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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026

| 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: 001-40873

Orion Properties Inc.
(Exact name of registrant as specified in its charter)

Maryland |  | 87-1656425
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
3200 E Camelback Road, Suite 100 | Phoenix | AZ |  | 85018
(Address of principal executive offices) |  | (Zip Code)

(602) | 698-1002
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each class: | Trading Symbol(s): | Name of each exchange on which registered:
Common Stock | $0.001 par value per share | ONL | 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 (the “Exchange Act”) 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 x No o
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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
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 | o |  | Accelerated filer | x |  | Non-accelerated filer | o
| Smaller reporting company | x |  | Emerging growth company | x |  |

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 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 x
There were 57,044,714 shares of common stock of Orion Properties Inc. outstanding as of July 31, 2026.

ORION PROPERTIES INC.
For the quarterly period ended June 30, 2026

|  | Page
PART I |  |
Item 1. Unaudited Financial Statements |  | 3
Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025 |  | 3
Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2026 and 2025 |  | 4
Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2026 and 2025 |  | 5
Consolidated Statements of Equity for the Three and Six Months Ended June 30, 2026 and 2025 |  | 6
Consolidated Statements of Cash Flows for the Six Months Ended J une 30, 2026 and 2025 |  | 7
Notes to Consolidated Financial Statements |  | 9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |  | 28
Item 3. Quantitative and Qualitative Disclosures About Market Risk |  | 51
Item 4. Controls and Procedures |  | 52
PART II |  |
Item 1. Legal Proceedings |  | 53
Item 1A. Risk Factors |  | 53
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities |  | 53
Item 3. Defaults Upon Senior Securities |  | 53
Item 4. Mine Safety Disclosures |  | 53
Item 5. Other Information |  | 54
Item 6. Exhibits |  | 54
Signatures |  | 55

Table of Contents
PART I — FINANCIAL INFORMATION
Item 1. Unaudited Financial Statements.
ORION PROPERTIES INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data) (Unaudited)

|  | June 30, 2026 |  | December 31, 2025
ASSETS |  |  |  |
Real estate investments, at cost: |  |  |  |
Land |  | $ | 167,254 |  |  | $ | 176,532 |
Buildings, fixtures and improvements |  | 956,882 |  |  | 976,676 |
Total real estate investments, at cost |  | 1,124,136 |  |  | 1,153,208 |
Less: accumulated depreciation |  | 196,198 |  |  | 195,042 |
Total real estate investments, net |  | 927,938 |  |  | 958,166 |
Accounts receivable, net |  | 41,111 |  |  | 35,333 |
Intangible lease assets, net |  | 77,872 |  |  | 75,947 |
Cash and cash equivalents |  | 16,870 |  |  | 22,362 |
Restricted cash |  | 46,659 |  |  | 38,277 |
Real estate assets held for sale, net |  | — |  |  | 12,803 |
Other assets, net |  | 29,625 |  |  | 27,614 |
Total assets |  | $ | 1,140,075 |  |  | $ | 1,170,502 |
LIABILITIES AND EQUITY |  |  |  |
Mortgages payable, net |  | $ | 331,802 |  |  | $ | 371,957 |
Credit facility revolver |  | 102,000 |  |  | 92,000 |
Accounts payable and accrued expenses |  | 25,471 |  |  | 40,219 |
Below-market lease liabilities, net |  | 17,429 |  |  | 18,449 |
Distributions payable |  | 1,141 |  |  | 1,208 |
Other liabilities, net |  | 28,203 |  |  | 22,154 |
Total liabilities |  | 506,046 |  |  | 545,987 |
Common stock, $0.001 par value, 100,000,000 shares authorized 57,044,714 and 56,314,634 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively |  | 57 |  |  | 56 |
Additional paid-in capital |  | 1,152,706 |  |  | 1,151,644 |
Accumulated other comprehensive loss |  | — |  |  | (5) |
Accumulated deficit |  | (520,011) |  |  | (528,482) |
Total stockholders’ equity |  | 632,752 |  |  | 623,213 |
Non-controlling interest |  | 1,277 |  | 1,302 |
Total equity |  | 634,029 |  |  | 624,515 |
Total liabilities and equity |  | $ | 1,140,075 |  |  | $ | 1,170,502 |

The accompanying notes are an integral part of these statements.
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ORION PROPERTIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per share data) (Unaudited)

|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2026 |  | 2025 |  | 2026 |  | 2025
Rental |  | $ | 34,098 |  |  | $ | 37,102 |  |  | $ | 70,232 |  |  | $ | 74,899 |
Fee income from unconsolidated joint venture |  | 206 |  |  | 203 |  |  | 343 |  |  | 407 |
Total revenues |  | 34,304 |  |  | 37,305 |  |  | 70,575 |  |  | 75,306 |
Operating expenses: |  |  |  |  |  |  |  |
Property operating |  | 12,477 |  |  | 15,895 |  |  | 27,260 |  |  | 32,345 |
General and administrative |  | 4,611 |  |  | 4,838 |  |  | 9,751 |  |  | 9,734 |
Depreciation and amortization |  | 13,520 |  |  | 14,928 |  |  | 26,679 |  |  | 30,950 |
Impairments |  | — |  |  | 19,503 |  |  | 6,296 |  |  | 21,212 |
Transaction related |  | 312 |  |  | 75 |  |  | 571 |  |  | 139 |
Total operating expenses |  | 30,920 |  |  | 55,239 |  |  | 70,557 |  |  | 94,380 |
Other income (expenses): |  |  |  |  |  |  |  |
Interest expense, net |  | (7,330) |  |  | (8,016) |  |  | (14,580) |  |  | (16,172) |
Gain on disposition of real estate assets |  | 28,826 |  |  | 891 |  |  | 28,826 |  |  | 891 |
Loss on extinguishment of debt, net |  | (288) |  |  | — |  |  | (532) |  |  | — |
Other income |  | 63 |  |  | 404 |  |  | 306 |  |  | 657 |
Other expenses |  | (1) |  |  | (108) |  |  | (3,320) |  |  | (108) |
Recovery of reserve on Member Loan |  | — |  |  | — |  |  | 439 |  |  | — |
Equity in loss of unconsolidated joint venture, net |  | — |  |  | (271) |  |  | — |  |  | (517) |
Total other income (expenses), net |  | 21,270 |  |  | (7,100) |  |  | 11,139 |  |  | (15,249) |
Income (loss) before taxes |  | 24,654 |  |  | (25,034) |  |  | 11,157 |  |  | (34,323) |
Provision for income taxes |  | (71) |  |  | (67) |  |  | (142) |  |  | (133) |
Net income (loss) |  | 24,583 |  |  | (25,101) |  |  | 11,015 |  |  | (34,456) |
Net income attributable to non-controlling interest |  | (4) |  |  | (2) |  |  | (14) |  |  | (8) |
Net income (loss) attributable to common stockholders |  | $ | 24,579 |  |  | $ | (25,103) |  |  | $ | 11,001 |  |  | $ | (34,464) |
Weighted average common shares outstanding - basic |  | 56,946 |  | 56,254 |  | 56,756 |  | 56,149
Weighted average common shares outstanding - diluted |  | 58,106 |  | 56,254 |  | 57,488 |  | 56,149
Net income (loss) per share attributable to common stockholders - basic |  | $ | 0.43 |  |  | $ | (0.45) |  |  | $ | 0.19 |  |  | $ | (0.61) |
Net income (loss) per share attributable to common stockholders - diluted |  | $ | 0.42 |  |  | $ | (0.45) |  |  | $ | 0.19 |  |  | $ | (0.61) |

The accompanying notes are an integral part of these statements.
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ORION PROPERTIES INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands) (Unaudited)

|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2026 |  | 2025 |  | 2026 |  | 2025
Net income (loss) |  | $ | 24,583 |  |  | $ | (25,101) |  |  | $ | 11,015 |  |  | $ | (34,456) |
Total other comprehensive income (loss): |  |  |  |  |  |  |  |
Unrealized gain (loss) on interest rate derivatives |  | — |  |  | (23) |  |  | 5 |  |  | (9) |
Reclassification of previous unrealized gain on interest rate derivatives into net loss |  | — |  |  | (1) |  |  | — |  |  | (1) |
Total other comprehensive income (loss) |  | — |  |  | (24) |  |  | 5 |  |  | (10) |
Total comprehensive income (loss) |  | 24,583 |  |  | (25,125) |  |  | 11,020 |  |  | (34,466) |
Comprehensive income attributable to non-controlling interest |  | (4) |  |  | (2) |  |  | (14) |  |  | (8) |
Total comprehensive income (loss) attributable to common stockholders |  | $ | 24,579 |  |  | $ | (25,127) |  |  | $ | 11,006 |  |  | $ | (34,474) |

The accompanying notes are an integral part of these statements.
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ORION PROPERTIES INC.
CONSOLIDATED STATEMENTS OF EQUITY
(In thousands, except for share data) (Unaudited)

|  | Common Stock |  |  |  |  |  |  |  |  |  |  |  |
|  | Number of Shares |  | Par Value |  | Additional Paid-In Capital |  | Accumulated Other Comprehensive Loss |  | Accumulated Deficit |  | Total Stockholders’ Equity |  | Non-Controlling Interest |  | Total Equity
Balance, January 1, 2026 |  | 56,314,634 |  |  | $ | 56 |  |  | $ | 1,151,644 |  |  | $ | (5) |  |  | $ | (528,482) |  |  | $ | 623,213 |  |  | $ | 1,302 |  |  | $ | 624,515 |
Net (loss) income |  | — |  |  | — |  |  | — |  |  | — |  |  | (13,578) |  |  | (13,578) |  |  | 10 |  |  | (13,568) |
Distributions |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,372) |  |  | (1,372) |  |  | (39) |  |  | (1,411) |
Repurchases of common stock to settle tax obligations |  | (270,109) |  |  | — |  |  | (619) |  |  | — |  |  | — |  |  | (619) |  |  | — |  |  | (619) |
Equity-based compensation, net |  | 785,543 |  |  | 1 |  |  | 867 |  |  | — |  |  | — |  |  | 868 |  |  | — |  |  | 868 |
Other comprehensive income, net |  | — |  |  | — |  |  | — |  |  | 5 |  |  | — |  |  | 5 |  |  | — |  |  | 5 |
Balance, March 31, 2026 |  | 56,830,068 |  |  | $ | 57 |  |  | $ | 1,151,892 |  |  | $ | — |  |  | $ | (543,432) |  |  | $ | 608,517 |  |  | $ | 1,273 |  |  | $ | 609,790 |
Net income |  | — |  |  | — |  |  | — |  |  | — |  |  | 24,579 |  |  | 24,579 |  |  | 4 |  |  | 24,583 |
Distributions |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,158) |  |  | (1,158) |  |  | — |  |  | (1,158) |
Equity-based compensation, net |  | 214,646 |  |  | — |  |  | 814 |  |  | — |  |  | — |  |  | 814 |  |  | — |  |  | 814 |
Balance, June 30, 2026 |  | 57,044,714 |  |  | $ | 57 |  |  | $ | 1,152,706 |  |  | $ | — |  |  | $ | (520,011) |  |  | $ | 632,752 |  |  | $ | 1,277 |  |  | $ | 634,029 |

|  | Common Stock |  |  |  |  |  |  |  |  |  |  |  |
|  | Number of Shares |  | Par Value |  | Additional Paid-In Capital |  | Accumulated Other Comprehensive Loss |  | Accumulated Deficit |  | Total Stockholders’ Equity |  | Non-Controlling Interest |  | Total Equity
Balance, January 1, 2025 |  | 55,951,876 |  |  | $ | 56 |  |  | $ | 1,148,223 |  |  | $ | (15) |  |  | $ | (384,348) |  |  | $ | 763,916 |  |  | $ | 1,340 |  |  | $ | 765,256 |
Net (loss) income |  | — |  |  | — |  |  | — |  |  | — |  |  | (9,361) |  |  | (9,361) |  |  | 6 |  |  | (9,355) |
Distributions |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,327) |  |  | (1,327) |  |  | (30) |  |  | (1,357) |
Repurchases of common stock to settle tax obligations |  | (132,362) |  |  | — |  |  | (466) |  |  | — |  |  | — |  |  | (466) |  |  | — |  |  | (466) |
Equity-based compensation, net |  | 374,151 |  |  | — |  |  | 704 |  |  | — |  |  | — |  |  | 704 |  |  | — |  |  | 704 |
Other comprehensive income, net |  | — |  |  | — |  |  | — |  |  | 14 |  |  | — |  |  | 14 |  |  | — |  |  | 14 |
Balance, March 31, 2025 |  | 56,193,665 |  |  | $ | 56 |  |  | $ | 1,148,461 |  |  | $ | (1) |  |  | $ | (395,036) |  |  | $ | 753,480 |  |  | $ | 1,316 |  |  | $ | 754,796 |
Net (loss) income |  | — |  |  | — |  |  | — |  |  | — |  |  | (25,103) |  |  | (25,103) |  |  | 2 |  |  | (25,101) |
Distributions |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,163) |  |  | (1,163) |  |  | — |  |  | (1,163) |
Equity-based compensation, net |  | 113,636 |  |  | — |  |  | 822 |  |  | — |  |  | — |  |  | 822 |  |  | — |  |  | 822 |
Other comprehensive loss, net |  | — |  |  | — |  |  | — |  |  | (24) |  |  | — |  |  | (24) |  |  | — |  |  | (24) |
Balance, June 30, 2025 |  | 56,307,301 |  |  | $ | 56 |  |  | $ | 1,149,283 |  |  | $ | (25) |  |  | $ | (421,302) |  |  | $ | 728,012 |  |  | $ | 1,318 |  |  | $ | 729,330 |

The accompanying notes are an integral part of these statements.
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ORION PROPERTIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)

|  | Six Months Ended June 30,
|  | 2026 |  | 2025
Cash flows from operating activities: |  |  |  |
Net income (loss) |  | $ | 11,015 |  |  | $ | (34,456) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |  |  |
Depreciation and amortization |  | 26,679 |  |  | 30,950 |
Straight-line rental revenue and other non-cash revenue adjustments, net |  | (1,109) |  |  | (6,319) |
Impairments |  | 6,296 |  |  | 21,212 |
Gain on disposition of real estate assets |  | (28,826) |  |  | (891) |
Loss on extinguishment of debt, net |  | 532 |  |  | — |
Amortization of deferred financing costs |  | 1,773 |  |  | 1,834 |
Equity-based compensation, net |  | 1,682 |  |  | 1,526 |
Equity in loss of unconsolidated joint venture, net |  | — |  |  | 517 |
Recovery of reserve on Member Loan |  | (439) |  |  | — |
Changes in assets and liabilities: |  |  |  |
Accounts receivable, net and other assets, net |  | (482) |  |  | 248 |
Accounts payable, accrued expenses and other liabilities, net |  | (8,766) |  |  | (5,305) |
Net cash provided by operating activities |  | 8,355 |  |  | 9,316 |
Cash flows from investing activities: |  |  |  |
Investment in real estate assets |  | (14,830) |  |  | — |
Capital expenditures and leasing costs |  | (33,661) |  |  | (15,631) |
Proceeds from disposition of real estate, net |  | 81,443 |  |  | 22,825 |
Origination of Member Loan |  | — |  |  | (8,328) |
Principal repayments received on Member Loan |  | 1,117 |  |  | 2,123 |
Principal repayments received on notes receivable |  | — |  |  | 2,500 |
Deposits for real estate assets |  | (305) |  |  | — |
Uses and refunds of deposits for real estate assets |  | 655 |  |  | — |
Net cash provided by investing activities |  | 34,419 |  |  | 3,489 |
Cash flows from financing activities: |  |  |  |
Payments on mortgages payable |  | (38,402) |  |  | — |
Proceeds from the Original Revolving Facility |  | 18,000 |  |  | 13,000 |
Repayments of the Original Revolving Facility |  | (110,000) |  |  | (22,000) |
Proceeds from New Revolving Facility |  | 127,000 |  |  | — |
Repayments of New Revolving Facility |  | (25,000) |  |  | — |
Payments of deferred financing costs |  | (8,228) |  |  | (8) |
Repurchases of common stock to settle tax obligations |  | (619) |  |  | (466) |
Distributions paid |  | (2,263) |  |  | (6,719) |
Other financing activities |  | (372) |  |  | (308) |
Net cash used in financing activities |  | (39,884) |  |  | (16,501) |
Net change in cash and cash equivalents and restricted cash |  | 2,890 |  |  | (3,696) |
Cash and cash equivalents and restricted cash, beginning of year |  | 60,639 |  |  | 57,170 |
Cash and cash equivalents and restricted cash, end of period |  | $ | 63,529 |  |  | $ | 53,474 |
Reconciliation of Cash and Cash Equivalents and Restricted Cash |  |  |  |
Cash and cash equivalents at beginning of year |  | $ | 22,362 |  |  | $ | 15,600 |

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ORION PROPERTIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)

Restricted cash at beginning of year |  | 38,277 |  |  | 41,570 |
Cash and cash equivalents and restricted cash at beginning of year |  | $ | 60,639 |  |  | $ | 57,170 |
Cash and cash equivalents at end of period |  | $ | 16,870 |  |  | $ | 17,384 |
Restricted cash at end of period |  | 46,659 |  |  | 36,090 |
Cash and cash equivalents and restricted cash at end of period |  | $ | 63,529 |  |  | $ | 53,474 |

