net (Loss) Income Attributable to NLOP
We recognized net loss attributable to NLOP for the three months ended June 30, 2025, as compared to net income for the same period in 2024, primarily due to significantly higher impairment charges and lower gain on sale of real estate, partially offset by lower interest expense. See Not e 6 for information on impairment charges recorded during the reporting period.
Net loss attributable to NLOP increased for the six months ended June 30, 2025, as compared to the same period in 2024, primarily due to significantly higher impairment charges and lower gain on sale of real estate, partially offset by lower interest expense. See Note 6 for information on impairment charges recorded during the reporting period.
FFO
FFO increased for the three and six months ended June 30, 2025 as compared to the same periods in 2024, primarily due to lower interest expense (including amortization of deferred financing costs), partially offset by the impact of disposition activity and lower other lease-related income.
Net Lease Office Properties 6/30/2025 10-Q – 24

AFFO
AFFO decreased for the three and six months ended June 30, 2025 as compared to the same periods in 2024, primarily due to the impact of disposition activity and lower other lease-related income, partially offset by lower interest expense (excluding amortization of deferred financing costs).
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.
Portfolio Summary

| June 30, 2025 |  | December 31, 2024
ABR (in thousands) | $ | 87,987 |  |  | $ | 88,124 |
Number of properties | 36 |  |  | 39 |
Number of tenants | 39 |  |  | 43 |
Occupancy | 88.1 | % |  | 85.2 | %
Weighted-average lease term (in years) | 4.0 |  |  | 4.3 |
Leasable square footage (in thousands) (a) | 5,304 |  |  | 5,613 |

__________
(a)Excludes 570,999 of operating square footage for a parking garage at a domestic property.
Portfolio
The tables below represent information about our portfolio at June 30, 2025 on a pro rata basis. See Terms and Definitions below for a description of pro rata amounts and ABR.
Top Ten Tenants by ABR
(dollars in thousands)

Tenant/Lease Guarantor |  | State/Country |  | ABR |  | ABR Percent |  | Square Footage |  | Number of Properties |  | Weighted-Average Lease Term (Years)
KBR, Inc. (a) |  | Texas |  | $ | 20,156 |  |  | 22.9 | % |  | 913,713 |  |  | 1 |  |  | 5.0 |
JPMorgan Chase Bank, N.A. (b) |  | Florida, Texas |  | 9,766 |  |  | 11.1 | % |  | 666,869 |  |  | 3 |  |  | 4.3 |
Siemens AS (c) |  | Norway |  | 4,842 |  |  | 5.5 | % |  | 165,905 |  |  | 1 |  |  | 0.5 |
Thermo Fisher Scientific Inc. |  | North Carolina |  | 4,063 |  |  | 4.6 | % |  | 219,812 |  |  | 1 |  |  | 8.4 |
Omnicom Group, Inc. |  | California |  | 3,961 |  |  | 4.5 | % |  | 120,000 |  |  | 1 |  |  | 3.3 |
R.R. Donnelley & Sons Company |  | Illinois |  | 3,393 |  |  | 3.9 | % |  | 167,215 |  |  | 1 |  |  | 2.3 |
Board of Regents, State of Iowa |  | Iowa |  | 3,254 |  |  | 3.7 | % |  | 191,700 |  |  | 1 |  |  | 5.3 |
Bankers Financial Corporation |  | Florida |  | 3,228 |  |  | 3.7 | % |  | 111,357 |  |  | 1 |  |  | 0.1 |
Google, LLC |  | California |  | 3,018 |  |  | 3.4 | % |  | 67,681 |  |  | 1 |  |  | 5.3 |
Northrop Grumman Systems Corporation |  | Minnesota |  | 2,679 |  |  | 3.0 | % |  | 191,336 |  |  | 1 |  |  | 4.4 |
Total |  |  |  | $ | 58,360 |  |  | 66.3 | % |  | 2,815,588 |  |  | 12 |  |  | 4.2 |