The accompanying notes are an integral part of these statements.
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ORION PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026 (Unaudited)
Note 1 – Organization
Organization
Orion Properties Inc. (the “Company”, “Orion”, “we” or “us”) is an internally managed real estate investment trust (“REIT”) engaged in the ownership, acquisition, and management of a diversified portfolio of office properties located in high-quality suburban markets across the United States and leased primarily on a single-tenant net lease basis to creditworthy tenants. The Company’s portfolio is comprised of traditional office properties, as well as governmental, medical office, flex/laboratory and R&D and flex/industrial properties. As part of its investment strategy, the Company intends to shift its portfolio concentration over time away from traditional office properties, towards more dedicated use assets with specialized uses that include an office component.
The Company was initially formed as a wholly owned subsidiary of Realty Income Corporation (“Realty Income”). Following completion of the merger transaction involving Realty Income and VEREIT, Inc. (“VEREIT”) on November 1, 2021, Realty Income contributed the combined business comprising certain office real properties and related assets previously owned by subsidiaries of Realty Income, and certain office real properties and related assets previously owned by subsidiaries of VEREIT (the “Separation”), to the Company and its operating partnership, Orion Properties LP (“Orion OP”), and on November 12, 2021, effected a special distribution to Realty Income’s stockholders of all the outstanding shares of common stock of the Company (the “Distribution”).
Following the Distribution, the Company became an independent and publicly traded company and its common stock, par value $0.001 per share, trades on the New York Stock Exchange (the “NYSE”) under the symbol “ONL.” The Company has elected to be taxed as a REIT for U.S. federal income tax purposes, commencing with its initial taxable year ended December 31, 2021.
As of June 30, 2026, the Company owned and operated 57 operating properties, with an aggregate of 6.4 million leasable square feet located in 26 states. The Company owned an equity interest in OAP/VER Venture, LLC (the “Unconsolidated Joint Venture”), an unconsolidated joint venture with an affiliate of Arch Street Capital Partners, LLC (“Arch Street Capital Partners”). As of June 30, 2026, the Unconsolidated Joint Venture owned a portfolio consisting of six properties totaling approximately 1.0 million leasable square feet located within six states.
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The consolidated financial statements of the Company presented herein include the accounts of the Company and its consolidated subsidiaries, including Orion OP, and a consolidated joint venture and are prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). All intercompany transactions have been eliminated upon consolidation. The portion of the consolidated joint venture not owned by the Company is presented as non-controlling interest in the accompanying consolidated balance sheets, statements of operations, statements of comprehensive income (loss) and statements of equity.
The consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. These adjustments are considered to be of a normal, recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2025, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 5, 2026. Information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to the rules and regulations of the SEC and U.S. GAAP.
For legal entities being evaluated for consolidation, the Company must first determine whether the interests that it holds and fees it receives qualify as variable interests in the entity. A variable interest is an investment or other interest that will absorb portions of an entity’s expected losses or receive portions of the entity’s expected residual returns. The Company’s evaluation includes consideration of fees paid to the Company where the Company acts as a decision maker or service provider to the entity being evaluated. If the Company determines that it holds a variable interest in an entity, it evaluates whether that entity is a variable interest entity (“VIE”). VIEs are entities where investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or where equity investors, as a group, lack one or more of the following characteristics: (a) the power to direct the activities that most significantly impact the entity’s economic performance,
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ORION PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026 (Unaudited)
(b) the obligation to absorb the expected losses of the entity; or (c) the right to receive the expected returns of the entity. The Company consolidates entities that are not VIEs if it has a majority voting interest or other rights that result in effectively controlling the entity.
The Company then qualitatively assesses whether it is (or is not) the primary beneficiary of a VIE, which is generally defined as the party who has a controlling financial interest in the VIE. Consideration of various factors include, but are not limited to, the Company’s ability to direct the activities that most significantly impact the entity’s economic performance and its obligation to absorb losses from or right to receive benefits of the VIE that could potentially be significant to the VIE. The Company continually evaluates the need to consolidate VIEs based on standards set forth in U.S. GAAP.
Reclassification
Other income and other expenses, which were previously combined as other income (expenses), net on the consolidated statements of operations, have been separately presented for all prior periods presented to be consistent with the presentation for the three and six months ended June 30, 2026. This reclassification had no impact on the reported net income (loss) in the accompanying consolidated statements of operations.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding real estate impairments, other than temporary equity method investment impairments, notes receivable reserves and purchase price allocations.
Revenue Recognition
Rental Revenue
For operating leases with minimum scheduled rent increases, the Company recognizes rental revenue on a straight-line basis, including the effect of any free rent periods, over the lease term when collectability of lease payments is probable. Variable lease payments are recognized as rental revenue in the period when the changes in facts and circumstances on which the variable lease payments are based occur.
Certain of the Company’s leases also contain provisions for tenants to reimburse the Company for real estate taxes, insurance and maintenance and other property operating expenses. Such reimbursements are included in rental revenue on a gross basis. Property operating expenses paid directly by tenants are recorded on a net basis (i.e., treated as fully offset by an identical amount of assumed reimbursement revenue) and, therefore, are not included in the accompanying consolidated financial statements.
The Company continually reviews receivables related to rent, straight-line rent and property operating expense reimbursements and determines collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. The review includes a binary assessment of whether or not substantially all of the amounts due under a tenant’s lease agreement are probable of collection. For leases that are deemed probable of collection, revenue continues to be recorded on a straight-line basis over the lease term. For leases that are deemed not probable of collection, revenue is recorded as cash is received and the Company reduces rental revenue for any straight-line rent receivables. The Company recognizes all changes in the collectability assessment for an operating lease as an adjustment to rental revenue. During the three and six months ended June 30, 2026, the Company recorded a reduction to rental revenue of less than $0.1 million for income not probable of collection. No such amounts were recorded for the three and six months ended June 30, 2025.
Rental revenue also includes lease termination income collected from tenants to allow for the tenants to settle their lease obligations and/or to vacate their space prior to their scheduled termination dates and recognized over the remaining or modified terms of the respective lease. The Company recognized lease termination income of $0.1 million and $2.0 million during the three and six months ended June 30, 2026, respectively, and $1.3 million and $1.9 million during the three and six months ended June 30, 2025, respectively. Amortization of above and below-market leases and lease incentives is also included in rental revenue and is discussed further in Note 3 – Real Estate Investments and Related Intangibles.
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ORION PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026 (Unaudited)
Fee Income from Unconsolidated Joint Venture
The Company provides various services to the Unconsolidated Joint Venture in exchange for market-based asset and property management fees. See Note 3 – Real Estate Investments and Related Intangibles - Investment in Unconsolidated Joint Venture for discussion regarding the recognition of these fees on a cash basis beginning in January 2026.
Cash and Cash Equivalents and Restricted Cash
Cash and cash equivalents include cash in bank accounts, as well as investments in highly-liquid funds with original maturities of three months or less. Restricted cash as of June 30, 2026 and December 31, 2025 was primarily comprised of reserves held by the lender under the CMBS Loan (as defined in Note 6 – Debt, Net). In connection with the February 2026 modification of the CMBS Loan discussed in Note 6 – Debt, Net, an all-purpose reserve was established by the lender into which all existing tenant improvement, leasing commission and other borrower reserve amounts were funded (a total of $37.7 million on the loan modification date), the Company funded an additional $7.74 million into the all-purpose reserve, and the Company agreed that a portion of all future excess cash flows from the properties that serve as collateral for the CMBS Loan will be used to continue to fund the all-purpose reserve. The all-purpose reserve may be used to pay leasing costs and capital expenditures associated with the properties collateralizing the CMBS Loan, as well as to pay any property operating expenses not otherwise fully covered by revenues from such properties.
The Company deposits cash with high quality financial institutions. These deposits are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to an insurance limit of $250,000. At times, the Company’s cash and cash equivalents and restricted cash may exceed federally insured levels. Although the Company bears risk on amounts in excess of those insured by the FDIC, it has not experienced and does not anticipate any losses due to the high quality of the institutions where the deposits are held.
Segment Reporting
The Company operates in one business segment: commercial real estate. This segment is characterized as owning, managing and leasing commercial real estate assets under long-term agreements. The chief operating decision maker (“CODM”) of the Company is the chief executive officer. The CODM reviews net income (loss) in the accompanying consolidated statements of operations, when assessing performance and making operating decisions, including the allocation of resources. The CODM uses net income (loss) as it informs comparative period trends for the forecasting process and is the baseline measurement for any additional measures of profit or loss of the Company’s consolidated financial results. Additionally, the CODM reviews the following significant expenses when measuring segment performance: property operating expenses for properties that were substantially vacant or became substantially vacant during the reporting period (“Vacant Property Operating Expenses”) and general and administrative expenses. A property is considered to be substantially vacant with an occupancy rate of 15% or less.
Segment revenues, profit or loss and general and administrative expenses are all disclosed in the accompanying consolidated statements of operations. Vacant Property Operating Expenses included in property operating expenses of the accompanying consolidated statements of operations were $1.4 million and $4.4 million for the three and six months ended June 30, 2026, respectively, and $3.9 million and $9.0 million for the three and six months ended June 30, 2025, respectively.
Asset information for the segment is not used by the CODM to measure performance but is disclosed in the accompanying consolidated balance sheets as of June 30, 2026 and December 31, 2025. The Company does not have intra-entity sales or transfers, and its revenues have been generated in and all long-lived assets are located within the United States.
Recent Accounting Pronouncements
In November 2024, the FASB issued Accounting Standards Update (“ASU”) 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures). ASU 2024-03 serves to improve disclosures about a public business entity’s expenses and provide detailed information about expense categories commonly presented in cost of sales, research and development and selling, general, and administrative expenses. The standard requires public business entities to disaggregate expense captions from the consolidated statements of operations, in tabular format, if they include expense categories such as purchases of inventory, employee compensation, depreciation, amortization and depletion. The guidance is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within annual reporting periods beginning after December 15, 2027, on a prospective or retrospective basis. Although the Company does not expect the standard to have a material impact on its
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ORION PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026 (Unaudited)
consolidated financial statements, it is expected to result in incremental disclosures within the notes to consolidated financial statements.
Note 3 – Real Estate Investments and Related Intangibles
Property Acquisitions
During the six months ended June 30, 2026, the Company acquired one 75,000 square foot flex/R&D facility located in Northbrook, Illinois for a gross purchase price of $15.0 million and net purchase price of $14.2 million, which includes capitalized external acquisition-related expenses of $0.1 million and is net of $0.9 million of adjustments to and credits against the gross purchase price agreed to by the Company pursuant to the purchase and sale agreement. The property is fully leased to a single tenant through December 2036.
During the six months ended June 30, 2025, the Company had no acquisitions.
The following table presents the allocation of the purchase consideration and capitalized transaction costs to the assets acquired and liabilities assumed based on their relative fair values during the six months ended June 30, 2026 (in thousands):

Real estate investment, at cost: |  |  |  |
Land |  | $ | 2,724 |  |  |
Building, fixtures and improvements |  | 5,041 |  |  |
Total real estate investment, at cost |  | 7,765 |  |  |
Acquired intangible assets: |  |  |  |
Intangible lease asset |  | 6,421 |  |  |
Net assets acquired |  | $ | 14,186 |  |  |

Additionally, during the three months ended June 30, 2026, the Company acquired the fee simple interest in one parcel of land at a property located in Lincoln, Nebraska. The Company’s ownership interest of this property was previously comprised of a long-term ground lease interest. The gross purchase price for the fee interest was $0.6 million, which includes capitalized external acquisition-related expenses. As a result of the transaction, $2.1 million that was previously classified as a below-market right-of-use asset, net was reclassified from other assets, net to land in the Company’s consolidated balance sheet as of June 30, 2026.
Property Dispositions and Real Estate Assets Held for Sale
The following table summarizes the Company’s property dispositions during the periods indicated below (dollars in thousands):

|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2026 |  | 2025 |  | 2026 |  | 2025
Total dispositions |  | 8 |  |  | 4 |  |  | 10 |  |  | 4 |
Aggregate gross sales price |  | $ | 70,600 |  |  | $ | 26,930 |  |  | $ | 83,700 |  |  | $ | 26,930 |
Gain on disposition of real estate assets |  | $ | 28,826 |  |  | $ | 891 |  |  | $ | 28,826 |  |  | $ | 891 |
Property count |  | 8 |  |  | 3 |  |  | 10 |  |  | 3 |
Impairments on disposition of real estate assets |  | $ | — |  |  | $ | 1,165 |  |  | $ | — |  |  | $ | 1,165 |
Property count |  | — |  |  | 1 |  |  | — |  |  | 1 |

As of June 30, 2026, the Company had no properties classified as held for sale.
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ORION PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026 (Unaudited)
Intangible Lease Assets and Liabilities
Intangible lease assets and liabilities consisted of the following as of the dates indicated below (in thousands, except weighted average useful life as of June 30, 2026):

|  | Weighted Average Useful Life (Years) |  | June 30, 2026 |  | December 31, 2025
Intangible lease assets: |  |  |  |  |  |
In-place leases, net of accumulated amortization of $149,712 and $152,989, respectively |  | 11.5 |  | $ | 40,059 |  |  | $ | 43,906 |
Leasing commissions, net of accumulated amortization of $7,776 and $7,522, respectively |  | 12.5 |  | 28,958 |  |  | 25,171 |
Above-market lease assets, net of accumulated amortization of $12,584 and $12,451, respectively |  | 13.3 |  | 797 |  |  | 1,194 |
Deferred lease incentives, net of accumulated amortization of $1,563 and $1,295, respectively |  | 12.3 |  | 8,058 |  |  | 5,676 |
Total intangible lease assets, net |  |  |  | $ | 77,872 |  |  | $ | 75,947 |
Intangible lease liabilities: |  |  |  |  |  |
Below-market lease liabilities, net of accumulated amortization of $21,231 and $20,211, respectively |  | 15.3 |  | $ | 17,429 |  |  | $ | 18,449 |

The following table summarizes amortization recognized on the Company’s intangible lease assets and liabilities during the periods indicated below (in thousands):

|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2026 |  | 2025 |  | 2026 |  | 2025
Amortization of in-place leases and leasing commissions included in depreciation and amortization expense |  | $ | 5,392 |  |  | $ | 6,692 |  |  | $ | 10,670 |  |  | $ | 14,425 |
Amortization of above-market lease assets and below-market lease liabilities included as a net increase to rental revenue |  | $ | 312 |  |  | $ | 321 |  |  | $ | 624 |  |  | $ | 675 |
Amortization of deferred lease incentives included as a net decrease to rental revenue |  | $ | 221 |  |  | $ | 115 |  |  | $ | 383 |  |  | $ | 219 |

The following table provides the projected amortization expense and adjustments to rental revenue related to the intangible lease assets and liabilities for the next five years as of June 30, 2026 (in thousands):

|  | Remainder of 2026 |  | 2027 |  | 2028 |  | 2029 |  | 2030 |  | 2031
In-place leases: |  |  |  |  |  |  |  |  |  |  |  |
Total projected to be included in amortization expense |  | $ | 6,453 |  |  | $ | 7,944 |  |  | $ | 5,902 |  |  | $ | 3,182 |  |  | $ | 2,761 |  |  | $ | 2,387 |
Leasing commissions: |  |  |  |  |  |  |  |  |  |  |  |
Total projected to be included in amortization expense |  | $ | 1,653 |  |  | $ | 3,258 |  |  | $ | 2,961 |  |  | $ | 2,669 |  |  | $ | 2,643 |  |  | $ | 2,581 |
Above-market lease assets: |  |  |  |  |  |  |  |  |  |  |  |
Total projected to be deducted from rental revenue |  | $ | 284 |  |  | $ | 237 |  |  | $ | 115 |  |  | $ | 63 |  |  | $ | 63 |  |  | $ | 34 |
Deferred lease incentives: |  |  |  |  |  |  |  |  |  |  |  |
Total projected to be deducted from rental revenue |  | $ | 404 |  |  | $ | 808 |  |  | $ | 795 |  |  | $ | 784 |  |  | $ | 781 |  |  | $ | 779 |
Below-market lease liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Total projected to be added to rental revenue |  | $ | 908 |  |  | $ | 1,766 |  |  | $ | 1,682 |  |  | $ | 1,500 |  |  | $ | 1,425 |  |  | $ | 1,135 |

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ORION PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026 (Unaudited)
Investment in Unconsolidated Joint Venture
The following is a summary of the Company’s investment in the Unconsolidated Joint Venture, as of the dates and for the periods indicated below (dollars in thousands):

|  | Ownership % (1) |  | Number of Properties |  | Carrying Value of Investment |  | Equity in Loss of Unconsolidated Joint Venture, Net
|  |  |  |  | Six Months Ended
Investment |  | June 30, 2026 |  | June 30, 2026 |  | December 31, 2025 |  | June 30, 2026 |  | June 30, 2025
Unconsolidated Joint Venture |  | 20% |  | 6 |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (517) |

____________________________________
(1)The Company’s ownership interest reflects its legal ownership interest. The Company’s legal ownership interest may, at times, not equal the Company’s economic interest because of various provisions in the joint venture agreement regarding capital contributions, distributions of cash flow based on capital account balances and allocations of profits and losses. As a result, the Company’s actual economic interest (as distinct from its legal ownership interest) in certain of the properties could fluctuate from time to time and may not wholly align with its legal ownership interest.
The non-recourse mortgage notes associated with the Unconsolidated Joint Venture, which had an outstanding principal balance of $125.6 million as of August 6, 2026, experienced a payment default at maturity during February 2026. The lenders’ agent under the loan has issued a default notice and has informed the joint venture that it intends to seek to compel a sale of the properties in the joint venture in order to repay the loan. During June 2026, the lenders agreed to extend the loan maturity date until July 31, 2026, to provide the Unconsolidated Joint Venture with time to consummate the sale of one of the six properties, however the sale transaction was subsequently terminated and the loan went back into default on August 1, 2026. The lenders have implemented an excess cash flow sweep and as a result of the loan default, the lenders have various additional rights and remedies that are customary in a non-recourse mortgage financing, such as the right to collect default interest, institute a proceeding for foreclosure and apply for the appointment of a receiver. The joint venture has delivered a proposed disposition strategy to the lenders for the six properties and remains in discussions with the lenders about next steps which may include a short-term extension and the requirement to sell one or more properties and utilize the proceeds to repay principal outstanding under the debt. The Company cannot provide any assurance that the Unconsolidated Joint Venture will be able to extend or refinance all or any portion of this debt obligation, complete the disposition of the six properties on favorable terms or in a timely manner, or at all, or that the lenders will not seek to enforce their remedies due to the ongoing payment default.
Due to the uncertainties with regard to recovery of its investments in the Unconsolidated Joint Venture, the Company recorded an other-than-temporary impairment loss on its investment in the Unconsolidated Joint Venture as of December 31, 2025, thereby reducing the carrying value of the investment to zero, and has recorded a loan loss reserve for the entire outstanding principal of its member loan to the Unconsolidated Joint Venture (the “Member Loan”). The Company accounts for its investment in the Unconsolidated Joint Venture under the equity method of accounting and during the year ended December 31, 2025, its share of losses exceeded the carrying amount of its investment. Accordingly, the Company has suspended recognition of its share of additional losses and will resume recognizing its share of earnings only after the Unconsolidated Joint Venture generates net income that exceeds the previously unrecognized losses. The Company has not recognized any further losses in excess of its investment and no contingent liabilities have been recorded related to the Unconsolidated Joint Venture as of and for the three and six months ended June 30, 2026. Additionally, beginning January 1, 2026, the Company is recording management fees from the Unconsolidated Joint Venture and interest income on the Member Loan on a cash basis rather than an accrual basis.
Note 4 – Receivables and Other Assets
Accounts receivable, net consisted of the following as of the dates indicated below (in thousands):

|  | June 30, 2026 |  | December 31, 2025
Accounts receivable, net |  | $ | 5,290 |  |  | $ | 4,899 |
Straight-line rent receivable, net |  | 35,821 |  |  | 30,434 |
Total |  | $ | 41,111 |  |  | $ | 35,333 |

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ORION PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026 (Unaudited)
Other assets, net consisted of the following as of the dates indicated below (in thousands):

|  | June 30, 2026 |  | December 31, 2025
Right-of-use assets, net (1) |  | $ | 19,538 |  |  | $ | 21,260 |
Deferred costs, net (2) |  | 5,399 |  |  | 1,158 |
Prepaid expenses |  | 2,902 |  |  | 2,130 |
Other assets, net |  | 1,786 |  |  | 2,038 |
Notes receivable (3) |  | — |  |  | 678 |
Restricted escrow deposits |  | — |  |  | 350 |
Total |  | $ | 29,625 |  |  | $ | 27,614 |

____________________________________
(1)Includes right-of-use finance leases of $5.6 million, right-of-use operating leases of $9.9 million, and a below-market right-of-use asset, net of $4.1 million as of June 30, 2026. Includes right-of-use finance leases of $5.6 million, right-of-use operating leases of $9.4 million, and a below-market right-of-use asset, net of $6.3 million as of December 31, 2025. Amortization expense for the below market right-of-use asset was less than $0.1 million for the three and six months ended June 30, 2026 and 2025. During the six months ended June 30, 2026, the Company recognized a $2.7 million operating lease right-of-use asset in connection with the relocation of its Phoenix corporate office following the scheduled expiration of the previous Phoenix corporate office sub-lease in February 2026. In June 2026, the Company acquired the fee simple interest in land at a property in Lincoln, Nebraska. As a result, $2.1 million previously classified as a below-market right-of-use asset, net was reclassified to land in the Company’s consolidated balance sheet.
(2)Includes accumulated amortization for deferred costs related to the New Revolving Facility, as defined in Note 6 – Debt, Net, of $0.9 million as of June 30, 2026, and related to the Original Revolving Facility, as defined in Note 6 – Debt, Net, of $10.0 million as of December 31, 2025. Amortization expense for deferred costs related to the Original and New Revolving Facility was $0.7 million for the three months ended June 30, 2026 and 2025, and $1.3 million and $1.5 million for the six months ended June 30, 2026 and 2025, respectively. During the six months ended June 30, 2026, the Company capitalized additional deferred costs of $5.8 million in connection with the New Revolving Facility and wrote-off net deferred costs of $0.2 million to loss on extinguishment of debt, net in the consolidated statements of operations in connection with the refinancing of the Original Revolving Facility with the New Revolving Facility and resulting in a net reduction in total borrowing capacity.
(3)Notes receivable includes a Member Loan, net of reserves, discussed in Note 3 – Real Estate Investments and Related Intangibles – Investment in Unconsolidated Joint Venture. The gross balance receivable on the Member Loan was $5.5 million and $6.6 million as of June 30, 2026 and December 31, 2025, respectively. See Note 3 – Real Estate Investments and Related Intangibles – Investment in Unconsolidated Joint Venture for discussion regarding the loan loss reserve recorded against the Member Loan. During the six months ended June 30, 2026, the Company received $1.1 million of repayments on the Member Loan, of which $0.4 million was previously reserved and is recognized in recovery of reserve on Member Loan in the accompanying consolidated statements of operations during the six months ended June 30, 2026.
Note 5 – Fair Value Measures
Items Measured at Fair Value on a Recurring Basis
The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of the dates indicated below, aggregated by the level in the fair value hierarchy within which those instruments fall (in thousands):

|  | Level 1 |  | Level 2 |  | Level 3 |  | Balance as of December 31, 2025
Derivative liabilities |  | $ | — |  |  | $ | 5 |  |  | $ | — |  |  | $ | 5 |

Derivative Liabilities – The Company’s derivative financial instruments comprised of an interest rate collar agreement entered into in order to hedge interest rate volatility with respect to the Company’s borrowings under the Original Revolving Facility and subsequently the New Revolving Facility with an aggregate notional amount of $75.0 million as of December 31, 2025 (as described in Note 6 – Debt, Net). The interest rate collar agreement expired in accordance with its terms on May 12, 2026 and the Company has no active derivative financial instrument in place as of June 30, 2026. The valuation of 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 and implied volatilities. In addition, credit valuation adjustments are incorporated into the fair values to account for the Company’s potential non-performance risk and the performance risk of the counterparties.
Although the Company determined that the majority of the inputs used to value its derivative fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with the derivative utilizes Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. However, as of December 31, 2025, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of the
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ORION PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026 (Unaudited)
Company’s derivative. As a result, the Company determined that its derivative valuations in their entirety were classified in Level 2 of the fair value hierarchy.
Items Measured at Fair Value on a Non-Recurring Basis
Certain financial and non-financial assets and liabilities are measured at fair value on a non-recurring basis and are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment.
Real Estate and Other Investments – The Company performs quarterly impairment review procedures for real estate investments, right-of-use assets and its investment in the Unconsolidated Joint Venture, primarily through continuous monitoring of events and changes in circumstances that could indicate the carrying value of such assets may not be recoverable. See Note 3 – Real Estate Investments and Related Intangibles - Investment in Unconsolidated Joint Venture for discussion of an other-than-temporary impairment recognized on the Company’s investment in the Unconsolidated Joint Venture as of December 31, 2025.
The following table summarizes the Company’s provisions for real estate asset impairment during the periods indicated below (dollars in thousands). The impairment charges reflect changes in the Company’s future cash flow assumptions for agreed-upon or estimated sales proceeds with respect to real estate assets that were expected to be sold as well as changes to assumptions with regard to management’s intent to sell or lease the real estate assets.

|  |  |  | Six Months Ended June 30,
|  |  |  |  |  | 2026 |  | 2025
Number of properties |  |  |  |  |  | 1 |  |  | 6 |
Carrying value of impaired properties |  |  |  |  |  | $ | 11,293 |  |  | $ | 64,209 |
Provisions for impairment |  |  |  |  |  | (6,296) |  |  | (21,212) |
Estimated fair value |  |  |  |  |  | $ | 4,997 |  |  | $ | 42,997 |

The Company estimates fair values using Level 2 and Level 3 inputs and uses a combined income and market approach, specifically using discounted cash flow analysis and/or recent comparable sales transactions. The evaluation of real estate assets for potential impairment requires the Company’s management to exercise significant judgment and make certain key assumptions, including the following: (1) capitalization rates; (2) discount rates; (3) number of years the property will be held; (4) property operating expenses; and (5) re-leasing assumptions including the number of months to re-lease, market rental revenue and required tenant improvements. There are inherent uncertainties in making these estimates such as market conditions and performance and sustainability of the Company’s tenants.
For the Company’s impairment tests over the real estate assets during the six months ended June 30, 2026, the fair value measurement for one property was determined by using a discount rate of 10.5% and a capitalization rate of 10.0%. During the six months ended June 30, 2026, the Company recognized impairment charges of $6.3 million for held and used properties.
For the Company’s impairment tests over the real estate assets during the six months ended June 30, 2025, the fair value measurements for three properties were determined based on the sales prices under definitive agreements, one property was determined by using a discount rate of 9.5% and a capitalization rate of 9.0%, and two properties were determined based on estimated sales prices based on market data. During the six months ended June 30, 2025, the Company recognized impairment charges of $18.3 million for held and used properties and impairment charges of $2.9 million were recognized for disposed properties, including $1.7 million recognized on properties classified as held for sale during the three months ended March 31, 2025.
The following table presents certain of the Company’s assets which were subject to impairment as of the date indicated below and therefore, have been measured at fair value on a non-recurring basis, aggregated by the level in the fair value hierarchy within which those assets fall (in thousands):

|  | Level 1 |  | Level 2 (1) |  | Level 3 (1) |  | Balance as of December 31, 2025
Assets of properties held for sale |  | $ | — |  |  | $ | 12,803 |  |  | $ | — |  |  | $ | 12,803 |

____________________________________
(1)The fair value of the level 2 category was derived using negotiated sales prices with third parties and the fair value of the level 3 category was derived using discounted cash flow analysis and management estimates of selling prices.
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ORION PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026 (Unaudited)
Fair Value of Financial Instruments
The fair value of short-term financial instruments such as cash and cash equivalents, restricted cash, accounts receivable, notes receivable and accounts payable approximates their carrying value in the accompanying consolidated balance sheets due to their short-term nature. The following table presents carrying values and fair values of the Company’s long-term financial instruments as of the dates indicated below (dollars in thousands):

|  | Level |  | Carrying Value at June 30, 2026 |  | Fair Value at June 30, 2026 |  | Carrying Value at December 31, 2025 |  | Fair Value at December 31, 2025
Assets: |  |  |  |  |  |  |  |  |  |
Notes receivable |  | 3 |  | $ | — |  |  | $ | — |  |  | $ | 678 |  |  | $ | 678 |
Liabilities (1): |  |  |  |  |  |  |  |  |  |
Mortgages payable |  | 2 |  | $ | 334,598 |  |  | $ | 313,984 |  |  | $ | 373,000 |  |  | $ | 365,853 |
New Revolving Facility (2) |  | 2 |  | 102,000 |  |  | 102,000 |  |  | — |  |  | — |
Total |  |  |  | $ | 436,598 |  |  | $ | 415,984 |  |  | $ | 373,000 |  |  | $ | 365,853 |

____________________________________
(1)Current and prior period liabilities’ carrying and fair values exclude net deferred financing costs.
(2)The carrying value and fair value for the Original Revolving Facility has been excluded from the table as of December 31, 2025, as its maturity date was less than one year from the reporting date.
Notes Receivable – The carrying value of the Company’s long-term promissory notes receivable, net of loan loss reserves, were determined to be at fair value based on management’s estimates of credit spreads and observable market interest rates, representing level 3 on the fair value hierarchy.
Debt – The fair value is estimated by an independent third party using a discounted cash flow analysis, based on management’s estimates of credit spreads and observable market interest rates, representing level 2 on the fair value hierarchy.
Note 6 – Debt, Net
As of June 30, 2026, the Company had debt outstanding of $433.8 million, including net deferred financing costs, with a weighted average years to maturity of 2.5 years (exclusive of borrower extension options) and a weighted average effective interest rate for the six months ended June 30, 2026 of 5.37%. The following table summarizes the carrying value of debt as of the date and the debt activity for the periods indicated below (in thousands):

|  |  |  | Six Months Ended June 30, 2026 |  |
|  | Balance as of December 31, 2025 |  | Debt Issuances |  | Repayments, Extinguishment and Assumptions |  | Amortization |  | Balance as of June 30, 2026
Mortgages payable: |  |  |  |  |  |  |  |  |  |
Outstanding balance |  | $ | 373,000 |  |  | $ | — |  |  | $ | (38,402) |  |  | $ | — |  |  | $ | 334,598 |
Deferred financing costs |  | (1,043) |  |  | (2,536) |  |  | 284 |  |  | 499 |  |  | (2,796) |
Mortgages payable, net |  | 371,957 |  |  | (2,536) |  |  | (38,118) |  |  | 499 |  |  | 331,802 |
Credit facility revolver |  |  |  |  |  |  |  |  |  |
Original Revolving Facility |  | 92,000 |  |  | 18,000 |  |  | (110,000) |  |  | — |  |  | — |
New Revolving Facility |  | — |  |  | 127,000 |  |  | (25,000) |  |  | — |  |  | 102,000 |
Credit facility revolver |  | 92,000 |  |  | 145,000 |  |  | (135,000) |  |  | — |  |  | 102,000 |
Total debt |  | $ | 463,957 |  |  | $ | 142,464 |  |  | $ | (173,118) |  |  | $ | 499 |  |  | $ | 433,802 |

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ORION PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026 (Unaudited)
The following table summarizes the scheduled aggregate principal repayments due on the Company’s debt outstanding as of June 30, 2026 (in thousands). The maturity dates reflected in the table exclude any borrower extension options under the Company’s debt obligations.

|  | Total
July 1, 2026 to December 31, 2026 |  | $ | — |
2027 |  | — |
2028 |  | 102,000 |
2029 |  | 316,598 |
2030 |  | — |
2031 |  | 18,000 |
Total |  | $ | 436,598 |

Credit Agreement
The Company’s prior $350.0 million senior revolving credit facility (the “Original Revolving Facility”) was scheduled to mature on May 12, 2026. As described in more detail below, the Original Revolving Facility was refinanced with a new $215.0 million senior secured revolving credit facility during February 2026 (the “New Revolving Facility”). During the three months ended March 31, 2026, in connection with the refinancing of the Original Revolving Facility with the New Revolving Facility and resulting net reduction in total borrowing capacity, the Company wrote-off net deferred costs of $0.2 million to loss on extinguishment of debt, net in the consolidated statements of operations.
On February 18, 2026, the Company, as parent, and Orion OP, as borrower, entered into a credit agreement for the New Revolving Facility. On May 15, 2026, the Company and Orion OP entered into a first amendment to the New Revolving Facility credit agreement to incorporate certain technical, clarifying and conforming changes in connection with granting the lenders first priority mortgages on the Collateral Properties (as defined below).
During the three months ended March 31, 2026, the Company drew a total of $127.0 million under the New Revolving Facility to refinance the Original Revolving Facility and pay related transaction costs and to fund a new property acquisition. During the three months ended June 30, 2026, the Company repaid $25.0 million of borrowings under the New Revolving Facility.
The credit agreement for the New Revolving Facility includes the following terms and conditions, among others:
•The Original Revolving Facility has been terminated and the indebtedness thereunder has been discharged and paid in full with borrowings under the New Revolving Facility.
•The lenders have agreed to make revolving loans in an aggregate principal balance of up to $215.0 million to Orion OP (a reduction in the lenders’ commitment from $350.0 million pursuant to the Original Revolving Facility). Proceeds from the New Revolving Facility may be used for general corporate purposes and loans under the New Revolving Facility may be prepaid and reborrowed, and unused commitments under the New Revolving Facility may be reduced, at any time, in whole or in part, by Orion OP, without premium or penalty (except for SOFR breakage costs).
•The maturity date of the New Revolving Facility is February 18, 2028, subject to Orion OP’s right to further extend the maturity date for two additional option periods of six months each, upon satisfaction of certain conditions.
•The interest rate applicable to the loans under the New Revolving Facility may be determined, at the election of Orion OP, on the basis of Daily Simple SOFR, Term SOFR or a base rate, plus an applicable margin of 2.75% for SOFR loans and 1.75% for base rate loans (representing a 50-basis point reduction in the applicable margins under the Original Revolving Facility and the 10-basis point SOFR adjustment under the Original Revolving Facility has been eliminated). To the extent that amounts under the New Revolving Facility remain unused, consistent with the Original Revolving Facility, Orion OP is required to pay a quarterly commitment fee on the unused portion of the New Revolving Facility in an amount equal to 0.25% of the unused portion of the New Revolving Facility.
•Orion OP and the Company have granted the lenders first priority mortgages and deeds of trust on a pool of 29 of the Company’s properties and have agreed to grant first priority mortgages on any additional properties acquired in the future by the Company and approved by the administrative agent (the “Collateral Properties”), and have granted the lenders other customary collateral associated with a first lien on commercial office properties. Collateral Properties
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ORION PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026 (Unaudited)
may only be released from the applicable lien in connection with a sale of such property to a third party or qualified financing and 100% of the net cash proceeds must be applied to repay borrowings under the New Revolving Facility.
•Orion OP’s borrowings are also secured by, among other things, first priority pledges of the equity interest in the Company’s subsidiaries that own the Collateral Properties (the “Subsidiary Guarantors”).
•Orion OP’s borrowings under the New Revolving Facility are guaranteed pursuant to a guaranty by each of the Company, Orion Properties Holdings I LLC and the Subsidiary Guarantors.
•The New Revolving Facility requires that Orion OP comply with various covenants, including covenants restricting, subject to certain exceptions, liens, investments, mergers, asset sales and the payment of certain dividends. If, on any day, Orion OP has unrestricted cash and cash equivalents in excess of $25.0 million (excluding amounts that are then designated for application or use and are subsequently used for such purposes within 30 days), Orion OP will use such excess amount to prepay loans under the New Revolving Facility, without premium or penalty and without any reduction in the lenders’ commitment under the New Revolving Facility.
The New Revolving Facility requires that Orion OP satisfy certain financial covenants.
The following are the financial covenants applicable to the New Revolving Facility:
•The ratio of total debt to total asset value must be not more than 0.60 to 1.00.
•The ratio of adjusted EBITDA to fixed charges must be not less than 1.50 to 1.00.
•Orion OP’s consolidated tangible net worth must be not less than $740.6 million plus 75% of the net proceeds from any equity offering after the date of the New Revolving Facility.
•Collateral Property Availability must be at least $215.0 million. For this purpose, Collateral Property Availability means 60% of the aggregate as-is appraised value of all Collateral Properties.
•Collateral Property Debt Yield must be at least 13%.
As of June 30, 2026, Orion OP was in compliance with the New Revolving Facility financial covenants.
The New Revolving Facility includes customary representations and warranties of the Company and Orion OP, which must be true and correct in all material respects as a condition to future extensions of credit under the New Revolving Facility. The New Revolving Facility also includes customary events of default, the occurrence of which, following any applicable grace period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations of Orion OP under the New Revolving Facility to be immediately due and payable and foreclose on the collateral securing the New Revolving Facility.
The Company entered into interest rate collar agreements on a total notional amount of $60.0 million to hedge against interest rate volatility on the Original Revolving Facility. Under the agreements, the benchmark rate for the Original Revolving Facility floated between no higher than 5.50% and no lower than 4.20% on $25.0 million, and no higher than 5.50% and no lower than 4.035% on $35.0 million, effective from November 13, 2023 until May 12, 2025. Upon the scheduled expiration of the interest rate collar agreements, the Company entered into a new interest rate collar agreement to hedge against interest rate volatility on the Original Revolving Facility and subsequently the New Revolving Facility. Under the agreement, the benchmark rate for the Original Revolving Facility or subsequently the New Revolving Facility floated between no higher than 4.29% and no lower than 3.28% on a total notional amount of $75.0 million, effective from May 12, 2025 to May 12, 2026. The interest rate collar agreement expired in accordance with its terms on May 12, 2026 and the Company currently has no active derivative agreement. As of June 30, 2026, the weighted average effective interest rate of the New Revolving Facility was 6.37%.
CMBS Loan
On February 10, 2022, certain indirect subsidiaries of the Company (the “Mortgage Borrowers”) obtained a $355.0 million fixed rate mortgage note (the “CMBS Loan”) from Wells Fargo Bank, National Association (together with its successor, the “Lender”), which was initially secured by the Mortgage Borrowers’ fee simple or ground lease interests in 19 properties owned indirectly by the Company (collectively, the “Mortgaged Properties”). During March 2022, Wells Fargo effected a securitization of the CMBS Loan. During June 2026, the Company sold one of the Mortgaged Properties and used the net proceeds of $34.4 million to prepay a portion of the outstanding principal balance on the CMBS Loan, thereby reducing the number of Mortgaged Properties securing the CMBS Loan to 18. In connection with this transaction, the Company wrote-off net deferred costs of $0.3 million to loss on extinguishment of debt, net in the consolidated statements of operations. The CMBS Loan bears interest at a fixed rate of 4.971% and upon issuance was scheduled to mature on February 11, 2027.
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ORION PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026 (Unaudited)
The CMBS Loan requires monthly payments of interest only and, except as described below under “Loan Extension and Modification Agreement”, all principal is due at maturity.
The CMBS Loan is secured by, among other things, first priority mortgages and deeds of trust granted by the Mortgage Borrowers and encumbering the Mortgaged Properties.
The CMBS Loan may be prepaid in whole, but not in part, at any time, upon the satisfaction of certain terms and conditions set forth in the loan agreement governing the CMBS Loan (the “CMBS Loan Agreement”). Further, releases of individual properties are permitted in connection with an arm’s length third party sale upon repayment of the Release Price (as defined in the CMBS Loan Agreement) for the applicable individual property and subject to the satisfaction of other terms and conditions set forth in the CMBS Loan Agreement. Pursuant to the Loan Modification Agreement described below, the lender is entitled to 100% of the net proceeds of any sale to prepay the outstanding principal balance of the CMBS Loan.
In connection with the CMBS Loan Agreement, the Company (as the guarantor) delivered a customary non-recourse carveout guaranty to the Lender (the “Guaranty”), under which the Company guaranteed the obligations and liabilities of the Mortgage Borrowers to the Lender with respect to certain non-recourse carveout events and the circumstances under which the CMBS Loan will be fully recourse to the Mortgage Borrowers, and which includes requirements for the Company to maintain a net worth of no less than $355.0 million and liquid assets of no less than $10.0 million, in each case, exclusive of the values of the collateral for the CMBS Loan. As of June 30, 2026, the Company was in compliance with these financial covenants.
The Mortgage Borrowers and the Company also provided a customary environmental indemnity agreement, pursuant to which the Mortgage Borrowers and the Company agreed to protect, defend, indemnify, release and hold harmless the Lender from and against certain environmental liabilities relating to the Mortgaged Properties.
The CMBS Loan Agreement includes customary representations, warranties and covenants of the Mortgage Borrowers and the Company. The CMBS Loan Agreement also includes customary events of default, the occurrence of which, following any applicable grace period, would permit the Lender to, among other things, declare the principal, accrued interest and other obligations of the Mortgage Borrowers to be immediately due and payable and foreclose on the Mortgaged Properties.
Loan Extension and Modification Agreement
On February 17, 2026, the Mortgage Borrowers, entered into a loan extension and modification agreement with the lender under the CMBS Loan (“Loan Modification Agreement”). The Loan Modification Agreement includes the following terms and conditions, among others:
•The maturity date of the CMBS Loan has been extended two years until February 11, 2029, subject to two borrower extension options, with the first giving the Mortgage Borrowers the right to further extend the maturity date for an additional one year until February 11, 2030, and the second giving the Mortgage Borrowers the right to further extend the maturity date for an additional six months, until August 11, 2030, each upon satisfaction of certain conditions, including prepayment of the outstanding principal balance of the CMBS Loan by $2.5 million for the initial one-year additional extension and $10.0 million for the six-month additional extension.
•The fixed annual interest rate on the CMBS Loan of 4.971% is unchanged during all extension terms.
•Upon closing of the Loan Modification Agreement, the Mortgage Borrowers made a $2.05 million partial prepayment of the CMBS Loan.
•An all-purpose reserve was established by the lender into which all existing tenant improvement, leasing commission and other borrower reserve amounts were funded (a total of $37.7 million on the loan modification date) and the Mortgage Borrowers deposited an additional $7.74 million into the all-purpose reserve which was funded from borrowings under the Original Revolving Facility and such borrowings were refinanced with borrowings under the New Revolving Facility.
•The all-purpose reserve will be used to pay leasing costs and capital expenditures associated with the Mortgaged Properties, as well as to pay any property operating expenses not otherwise fully covered by revenues from the Mortgaged Properties.
•The Mortgage Borrowers have agreed that until maturity, the lender will sweep all monthly excess cash flows from the Mortgaged Properties, after payment of interest and property operating expenses. During the initial two-year extension period, the lender will apply one-half of such excess funds to prepay the outstanding principal balance of the CMBS Loan, and the other half to fund the all-purpose reserve. During any additional extension period, the lender will apply 75% of such excess funds to prepay the outstanding principal balance of the CMBS Loan, and the remaining 25% of
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ORION PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026 (Unaudited)
such excess funds to fund the all-purpose reserve. The all-purpose reserve is subject to a cap of $15.0 million during the one-year additional extension period and $5.0 million during the six-month additional extension period. If the reserve cap has been reached, all additional or excess amounts will be utilized to prepay the outstanding principal balance of the CMBS Loan.
•The Company agreed to certain additional obligations that are recourse to the Company pursuant to the non-recourse carveout Guaranty described above.
San Ramon Loan
On November 7, 2024, an indirect subsidiary of the Company (the “San Ramon Borrower”) obtained an $18.0 million fixed rate mortgage note (the “San Ramon Loan”) from RGA Americas Investments LLC (the “San Ramon Lender”) secured by the fee simple interest in the San Ramon, California property acquired in September 2024 (the “San Ramon Property”). The San Ramon Loan bears interest at a fixed rate of 5.90% and matures on December 1, 2031.
The San Ramon Loan requires monthly payments of interest only and all principal is due at maturity and is generally not freely prepayable by the San Ramon Borrower until December 2026, and thereafter without payment of certain prepayment premiums and costs. In connection with the San Ramon Loan, the Company (as guarantor) delivered a customary non-recourse carveout guaranty, under which the Company guaranteed the obligations and liabilities of the San Ramon Borrower under the San Ramon Loan with respect to certain non-recourse carveout events and the circumstances under which the San Ramon Loan will be fully recourse to the San Ramon Borrower. The San Ramon Borrower and the Company also provided a customary environmental indemnity agreement, pursuant to which the San Ramon Borrower and the Company agreed to protect, defend, indemnify and hold harmless the San Ramon Lender from and against certain environmental liabilities related to the San Ramon Property.
The loan agreement governing the San Ramon Loan (the “San Ramon Loan Agreement”) includes customary representations, warranties and covenants of the San Ramon Borrower and the Company. The San Ramon Loan Agreement also includes customary events of default, the occurrence of which, following any applicable grace period, would permit the Lender to, among other things, declare the principal, accrued interest and other obligations of the San Ramon Borrower to be immediately due and payable and foreclose on the San Ramon Property.
The Company’s consolidated debt consisted of the following as of June 30, 2026 (dollars in thousands):

|  | Encumbered Properties |  | Net Carrying Value of Collateralized Properties (1) |  | Outstanding Balance |  | Weighted Average Interest Rate (2) |  | Weighted Average Years to Maturity
Fixed-rate debt |  | 19 |  |  | $ | 402,005 |  |  | $ | 334,598 |  |  | 5.02 | % |  | 2.8
Variable-rate debt |  | 29 |  |  | 509,720 |  |  | 102,000 |  |  | 6.37 | % |  | 1.6
Total |  | 48 |  |  | $ | 911,725 |  |  | $ | 436,598 |  |  |  |  |

____________________________________
(1)Net carrying value is real estate assets, including right-of-use assets, net of real estate liabilities.
(2)The weighted average interest rate for variable-rate debt represents the interest rate in effect on the New Revolving Facility as of June 30, 2026.
Note 7 – Derivatives and Hedging Activities
Cash Flow Hedges of Interest Rate Risk
As of December 31, 2025, the Company had an outstanding derivative agreement with a notional amount of $75.0 million, which was designated as a cash flow hedge under U.S. GAAP. The interest rate derivative agreement was comprised of an interest rate collar agreement entered into in order to hedge interest rate volatility with respect to the Company’s borrowings under the Original Revolving Facility and subsequently the New Revolving Facility. Under the agreement, the benchmark rate for the Original Revolving Facility or subsequently the New Revolving Facility floated between no higher than 4.29% and no lower than 3.28% on a total notional amount of $75.0 million, effective from May 12, 2025 to May 12, 2026. The interest rate collar agreement expired in accordance with its terms on May 12, 2026 and the Company currently has no active derivative agreement in place.
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ORION PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026 (Unaudited)
The table below presents the fair value of the Company’s derivative financial instruments designated as a cash flow hedge as well as their classification in the accompanying consolidated balance sheets as of the dates indicated below (in thousands):

Derivatives Designated as Hedging Instruments |  | Balance Sheet Location |  | June 30, 2026 |  | December 31, 2025
Interest rate collars |  | Other liabilities, net |  | — |  |  | (5) |

During the three and six months ended June 30, 2026, the Company recorded net unrealized gains of less than $0.1 million for changes in the fair value of its cash flow hedge in accumulated other comprehensive loss. During the three and six months ended June 30, 2025, the Company recorded unrealized losses of less than $0.1 million for changes in the fair value of its cash flow hedges in accumulated other comprehensive loss.
During the three and six months ended June 30, 2026, the Company did not reclassify any previous net gains or losses from accumulated other comprehensive income (loss) into interest expense, net as a result of the hedged transactions impacting earnings. During the three and six months ended June 30, 2025, the Company reclassified previous net gains of less than $0.1 million from accumulated other comprehensive loss into interest expense, net as a result of the hedged transactions impacting earnings.
Derivatives Not Designated as Hedging Instruments
As of June 30, 2026 and December 31, 2025, the Company had no derivatives that were not designated as qualifying hedging relationships.
Tabular Disclosure of Offsetting Derivatives
The table below details a gross presentation, the effects of offsetting and a net presentation of the Company’s derivatives as of the dates indicated below (in thousands). The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value.