__________
(a)Excludes 570,999 of operating square footage for a parking garage associated with the KBR, Inc. property in Houston, Texas.
(b)A property in Tampa, Florida, was sold in July 2025. This property was classified as held for sale as of June 30, 2025 (Note 13).
(c)ABR amount is subject to fluctuations in foreign currency exchange rates.
Net Lease Office Properties 6/30/2025 10-Q – 25

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
Remaining 2025 |  | 7 |  |  | 7 |  |  | $ | 12,142 |  |  | 13.8 | % |  | 571,125 |  |  | 10.8 | %
2026 |  | 6 |  |  | 6 |  |  | 4,940 |  |  | 5.6 | % |  | 308,997 |  |  | 5.8 | %
2027 |  | 7 |  |  | 6 |  |  | 8,879 |  |  | 10.1 | % |  | 499,571 |  |  | 9.4 | %
2028 |  | 7 |  |  | 6 |  |  | 10,551 |  |  | 12.0 | % |  | 476,036 |  |  | 9.0 | %
2029 |  | 4 |  |  | 3 |  |  | 4,597 |  |  | 5.2 | % |  | 304,613 |  |  | 5.7 | %
2030 |  | 7 |  |  | 6 |  |  | 34,720 |  |  | 39.5 | % |  | 1,772,623 |  |  | 33.4 | %
2031 |  | 1 |  |  | 1 |  |  | 631 |  |  | 0.7 | % |  | 50,600 |  |  | 1.0 | %
2032 |  | 2 |  |  | 2 |  |  | 3,721 |  |  | 4.2 | % |  | 257,008 |  |  | 4.8 | %
2033 |  | 1 |  |  | 1 |  |  | 4,063 |  |  | 4.6 | % |  | 219,812 |  |  | 4.2 | %
2035 |  | 1 |  |  | 1 |  |  | 2,050 |  |  | 2.4 | % |  | 120,147 |  |  | 2.3 | %
2036 |  | 1 |  |  | 1 |  |  | 1,148 |  |  | 1.3 | % |  | 60,463 |  |  | 1.1 | %
2037 |  | 1 |  |  | 1 |  |  | 545 |  |  | 0.6 | % |  | 31,120 |  |  | 0.6 | %
Vacant |  | — |  |  | — |  |  | — |  |  | — | % |  | 631,438 |  |  | 11.9 | %
Total |  | 45 |  |  |  |  | $ | 87,987 |  |  | 100.0 | % |  | 5,303,553 |  |  | 100.0 | %

__________
(a)Assumes tenants do not exercise any renewal options or purchase options.
(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%. 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%. On a pro rata basis, we generally present our proportionate share, based on our economic ownership of this jointly owned investment, of the portfolio metrics of this investment. Multiplying this 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 and reflects exchange rates as of June 30, 2025. If there is a rent abatement, we annualize the first monthly contractual base rent following the free rent period.
Results of Operations
Revenues

| Three Months Ended June 30, |  | Six Months Ended June 30,
(in thousands) | 2025 |  | 2024 |  | Change |  | 2025 |  | 2024 |  | Change
Revenues |  |  |  |  |  |  |  |  |  |  |
Lease revenues | $ | 27,508 |  |  | $ | 35,149 |  |  | $ | (7,641) |  |  | $ | 54,900 |  |  | $ | 73,463 |  |  | $ | (18,563) |
Income from finance leases | — |  |  | — |  |  | — |  |  | — |  |  | 89 |  |  | (89) |
Other lease-related income | 1,666 |  |  | 3,880 |  |  | (2,214) |  |  | 3,487 |  |  | 9,484 |  |  | (5,997) |
| $ | 29,174 |  |  | $ | 39,029 |  |  | $ | (9,855) |  |  | $ | 58,387 |  |  | $ | 83,036 |  |  | $ | (24,649) |