|  | Offsetting of Derivative Assets and Liabilities
|  | Gross Amounts of Recognized Assets |  | Gross Amounts of Recognized Liabilities |  | Gross Amounts Offset in the Consolidated Balance Sheets |  | Net Amounts of Assets Presented in the Consolidated Balance Sheets |  | Net Amounts of Liabilities Presented in the Consolidated Balance Sheets |  | Financial Instruments |  | Cash Collateral Received |  | Net Amount
December 31, 2025 |  | $ | — |  |  | $ | (5) |  |  | $ | — |  |  | $ | — |  |  | $ | (5) |  |  | $ | — |  |  | $ | — |  |  | $ | (5) |

Note 8 – Supplemental Cash Flow Disclosures
Supplemental cash flow information was as follows during the periods indicated below (in thousands):

|  | Six Months Ended June 30,
|  | 2026 |  | 2025 |  |
Supplemental disclosures: |  |  |  |  |  |
Cash paid for interest, net (1) |  | $ | 12,972 |  |  | $ | 14,399 |  |  |
Cash paid for income taxes, net of refunds |  | $ | 163 |  |  | $ | 214 |  |  |
Non-cash investing and financing activities: |  |  |  |  |  |
Accrued capital expenditures and leasing costs |  | $ | 7,133 |  |  | $ | 14,401 |  |  |
Establishment of right-of-use assets and lease liabilities |  | $ | 2,666 |  |  | $ | — |  |  |
Land right-of-use asset acquired |  | $ | 2,054 |  |  | $ | — |  |  |
Distributions declared and unpaid |  | $ | 1,141 |  |  | $ | 1,126 |  |  |
Accrued deferred financing costs |  | $ | 60 |  |  | $ | — |  |  |

____________________________________
(1)Net of capitalized interest of $0.4 million and $0.2 million for the six months ended June 30, 2026 and 2025, respectively.
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ORION PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026 (Unaudited)
Note 9 – Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consisted of the following as of the dates indicated below (in thousands):

|  | June 30, 2026 |  | December 31, 2025
Accrued capital expenditures and leasing costs |  | $ | 9,076 |  |  | $ | 15,224 |
Accrued operating and other |  | 6,839 |  |  | 10,650 |
Accrued real estate and other taxes |  | 4,807 |  |  | 9,686 |
Accounts payable |  | 3,179 |  |  | 2,807 |
Accrued interest |  | 1,570 |  |  | 1,852 |
Total |  | $ | 25,471 |  |  | $ | 40,219 |

Note 10 – Commitments and Contingencies
Leasing
As part of its ordinary re-leasing activities, the Company has agreed and anticipates that it will continue to agree to provide rent concessions to tenants and incur leasing costs with respect to its properties, including amounts paid directly to tenants to improve their space and/or building systems, or tenant improvement allowances, landlord agreements to perform and pay for certain improvements, and leasing commissions. These commitments could be significant and are expected to vary due to factors such as competitive market conditions for leasing commercial office space and the volume of square footage subject to re-leasing by the Company.
As of June 30, 2026, the Company had the following estimated total outstanding leasing cost commitments (in thousands):

|  | Total (1)
Tenant improvement allowances |  | $ | 36,510 |
Reimbursable landlord work (2) |  | 2,315 |
Non-reimbursable landlord work (2) |  | 4,619 |
Total |  | $ | 43,444 |

____________________________________
(1)Outstanding commitments do not include rent concessions as such amounts are recorded as a component of straight-line rent receivable, net, in accordance with U.S. GAAP.
(2)Landlord work represents specific improvements agreed to within the lease agreement to be performed by the Company, as landlord, as a new and non-recurring obligation and in order to induce the tenant to enter into a new lease or lease renewal or extension. Outstanding commitments for reimbursable and non-reimbursable landlord work include estimates and are subject to change.
The actual amount the Company pays for tenant improvement allowances may be lower than the amount agreed upon in the applicable lease and will depend upon the tenant’s use of the capital on the agreed upon timeline. The timing of the Company’s cash outlay for tenant improvement allowances is significantly uncertain and will depend upon the applicable tenant’s schedule for the improvements and corresponding use of capital, if any.
For assets financed on the CMBS Loan, the Company has funded an all-purpose reserve with the lender which had total cash reserves of $42.8 million as of June 30, 2026 and may be used for leasing costs and capital expenditures.
Litigation
From time to time, the Company may be party to various legal proceedings which it believes are routine in nature and incidental to the ordinary operation of its business. As of June 30, 2026, the Company does not believe that any such legal proceedings will have a material adverse effect, individually or in aggregate, upon its consolidated position or results of operations.
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ORION PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026 (Unaudited)
Environmental Matters
In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. The Company has not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition, in each case, that it believes will have a material adverse effect upon its consolidated position or results of operations.
Note 11 – Leases
Lessor
As of June 30, 2026, the Company’s operating leases have non-cancelable lease terms ranging from 0.1 years to 15.2 years. Certain leases with tenants include tenant options to extend or terminate the lease agreements or to purchase the underlying assets. Lease agreements may also contain rent increases that are based on an index or rate (e.g., the consumer price index).
The components of rental revenue from the Company’s operating leases during the periods indicated below were as follows (in thousands):

|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2026 |  | 2025 |  | 2026 |  | 2025
Fixed: |  |  |  |  |  |  |  |
Cash rental revenue |  | $ | 22,534 |  |  | $ | 22,890 |  |  | $ | 49,045 |  |  | $ | 46,532 |
Straight-line rental revenue |  | 2,998 |  |  | 2,519 |  |  | 1,168 |  |  | 6,150 |
Lease intangible amortization |  | 91 |  |  | 206 |  |  | 241 |  |  | 456 |
Fixed property operating cost reimbursements |  | 1,711 |  |  | 1,519 |  |  | 3,370 |  |  | 3,028 |
Other fixed rental revenue |  | 143 |  |  | 792 |  |  | 2,043 |  |  | 1,495 |
Total fixed |  | 27,477 |  |  | 27,926 |  |  | 55,867 |  |  | 57,661 |
Variable: |  |  |  |  |  |  |  |
Variable property operating cost reimbursements |  | 6,021 |  |  | 8,580 |  |  | 13,229 |  |  | 16,040 |
Other variable rental revenue |  | 600 |  |  | 596 |  |  | 1,136 |  |  | 1,198 |
Total variable |  | 6,621 |  |  | 9,176 |  |  | 14,365 |  |  | 17,238 |
Total rental revenue |  | $ | 34,098 |  |  | $ | 37,102 |  |  | $ | 70,232 |  |  | $ | 74,899 |

The following table presents future minimum base rent payments due to the Company under the terms of its operating lease agreements, excluding expense reimbursements, over the next five years and thereafter as of June 30, 2026 (in thousands).

|  | Future Minimum Base Rent Payments
July 1, 2026 - December 31, 2026 |  | $ | 42,471 |
2027 |  | 83,362 |
2028 |  | 76,381 |
2029 |  | 61,975 |
2030 |  | 60,195 |
2031 |  | 55,444 |
Thereafter |  | 290,110 |
Total |  | $ | 669,938 |

Lessee
The Company is the lessee under ground lease arrangements and corporate office leases, which meet the criteria under U.S. GAAP for an operating lease. As of June 30, 2026, the Company’s operating leases had remaining lease terms ranging from 2.6 years to 58.5 years, which includes options to extend. Under the operating leases, the Company pays rent and may also pay variable costs, including property operating expenses and common area maintenance. The weighted average discount rate used
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ORION PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026 (Unaudited)
to measure the lease liability for the Company’s operating leases was 3.64% as of June 30, 2026. As the Company’s leases do not provide an implicit rate, the Company used an estimated incremental borrowing rate based on the information available at the lease commencement date or the lease guidance adoption date, as applicable, in determining the present value of lease payments.
Operating lease costs were $0.3 million for the three months ended June 30, 2026 and 2025, and $0.6 million for the six months ended June 30, 2026 and 2025. Operating lease costs were included in property operating and general and administrative expenses in the consolidated statements of operations. No cash paid for operating lease liabilities was capitalized during the three and six months ended June 30, 2026 and 2025.
The following table reflects the maturity analysis of payments due from the Company over the next five years and thereafter for ground and corporate office lease obligations as of June 30, 2026 (in thousands).

|  | Future Minimum Lease Payments
July 1, 2026 - December 31, 2026 |  | $ | 467 |
2027 |  | 1,239 |
2028 |  | 1,262 |
2029 |  | 990 |
2030 |  | 980 |
2031 |  | 715 |
Thereafter |  | 8,445 |
Total |  | 14,098 |
Less: imputed interest |  | 4,001 |
Total |  | $ | 10,097 |

The Company’s lease liability is included in other liabilities, net in the consolidated balance sheets.
Note 12 – Stockholders’ Equity
Common Stock
The Company was initially capitalized on July 15, 2021 with the issuance of 100,000 shares of common stock to Realty Income for a total of $1,000.
On November 10, 2021, the Company issued 56,525,650 additional shares of common stock to Realty Income, such that Realty Income owned 56,625,650 shares of the Company’s common stock. On November 12, 2021, Realty Income effected the Distribution.
Distributions
During the six months ended June 30, 2026 and 2025, the Company’s Board of Directors declared quarterly cash dividends on shares of the Company’s common stock as follows:

Declaration Date |  | Record Date |  | Paid Date |  | Distributions Per Share
March 4, 2026 |  | March 31, 2026 |  | April 15, 2026 |  | $ | 0.02 |
May 5, 2026 |  | June 30, 2026 |  | July 15, 2026 |  | $ | 0.02 |

Declaration Date |  | Record Date |  | Paid Date |  | Distributions Per Share
March 4, 2025 |  | March 31, 2025 |  | April 15, 2025 |  | $ | 0.02 |
May 6, 2025 |  | June 30, 2025 |  | July 15, 2025 |  | $ | 0.02 |

On August 5, 2026, the Company’s Board of Directors declared a quarterly cash dividend of $0.02 per share for the third quarter of 2026, payable on October 15, 2026, to stockholders of record as of September 30, 2026.
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ORION PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026 (Unaudited)
Note 13 – Equity-Based Compensation
The Company has an equity-based incentive award plan (the “Equity Plan”) for officers, other employees, non-employee directors and consultants who provide services to the Company. Awards under the Equity Plan are accounted for under U.S. GAAP as share-based payments. The expense for such awards is recognized over the requisite service period, which is generally the vesting period. Under the Equity Plan, the Company may grant various types of awards, including restricted stock units that will vest if the recipient maintains employment with the Company over the requisite service period (the “Time-Based RSUs”) and restricted stock units that may vest in a number ranging from 0% to 100% of the total number of units granted, based on the Company’s total shareholder return measured on an absolute basis (“TSR-Based RSUs”) and based on certain operational performance metrics (“Metrics-Based RSUs” and collectively with the TSR-Based RSUs, “Performance-Based RSUs”), in each case for officers and other employees during a three-year performance period. The Company also granted Time-Based RSUs to its non-employee directors which are scheduled to vest on the earlier of the one-year anniversary of the grant date and the next annual meeting, subject to the recipient’s continued service with the Company.
Failure to satisfy the performance conditions for the Metrics-Based RSUs will result in the forfeiture of the units and, in the case of awards where the performance conditions were previously determined to be likely of achieving, a reversal of any previously recognized equity-based compensation expense. Failure to satisfy the market conditions for the TSR-Based RSUs will result in the forfeiture of the units but does not result in a reversal of previously recognized equity-based compensation expense, provided that the requisite service has been rendered. Forfeiture of Time-Based RSUs or Performance-Based RSUs due to the failure to meet the service requirements results in the reversal of previously recognized equity-based compensation expense. The Company adjusts for forfeitures of Time-Based RSUs and Performance-Based RSUs as they occur.
During the six months ended June 30, 2026 and 2025, the Company granted Time-Based RSUs and/or Performance-Based RSUs to officers, other employees and non-employee directors of the Company. The fair value of the Time-Based RSUs is determined using the closing stock price on the grant date and is expensed over the requisite service period on a straight-line basis. The fair value of the TSR-Based RSUs is determined using a Monte Carlo simulation which takes into account multiple input variables that determine the probability of satisfying the required total shareholder return, and such fair value is expensed over the performance period. The fair value of the Metrics-Based RSUs is determined using the closing stock price on the grant date and is expensed over the requisite service period to the extent that the likelihood of achieving the performance metrics is probable. As of June 30, 2026, the Company determined that the likelihood of achieving some of the performance metrics was probable and, accordingly, the Company recognized compensation expense for such Metrics-Based RSUs and determined that the likelihood of achieving the remaining performance metrics was improbable and the Company recognized no compensation expense for the remaining Metrics-Based RSUs.
Time-Based RSUs and Performance-Based RSUs do not provide for any rights of a common stockholder prior to the vesting of such restricted stock units. Equity-based compensation expense related to Time-Based RSUs and Performance-Based RSUs for the three and six months ended June 30, 2026, was $0.8 million and $1.7 million, respectively. Equity-based compensation expense related to Time-Based RSUs and Performance-Based RSUs for the three and six months ended June 30, 2025, was $0.8 million and $1.5 million, respectively. As of June 30, 2026, total unrecognized compensation expense related to Time-Based RSUs and Performance-Based RSUs was approximately $4.6 million, with an aggregate weighted average remaining term of 1.9 years.
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ORION PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026 (Unaudited)
Note 14 – Net Income (Loss) Per Share
The computation of basic and diluted earnings per share is as follows for the periods indicated below (in thousands, except per share data):

|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2026 |  | 2025 |  | 2026 |  | 2025
Net income (loss) |  | $ | 24,583 |  |  | $ | (25,101) |  |  | $ | 11,015 |  |  | $ | (34,456) |
Net income attributable to non-controlling interest |  | (4) |  |  | (2) |  |  | (14) |  |  | (8) |
Net income (loss) attributable to common stockholders and used in basic and diluted net income (loss) per share |  | 24,579 |  |  | (25,103) |  |  | 11,001 |  |  | (34,464) |
Weighted average shares of common stock outstanding - basic |  | 56,946 |  |  | 56,254 |  |  | 56,756 |  |  | 56,149 |
Effect of dilutive securities (1) |  | 1,160 |  |  | — |  |  | 732 |  |  | — |
Weighted average shares of common stock - diluted |  | 58,106 |  |  | 56,254 |  |  | 57,488 |  |  | 56,149 |
Net income (loss) per share attributable to common stockholders - basic |  | $ | 0.43 |  |  | $ | (0.45) |  |  | $ | 0.19 |  |  | $ | (0.61) |
Net income (loss) per share attributable to common stockholders - diluted |  | $ | 0.42 |  |  | $ | (0.45) |  |  | $ | 0.19 |  |  | $ | (0.61) |

____________________________________
(1)Adjustments to the weighted average shares of common stock outstanding for the three and six months ended June 30, 2026 include 1.2 million and 0.7 million shares, respectively, of potentially dilutive securities comprised of the weighted average unvested Time-Based RSUs and Performance-Based RSUs granted under the Equity Plan. There were no adjustments to the weighted average common shares outstanding used in the diluted calculation given that all potentially dilutive shares were antidilutive for the three and six months ended June 30, 2025.
The following were excluded from diluted net income (loss) per share attributable to common stockholders during the periods indicated below, as the effect would have been antidilutive (in thousands):

|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2026 |  | 2025 |  | 2026 |  | 2025
Weighted average unvested Time-Based RSUs and Performance-Based RSUs (1) |  | — |  |  | 47 |  |  | — |  |  | 67 |
Weighted average stock warrants |  | 1,120 |  |  | 1,120 |  |  | 1,120 |  |  | 1,120 |