Net Lease Office Properties 6/30/2025 10-Q – 26

Lease Revenues
For the three and six months ended June 30, 2025 as compared to the same periods in 2024, lease revenues decreased by $7.6 million and $18.6 million, respectively, primarily due to disposition activity and tenant vacancies at certain properties.
Income from Finance Leases
For the six months ended June 30, 2025 as compared to the same period in 2024, income from direct finance leases decreased by less than $0.1 million, primarily due to the disposition of our remaining property classified as net investments in sales-type lease during the first quarter of 2024 (Note 4).
Other Lease-Related Income
Other lease-related income is described in Note 4.
Operating Expenses

| Three Months Ended June 30, |  | Six Months Ended June 30,
(in thousands) | 2025 |  | 2024 |  | Change |  | 2025 |  | 2024 |  | Change
Operating Expenses |  |  |  |  |  |  |  |  |  |  |
Impairment charges — real estate | $ | 81,817 |  |  | $ | 8,222 |  |  | $ | 73,595 |  |  | $ | 82,737 |  |  | $ | 12,287 |  |  | $ | 70,450 |
Depreciation and amortization | 9,687 |  |  | 15,122 |  |  | (5,435) |  |  | 19,412 |  |  | 33,092 |  |  | (13,680) |
Reimbursable tenant costs | 6,537 |  |  | 7,189 |  |  | (652) |  |  | 12,677 |  |  | 13,389 |  |  | (712) |
Property expenses, excluding reimbursable tenant costs | 2,244 |  |  | 2,652 |  |  | (408) |  |  | 4,699 |  |  | 4,903 |  |  | (204) |
General and administrative | 2,144 |  |  | 1,880 |  |  | 264 |  |  | 3,951 |  |  | 3,781 |  |  | 170 |
Asset management fees | 1,209 |  |  | 1,599 |  |  | (390) |  |  | 2,469 |  |  | 3,403 |  |  | (934) |
Other expenses | — |  |  | — |  |  | — |  |  | — |  |  | 16 |  |  | (16) |
| $ | 103,638 |  |  | $ | 36,664 |  |  | $ | 66,974 |  |  | $ | 125,945 |  |  | $ | 70,871 |  |  | $ | 55,074 |

Impairment Charges — Real Estate
Our impairment charges on real estate are described in Note 6.
Depreciation and Amortization
For the three and six months ended June 30, 2025 as compared to the same periods in 2024, depreciation and amortization expense decreased by $5.4 million and $13.7 million, respectively, primarily due to the impact of disposition activity and accelerated amortization of intangible assets in connection with a lease restructuring during the prior year period.
Reimbursable Tenant Costs
For both the three and six months ended June 30, 2025 as compared to the same periods in 2024, reimbursable tenant costs decreased by $0.7 million, primarily due to the impact of disposition activity and lower repair and maintenance costs.
Property Expenses, Excluding Reimbursable Tenant Costs
For the three and six months ended June 30, 2025 as compared to the same periods in 2024, property expenses, excluding reimbursable tenant costs, decreased by $0.4 million and $0.2 million, respectively, primarily due to the impact of disposition activity, partially offset by tenant vacancies (which resulted in property expenses no longer being reimbursable).
General and Administrative
For the three and six months ended June 30, 2025 as compared to the same periods in 2024, general and administrative expenses increased by $0.3 million and $0.2 million, respectively, primarily due to higher investor relations costs related to our inaugural proxy filing.
Net Lease Office Properties 6/30/2025 10-Q – 27

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 each month following the disposition of each portfolio property (Note 3).
For the three and six months ended June 30, 2025 as compared to the same periods in 2024, asset management fees decreased by $0.4 million and $0.9 million, respectively, due to the impact of disposition activity.
Other Income and Expenses, and Provision for Income Taxes

| Three Months Ended June 30, |  | Six Months Ended June 30,
(in thousands) | 2025 |  | 2024 |  | Change |  | 2025 |  | 2024 |  | Change
Other Income and Expenses, and Provision for Income Taxes |  |  |  |  |  |  |  |  |  |  |
Interest expense | $ | (4,400) |  |  | $ | (27,798) |  |  | $ | 23,398 |  |  | $ | (10,146) |  |  | $ | (48,598) |  |  | $ | 38,452 |
(Loss) gain on sale of real estate, net | (3,251) |  |  | 37,723 |  |  | (40,974) |  |  | (4,259) |  |  | 21,947 |  |  | (26,206) |
Other gains and (losses) | 697 |  |  | 332 |  |  | 365 |  |  | 1,140 |  |  | (489) |  |  | 1,629 |
Provision for income taxes | (100) |  |  | (149) |  |  | 49 |  |  | (182) |  |  | (373) |  |  | 191 |
| $ | (7,054) |  |  | $ | 10,108 |  |  | $ | (17,162) |  |  | $ | (13,447) |  |  | $ | (27,513) |  |  | $ | 14,066 |

Interest Expense
Interest expense is comprised of 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 8).
For the three and six months ended June 30, 2025 as compared to the same periods in 2024, interest expense decreased by $23.4 million and $38.5 million, respectively, primarily due to repayments of our debt since January 1, 2024 (Note 8).
(Loss) Gain on Sale of Real Estate, Net
(Loss) gain on sale of real estate, net, consists of loss or gain on the sale of properties that were disposed of or included in assets held for sale and subject to a revised estimated purchase price, during the reporting period, as more fully described in Note 4 and Note 12.
Other Gains and (Losses)
For the three months ended June 30, 2025, other gains and (losses) of $0.7 million were primarily comprised of (i) interest income on our cash deposits of $0.4 million, (ii) escrow refund related to facility improvements of $0.4 million, (iii) loss on extinguishment of debt of ($0.2) million related to the full repayment of the NLOP Mezzanine Loan in April 2025 (Note 8), and (iv) net realized and unrealized gains on foreign currency exchange rate movements of $0.1 million.
For the three months ended June 30, 2024, other gains and (losses) of $0.3 million were primarily comprised of (i) interest income on our cash deposits of $0.9 million and (ii) realized losses on our interest rate cap derivative of ($0.6) million (Note 7).
For the six months ended June 30, 2025, other gains and (losses) of $1.1 million were primarily comprised of (i) interest income on our cash deposits of $0.8 million, (ii) escrow refund related to facility improvements of $0.4 million, (iii) loss on extinguishment of debt of ($0.2) million related to the full repayment of the NLOP Mezzanine Loan in April 2025 (Note 8), and (iv) net realized and unrealized gains on foreign currency exchange rate movements of $0.1 million.
For the six months ended June 30, 2024, other gains and (losses) of $(0.5) million were primarily comprised of (i) net realized and unrealized losses on foreign currency exchange rate movements of ($0.7) million, (ii) realized losses on our interest rate cap derivative of ($0.6) million (Note 7), (iii) a loss on extinguishment of debt of ($0.3) million, and (iv) interest income on our cash deposits of $1.0 million.
Net Lease Office Properties 6/30/2025 10-Q – 28

Provision for Income Taxes
For the six months ended June 30, 2025 as compared to the same period in 2024, provision for income taxes decreased by $0.2 million, primarily due to the impact of international property dispositions during the reporting period.
Liquidity and Capital Resources
Sources and Uses of Cash During the Period
We use the cash flow generated from our investments primarily to meet our operating expenses, capital expenditures, and debt service. Our cash flows fluctuate periodically due to a number of factors, which may include, among other things: the timing of capital expenditures and sales of real estate; the timing of the repayment of debt and receipt of lease revenues; the timing and amount of other lease-related payments; and the timing of advisory fees and reimbursements paid to our Advisor. Despite these fluctuations, we believe that we will generate sufficient cash from operations to meet our normal recurring short-term and long-term liquidity needs. We may also use existing cash resources and proceeds from dispositions of properties in order to meet these needs. We assess our ability to access capital on an ongoing basis. The following table summarizes the changes in cash flows for the periods presented (in thousands):

| Six Months Ended June 30, |  | Change
| 2025 |  | 2024 |
Net cash provided by operating activities | $ | 25,828 |  |  | $ | 41,084 |  |  | $ | (15,256) |
Net cash provided by investing activities | 22,706 |  |  | 177,543 |  |  | (154,837) |
Net cash used in financing activities | (61,496) |  |  | (205,179) |  |  | 143,683 |