____________________________________
(1)Net of assumed purchases in accordance with the treasury stock method and exclude Performance-Based RSUs for which the performance thresholds have not been met by the end of the applicable reporting period.
Note 15 – Subsequent Events
Distributions
On August 5, 2026, the Company’s Board of Directors declared a quarterly cash dividend of $0.02 per share for the third quarter of 2026, payable on October 15, 2026 to stockholders of record as of September 30, 2026.
Leasing Activity
Subsequent to June 30, 2026, the Company completed a new 10.5-year lease for approximately 19,000 square feet at its property in Plano, Texas, a new 10.6-year lease for approximately 28,000 square feet at its property in Tulsa, Oklahoma and a 3.0-year lease renewal for 69,000 square feet at its property in Salem, Oregon.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q.
Forward-Looking Statements
This Quarterly Report on Form 10-Q includes “forward-looking statements” which reflect Orion Properties Inc.’s (the “Company”, “Orion”, “we”, or “us”) expectations and projections regarding future events and plans, future financial condition, results of operations, liquidity and business, including leasing and occupancy, acquisitions, dispositions, rent receipts, expected borrowings and financing costs and the payment of future dividends. Generally, the words “anticipates,” “assumes,” “believes,” “continues,” “could,” “estimates,” “expects,” “goals,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “targets,” “will,” “guidance,” variations of such words and similar expressions identify forward-looking statements. These forward-looking statements are based on information currently available to us and involve a number of known and unknown assumptions and risks, uncertainties and other factors, which may be difficult to predict and beyond the Company’s control, that could cause actual events and plans or could cause our business, financial condition, liquidity and results of operations to differ materially from those expressed or implied in the forward-looking statements. These factors include, among other things, those discussed below. Information regarding historical rent collections should not serve as an indicator of future rent collections. We disclaim any obligation to publicly update or revise any forward-looking statements, whether as a result of changes in underlying assumptions or factors, new information, future events or otherwise, except as may be required by law.
The following are some, but not all, of the assumptions, risks, uncertainties and other factors that could cause our actual results to differ materially from those presented in our forward-looking statements:
•the risk of increases in interest rates, including that our borrowing costs may increase and we may be unable to extend or refinance our debt obligations on favorable terms and in a timely manner, or at all;
•the risk of inflation, including that our operating costs, such as insurance premiums, utilities, real estate taxes, capital expenditures and repair and maintenance costs, may rise;
•conditions associated with the global market, including an oversupply of office space, tenant credit risk and general economic conditions and geopolitical conditions;
•our strategic review process is and will continue to be costly and time-consuming and may not result in a transaction, and any transaction that occurs may not increase stockholder value;
•the risk that our strategic review process may disrupt our operations, divert management’s attention and create uncertainty for tenants, employees and counterparties;
•the risk that recent changes in United States trade policy and the imposition of new tariffs continue to create disruption in macroeconomic conditions and could adversely impact our lenders, tenants and prospective tenants, and cause them to reduce or decline to do business with us or fail to meet their obligations to us;
•the extent to which changes in workplace practices and office space utilization, including remote and hybrid work arrangements, and changes in government budgetary priorities, will continue and the impact that may have on demand for office space at our properties;
•our ability to acquire new properties, convert certain vacant properties to multi-tenant use and sell non-core assets on favorable terms and in a timely manner, or at all;
•risks associated with acquisitions, including the risk that we may not be in a position, or have the opportunity in the future, to make suitable property acquisitions on advantageous terms and/or that such acquisitions will fail to perform as expected;
•our assumptions concerning tenant utilization and renewal probability of Dedicated Use Assets, and our ability to successfully execute on our strategy to shift our portfolio concentration over time away from traditional office properties, towards more Dedicated Use Assets;
•our ability to comply with the terms of our credit agreements or to meet the debt obligations on our properties;
•our ability to access the capital markets to raise additional equity or refinance maturing debt on favorable terms and in a timely manner, or at all;
•changes in the real estate industry and in performance of the financial markets and interest rates and our ability to effectively hedge against interest rate changes;
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•the risk of tenants defaulting on their lease obligations, which is heightened due to our focus on single tenant properties;
•our ability to renew leases with existing tenants or re-let vacant space to new tenants on favorable terms and in a timely manner, or at all;
•the cost of rent concessions, tenant improvement allowances and leasing commissions;
•the potential for termination of existing leases pursuant to tenant termination rights;
•the amount, growth and relative inelasticity of our expenses;
•risks associated with the ownership and development of real property;
•risks accompanying our investment in and the management of OAP/VER Venture, LLC (the “Unconsolidated Joint Venture”), our unconsolidated joint venture, in which we hold a non-controlling ownership interest, including that the Unconsolidated Joint Venture may be unable to extend or refinance all or any portion of its mortgage debt obligations which are subject to an ongoing payment default that occurred at maturity or complete the disposition of the six joint venture properties on favorable terms or in a timely manner, or at all, or that the lenders may seek to enforce their remedies due to the ongoing payment default under the Unconsolidated Joint Venture Mortgage debt, and we may be unable to recover our original investment in the Unconsolidated Joint Venture, which we have written down to zero or, in the case of the Member Loan, fully reserved accordingly;
•our ability to close pending real estate transactions, which may be subject to conditions that are outside of our control;
•we may change our dividend policy at any time, and therefore the amount, timing and continued payment of dividends are not assured;
•our properties may be subject to impairment charges;
•risks resulting from losses in excess of insured limits or uninsured losses;
•risks associated with the potential volatility of our common stock;
•the risk that we may fail to maintain our income tax qualification as a real estate investment trust; and
•other risks and uncertainties detailed from time to time in our SEC filings.
All forward-looking statements should be read in light of the risks identified in Part I, Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, as may be updated from time to time in any of the Company’s Quarterly Reports filed during the year ended December 31, 2026.
We use certain defined terms throughout this Quarterly Report on Form 10-Q that have the following meanings:
When we refer to “annualized base rent,” we mean the monthly aggregate cash amount charged to tenants under our leases (including monthly base rent receivables and certain fixed contractually obligated reimbursements by our tenants), as of June 30, 2026, multiplied by 12. Annualized base rent is not indicative of future performance.
Historically, we have included our proportionate share of the Unconsolidated Joint Venture’s financial statement line items and operating metrics in our non-GAAP financial results and other operating metrics. This includes among other line items and metrics, our proportionate share of annualized base rent, occupied square feet, rentable square feet and weighted average remaining lease term from the Unconsolidated Joint Venture properties. Due to the uncertainty with regard to the recovery of our investment in the Unconsolidated Joint Venture, beginning January 1, 2026, we no longer include the proportionate share of the joint venture’s financial statement line items and operating metrics in our non-GAAP financial results and other operating metrics.
Under a “net lease”, the tenant occupying the leased property (usually as a single tenant) does so in much the same manner as if the tenant was the owner of the property. There are various forms of net leases, most typically classified as triple net or double net. Triple net leases typically require that the tenant pay all expenses associated with the property (e.g., real estate taxes, insurance, maintenance and repairs in accordance with the lease terms). Double net leases typically require that the tenant pay all operating expenses associated with the property (e.g., real estate taxes, insurance and maintenance), but excludes some or all major repairs (e.g., roof, structure and parking lot, in each case, as further defined in the applicable lease). Accordingly, the owner receives the rent “net” of these expenses, rendering the cash flow associated with the lease predictable for the term of the lease.
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Overview
Orion is an internally managed real estate investment trust (“REIT”) engaged in the ownership, acquisition, and management of a diversified portfolio of office properties located in high-quality suburban markets across the United States and leased primarily on a single-tenant net lease basis to creditworthy tenants. Our portfolio is comprised of traditional office properties, as well as governmental, medical office, flex/laboratory and R&D and flex/industrial properties. As part of our investment strategy, we intend to shift our portfolio concentration over time away from traditional office properties, towards more dedicated use assets with specialized uses that include an office component.
The Company was initially formed as a wholly owned subsidiary of Realty Income Corporation (“Realty Income”). Following completion of the merger transaction involving Realty Income and VEREIT, Inc. (“VEREIT”) on November 1, 2021, Realty Income contributed the combined business comprising certain office real properties and related assets previously owned by subsidiaries of Realty Income, and certain office real properties and related assets previously owned by subsidiaries of VEREIT (the “Separation”), to the Company and its operating partnership, Orion Properties LP (“Orion OP”), and on November 12, 2021, effected a special distribution to Realty Income’s stockholders of all the outstanding shares of common stock of the Company (the “Distribution”).
Following the Distribution, we became an independent and publicly traded company, and our common stock, par value $0.001, trades on the New York Stock Exchange (the “NYSE”) under the symbol “ONL”. The Company has elected to be taxed as a REIT for U.S. federal income tax purposes, commencing with its initial taxable year ended December 31, 2021.
Cooperation Agreement and Strategic Review Process
On January 26, 2026, we entered into a cooperation agreement (the “Cooperation Agreement”) with one of the Company’s stockholders, The Kawa Fund Limited and its affiliate, Kawa Capital Management, Inc. (collectively, “Kawa”).
Also on January 26, 2026, pursuant to the Cooperation Agreement, we commenced a review of strategic options for the Company, which review may include, without limitation, the consideration of potential acquisition and merger targets, the potential sale of the Company and continuing to operate as an independent publicly traded entity. As of August 6, 2026, the strategic options review process remains ongoing as we continue to actively engage with several parties. We cannot provide any assurance that these discussions will lead to any actionable proposal. The Cooperation Agreement does not obligate the Company to pursue or consummate any transaction or require our Board of Directors to take any action that it determines in good faith is inconsistent with its duties under applicable law.
The Cooperation Agreement contains customary standstill and non-disparagement provisions. The Cooperation Agreement will terminate on September 1, 2026. Pursuant to the Cooperation Agreement, Kawa withdrew its notice of intent to nominate director candidates for election to our Board of Directors at the Company’s 2026 annual meeting of stockholders, and Kawa must cause all shares of common stock pursuant to which it has the sole or shared power to direct the voting to be present for quorum purposes at our 2026 annual meeting of stockholders and to refrain from “withholding” or voting “against” the directors nominated by our Board of Directors for election at such annual meeting.
Real Estate Portfolio
As of June 30, 2026, we owned and operated 57 operating properties with an aggregate of 6.4 million leasable square feet and annualized base rent of $108.0 million, located within 26 states with an occupancy rate of 78.1% and a weighted average remaining lease term of 6.2 years.
Factors That May Influence Our Operating Results and Financial Condition
Rental Revenues
Our operating results depend primarily upon generating rental revenue from the properties in our portfolio. The amount of rental revenue generated by these properties is affected by our ability to maintain or increase occupancy levels, which will depend upon our ability to re-lease expiring space and lease up vacant space at favorable rates (see “Economic Environment and Tenant Retention” below). In addition, we have agreed to provide rent concessions to tenants and incur leasing costs with respect to our properties, including amounts paid directly to tenants to improve their space and/or building systems, or tenant improvement allowances, landlord agreements to perform and pay for certain improvements, and leasing commissions, and we anticipate we will continue to do so in future periods (see “Leasing Activity and Capital Expenditures” below).
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Economic Environment and Tenant Retention
Our portfolio comprises primarily single-tenant leases, and tenant retention remains a significant challenge, as we have faced and will continue to face significant lease expirations the next few years. For example, leases representing approximately 3.8% and 10.5% of our annualized base rent are scheduled to expire during the remainder of 2026 and in 2027, respectively, and we may be unable to renew leases or find replacement tenants. Certain changes in office space utilization, including increased remote and hybrid work arrangements and tenants consolidating their real estate footprint, continue to impact the office leasing market. The utilization and demand for office space continue to face headwinds and the duration and ultimate impact of current trends on the demand for office space at our properties remains uncertain and subject to change. Accordingly, we do not yet know what the full extent of the impacts will be on our or our tenants’ businesses and operations or the long-term outlook for leasing our properties. Higher interest rates, inflationary pressures, geopolitical hostilities and tensions, changes in United States trade policy and the imposition of new tariffs and concerns that the United States economy may enter an economic recession have caused disruptions in the financial markets; in addition, the impact of a future prolonged federal government shutdown, similar to the shutdown that began in the third quarter of 2025 and the partial shutdown that began in the first quarter of 2026, may cause increased government budgetary pressures and uncertainty surrounding budgetary priorities. These factors could adversely affect our and our tenants’ financial condition and the ability or willingness of our current and prospective tenants to renew their leases, enter into new leases or pay rent to us.
Our leasing and asset disposition activity since the completion of our distribution from Realty Income continues to be adversely impacted by a variety of market and property specific conditions. T he COVID-19 pandemic and its aftermath has significantly reduced demand for office space and changes in space usage in the office leasing market, as tenants seek to attract employees back to the office, in newer, renovated properties with more amenities.
As of June 30, 2026, 69.7%, 25.7% and 4.6% of our properties by rentable square feet were classified as class A, class B and class C, respectively, as determined primarily by the most recent appraisals of the properties. As of June 30, 2026, our class B and class C properties collectively included the following 10% or greater geographic concentrations and property type concentrations as measured by rentable square feet:

Geographic Concentration |  | % of Rentable Square Feet
Texas |  | 27.1 | %
California |  | 11.1 | %

Property Type |  | % of Rentable Square Feet
Traditional Office |  | 59.9 | %
Flex/Industrial |  | 16.9 | %
Governmental |  | 15.3 | %

In the current office environment, class B and class C properties generally have been experiencing reduced demand and lea se or sell at discounts to class A properties and our tenants and prospective new tenants across our portfolio sometimes compare the cost and the value of leasing space in our property to the value of newer space with more amenities asking higher rent in other properties in the market. The class of buildings we own may be negatively impacting our leasing velocity and pushing our leasing costs higher and may also be negatively impacting our sales price on non-core asset sales.
Indebtedness
We have incurred significant amounts of indebtedness and, therefore, are subject to the risks normally associated with debt financing, including that we may be unable to extend, refinance or repay our debt obligations as they come due. Deteriorating office fundamentals, high interest rates, market sentiment towards the office sector and recent changes in United States trade policy and the imposition of new tariffs may adversely impact us or our lenders or restrict our access to, and increase our cost of, capital as we seek to extend, refinance or repay our debts. See “Liquidity and Capital Resources - Credit Agreements” below for more information about our indebtedness.
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Property Acquisitions and Dispositions
We intend to shift our portfolio concentration over time away from traditional office properties, towards more dedicated use assets that have an office component. We expect to continue to selectively dispose of properties in our current portfolio if we determine that they do not fit our investment strategies. Proceeds from the sale of real estate assets are expected to be redeployed to fund capital investment into our existing portfolio to further enhance the quality of our portfolio and stability of our cash flows, selective acquisitions and other general corporate purposes. As part of our capital recycling efforts, we are seeking opportunities to invest in properties featuring, among other uses, government, medical, laboratory and research and development, and flex operations. We cannot provide any assurance as to whether we will be able to acquire new properties or sell non-core assets on favorable terms and in a timely manner, or at all.
Emerging Growth Company Status
We have been an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”) since the public Distribution of our common stock in November 2021. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that apply to other public companies that are not emerging growth companies, including compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and the requirements to hold a non-binding advisory vote on executive compensation and any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we rely on the exemptions available to us as an emerging growth company. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
In addition, Section 107 of the JOBS Act provides that an emerging growth company may take advantage of the extended transition period provided in Section 13(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period and, therefore, will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies until we can no longer avail ourselves of the exemptions applicable to emerging growth companies or until we affirmatively and irrevocably opt out of the extended transition period.
We will lose our emerging growth company status on December 31, 2026. As such, we will be subject to the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act for our annual report on Form 10-K for the year ended December 31, 2026, and the requirements to hold a non-binding advisory vote on executive compensation for our 2027 annual meeting of stockholders.
We are also a “smaller reporting company” as defined in Regulation S-K under the Securities Act and will retain such status as of December 31, 2026, even though we will no longer be an emerging growth company. As such, we may elect to take advantage of certain scaled disclosures available to smaller reporting companies.
Basis of Presentation
The consolidated financial statements of the Company for the three and six months ended June 30, 2026 and 2025, include the accounts of the Company and its consolidated subsidiaries, including Orion OP, and a consolidated joint venture. All intercompany transactions have been eliminated upon consolidation.
Election as a REIT
The Company elected to be taxed as a REIT for U.S. federal income tax purposes under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, commencing with the taxable year ended December 31, 2021. To maintain our qualification as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute annually at least 90% of our REIT taxable income, subject to certain adjustments and excluding any net capital gain, to stockholders. As a REIT, except as discussed below, we generally are not subject to federal income tax on taxable income that we distribute to our stockholders so long as we distribute at least 90% of our annual taxable income (computed without regard to the deduction for dividends paid and excluding net capital gains). REITs are subject to a number of other organizational and operational requirements. Even if we maintain our qualification for taxation as a REIT, we may become subject to certain state and local taxes on our income and property, and federal income taxes on certain income and excise taxes on our undistributed income.
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Critical Accounting Estimates
Our accounting policies have been established to conform with U.S. GAAP. The preparation of financial statements in conformity with U.S. GAAP requires us to use judgment in the application of accounting policies, including making estimates and assumptions. These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Management believes that it has made these estimates and assumptions in an appropriate manner and in a way that accurately reflects our financial condition. We continually test and evaluate these estimates and assumptions using our historical knowledge of the business, expectations and projections regarding future events and plans, as well as other factors, to ensure that they are reasonable for reporting purposes. However, actual results may differ from these estimates and assumptions. If our judgment or interpretation of the facts and circumstances relating to the various transactions had been different, it is possible that different accounting estimates would have been applied, thus resulting in a different presentation of the financial statements. Additionally, other companies may utilize different assumptions or estimates that may impact comparability of our results of operations to those of companies in similar businesses. We believe the critical accounting policies described below involve significant judgments and estimates used in the preparation of our financial statements, which should be read in conjunction with the more complete discussion of our accounting policies and procedures included in Note 2 – Summary of Significant Accounting Policies to our consolidated financial statements.
Real Estate Impairment
We invest in real estate assets and subsequently monitor those investments quarterly for impairment. The risks and uncertainties involved in applying the principles related to real estate impairment include, but are not limited to, the following:
•The review of impairment indicators and subsequent determination of the undiscounted future cash flows could require us to reduce the carrying value of assets and recognize an impairment loss.
•The evaluation of real estate assets for potential impairment requires our management to exercise significant judgment and make certain key assumptions, including the following: (1) capitalization rate; (2) discount rate; (3) number of years the property will be held; (4) property operating expenses; and (5) re-leasing assumptions including the number of months to re-lease, market rental revenue and required tenant improvements. There are inherent uncertainties in making these estimates such as market conditions and performance and sustainability of our tenants.
•Changes related to management’s intent to sell or lease the real estate assets used to develop the forecasted cash flows may have a material impact on our financial results.
Allocation of Purchase Price of Real Estate Assets
We generally account for acquisitions of properties as asset acquisitions and we measure the real estate assets acquired based on the purchase price or total consideration exchanged, inclusive of acquisition costs, and allocate the total consideration exchanged to tangible and intangible assets and liabilities based on their respective estimated fair values. Tangible assets consist of land, buildings, fixtures and improvements. Intangible assets and liabilities consist of any above-market and below-market leases, acquired in-place leases and other identified intangible assets and assumed liabilities (including ground leases, if applicable). Our purchase price allocations are developed utilizing third-party appraisal reports, industry standards and management experience. The risks and uncertainties involved in applying the principles related to purchase price allocations include, but are not limited to, the following:
•The value allocated to land, as opposed to buildings, fixtures and improvements, affects the amount and timing of depreciation expense we record. If more value is attributed to land, depreciation expense is lower than if more value is attributed to buildings, fixtures and improvements.
•Intangible lease assets and liabilities can be significantly affected by estimates, including market rent, lease term (including renewal options at rental rates below estimated market rental rates), carrying costs of the property during a hypothetical expected lease-up period, and current market conditions and costs, including tenant improvement allowances and rent concessions.
•If any financing is assumed, we determine whether such financing is above-market or below-market based upon comparison to similar financing terms for similar investment properties.
Recently Issued Accounting Pronouncements
Recently issued accounting pronouncements are described in Note 2 – Summary of Significant Accounting Policies to our consolidated financial statements.
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Significant Transactions Summary
Activity through June 30, 2026 and Subsequent Events
Real Estate Operations
•During the six months ended June 30, 2026, we completed approximately 557,000 square feet of lease extensions and new leases across seven different properties and a weighted average lease term of 6.9 years.
•During July 2026, we completed a new 10.5-year lease for approximately 19,000 square feet at our property in Plano, Texas, a new 10.6-year lease for approximately 28,000 square feet at our property in Tulsa, Oklahoma and a 3.0-year lease renewal for 69,000 square feet at our property in Salem, Oregon.
•During February 2026, we acquired one 75,000 square foot property in Northbrook, Illinois for a gross purchase price of $15.0 million. The property is fully leased to a single tenant through December 2036.
•During June 2026, we acquired the fee simple interest in one parcel of land at a property located in Lincoln, Nebraska, where the Company’s ownership interest of this property was previously comprised of a long-term ground lease interest. See Note 3 – Real Estate Investments and Related Intangibles - Property Acquisitions for further information.
•During the six months ended June 30, 2026, we closed on the sale of four properties and the 37.4 acre Deerfield, Illinois properties for an aggregate gross sales price of $83.7 million. These sale transactions include the opportunistic sale of two Operating Properties comprising approximately 260,000 square feet for a gross sales price of $57.5 million during the three months ended June 30, 2026, and the sale of two vacant properties totaling approximately 516,000 square feet for a gross sales price of $13.1 million during the three months ended March 31, 2026.
•As of August 6, 2026, we have an agreement in place to sell one property currently leased to the United States Government for a gross sales price of $3.4 million. Our pending sale agreement is subject to a variety of conditions outside of our control, such as the buyer’s satisfactory completion of its due diligence and therefore, we cannot provide any assurance the transaction will close on the agreed upon price or other terms, or at all.
Debt
•On February 18, 2026, the Company entered into a credit agreement for the New Revolving Facility and the Original Revolving Facility was terminated and the indebtedness thereunder discharged and paid in full with borrowings under the New Revolving Facility. Among other things, the New Revolving Facility extended the maturity date under the Original Revolving Facility until February 18, 2028, subject to two six-month borrower extension options until February 18, 2029 if we satisfy certain conditions, reduced the lenders’ commitment to $215.0 million to more closely align with our business plan, reduced the interest rate margin on our borrowings by 50-basis points and eliminated the 10-basis point SOFR adjustment. See “Liquidity and Capital Resources - Credit Agreements” below for more information about the New Revolving Facility.
•Also during February 2026, the Company entered into an amendment to the CMBS Loan which, among other things, extended the maturity date two years until February 11, 2029, subject to two borrower extension options for a total of 18 months until August 11, 2030 if certain conditions have been satisfied. The fixed interest rate on the CMBS Loan is unchanged during the extension terms. See “Liquidity and Capital Resources - Credit Agreements” below for more information about the amendment to the CMBS Loan.
•During the three months ended March 31, 2026, the Company drew a total of $127.0 million under the New Revolving Facility to refinance the Original Revolving Facility and pay related transaction costs and to fund the acquisition of the property in Northbrook, Illinois discussed above. During the three months ended June 30, 2026, the Company repaid $25.0 million of borrowings under the New Revolving Facility. As of June 30, 2026, the outstanding principal balance under the New Revolving Facility was $102.0 million.
•The Company made principal payments of $38.4 million on the CMBS Loan during the six months ended June 30, 2026.
Equity
•The Company’s Board of Directors declared a quarterly cash dividend of $0.02 per share for the first and second quarters of 2026 which were paid on April 15, 2026 and July 15, 2026.
•On August 5, 2026, the Company’s Board of Directors declared a quarterly cash dividend of $0.02 per share for the third quarter of 2026, payable on October 15, 2026 to stockholders of record as of September 30, 2026.
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Portfolio Overview
Real Estate Portfolio Metrics
Our financial performance is impacted by the timing of acquisitions and dispositions and the operating performance of our properties. The following table shows the property statistics of our consolidated operating properties as of the dates indicated below:

|  | June 30, 2026 |  | December 31, 2025
Portfolio Metrics |  |  |  |
Operating properties |  | 57 |  | 58
Non-operating properties |  | — |  | 8
Rentable square feet (in thousands) (1) (2) |  | 6,352 |  | 6,546
Annualized base rent (in thousands) (1) |  | $107,993 |  | $107,278
Occupancy rate (1) (3) |  | 78.1% |  | 78.1%
Leased rate (1) (4) |  | 78.1% |  | 80.1%
Investment-grade tenants (1) (5) |  | 69.1% |  | 67.7%
Weighted average remaining lease term (in years) (1) |  | 6.2 |  | 5.6

____________________________________
(1)As of January 1, 2026, the Company no longer includes the proportionate share of the Unconsolidated Joint Venture’s financial statement line items and operating metrics in its non-GAAP metrics and other operating metrics. This change has been applied retrospectively to rentable square feet, annualized base rent, occupancy rate, leased rate, investment-grade tenants and weighted average lease term as of December 31, 2025, for comparison purposes.
(2)Represents leasable square feet of operating properties.
(3)Occupancy rate equals the sum of occupied square feet divided by rentable square feet of operating properties.
(4)Leased rate equals the sum of leased square feet divided by rentable square feet of operating properties.
(5)Based on annualized base rent of our real estate portfolio as of June 30, 2026. Investment-grade tenants are those with a credit rating of BBB- or higher by Standard & Poor’s Financial Services LLC or a credit rating of Baa3 or higher by Moody’s Investor Service, Inc. The ratings may reflect those assigned by Standard & Poor’s Financial Services LLC or Moody’s Investor Service, Inc. to the lease guarantor or the parent company, as applicable.
Operating Performance
In addition, management uses the following financial metrics to assess our operating performance (in thousands, except per share amounts):

|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2026 |  | 2025 |  | 2026 |  | 2025
Financial Metrics |  |  |  |  |  |  |  |
Total revenues |  | $ | 34,304 |  |  | $ | 37,305 |  |  | $ | 70,575 |  |  | $ | 75,306 |
Net income (loss) attributable to common stockholders |  | $ | 24,579 |  |  | $ | (25,103) |  |  | $ | 11,001 |  |  | $ | (34,464) |
Net income (loss) per share attributable to common stockholders - basic |  | $ | 0.43 |  |  | $ | (0.45) |  |  | $ | 0.19 |  |  | $ | (0.61) |
Net income (loss) per share attributable to common stockholders - diluted |  | $ | 0.42 |  |  | $ | (0.45) |  |  | $ | 0.19 |  |  | $ | (0.61) |
FFO attributable to common stockholders (1) |  | $ | 9,234 |  |  | $ | 8,881 |  |  | $ | 15,077 |  |  | $ | 17,686 |
FFO attributable to common stockholders per diluted share (1) |  | $ | 0.16 |  |  | $ | 0.16 |  |  | $ | 0.26 |  |  | $ | 0.31 |
Core FFO attributable to common stockholders (1) |  | $ | 11,798 |  |  | $ | 11,458 |  |  | $ | 23,539 |  |  | $ | 22,111 |
Core FFO attributable to common stockholders per diluted share (1) |  | $ | 0.20 |  |  | $ | 0.20 |  |  | $ | 0.41 |  |  | $ | 0.39 |