Net Cash Provided by Operating Activities — Net cash provided by operating activities decreased by $15.3 million during the six months ended June 30, 2025 as compared to the same period in 2024, primarily due to $10.3 million of proceeds received from the sale of a net investment in sales-type lease during the prior year period and the impact of disposition activity, partially offset by lower interest expense.
Net Cash Provided by Investing Activities — Net cash provided by investing activities decreased by $154.8 million during the six months ended June 30, 2025 as compared to the same period in 2024, primarily due to lower proceeds from dispositions during the current year period.
Net Cash Used in Financing Activities — Net cash used in financing activities decreased by $143.7 million during the six months ended June 30, 2025 as compared to the same period in 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 8)).
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Summary of Financing
The table below summarizes our non-recourse mortgages and NLOP Mezzanine Loan (dollars in thousands):

| June 30, 2025 |  | December 31, 2024
Carrying Value |  |  |
Fixed rate: |  |  |
Non-recourse mortgages, net (a) | $ | 71,575 |  |  | $ | 71,488 |
NLOP Mezzanine Loan, net (a) (b) | — |  |  | 57,957 |
| 71,575 |  |  | 129,445 |
Variable rate: |  |  |
Non-recourse mortgages, net (a) | 45,595 |  |  | 39,771 |
| 45,595 |  |  | 39,771 |
| $ | 117,170 |  |  | $ | 169,216 |
Percent of Total Debt |  |  |
Fixed rate | 61 | % |  | 76 | %
Variable rate | 39 | % |  | 24 | %
| 100 | % |  | 100 | %
Weighted-Average Interest Rate at End of Period |  |  |
Fixed rate | 7.4 | % |  | 9.0 | %
Variable rate | 4.9 | % |  | 4.9 | %
Total debt | 6.4 | % |  | 8.1 | %