____________________________________
(1)See the Non-GAAP Measures section below for descriptions of our non-GAAP measures and reconciliations to the most comparable U.S. GAAP measure.
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Leasing Activity and Capital Expenditures
We remain highly focused on leasing activity, given the 6.2 year weighted average remaining lease term and the significant lease maturities which will occur across the portfolio over the next few years. If our tenants decide not to renew their leases, terminate their leases early or default on their leases, we will seek to re-lease the space to new tenants. We may not, however, be able to re-lease the space to suitable replacement tenants on a timely basis, or at all. Our properties may not be as attractive to existing or new tenants as properties owned by our competitors due to age of buildings, physical condition, lack of amenities or other similar factors. Even if we are able to renew leases with existing tenants or enter into new leases with replacement tenants, the terms of renewals or new leases, including the cost of required renovations, improvements or concessions to tenants, may be less favorable to us than current lease terms. As a result of the above factors, our net income and ability to pay dividends to stockholders could be materially adversely affected. Further, if any of our properties cannot be leased on terms and conditions favorable to us, we may seek to dispose of the property; however, such property may not be marketable at a suitable price without substantial capital improvements, alterations, or at all, which could inhibit our ability to effectively dispose of those properties and could require us to expend capital to fund necessary capital improvements or alterations. In general, when we sell properties that are vacant or soon to be vacant, the valuation will be discounted to reflect that the new owner will bear carrying costs until the property has been leased up and take the risk that the property may not be leased up on a timely basis, favorable terms or at all.
As an owner of commercial real estate, we are required to make capital expenditures with respect to our portfolio, which include normal building improvements to replace obsolete building components and expenditures to extend the useful life of existing assets and lease related expenditures to retain existing tenants or attract new tenants to our properties. We have agreed to provide rent concessions to tenants and incur leasing costs with respect to our properties, including amounts paid directly to tenants to improve their space and/or building systems, or tenant improvement allowances, landlord agreements to perform and pay for certain improvements, and leasing commissions. We anticipate that we will continue to agree to tenant improvement allowances, the amount of which may increase in future periods. These rent concessions and leasing costs could be significant and are expected to vary due to factors such as competitive market conditions for leasing of commercial office space and the volume of square footage subject to re-leasing by us.
As of June 30, 2026, we had the following estimated total outstanding rent concessions and leasing cost commitments (in thousands, except per square foot amounts):

|  | Outstanding Amount |  | Leased Square Feet (1) |  | Outstanding Amount Per Square Foot (1)
Rent concessions (2) |  | $ | 15,066 |  |  | 1,247 |  |  | $ | 12.08 |
Tenant improvement allowances |  | 36,510 |  |  | 1,851 |  |  | $ | 19.72 |
Reimbursable landlord work (3) |  | 2,315 |  |  | 128 |  |  | $ | 18.09 |
Non-reimbursable landlord work (3) |  | 4,619 |  |  | 1,078 |  |  | $ | 4.28 |
Total |  | $ | 58,510 |  |  | 2,742 |  |  | $ | 21.34 |

____________________________________
(1)Certain leases may contain more than one of the above rent concessions and leasing costs. The total leased square feet associated with our outstanding rent concessions and leasing costs excludes any duplicate square footage for the purpose of calculating the total outstanding amount per square foot.
(2)Rent concessions include free rent for future periods under our executed leases which include certain leases for which the lease term has yet to commence, and includes estimates of property operating expenses, where applicable.
(3)Landlord work represents specific improvements agreed to within the lease agreement to be performed by us, as landlord, as a new non-recurring obligation and in order to induce the tenant to enter into a new lease or lease renewal or extension. Outstanding commitments for reimbursable and non-reimbursable landlord work amounts include estimates and are subject to change.
The actual amount we pay for tenant improvement allowances may be lower than the amount agreed upon in the applicable lease and will depend upon the tenant’s use of the capital on the agreed upon timeline. The timing of our cash outlay for tenant improvement allowances is significantly uncertain and will depend upon the applicable tenant’s schedule for the improvements and corresponding use of capital, if any. We estimate that the foregoing rent concessions and leasing costs will be funded between 2026 and 2041.
We have funded and intend to continue to fund our outstanding leasing costs with cash on hand, which may include proceeds from dispositions. For assets financed on the CMBS Loan, we have funded an all-purpose reserve with the lender which had total cash reserves of $42.8 million as of June 30, 2026 and may be used for leasing costs and capital expenditures.
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During the periods indicated below, we entered into new and renewal leases as summarized in the following tables (dollars and square feet in thousands):

|  | Three Months Ended June 30, 2026
|  | New Leases |  | Renewals |  | Total
Number of leases |  | 2 |  | 4 |  | 6
Rentable square feet leased |  | 6 |  | 196 |  | 202
Weighted average lease term (by rentable square feet) (years) - firm term (1) |  | 5.5 |  | 5.1 |  | 5.1
Weighted average lease term (by rentable square feet) (years) - non-firm term (1) |  | 5.5 |  | 5.1 |  | 5.1
Weighted average new term rental rate per rentable square foot per year (cash basis) |  | $ | 10.90 |  |  | $ | 24.47 |  |  | $ | 24.11 |
Weighted average rental rate change (cash basis) (2) (3) |  | N/A |  | (7.7) | % |  | (7.7) | %
Tenant rent concessions and leasing costs per rentable square foot per year - firm term (4) (5) |  | $ | 0.84 |  |  | $ | 5.49 |  |  | $ | 5.36 |
Tenant rent concessions and leasing costs per rentable square foot per year - non-firm term (4) |  | $ | 0.84 |  |  | $ | 5.49 |  |  | $ | 5.36 |

|  | Three Months Ended June 30, 2025
|  | New Leases |  | Renewals |  | Total
Number of leases |  | 2 |  | 2 |  | 4
Rentable square feet leased |  | 69 |  | 110 |  | 179
Weighted average lease term (by rentable square feet) (years) - firm term (1) |  | 13.0 |  | 1.6 |  | 6.0
Weighted average lease term (by rentable square feet) (years) - non-firm term (1) |  | 13.0 |  | 1.6 |  | 6.0
Weighted average new term rental rate per rentable square foot per year (cash basis) |  | $ | 27.82 |  |  | $ | 11.45 |  |  | $ | 17.80 |
Weighted average rental rate change (cash basis) (2) (3) |  | N/A |  | 6.2 | % |  | 6.2 | %
Tenant rent concessions and leasing costs per rentable square foot per year - firm term (4) (5) |  | $ | 10.26 |  |  | $ | 2.09 |  |  | $ | 8.91 |
Tenant rent concessions and leasing costs per rentable square foot per year - non-firm term (4) |  | $ | 10.26 |  |  | $ | 2.09 |  |  | $ | 8.91 |

____________________________________
(1)Firm term includes the non-cancellable portion of the lease term and any cancellable portion of the lease term if the tenant's right to cancel requires payment of a termination fee. Non-firm term includes the firm term plus the portion of the lease term, principally under our United States Government leases, where the tenant has the right to terminate without payment of a termination fee.
(2)Represents weighted average percentage increase or decrease in (i) the annualized monthly cash amount charged to the applicable tenants (including monthly base rent receivables and certain fixed contractually obligated reimbursements by the applicable tenants, which may include estimates) as of the commencement date of the new lease term (excluding any full or partial rent abatement period) compared to (ii) the annualized monthly cash amount charged to the applicable tenants (including the monthly base rent receivables and certain fixed contractually obligated reimbursements by the applicable tenants, which may include estimates) as of the expiration date of the prior lease term. Contractually obligated reimbursements include estimated amortization of certain landlord funded improvements under our United States Government leases. If a space has been or will be vacant for more than 12 months prior to the commencement of a new lease, was previously otherwise not generating full cash rental revenue or if the lease types are not comparable, the lease will be excluded from the rental rate change calculation.
(3)Excludes two new leases for approximately 6,000 square feet for the three months ended June 30, 2026 that had been or will be vacant for more than 12 months at the time the new lease commences. Excludes two new leases for approximately 69,000 square feet during the three months ended June 30, 2025.
(4)Includes tenant improvement allowances and base building allowances, certain reimbursable and non-reimbursable landlord funded improvements, leasing commissions and rent concessions (includes estimates of property operating expenses, where applicable). For its multi-tenant properties, the Company has allocated the estimated cost of landlord funded improvements that benefit the property generally and/or the common areas and not the tenant's premises in particular, to the applicable lease based on square footage of the related tenant.
(5)There were no reimbursable landlord funded improvements or tenant improvement allowances included in the tenant rent concessions and leasing costs for the three months ended June 30, 2026 and 2025.
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During the periods indicated below, we entered into new and renewal leases as summarized in the following table (dollars and square feet in thousands):

|  | Six Months Ended June 30, 2026
|  | New Leases |  | Renewals |  | Total
Number of leases |  | 4 |  | 5 |  | 9
Rentable square feet leased |  | 201 |  | 356 |  | 557
Weighted average lease term (by rentable square feet) (years) - firm term (1) |  | 11.6 |  | 4.2 |  | 6.9
Weighted average lease term (by rentable square feet) (years) - non-firm term (1) |  | 11.6 |  | 4.2 |  | 6.9
Weighted average new term rental rate per rentable square foot per year (cash basis) |  | $ | 16.10 |  |  | $ | 30.63 |  |  | $ | 25.40 |
Weighted average rental rate change (cash basis) (2) (3) |  | N/A |  | (2.3) | % |  | (2.3) | %
Tenant rent concessions and leasing costs per rentable square foot per year - firm term (4) (5) |  | $ | 5.60 |  |  | $ | 4.69 |  |  | $ | 5.25 |
Tenant rent concessions and leasing costs per rentable square foot per year - non-firm term (4) |  | $ | 5.60 |  |  | $ | 4.69 |  |  | $ | 5.25 |

|  | Six Months Ended June 30, 2025
|  | New Leases |  | Renewals (6) |  | Total
Number of leases |  | 3 |  | 5 |  | 8
Rentable square feet leased |  | 229 |  | 330 |  | 559
Weighted average lease term (by rentable square feet) (years) - firm term (1) |  | 10.9 |  | 3.4 |  | 6.5
Weighted average lease term (by rentable square feet) (years) - non-firm term (1) |  | 10.9 |  | 3.4 |  | 6.5
Weighted average new term rental rate per rentable square foot per year (cash basis) |  | $ | 29.24 |  |  | $ | 20.51 |  |  | $ | 24.10 |
Weighted average rental rate change (cash basis) (2) (3) |  | N/A |  | (14.2) | % |  | (14.2) | %
Tenant rent concessions and leasing costs per rentable square foot per year - firm term (4) (5) |  | $ | 8.68 |  |  | $ | 4.22 |  |  | $ | 7.30 |
Tenant rent concessions and leasing costs per rentable square foot per year - non-firm term (4) |  | $ | 8.68 |  |  | $ | 4.22 |  |  | $ | 7.30 |

____________________________________
(1)Firm term includes the non-cancellable portion of the lease term and any cancellable portion of the lease term if the tenant's right to cancel requires payment of a termination fee. Non-firm term includes the firm term plus the portion of the lease term, principally under our United States Government leases, where the tenant has the right to terminate without payment of a termination fee.
(2)Represents weighted average percentage increase or decrease in (i) the annualized monthly cash amount charged to the applicable tenants (including monthly base rent receivables and certain fixed contractually obligated reimbursements by the applicable tenants, which may include estimates) as of the commencement date of the new lease term (excluding any full or partial rent abatement period) compared to (ii) the annualized monthly cash amount charged to the applicable tenants (including the monthly base rent receivables and certain fixed contractually obligated reimbursements by the applicable tenants, which may include estimates) as of the expiration date of the prior lease term. Contractually obligated reimbursements include estimated amortization of certain landlord funded improvements under our United States Government leases. If a space has been or will be vacant for more than 12 months prior to the commencement of a new lease, was previously otherwise not generating full cash rental revenue or if the lease types are not comparable, the lease will be excluded from the rental rate change calculation.
(3)Excludes four new leases for approximately 201,000 square feet for the six months ended June 30, 2026 that had been or will be vacant for more than 12 months at the time the new lease commences. Excludes three new leases for approximately 229,000 square feet during the six months ended June 30, 2025.
(4)Includes tenant improvement allowances and base building allowances, certain reimbursable and non-reimbursable landlord funded improvements, leasing commissions and rent concessions (includes estimates of property operating expenses, where applicable). For its multi-tenant properties, the Company has allocated the estimated cost of landlord funded improvements that benefit the property generally and/or the common areas and not the tenant’s premises in particular, to the applicable lease based on square footage of the related tenant.
(5)There were no reimbursable landlord funded improvements or tenant improvement allowances included in the tenant rent concessions and leasing costs for the six months ended June 30, 2026. Tenant rent concessions and leasing costs per rentable square foot for the six months ended June 30, 2025 and attributable to new leases have been retrospectively updated to reduce the amount of tenant improvement allowances by $0.64 per rentable square foot per year pursuant to the terms of a subsequent lease amendment entered into during the three months ended March 31, 2026.
(6)Includes the Company's proportionate share of rentable square feet and tenant rent concessions and leasing costs for one 163,000 square foot renewal at a property owned by the Company's Unconsolidated Joint Venture.
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During the three months ended June 30, 2026, four leases expired or were downsized comprising a total reduction in occupied square feet of approximately 422,000 square feet. We closed on the sale of one of these properties totaling approximately 120,000 square feet during the three months ended June 30, 2026, and are currently marketing for sale an additional vacant property totaling approximately 109,000 square feet. We currently intend to re-let the remaining two vacancies. The expired base rent per square foot and our market rent estimates for these vacancies are as follows (square feet in thousands):

Vacancy Location |  | Rentable Square Feet |  | Expired Base Rent Per Square Foot |  | Estimated Market Rent Per Square Foot Range
Amherst, New York |  | 170 |  | $18.04 |  | $16.00 - $18.00
San Antonio, Texas |  | 23 |  | $19.60 |  | $18.00 - $20.00

Our market rent estimates are based on a variety of assumptions which are subject to change, and we cannot provide any assurance that we will be able to re-let vacant space to new tenants on these or any other terms, in a timely manner, or at all. Our plans with respect to vacant properties are subject to change.
During the periods indicated below, amounts capitalized by the Company for capital expenditures were as follows (in thousands):

|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2026 |  | 2025 |  | 2026 |  | 2025
Lease related costs (1) |  | $ | 1,440 |  |  | $ | 2,512 |  |  | $ | 5,409 |  |  | $ | 4,623 |
Lease incentives (2) |  | 1,770 |  |  | 883 |  |  | 2,764 |  |  | 1,030 |
Building, fixtures and improvements (3) |  | 5,642 |  |  | 12,177 |  |  | 19,330 |  |  | 18,260 |
Total capital expenditures |  | $ | 8,852 |  |  | $ | 15,572 |  |  | $ | 27,503 |  |  | $ | 23,913 |

____________________________________
(1)Lease related costs generally include lease commissions paid in connection with the execution of new and/or renewed leases.
(2)Lease incentives generally include expenses paid on behalf of the tenant or reimbursed to the tenant, including expenditures related to the construction of tenant-owned improvements.
(3)Building, fixtures and improvements generally include expenditures to replace obsolete building or land components, expenditures that extend the useful life of existing assets, expenditures to construct landlord owned improvements and any capitalized interest charges associated with such expenditures.
Results of Operations
The results of operations discussed in this section include the accounts of the Company and its consolidated subsidiaries for the three and six months ended June 30, 2026 and 2025.
Revenues
The table below sets forth, for the periods presented, revenue information and the dollar amount change year over year (in thousands):

|  | Three Months Ended June 30, |  |  |  |  | Six Months Ended June 30, |  |
|  | 2026 |  | 2025 |  | 2026 vs 2025 Increase/(Decrease) |  |  |  |  | 2026 |  | 2025 |  | 2026 vs 2025 Increase/(Decrease) |  |  |
Rental |  | $ | 34,098 |  |  | $ | 37,102 |  |  | $ | (3,004) |  |  |  |  |  | $ | 70,232 |  |  | $ | 74,899 |  |  | $ | (4,667) |  |  |  |
Fee income from unconsolidated joint venture |  | 206 |  |  | 203 |  |  | 3 |  |  |  |  |  | 343 |  |  | 407 |  |  | (64) |  |  |  |
Total revenues |  | $ | 34,304 |  |  | $ | 37,305 |  |  | $ | (3,001) |  |  |  |  |  | $ | 70,575 |  |  | $ | 75,306 |  |  | $ | (4,731) |  |  |  |

Rental
The decreases in rental revenues of $3.0 million and $4.7 million during the three and six months ended June 30, 2026, as compared to the same periods in 2025, respectively, were primarily due to the impact of decreasing overall occupied square footage resulting from the expiration of leases totaling $4.3 million and $7.2 million in rental revenues during the three and six months ended June 30, 2026, respectively, dispositions of certain properties of $1.3 million and $1.8 million, respectively, and reimbursement revenue related to property tax reassessments of $0.7 million and $1.2 million, respectively. The decreases in
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revenues were partially offset by $3.3 million and $5.2 million of rental revenue during the three and six months ended June 30, 2026, respectively, related to leasing activity that occurred during the comparative periods and revenues of $0.5 million and $0.6 million, respectively, from the property we acquired in February 2026 located in Northbrook, Illinois.
We had 57 operating properties with an aggregate of 6.4 million leasable square feet and an occupancy rate of 78.1% as of June 30, 2026, as compared to 66 operating properties with an aggregate of 7.6 million leasable square feet and an occupancy rate of 76.8% as of June 30, 2025.
Operating Expenses
The table below sets forth, for the periods presented, certain operating expense information and the dollar amount change year over year (in thousands):

|  | Three Months Ended June 30, |  | Six Months Ended June 30, |  |  |
|  | 2026 |  | 2025 |  | 2026 vs 2025 Increase/(Decrease) |  | 2026 |  | 2025 |  | 2026 vs 2025 Increase/(Decrease) |  |  |
Property operating |  | $ | 12,477 |  |  | $ | 15,895 |  |  | $ | (3,418) |  |  | $ | 27,260 |  |  | $ | 32,345 |  |  | $ | (5,085) |  |  |  |
General and administrative |  | 4,611 |  |  | 4,838 |  |  | (227) |  |  | 9,751 |  |  | 9,734 |  |  | 17 |  |  |  |
Depreciation and amortization |  | 13,520 |  |  | 14,928 |  |  | (1,408) |  |  | 26,679 |  |  | 30,950 |  |  | (4,271) |  |  |  |
Impairments |  | — |  |  | 19,503 |  |  | (19,503) |  |  | 6,296 |  |  | 21,212 |  |  | (14,916) |  |  |  |
Transaction related |  | 312 |  |  | 75 |  |  | 237 |  |  | 571 |  |  | 139 |  |  | 432 |  |  |  |
Total operating expenses |  | $ | 30,920 |  |  | $ | 55,239 |  |  | $ | (24,319) |  |  | $ | 70,557 |  |  | $ | 94,380 |  |  | $ | (23,823) |  |  |  |

Property operating expenses
Property operating expenses such as taxes, insurance, ground rent and maintenance include both reimbursable and non-reimbursable property expenses. Property operating expenses decreased $3.4 million and $5.1 million during the three and six months ended June 30, 2026, as compared to the same periods in 2025, respectively. The decrease during the three months ended June 30, 2026 as compared to the same period in 2025 is primarily due to decreases in property operating expenses resulting from property dispositions of $2.4 million and a decrease in real estate taxes due to property reassessments of $1.4 million, offset by increased operating expenses from our leasing efforts to increase occupancy at certain properties of $0.6 million.
The decrease during the six months ended June 30, 2026 compared to the same period in 2025 is primarily due to decreases in property operating expenses resulting from property dispositions of $4.9 million and a decrease in real estate taxes due to property reassessments of $2.0 million, offset by increased operating expenses from our leasing efforts to increase occupancy at certain properties of $1.1 million and additional operating expenses related to the property we acquired in February 2026 located in Northbrook, Illinois of $0.2 million.
General and administrative expenses
General and administrative expenses decreased during the three months ended June 30, 2026, as compared to the same period in 2025, primarily due to savings of $0.2 million from lower employee headcount. General and administrative expenses were relatively consistent during the six months ended June 30, 2026, as compared to the same period in 2025, as an increase in legal fees of $0.2 million related to the ongoing strategic options review and managing activist shareholders and higher audit fees of $0.1 million due to the upcoming auditor attestation requirements under Section 404 of the Sarbanes-Oxley Act, were offset by savings of $0.4 million from lower employee headcount.
Depreciation and amortization expenses
Depreciation and amortization expenses decreased $1.4 million and $4.3 million during the three and six months ended June 30, 2026, respectively, as compared to the same periods in 2025. The decrease in depreciation and amortization expense in the three month period was primarily driven by the $1.4 million impact from the full amortization of certain intangible assets as a result of leases expiring in accordance with their terms and lower depreciation and amortization expenses due to disposed properties of $1.0 million, partially offset by an increase in depreciation and amortization from capital expenditures and leasing costs of $1.2 million.
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The decrease in depreciation and amortization expenses in the six month period was primarily driven by the $4.3 million impact from the full amortization of certain intangible assets as a result of leases expiring in accordance with their terms and early lease terminations, lower depreciation and amortization expenses due to disposed properties of $2.0 million, partially offset by an increase in depreciation and amortization from capital expenditures and leasing costs of $2.0 million.
Impairments
Impairments decreased $19.5 million and $14.9 million during the three and six months ended June 30, 2026, respectively, as compared to the same periods in 2025. No impairment charges were recorded during the three months ended June 30, 2026. The impairment charges of $6.3 million during the six months ended June 30, 2026 include one property. The charges reflect management’s estimates of leasing probability, timing and terms of such leasing, carrying costs, sale probability and estimates of sale proceeds.
Impairment charges totaling $19.5 million with respect to four properties were recorded during the three months ended June 30, 2025. Impairment charges totaling $21.2 million with respect to six properties were recorded during the six months ended June 30, 2025. See Note 5 - Fair Value Measures for further information.
Transaction related expenses
Transaction related expense increased $0.2 million and $0.4 million during the three and six months ended June 30, 2026, respectively, as compared to the same periods in 2025. The increase in transaction related expenses in the three and six month periods was primarily driven by $0.2 million of costs incurred to perform work at a property sold by the Company, as required under the terms of the sale. Additionally, during the six month period, we recognized costs from terminated transactions of $0.1 million.
Other Income (Expenses) and Provision for Income Taxes
The table below sets forth, for the periods presented, certain financial information and the dollar amount change year over year (in thousands):

|  | Three Months Ended June 30, |  |  |  |  | Six Months Ended June 30, |  |
|  | 2026 |  | 2025 |  | 2026 vs 2025 Increase/(Decrease) |  |  |  |  | 2026 |  | 2025 |  | 2026 vs 2025 Increase/(Decrease) |  |
Interest expense, net |  | $ | (7,330) |  |  | $ | (8,016) |  |  | $ | (686) |  |  |  |  |  | $ | (14,580) |  |  | $ | (16,172) |  |  | $ | (1,592) |  |  |
Gain on disposition of real estate assets |  | $ | 28,826 |  |  | $ | 891 |  |  | $ | 27,935 |  |  |  |  |  | $ | 28,826 |  |  | $ | 891 |  |  | $ | 27,935 |  |  |
Loss on extinguishment of debt, net |  | $ | (288) |  |  | $ | — |  |  | $ | 288 |  |  |  |  |  | $ | (532) |  |  | $ | — |  |  | $ | 532 |  |  |
Other income |  | $ | 63 |  |  | $ | 404 |  |  | $ | (341) |  |  |  |  |  | $ | 306 |  |  | $ | 657 |  |  | $ | (351) |  |  |
Other expenses |  | $ | (1) |  |  | $ | (108) |  |  | $ | (107) |  |  |  |  |  | $ | (3,320) |  |  | $ | (108) |  |  | $ | 3,212 |  |  |
Recovery of reserve on Member Loan |  | $ | — |  |  | $ | — |  |  | $ | — |  |  |  |  |  | $ | 439 |  |  | $ | — |  |  | $ | 439 |  |  |
Equity in loss of unconsolidated joint venture, net |  | $ | — |  |  | $ | (271) |  |  | $ | (271) |  |  |  |  |  | $ | — |  |  | $ | (517) |  |  | $ | (517) |  |  |
Provision for income taxes |  | $ | (71) |  |  | $ | (67) |  |  | $ | 4 |  |  |  |  |  | $ | (142) |  |  | $ | (133) |  |  | $ | 9 |  |  |