__________
(a)Aggregate debt balance includes unamortized premium, net, totaling $0.1 million as of June 30, 2025 and unamortized discount, net, totaling $1.8 million as of December 31, 2024, and unamortized deferred financing costs totaling $1.0 million as of December 31, 2024.
(b)In April 2025, we fully repaid the NLOP Mezzanine Loan (Note 8).
During the six months ended June 30, 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 8).
Cash Resources
At June 30, 2025, our cash resources consisted of the following:
•cash and cash equivalents totaling $54.1 million. 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 $471.8 million at June 30, 2025, although there can be no assurance that we would be able to sell or obtain financing for these properties.
Cash Requirements and Liquidity
As of June 30, 2025, scheduled debt principal payments total $80.5 million during the remainder of 2025 and $36.6 million during 2026 (Note 8).
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During the next 12 months following June 30, 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 $117.1 million, with $95.2 million due during the next 12 months;
•making scheduled interest payments on our non-recourse mortgage obligations, totaling $3.7 million, with $3.6 million due during the next 12 months; and
•other normal recurring operating expenses.
We expect to fund these cash requirements through cash generated from operations and cash received from dispositions of properties.
Our liquidity could be adversely affected by refinancing debt at higher interest rates or an unanticipated disruption to our operating cash flow, which could include interrupted rent collections or greater-than-anticipated operating expenses.
Certain amounts disclosed above are based on the applicable foreign currency exchange rate at June 30, 2025.
New Tax Legislation
Effective July 4, 2025, certain changes to U.S. tax law were approved that may impact us and our shareholders. Among other changes, this legislation (i) permanently extended the 20% deduction for “qualified REIT dividends” for individuals and other non-corporate taxpayers under Section 199A of the Code, (ii) increased the percentage limit under the REIT asset test applicable to taxable REIT subsidiaries from 20% to 25% for taxable years beginning after December 31, 2025, and (iii) increases the base on which the 30% interest deduction limit under Section 163(j) of the Code applies by excluding depreciation, amortization, and depletion from the definition of “adjusted taxable income” (i.e. based on EBITDA rather than EBIT) for taxable years beginning after December 31, 2024.
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. Additionally, in the formulation of our goals and in the evaluation of the effectiveness of our strategies, we use FFO and AFFO, which are non-GAAP measures defined by our management. We believe that these measures are useful to investors to consider because they may assist them to better understand and measure the performance of our business over time and against similar companies. A description of FFO and AFFO and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are provided below.
Funds from Operations and Adjusted Funds from Operations
Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts (“NAREIT”), an industry trade group, has promulgated a non-GAAP measure known as FFO, which we believe to be an appropriate supplemental measure, when used in addition to and in conjunction with results presented in accordance with GAAP, to reflect the operating performance of a REIT. The use of FFO is recommended by the REIT industry as a supplemental non-GAAP measure. FFO is not equivalent to, nor a substitute for, net income or loss as determined under GAAP.
We define FFO, a non-GAAP measure, consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT, as restated in December 2018. The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding gains or losses from the sale of certain real estate, impairment charges on real estate or other assets incidental to the company’s main business, gains or losses on changes in control of interests in real estate, and depreciation and amortization from real estate assets; and after adjustments for unconsolidated partnerships and jointly owned investments. Adjustments for unconsolidated partnerships and jointly owned investments are calculated to reflect FFO on the same basis.
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We also modify the NAREIT computation of FFO to adjust GAAP net income for certain non-cash charges, such as amortization of real estate-related intangibles, deferred income tax benefits and expenses, straight-line rent and related reserves, other non-cash rent adjustments, non-cash allowance for credit losses on finance leases, stock-based compensation, non-cash environmental accretion expense, amortization of discounts and premiums on debt, and amortization of deferred financing costs. Our assessment of our operations is focused on long-term sustainability and not on such non-cash items, which may cause short-term fluctuations in net income but have no impact on cash flows. Additionally, we exclude non-core income and expenses, such as gains or losses from extinguishment of debt, merger and acquisition expenses, and spin-off expenses. We also exclude realized and unrealized gains/losses on foreign currency exchange rate movements, which are not considered fundamental attributes of our business plan and do not affect our overall long-term operating performance. We refer to our modified definition of FFO as AFFO. 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. AFFO also reflects adjustments for jointly owned investments. We use AFFO as one measure of our operating performance when we formulate corporate goals and evaluate the effectiveness of our strategies.
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. For example, impairment charges and unrealized foreign currency losses that we exclude may become actual realized losses upon the ultimate disposition of the properties in the form of lower cash proceeds or other considerations. We use our FFO and AFFO measures as supplemental financial measures of operating performance. 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.
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FFO and AFFO were as follows (in thousands):

| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Net (loss) income attributable to NLOP | $ | (81,540) |  |  | $ | 12,451 |  |  | $ | (81,048) |  |  | $ | (15,391) |
Adjustments: |  |  |  |  |  |  |
Impairment charges — real estate (a) | 81,817 |  |  | 8,222 |  |  | 82,737 |  |  | 12,287 |
Depreciation and amortization of real property | 9,688 |  |  | 15,122 |  |  | 19,413 |  |  | 33,092 |
Loss (gain) on sale of real estate, net | 3,251 |  |  | (37,723) |  |  | 4,259 |  |  | (21,947) |
Proportionate share of adjustments for noncontrolling interests (b) | (52) |  |  | (51) |  |  | (104) |  |  | (103) |
Total adjustments | 94,704 |  |  | (14,430) |  |  | 106,305 |  |  | 23,329 |
FFO (as defined by NAREIT) attributable to NLOP | 13,164 |  |  | (1,979) |  |  | 25,257 |  |  | 7,938 |
Adjustments: |  |  |  |  |  |  |
Amortization of deferred financing costs | 2,900 |  |  | 17,028 |  |  | 4,960 |  |  | 24,058 |
Straight-line and other leasing and financing adjustments | 726 |  |  | 733 |  |  | 1,240 |  |  | 1,510 |
Above and below-market rent intangible lease amortization, net | 316 |  |  | 931 |  |  | 566 |  |  | 2,008 |
Other (gains) and losses (c) | (293) |  |  | (14) |  |  | (340) |  |  | 930 |
Other amortization and non-cash items | 109 |  |  | 824 |  |  | 217 |  |  | 1,138 |
Tax benefit — deferred | — |  |  | (183) |  |  | — |  |  | (306) |
Stock-based compensation | — |  |  | 75 |  |  | — |  |  | 150 |
Other expenses | — |  |  | — |  |  | — |  |  | 16 |
Proportionate share of adjustments for noncontrolling interests (b) | (13) |  |  | (13) |  |  | (26) |  |  | (26) |
Total adjustments | 3,745 |  |  | 19,381 |  |  | 6,617 |  |  | 29,478 |
AFFO attributable to NLOP | $ | 16,909 |  |  | $ | 17,402 |  |  | $ | 31,874 |  |  | $ | 37,416 |
Summary |  |  |  |  |  |  |
FFO (as defined by NAREIT) attributable to NLOP | $ | 13,164 |  |  | $ | (1,979) |  |  | $ | 25,257 |  |  | $ | 7,938 |
AFFO attributable to NLOP | $ | 16,909 |  |  | $ | 17,402 |  |  | $ | 31,874 |  |  | $ | 37,416 |

__________
(a)Amounts for the three and six months ended June 30, 2025 include an impairment charge of $81.6 million recognized on the KBR, Inc. property in Houston, Texas (Note 6).
(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.
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. 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 6/30/2025 10-Q – 33

Item 3. 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.
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 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. The value of our real estate is also subject to fluctuations based on local and regional economic conditions and changes in the creditworthiness of lessees, which may affect our ability to refinance debt when balloon payments are scheduled, if we do not choose to repay the debt when due. Interest rates are highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political conditions, and other factors beyond our control. An increase in interest rates would likely cause the fair value of our assets to decrease. Increases in interest rates may also have an impact on the credit profile of certain tenants.
We are exposed to the effects of interest rate changes as a result of borrowings used to maintain liquidity and to fund the financing and refinancing of our real estate investment portfolio and operations. Our profitability and the value of our real estate investment portfolio may be adversely affected during any period as a result of interest rate changes.
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. 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. 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 7 for additional information on our interest rate caps.
At June 30, 2025, fixed-rate debt comprises 61% of our debt and variable-rate debt comprises 39%.
Our debt obligations are more fully described in Note 8 and Liquidity and Capital Resources — Summary of Financing in Item 2 above. The following table presents principal cash flows based upon expected maturity dates of our debt obligations outstanding at June 30, 2025 (in thousands):

| 2025 (Remainder) |  | 2026 |  | 2027 |  | 2028 |  | 2029 |  | Total |  | Fair Value
Fixed-rate debt | $ | 35,074 |  |  | $ | 36,577 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 71,651 |  |  | $ | 66,224 |
Variable-rate debt (a) | $ | 45,451 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 45,451 |  |  | $ | 28,328 |

__________
(a)Amounts are based on the exchange rate at June 30, 2025, as applicable.
Annual interest expense on our variable-rate debt at June 30, 2025 would increase or decrease by $0.5 million, for each respective 1% change in annual interest rates.
Net Lease Office Properties 6/30/2025 10-Q – 34