Interest expense, net
Interest expense, net decreased $0.7 million and $1.6 million during the three and six months ended June 30, 2026, respectively, as compared to the same periods in 2025 primarily as a result of lower average debt balances and lower weighted average interest rates. Our average debt outstanding was $466.9 million and $450.8 million for the three and six months ended June 30, 2026, respectively, compared to $494.0 million and $487.5 million for each of the same periods in 2025. The weighted average interest rate on our debt obligations was 5.34% and 5.37% for the three and six months ended June 30, 2026, respectively, and 5.67% and 5.68% for the three and six months ended June 30, 2025, respectively. Interest expense, net for the three and six months ended June 30, 2026 was offset by capitalized interest of $0.1 million and $0.4 million, respectively, compared to capitalized interest of $0.2 million during the three and six months ended June 30, 2025.
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Gain on disposition of real estate assets
Gains on disposition of real estate assets were $28.8 million for the three and six months ended June 30, 2026 as compared to $0.9 million recognized during the same periods in 2025. The gains on disposition of real estate assets recognized during 2026 were primarily driven by the opportunistic sale of two Operating Properties, including our property located in Columbus, Ohio and our property located in Glen Burnie, Maryland for gains of $20.0 million and $7.4 million, respectively. The remaining $1.4 million of gains recognized during the 2026 periods were from the sale of properties which were subject to cumulative impairment losses of $99.5 million in prior periods.
Loss on extinguishment of debt, net
Loss on extinguishment of debt, net during the six months ended June 30, 2026 was related to the write off of deferred financing costs of $0.2 million in connection with the refinancing of the Original Revolving Facility with the New Revolving Facility and resulting net reduction in total borrowing capacity discussed in Note 6 – Debt, Net. During the three months ended June 30, 2026, the Company wrote-off an additional $0.3 million of deferred financing costs in connection with a $34.4 million CMBS Loan principal paydown as part of the sale of one of the properties collateralizing the CMBS Loan. See Note 6 – Debt, Net - CMBS Loan for further information. There were no such costs incurred during the six months ended June 30, 2025.
Other expenses
Other expenses recognized during the six months ended June 30, 2026 primarily related to $3.0 million of costs incurred for professional services rendered in connection with the February 2026 amendment to the CMBS Loan.
Recovery of reserve on Member Loan
During the six months ended June 30, 2026, we received $1.1 million of repayments on the Member Loan, of which $0.4 million was previously reserved.
Equity in loss of unconsolidated joint venture, net
We account for our investment in the Unconsolidated Joint Venture under the equity method of accounting and during the year ended December 31, 2025, our share of losses exceeded the carrying amount of our investment. Accordingly, we have suspended recognition of our share of additional losses and will resume recognizing our share of earnings only after the Unconsolidated Joint Venture generates net income that exceeds the previously unrecognized losses. We have not recognized any further losses in excess of our investment in the Unconsolidated Joint Venture during three and six months ended June 30, 2026.
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Non-GAAP Measures
Our results are presented in accordance with U.S. GAAP. We also disclose certain non-GAAP measures, as discussed further below. M anagement uses these non-GAAP financial measures in our internal analysis of results and believes these measures are useful to investors for the reasons explained below. These non-GAAP financial measures should not be considered as substitutes for any measures derived in accordance with U.S. GAAP.
Funds From Operations (“FFO”) and Core Funds From Operations (“Core FFO”) Attributable to Common Stockholders
Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts, Inc. (“Nareit”), an industry trade group, has promulgated a supplemental performance measure known as FFO, which we believe to be an appropriate supplemental performance measure to reflect the operating performance of the Company. FFO is not equivalent to our net income (loss) as determined under U.S. GAAP.
Nareit defines FFO as net income (loss) computed in accordance with U.S. GAAP adjusted for gains or losses from disposition of real estate assets, depreciation and amortization of real estate assets, impairment write-downs on real estate and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. For periods prior to January 1, 2026, we also adjust for our proportionate share of FFO adjustments related to the Unconsolidated Joint Venture. We calculate FFO in accordance with Nareit’s definition described above.
In addition to FFO, we use Core FFO as a non-GAAP supplemental financial performance measure to evaluate the operating performance of the Company. Core FFO, as defined by the Company, excludes from FFO items that we believe do not reflect the ongoing operating performance of our business such as transaction related expenses, amortization of deferred financing costs, amortization of deferred lease incentives, net, equity-based compensation, amortization of premiums and discounts on debt, net and gains or losses on extinguishment of swaps and/or debt, and, for periods prior to January 1, 2026, our proportionate share of Core FFO adjustments related to the Unconsolidated Joint Venture.
We believe that FFO and Core FFO allow for a comparison of the performance of our operations with other publicly-traded REITs, as FFO and Core FFO, or a substantially similar measure, are routinely reported by publicly-traded REITs, each adjust for items that we believe do not reflect the ongoing operating performance of our business and we believe are often used by analysts and investors for comparison purposes.
For all of these reasons, we believe FFO and Core FFO, in addition to net income (loss), as determined under U.S. GAAP, are helpful supplemental performance measures and useful in understanding the various ways in which our management evaluates the performance of the Company over time. However, not all REITs calculate FFO and Core FFO the same way, so comparisons with other REITs may not be meaningful. FFO and Core FFO should not be considered as alternatives to net income (loss) and are not intended to be used as a liquidity measure indicative of cash flow available to fund our cash needs. Neither the SEC, Nareit, nor any other regulatory body has evaluated the acceptability of the exclusions used to adjust FFO in order to calculate Core FFO and its use as a non-GAAP financial performance measure.
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The table below presents a reconciliation of FFO and Core FFO to net loss attributable to common stockholders, the most directly comparable U.S. GAAP financial measure, for the periods indicated below (in thousands, except per share amounts):

|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2026 |  | 2025 |  | 2026 |  | 2025
Net income (loss) attributable to common stockholders |  | $ | 24,579 |  |  | $ | (25,103) |  |  | $ | 11,001 |  |  | $ | (34,464) |
Depreciation and amortization of real estate assets |  | 13,481 |  |  | 14,897 |  |  | 26,606 |  |  | 30,885 |
Gain on disposition of real estate assets |  | (28,826) |  |  | (891) |  |  | (28,826) |  |  | (891) |
Impairment of real estate |  | — |  |  | 19,503 |  |  | 6,296 |  |  | 21,212 |
Proportionate share of Unconsolidated Joint Venture adjustments for items above, as applicable |  | — |  |  | 475 |  |  | — |  |  | 944 |
FFO attributable to common stockholders |  | $ | 9,234 |  |  | $ | 8,881 |  |  | $ | 15,077 |  |  | $ | 17,686 |
Transaction related |  | 312 |  |  | 75 |  |  | 571 |  |  | 139 |
Amortization of deferred financing costs |  | 928 |  |  | 922 |  |  | 1,773 |  |  | 1,834 |
Amortization of deferred lease incentives, net |  | 221 |  |  | 115 |  |  | 383 |  |  | 219 |
Equity-based compensation, net |  | 814 |  |  | 822 |  |  | 1,584 |  |  | 1,526 |
Loss on extinguishment of debt, net |  | 288 |  |  | — |  |  | 532 |  |  | — |
Other adjustments, net (1) |  | 1 |  |  | 629 |  |  | 3,619 |  |  | 679 |
Proportionate share of Unconsolidated Joint Venture adjustments for items above, as applicable |  | — |  |  | 14 |  |  | — |  |  | 28 |
Core FFO attributable to common stockholders |  | $ | 11,798 |  |  | $ | 11,458 |  |  | $ | 23,539 |  |  | $ | 22,111 |
Weighted average shares of common stock outstanding - basic |  | 56,946 |  |  | 56,254 |  |  | 56,756 |  |  | 56,149 |
Effect of weighted average dilutive securities (2) |  | 1,160 |  |  | 47 |  |  | 732 |  |  | 67 |
Weighted average shares of common stock outstanding - diluted |  | 58,106 |  |  | 56,301 |  |  | 57,488 |  |  | 56,216 |
FFO attributable to common stockholders per diluted share |  | $ | 0.16 |  |  | $ | 0.16 |  |  | $ | 0.26 |  |  | $ | 0.31 |
Core FFO attributable to common stockholders per diluted share |  | $ | 0.20 |  |  | $ | 0.20 |  |  | $ | 0.41 |  |  | $ | 0.39 |

____________________________________
(1)Other adjustments, net during the six months ended June 30, 2026 includes $3.0 million of costs incurred for professional services rendered in connection with the February 2026 amendment to the CMBS Loan and are presented in other expenses on the consolidated statements of operations and $0.7 million of costs incurred in connection with the demolition of the six buildings on the Deerfield, Illinois campus presented in property operating expenses on the consolidated statements of operations, offset by $0.4 million for a partial recovery of the reserve on the Member Loan presented separately on the consolidated statements of operations. The above items have been included as “other adjustments” to Core FFO as they do not reflect the ongoing operating performance of the Company.
(2)Dilutive securities include unvested restricted stock units net of assumed repurchases in accordance with the treasury stock method and exclude Performance-Based RSUs for which the performance thresholds have not been met by the end of the applicable reporting period. Such dilutive securities are not included when calculating net loss per diluted share applicable to the Company for the periods presented above, as the effect would be antidilutive.
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Liquidity and Capital Resources
General
Our principal liquidity needs for the next twelve months are estimated to be: (i) fund operating expenses; (ii) pay interest and principal on our debt; (iii) pay dividends to our stockholders; (iv) fund capital expenditures and leasing costs at properties we own; and (v) fund new acquisitions. We believe that our principal sources of short-term liquidity, which are our cash and cash equivalents on hand, cash flows from operations, proceeds from real estate dispositions, and borrowings under the New Revolving Facility are sufficient to meet our liquidity needs for the next twelve months. As of June 30, 2026, we had $63.5 million of cash and cash equivalents and restricted cash and $113.0 million of borrowing capacity under the New Revolving Facility.
The non-recourse mortgage notes associated with the Unconsolidated Joint Venture experienced a payment default at maturity during February 2026. The lenders’ agent under the loan has issued a default notice and has informed the joint venture that it intends to seek to compel a sale of the properties in the joint venture in order to repay the loan.
During June 2026, the lenders agreed to extend the loan maturity date until July 31, 2026, to provide the Unconsolidated Joint Venture with time to consummate the sale of one of the six properties, however the sale transaction was subsequently terminated and the loan went back into default on August 1, 2026. The lenders have implemented an excess cash flow sweep and as a result of the loan default, have various additional rights and remedies that are customary in a non-recourse mortgage financing, such as the right to collect default interest, institute a proceeding for foreclosure and apply for the appointment of a receiver. The joint venture has delivered a proposed disposition strategy to the lenders for the six properties and remains in discussions with the lenders about next steps which may include a short-term extension and the requirement to sell one or more properties and utilize the proceeds to repay principal outstanding under the debt. We cannot provide any assurance that the Unconsolidated Joint Venture will be able to extend or refinance all or any portion of this debt obligation, complete the disposition of the six properties on favorable terms or in a timely manner, or at all, or that the lenders will not seek to enforce their remedies due to the ongoing payment default.
The Unconsolidated Joint Venture mortgage notes have a variable interest rate and the spread on a SOFR (the secured overnight financing rate as administered by the Federal Reserve Bank of New York) loan is 2.60%, and the spread on a base rate loan is 0.50%.
Due to the uncertainties with regard to recovery of our investments in the Unconsolidated Joint Venture, we recorded an other-than-temporary impairment loss on our investment in the Unconsolidated Joint Venture as of December 31, 2025, thereby reducing the carrying value of our investment to zero, and have recorded a loan loss reserve for the entire outstanding principal of our member loan to the Unconsolidated Joint Venture (the “Member Loan”). Beginning January 1, 2026, we are recording management fees from the Unconsolidated Joint Venture and interest income on the Member Loan on a cash basis rather than an accrual basis.
Our principal liquidity needs beyond the next twelve months are estimated to be: (i) extend, refinance or repay debt at or prior to maturity; (ii) pay dividends to our stockholders; (iii) fund capital expenditures and leasing costs at properties we own; and (iv) fund new acquisitions. We generally believe we will be able to satisfy these liquidity needs by a combination of cash flows from operations, borrowings under the New Revolving Facility, proceeds from real estate dispositions, new borrowings such as bank term loans or other secured or unsecured debt, and issuances of equity securities. We believe we will be successful in either repaying or refinancing our debt obligations at or prior to maturity, but we cannot provide any assurance we will be able to do so. Our ability to extend, refinance or repay debt, raise capital and/or sell assets will be affected by various factors existing at the relevant time, such as capital and credit market conditions, the state of the national and regional economies, commercial real estate market conditions, available interest rate levels, the lease terms for and equity in and value of any related collateral, our financial condition and the operating history of the collateral, if any.
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Credit Agreements
Summary
As of June 30, 2026, we had $436.6 million of total consolidated debt outstanding, consisting of a $316.6 million fixed rate mortgage note collateralized by 18 properties (the “CMBS Loan”), $102.0 million borrowed under our $215.0 million New Revolving Facility and an $18.0 million fixed rate mortgage note secured by our San Ramon, California property (the “San Ramon Loan”). The following is a summary of the interest rate and scheduled maturities of our consolidated debt obligations as of June 30, 2026 (in thousands):

|  |  |  |  | Principal Amounts Due During the Years Ending December 31,
| Weighted Average Interest Rate (1) |  | Weighted Average Years to Maturity |  | Total |  |  |  |  |  | 2028 |  | 2029 |  | 2030 |  | 2031 |  |
New Revolving Facility (2) | 6.37% |  | 1.6 |  | $ | 102,000 |  |  |  |  |  |  | $ | 102,000 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  |
Mortgages payable (3) (4) | 5.02% |  | 2.8 |  | 334,598 |  |  |  |  |  | — |  | 316,598 |  | — |  | 18,000 |  |  |
Total |  |  |  |  | $ | 436,598 |  |  |  |  |  |  | $ | 102,000 |  |  | $ | 316,598 |  |  | $ | — |  |  | $ | 18,000 |  |  |

____________________________________
(1)The weighted average interest rate represents the interest rate in effect as of June 30, 2026.
(2)See “Credit Agreement Obligation” below for additional information with respect to the interest rate and maturity of loans under the New Revolving Facility. The New Revolving Facility was subject to an interest rate collar agreement to hedge against interest rate volatility. Under the agreement, the benchmark rate for the New Revolving Facility floated between no higher than 4.29% and no lower than 3.28% on a total notional amount of $75.0 million, effective from May 12, 2025 to May 12, 2026. The interest rate collar agreement expired in accordance with its terms on May 12, 2026 and we currently have no active derivative agreement.
(3)Includes $316.6 million securitized mortgage note secured by 18 of our properties which bears interest at a fixed rate of 4.971% and matures on February 11, 2029, subject to two borrower extension options for an aggregate of 18 months until August 11, 2030, each upon satisfaction of certain conditions. Also includes $18.0 million fixed rate mortgage note entered into on November 7, 2024 and secured by the San Ramon, California property, which bears interest at a fixed rate of 5.90% and matures on December 1, 2031.
(4)Does not include non-recourse mortgage notes associated with the Unconsolidated Joint Venture of $126.3 million, of which our proportionate share was $25.3 million as of June 30, 2026.
Credit Agreement Obligations
Our prior $350.0 million senior revolving credit facility (the “Original Revolving Facility”) was scheduled to mature on May 12, 2026. As described in more detail below, the Original Revolving Facility was refinanced with a new $215.0 million senior secured revolving credit facility during February 2026 (the “New Revolving Facility”).
On February 18, 2026, the Company, as parent, and Orion OP, as borrower, entered into a credit agreement for the New Revolving Facility. On May 15, 2026, the Company and Orion OP entered into a first amendment to the New Revolving Facility credit agreement to incorporate certain technical, clarifying and conforming changes in connection with granting the lenders first priority mortgages on the Collateral Properties (as defined below).
During the three months ended March 31, 2026, the Company drew a total of $127.0 million under the New Revolving Facility to refinance the Original Revolving Facility and pay related transaction costs and to fund the acquisition of the property in Northbrook, Illinois discussed above under “Significant Transactions Summary.” During the three months ended June 30, 2026, the Company repaid $25.0 million of borrowings under the New Revolving Facility. As of June 30, 2026, the outstanding principal balance under the New Revolving Facility was $102.0 million.
The credit agreement for the New Revolving Facility includes the following terms and conditions, among others:
•The Original Revolving Facility has been terminated and the indebtedness thereunder has been discharged and paid in full with borrowings under the New Revolving Facility.
•The lenders have agreed to make revolving loans in an aggregate principal balance of up to $215.0 million to Orion OP (a reduction in the lenders’ commitment from $350.0 million pursuant to the Original Revolving Facility). Proceeds from the New Revolving Facility may be used for general corporate purposes and loans under the New Revolving Facility may be prepaid and reborrowed, and unused commitments under the New Revolving Facility may be reduced, at any time, in whole or in part, by Orion OP, without premium or penalty (except for SOFR breakage costs).
•The maturity date of the New Revolving Facility is February 18, 2028, subject to Orion OP’s right to further extend the maturity date for two additional option periods of six months each, upon satisfaction of certain conditions.
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•The interest rate applicable to the loans under the New Revolving Facility may be determined, at the election of Orion OP, on the basis of Daily Simple SOFR, Term SOFR or a base rate, plus an applicable margin of 2.75% for SOFR loans and 1.75% for base rate loans (representing a 50-basis point reduction in the applicable margins under the Original Revolving Facility and the 10-basis point SOFR adjustment under the Original Revolving Facility has been eliminated). To the extent that amounts under the New Revolving Facility remain unused, consistent with the Original Revolving Facility, Orion OP is required to pay a quarterly commitment fee on the unused portion of the New Revolving Facility in an amount equal to 0.25% of the unused portion of the New Revolving Facility.
•Orion OP and the Company have granted the lenders first priority mortgages and deeds of trust on a pool of 29 of the Company’s properties and have agreed to grant first priority mortgages on any additional properties acquired in the future by the Company and approved by the administrative agent (the “Collateral Properties”), and have granted the lenders other customary collateral associated with a first lien on commercial office properties. Collateral Properties may only be released from the applicable lien in connection with a sale of such property to a third party or qualified financing and 100% of the net cash proceeds must be applied to repay borrowings under the New Revolving Facility.
•Orion OP’s borrowings are also secured by, among other things, first priority pledges of the equity interest in our subsidiaries that own the Collateral Properties (the “Subsidiary Guarantors”).
•Orion OP’s borrowings under the New Revolving Facility are guaranteed pursuant to a guaranty by each of the Company, Orion Properties Holdings I LLC and the Subsidiary Guarantors.
•Orion OP and the lenders agreed that the financial covenants set forth below must be satisfied by Orion OP under the New Revolving Facility.
◦The ratio of total debt to total asset value must be not more than 0.60 to 1.00.
◦The ratio of adjusted EBITDA to fixed charges must be not less than 1.50 to 1.00.
◦Orion OP’s consolidated tangible net worth must be not less than $740.6 million plus 75% of the net proceeds from any equity offering after the date of the New Revolving Facility.
◦Collateral Property Availability must be at least $215.0 million. For this purpose, Collateral Property Availability means 60% of the aggregate as-is appraised value of all Collateral Properties.
◦Collateral Property Debt Yield must be at least 13%.
•The New Revolving Facility requires that Orion OP comply with various covenants, including covenants restricting, subject to certain exceptions, liens, investments, mergers, asset sales and the payment of certain dividends. If, on any day, Orion OP has unrestricted cash and cash equivalents in excess of $25.0 million (excluding amounts that are then designated for application or use and are subsequently used for such purposes within 30 days), Orion OP will use such excess amount to prepay loans under the New Revolving Facility, without premium or penalty and without any reduction in the lenders’ commitment under the New Revolving Facility.
The New Revolving Facility includes customary representations and warranties of the Company and Orion OP, which must be true and correct in all material respects as a condition to future extensions of credit under the New Revolving Facility. The New Revolving Facility also includes customary events of default, the occurrence of which, following any applicable grace period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations of Orion OP under the New Revolving Facility to be immediately due and payable and foreclose on the collateral securing the New Revolving Facility.
We entered into interest rate collar agreements on a total notional amount of $60.0 million to hedge against interest rate volatility on the Original Revolving Facility. Under the agreements, the benchmark rate for the Original Revolving Facility floated between no higher than 5.50% and no lower than 4.20% on $25.0 million, and no higher than 5.50% and no lower than 4.035% on $35.0 million, effective from November 13, 2023 until May 12, 2025. Upon the scheduled expiration of the interest rate collar agreements, we entered into a new interest rate collar agreement to hedge against interest rate volatility on the Original Revolving Facility and subsequently the New Revolving Facility. Under the agreement, the benchmark rate for the Original Revolving Facility or subsequently the New Revolving Facility floated between no higher than 4.29% and no lower than 3.28% on a total notional amount of $75.0 million, effective from May 12, 2025 to May 12, 2026. The interest rate collar agreement expired in accordance with its terms on May 12, 2026 and we currently have no active derivative agreement. As of June 30, 2026, the weighted average effective interest rate of the New Revolving Facility was 6.37%.
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Revolving Facility Covenants
The table that follows summarizes the financial covenants for the Company’s New Revolving Facility, and the Company’s compliance therewith as of June 30, 2026 as calculated per the terms of the credit agreement. These calculations are presented to show the Company’s compliance with the financial covenants and are not measures of the Company’s liquidity or performance.