Foreign Currency Exchange Rate Risk
We own an international investment in Norway, and as a result are subject to risk from the effects of exchange rate movements in the Norwegian krone, which may affect future costs and cash flows. 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. 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. We estimate that, for a 1% increase or decrease in the exchange rate between the Norwegian krone 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 June 30, 2025 of less than $0.1 million for the Norwegian krone.
Concentration of Credit Risk
Concentrations of credit risk arise when a number of tenants are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations, including those to the Company, to be similarly affected by changes in economic conditions. The Company is subject to tenant, geographic and industry concentrations. Any downturn of the economic conditions in one or more of these tenants, geographies or industries could result in a material reduction of our cash flows or material losses to us.
The factors we consider in determining the credit risk of our tenants include, but are not limited to: payment history; credit status (credit ratings for public companies are used as a primary metric); change in tenant space needs (i.e., expansion/downsize); tenant financial performance; economic conditions in a specific geographic region; and industry specific credit considerations. We believe that the credit risk of our portfolio is reduced by the high quality and diversity of our existing tenant base, reviews of prospective tenants’ risk profiles prior to lease execution and consistent monitoring of our portfolio to identify potential problem tenants.
For the six months ended June 30, 2025, our consolidated portfolio had the following significant characteristics in excess of 10%, based on the percentage of our consolidated total revenues:
•28% related to our tenant KBR, Inc. and 14% related to our tenant JPMorgan Chase Bank, N.A.; and
•96% related to domestic operations; which included concentrations of 43%, 14%, and 11% in Texas, Minnesota, and Florida, respectively.
Net Lease Office Properties 6/30/2025 10-Q – 35

Item 4. Controls and Procedures.
Disclosure Controls and Procedures
Our disclosure controls and procedures include internal controls and other procedures designed to provide reasonable assurance that information required to be disclosed in this and other reports filed under the Exchange Act is recorded, processed, summarized, and reported within the required time periods specified in the SEC’s rules and forms; and that such information is accumulated and communicated to management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosures. It should be noted that no system of controls can provide complete assurance of achieving a company’s objectives and that future events may impact the effectiveness of a system of controls.
Our chief executive officer and chief financial officer, after conducting an evaluation, together with members of our management, of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2025, have concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) were effective as of June 30, 2025 at a reasonable level of assurance.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
Net Lease Office Properties 6/30/2025 10-Q – 36

PART II — OTHER INFORMATION
Item 6. Exhibits.
The following exhibits are filed with this Report. Documents other than those designated as being filed herewith are incorporated herein by reference.

Exhibit No. |  | Description |  | Method of Filing
31.1 |  |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |  | Filed herewith
31.2 |  |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |  | Filed herewith
32 |  |  | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |  | Filed herewith
101.INS |  | XBRL Instance Document — the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document |  | Filed herewith
101.SCH |  | XBRL Taxonomy Extension Schema Document |  | Filed herewith
101.CAL |  | XBRL Taxonomy Extension Calculation Linkbase Document |  | Filed herewith
101.DEF |  | XBRL Taxonomy Extension Definition Linkbase Document |  | Filed herewith
101.LAB |  | XBRL Taxonomy Extension Label Linkbase Document |  | Filed herewith
101.PRE |  | XBRL Taxonomy Extension Presentation Linkbase Document |  | Filed herewith
104 |  |  | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |  | Filed herewith

Net Lease Office Properties 6/30/2025 10-Q – 37

SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

|  |  | Net Lease Office Properties
Date: | August 6, 2025 | By: | /s/ ToniAnn Sanzone
|  |  | ToniAnn Sanzone
|  |  | Chief Financial Officer
|  |  | (Principal Financial Officer)
Date: | August 6, 2025 | By: | /s/ Brian Zander
|  |  | Brian Zander
|  |  | Chief Accounting Officer
|  |  | (Principal Accounting Officer)

Net Lease Office Properties 6/30/2025 10-Q – 38