New Revolving Facility Financial Covenants |  | Required |  | June 30, 2026
Ratio of total indebtedness to total asset value |  | ≤ 60% |  | 45.4%
Ratio of adjusted EBITDA to fixed charges |  | ≥ 1.5x |  | 2.52x
Consolidated tangible net worth |  | ≥ $740.6 million |  | $985.4 million
Collateral property availability |  | ≥ $215.0 million |  | $295.5 million
Collateral property debt yield |  | ≥ 13% |  | 29.9%

As of June 30, 2026, Orion OP was in compliance with the financial covenants for the New Revolving Facility.
CMBS Loan
On February 10, 2022, certain indirect subsidiaries of the Company (the “Mortgage Borrowers”) obtained a $355.0 million fixed rate mortgage note (the “CMBS Loan”) from Wells Fargo Bank, National Association (together with its successor, the “Lender”), which was initially secured by the Mortgage Borrowers’ fee simple or ground lease interests in 19 properties owned indirectly by the Company (collectively, the “Mortgaged Properties”). During March 2022, Wells Fargo effected a securitization of the CMBS Loan. During June 2026, the Company sold one of the Mortgaged Properties and used the net proceeds of $34.4 million to prepay a portion of the outstanding principal balance on the CMBS Loan, thereby reducing the number of Mortgaged Properties securing the CMBS Loan to 18. In connection with this transaction, the Company wrote-off net deferred costs of $0.3 million to loss on extinguishment of debt, net in the consolidated statements of operations. The CMBS Loan bears interest at a fixed rate of 4.971% and upon issuance was scheduled to mature on February 11, 2027.
The CMBS Loan requires monthly payments of interest only and, except as described below under “Loan Extension and Modification Agreement”, all principal is due at maturity.
The CMBS Loan is secured by, among other things, first priority mortgages and deeds of trust granted by the Mortgage Borrowers and encumbering the Mortgaged Properties.
The CMBS Loan may be prepaid in whole, but not in part, at any time, upon the satisfaction of certain terms and conditions set forth in the loan agreement governing the CMBS Loan (the “CMBS Loan Agreement”). Further, releases of individual properties are permitted in connection with an arm’s length third party sale upon repayment of the Release Price (as defined in the CMBS Loan Agreement) for the applicable individual property and subject to the satisfaction of other terms and conditions set forth in the CMBS Loan Agreement. Pursuant to the Loan Modification Agreement described below, the lender is entitled to 100% of the net proceeds of any sale to prepay the outstanding principal balance of the CMBS Loan.
In connection with the CMBS Loan Agreement, the Company (as the guarantor) delivered a customary non-recourse carveout guaranty to the Lender (the “Guaranty”), under which the Company guaranteed the obligations and liabilities of the Mortgage Borrowers to the Lender with respect to certain non-recourse carveout events and the circumstances under which the CMBS Loan will be fully recourse to the Mortgage Borrowers, and which includes requirements for the Company to maintain a net worth of no less than $355.0 million and liquid assets of no less than $10.0 million, in each case, exclusive of the values of the collateral for the CMBS Loan. As of June 30, 2026, the Company was in compliance with these financial covenants.
The Mortgage Borrowers and the Company also provided a customary environmental indemnity agreement, pursuant to which the Mortgage Borrowers and the Company agreed to protect, defend, indemnify, release and hold harmless the Lender from and against certain environmental liabilities relating to the Mortgaged Properties.
The CMBS Loan Agreement includes customary representations, warranties and covenants of the Mortgage Borrowers and the Company. The CMBS Loan Agreement also includes customary events of default, the occurrence of which, following any applicable grace period, would permit the Lender to, among other things, declare the principal, accrued interest and other obligations of the Mortgage Borrowers to be immediately due and payable and foreclose on the Mortgaged Properties.
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Loan Extension and Modification Agreement
On February 17, 2026, the Mortgage Borrowers entered into a loan extension and modification agreement with the lender under the CMBS Loan (“Loan Modification Agreement”). The Loan Modification Agreement includes the following terms and conditions, among others:
•The maturity date of the CMBS Loan has been extended two years until February 11, 2029, subject to two borrower extension options, with the first giving the Mortgage Borrowers the right to further extend the maturity date for an additional one year until February 11, 2030, and the second giving the Mortgage Borrowers the right to further extend the maturity date for an additional six months, until August 11, 2030, each upon satisfaction of certain conditions, including prepayment of the outstanding principal balance of the CMBS Loan by $2.5 million for the initial one-year additional extension and $10.0 million for the six-month additional extension.
•The fixed annual interest rate on the CMBS Loan of 4.971% is unchanged during all extension terms.
•Upon closing of the Loan Modification Agreement, the Mortgage Borrowers made a $2.05 million partial prepayment of the CMBS Loan.
•An all-purpose reserve was established by the lender into which all existing tenant improvement, leasing commission and other borrower reserve amounts were funded (a total of $37.7 million on the loan modification date) and the Mortgage Borrowers deposited an additional $7.74 million into the all-purpose reserve which was funded from borrowings under the Original Revolving Facility and such borrowings were refinanced with borrowings under the New Revolving Facility.
•The all-purpose reserve will be used to pay leasing costs and capital expenditures associated with the Mortgaged Properties, as well as to pay any property operating expenses not otherwise fully covered by revenues from the Mortgaged Properties.
•The Mortgage Borrowers have agreed that until maturity, the lender will sweep all monthly excess cash flows from the Mortgaged Properties, after payment of interest and property operating expenses. During the initial two-year extension period, the lender will apply one-half of such excess funds to prepay the outstanding principal balance of the CMBS Loan, and the other half to fund the all-purpose reserve. During any additional extension period, the lender will apply 75% of such excess funds to prepay the outstanding principal balance of the CMBS Loan, and the remaining 25% of such excess funds to fund the all-purpose reserve. The all-purpose reserve is subject to a cap of $15.0 million during the one-year additional extension period and $5.0 million during the six-month additional extension period. If the reserve cap has been reached, all additional or excess amounts will be utilized to prepay the outstanding principal balance of the CMBS Loan.
•The Company agreed to certain additional obligations that are recourse to the Company pursuant to the non-recourse carveout Guaranty described above.
San Ramon Loan
On November 7, 2024, an indirect subsidiary of the Company (the “San Ramon Borrower”) obtained an $18.0 million fixed rate mortgage note (the “San Ramon Loan”) from RGA Americas Investments LLC (the “San Ramon Lender”) secured by the fee simple interest in the San Ramon, California property acquired in September 2024 (the “San Ramon Property”). The San Ramon Loan bears interest at a fixed rate of 5.90% and matures on December 1, 2031.
The San Ramon Loan requires monthly payments of interest only and all principal is due at maturity and is generally not freely prepayable by the San Ramon Borrower until December 2026, and thereafter without payment of certain prepayment premiums and costs. In connection with the San Ramon Loan, the Company (as guarantor) delivered a customary non-recourse carveout guaranty, under which the Company guaranteed the obligations and liabilities of the San Ramon Borrower under the San Ramon Loan with respect to certain non-recourse carveout events and the circumstances under which the San Ramon Loan will be fully recourse to the San Ramon Borrower. The San Ramon Borrower and the Company also provided a customary environmental indemnity agreement, pursuant to which the San Ramon Borrower and the Company agreed to protect, defend, indemnify and hold harmless the San Ramon Lender from and against certain environmental liabilities related to the San Ramon Property.
The loan agreement governing the San Ramon Loan (the “San Ramon Loan Agreement”) includes customary representations, warranties and covenants of the San Ramon Borrower and the Company. The San Ramon Loan Agreement also includes customary events of default, the occurrence of which, following any applicable grace period, would permit the Lender
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to, among other things, declare the principal, accrued interest and other obligations of the San Ramon Borrower to be immediately due and payable and foreclose on the San Ramon Property.
Arch Street Warrants
On November 12, 2021, in connection with the Distribution, Orion OP entered into an amendment and restatement of the limited liability company agreement (the “LLCA”) for the Unconsolidated Joint Venture pursuant to which our partner in the Unconsolidated Joint Venture consented to the transfer of the equity interests of the Unconsolidated Joint Venture previously held by VEREIT Real Estate, L.P. to Orion OP.
Also on November 12, 2021, in connection with the entry into the LLCA, we granted our partner in the Unconsolidated Joint Venture and Arch Street Capital Partners warrants to purchase up to 1,120,000 shares of our common stock (the “Arch Street Warrants”). The Arch Street Warrants entitle the respective holders to purchase shares of our common stock at a price per share equal to $22.42, at any time. The Arch Street Warrants may be exercised, in whole or in part, through a cashless exercise, in which case the holder would receive upon such exercise the net number of shares of our common stock determined according to the formula set forth in the Arch Street Warrants. The Arch Street Warrants expire on the earlier of (a) ten years after issuance and (b) if the Unconsolidated Joint Venture is terminated, the later of the termination of the Unconsolidated Joint Venture and seven years after issuance.
In accordance with our obligation under the Arch Street Warrants, on November 2, 2022, we filed with the SEC a registration statement on Form S-3 for the registration, under the Securities Act, of the shares of our common stock issuable upon exercise of the Arch Street Warrants, and the registration statement was declared effective by the SEC on November 14, 2022. We will use our commercially reasonable efforts to maintain the effectiveness of the registration statement, and a current prospectus relating thereto, until the earlier of (a) the expiration of the Arch Street Warrants, or (b) the shares issuable upon such exercise become freely tradable under United States federal securities laws by anyone who is not an affiliate (as such term is defined in Rule 144 under the Securities Act (or any successor rule)) of us. The holders of the Arch Street Warrants will also remain subject to the ownership limitations pursuant to our organizational documents.
Distributions
We have elected to be taxed as a REIT for U.S. federal income tax purposes beginning with our taxable year ended December 31, 2021. We intend to make distributions to our stockholders to satisfy the requirements to maintain our qualification as a REIT.
During the six months ended June 30, 2026, the Company’s Board of Directors declared quarterly cash dividends on shares of the Company’s common stock as follows:

Declaration Date |  | Record Date |  | Paid Date |  | Distributions Per Share
March 4, 2026 |  | March 31, 2026 |  | April 15, 2026 |  | $ | 0.02 |
May 5, 2026 |  | June 30, 2026 |  | July 15, 2026 |  | $ | 0.02 |

On August 5, 2026, the Company’s Board of Directors declared a quarterly cash dividend of $0.02 per share for the third quarter of 2026, payable on October 15, 2026 to stockholders of record as of September 30, 2026.
Our dividend policy is established at the discretion of the Company’s Board of Directors and the amount and timing of dividends will depend upon cash generated by operating activities, the Company’s business, financial condition, results of operations, capital requirements, annual distribution requirements under the REIT provisions of the Code, and such other factors as the Company’s Board of Directors deems relevant. The Company’s Board of Directors may change our dividend policy at any time, and there can be no assurance as to the manner in which future dividends will be paid or that the current dividend level will be maintained in future periods.
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Universal Shelf Registration Statement
On November 10, 2025, the Company filed a new universal shelf registration statement on Form S-3 (the “Universal Shelf”), and the Universal Shelf was declared effective by the SEC on November 28, 2025. Pursuant to the Universal Shelf, the Company is able to offer and sell from time to time in multiple transactions, up to $750.0 million of the Company’s securities, including through “at the market” offering programs or firm commitment underwritten offerings. These securities may include shares of the Company’s common stock, shares of the Company’s preferred stock, depository shares representing interests in shares of the Company’s preferred stock, debt securities, warrants to purchase shares of the Company’s common stock or shares of the Company’s preferred stock and units consisting of two or more shares of common stock, shares of preferred stock, depository shares, debt securities and warrants. The Company has not established an “at the market” offering program under the Universal Shelf, although it may do so at any time in the future.
Cash Flow Analysis
The following table summarizes the changes in cash flows for the periods indicated below (in thousands):

|  | Six Months Ended June 30, |  | 2026 vs 2025 Increase/(Decrease) |
|  | 2026 |  | 2025 |  |
Net cash provided by operating activities |  | $ | 8,355 |  |  | $ | 9,316 |  |  | $ | (961) |  |
Net cash provided by investing activities |  | $ | 34,419 |  |  | $ | 3,489 |  |  | $ | 30,930 |  |
Net cash used in financing activities |  | $ | (39,884) |  |  | $ | (16,501) |  |  | $ | 23,383 |  |

Net cash provided by operating activities decreased $1.0 million during the six months ended June 30, 2026, compared to the same period in 2025, primarily due to net changes in accounts payable, accrued expenses and other liabilities, net and net changes in accounts receivable, net and other assets, net.
Net cash provided by investing activities increased $30.9 million during the six months ended June 30, 2026, compared to the same period in 2025. Net cash provided by investing activities during the six months ended June 30, 2026 includes proceeds from the sale of real estate assets of $81.4 million and payments received on the Member Loan of $1.1 million, offset by cash paid for capital expenditures and leasing costs of $33.7 million and the acquisition of two real estate assets for $14.8 million. Net cash provided by investing activities during the six months ended June 30, 2025 includes proceeds from the sale of real estate assets of $22.8 million and payments received on a note receivable of $2.5 million, offset by cash paid for capital expenditures and leasing costs of $15.6 million and the net funding of the Member Loan of $6.2 million.
Net cash used in financing activities increased $23.4 million during the six months ended June 30, 2026, compared to the same period in 2025, primarily due to principal payments on the CMBS Loan of $38.4 million and payments of deferred financing costs of $8.2 million, offset by a decrease in distributions paid to stockholders of $4.5 million and a net increase in Revolving Facility borrowings of $19.0 million. During the six months ended June 30, 2026, the Company had net draws on the Original Revolving Facility and New Revolving Facility of $10.0 million, as compared to net repayments on the Original Revolving Facility of $9.0 million during the same period in 2025.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
See information appearing under the caption “Liquidity and Capital Resources” appearing in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q.
Market Risk
The market risk associated with financial instruments and derivative financial instruments is the risk of loss from adverse changes in market prices or interest rates. Our market risk arises primarily from interest rate risk relating to variable-rate borrowings. To meet our short and long-term liquidity requirements, we borrow funds at a combination of fixed and variable rates. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to manage our overall borrowing costs. To achieve these objectives, from time to time, we may enter into interest rate hedge contracts such as swaps, caps, collars, treasury locks, options and forwards in order to mitigate our interest rate risk with respect to various debt instruments. We would not hold or issue these derivative contracts for trading or speculative purposes.
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Interest Rate Risk
As of June 30, 2026, our debt included fixed-rate debt, with a fair value and carrying value of $314.0 million and $334.6 million, respectively. Changes in market interest rates on our fixed-rate debt impact the fair value of the debt, but they have no impact on interest incurred or cash flow. For instance, if interest rates rise 100 basis points, and the fixed-rate debt balance remains constant, we expect the fair value of our debt to decrease, the same way the price of a bond declines as interest rates rise. The sensitivity analysis related to our fixed-rate debt assumes an immediate 100 basis point move in interest rates from June 30, 2026 levels, with all other variables held constant. A 100 basis point increase in market interest rates would result in a decrease in the fair value of our fixed-rate debt of $7.6 million. A 100 basis point decrease in market interest rates would result in an increase in the fair value of our fixed-rate debt of $7.9 million.
As of June 30, 2026, our debt included variable-rate debt with a fair value and carrying value of $102.0 million. As a result, we are subject to the potential impact of increases in interest rates, which could negatively impact our results of operations and cash flows. The sensitivity analysis related to our variable-rate debt assumes an immediate 100 basis point move in interest rates from June 30, 2026 levels and excludes the impact of the derivative instrument, with all other variables held constant. A 100 basis point increase or decrease in variable interest rates would result in a decrease or increase in the fair value of our variable-rate debt of less than $0.1 million and would increase or decrease our interest expense by $1.0 million annually.
As the information presented above includes only those exposures that existed as of June 30, 2026, it does not consider exposures or positions arising after that date. The information presented herein has limited predictive value. Future actual realized gains or losses with respect to interest rate fluctuations will depend on cumulative exposures, hedging strategies employed and the magnitude of the fluctuations.
These amounts were determined by considering the impact of hypothetical interest rate changes on our borrowing costs and assume no other changes in our capital structure.
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. See “Item 1. Business” and “Item 2. Properties” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. 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 and change in 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.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms, and that such information is accumulated and communicated to us, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that no controls and procedures, no matter how well designed and operated, can provide absolute assurance of achieving the desired control objectives.
As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, an evaluation was conducted under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2026. Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures, as of June 30, 2026, were effective at a reasonable assurance level.
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Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act of 1934) during the three months ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
As of the end of the period covered by this Quarterly Report on Form 10-Q, we are not a party to, and none of our properties are subject to, any material pending legal proceedings.
Item 1A. Risk Factors.
There have been no material changes to the risk factors previously disclosed in Part I, Item 1A. “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, except as set forth below.
We have made equity and Member Loan investments in the Unconsolidated Joint Venture which may not be recoverable.
We are invested in the Unconsolidated Joint Venture where we own a 20% minority, non-controlling interest and our partner owns the remaining 80% interest. We also made a Member Loan to the Unconsolidated Joint Venture to fund certain capital requirements of the joint venture. The six properties owned by the Unconsolidated Joint Venture are financed with non-recourse mortgage notes which are currently subject to a payment default that occurred at maturity. The ongoing default situation with respect to the mortgage notes has created significant uncertainty with regard to our recovery of our investments in the Unconsolidated Joint Venture. The agent for the mortgage lenders is currently sweeping cash flows from the properties and the lenders have various rights and remedies that are customary in a non-recourse mortgage financing, such as the right to collect default interest, institute a proceeding for foreclosure and apply for the appointment of a receiver. As of December 31, 2025, we recorded a $10.8 million impairment charge on our investment in the Unconsolidated Joint Venture and thereby wrote the carrying value of such investment to zero, and we have recorded a loan loss reserve for the entire $5.5 million gross amount receivable on the Member Loan. We are seeking to work with the lenders and our joint venture partner to sell the joint venture properties in an orderly manner, repay the mortgage notes and recover as much of the Member Loan and equity in the Unconsolidated Joint Venture as possible. We cannot provide any assurance that the Unconsolidated Joint Venture will be able to extend or refinance all or any portion of the mortgage debt obligations, complete the disposition of the six properties on favorable terms or in a timely manner, or at all, or that the lenders will not seek to enforce their remedies due to the ongoing payment default under the mortgage debt, and we may be unable to recover our original investment in the Unconsolidated Joint Venture, which we have written down to zero or, in the case of the Member Loan, fully reserved accordingly.
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities.
Recent Sales of Unregistered Securities
None.
Use of Proceeds from Sales of Registered Securities
Not applicable.
Issuer Purchases of Equity Securities
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
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Item 5. Other Information.
Rule 10b5-1 Trading Agreements
During the three months ended June 30, 2026, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(c) of Regulation S-K.
Item 6. Exhibits.
The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the period ended June 30, 2026 (and are numbered in accordance with Item 601 of Regulation S-K):

Exhibit No. |  | Description
10.1* |  | First Amendment to Credit Agreement, dated May 15, 2026, by and among Orion Properties Inc., as Parent, Orion Properties LP, as Borrower, the financial institutions party thereto, as Lenders, and Wells Fargo Bank, National Association, as Administrative Agent.
31.1* |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2* |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1* |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2* |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.SCH* |  | Inline XBRL Taxonomy Extension Schema Document.
101.CAL* |  | Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF* |  | Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB* |  | Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE* |  | Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104* |  | Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*).

____________________________________
* Filed herewith
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.

| Orion Properties Inc.
| By: | /s/ Gavin B. Brandon
| Gavin B. Brandon
| Chief Financial Officer, Executive Vice President and Treasurer

Dated: August 6, 2026
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