- Total Revenue of $53.2 million -
- Core FFO of $28.0 million, or $0.49 Per
Share -
- Secured 178,000 Square Feet of Lease
Extensions and Expansions in Texas and Georgia -
- Reached Agreement to Sell Three Properties
for $13 million -
Orion Office REIT Inc. (NYSE: ONL) (“Orion” or the “Company”), a
fully-integrated real estate investment trust focused on the
ownership, acquisition and management of single-tenant net lease
mission-critical suburban office properties located across the
U.S., announced today its operating results for the first quarter
ended March 31, 2022. Orion commenced operations on November 12,
2021 after being spun-off by Realty Income Corporation.
“In our first full quarter operating as a publicly-listed
company, we continued to make strides in optimizing the portfolio
and positioning Orion for future success. We were able to secure
multiple early lease extensions and expansions and are in various
stages of negotiating more across the portfolio”, commented Paul
McDowell, Orion’s Chief Executive Officer and President.
“Furthermore, we continued to make progress in disposing of
non-core or vacant properties that we inherited in our November
2021 spin-off, while continuing to leverage our joint venture in
seeking to acquire value-enhancing assets. While our efforts to
improve the portfolio will take time, we remain energized about the
opportunity to transform and maximize our office net lease platform
and are steadfast in our commitment to deliver shareholder
value.”
First Quarter 2022 Financial and Operating Highlights
- Total revenue of $53.2 million
- Net Loss Attributable to Common Stockholders of $(9.9) million,
or $(0.17) per share
- Funds from Operations (“FFO”) of $26.7 million, or $0.47 per
share
- Core FFO of $28.0 million, or $0.49 per share
- EBITDA of $32.3 million, EBITDAre of $33.9 million and Adjusted
EBITDA of $34.9 million
Real Estate Portfolio Orion’s real estate portfolio
consists of 92 properties as well as a 20% ownership interest in a
joint venture comprising six properties. As of March 31, 2022, the
Company’s portfolio occupancy rate was 88.3%, with 67.0% of
annualized base rent derived from tenants with an investment grade
credit rating, and the portfolio’s weighted average remaining lease
term was 4.1 years.
Leasing Activity Orion believes that lease maturities and
vacant assets may represent a value creation opportunity in the
coming years for the Company. Orion will employ active asset
management strategies and leverage its tenant and broker
relationships to attract and retain high-quality creditworthy
tenants, drive re-leasing and renewal activity and maximize tenant
retention rates.
The Company had the following leasing activity during the
quarter ended March 31, 2022:
- A five-year extension for the Company’s entire 78,000 square
foot property in Augusta, Georgia;
- A two-year extension covering 54,000 square feet at the
Company’s property in Plano, Texas;
- A 41,000 square foot expansion with an existing tenant who now
occupies 92% of the building on an 11-year lease term at one of the
Company’s properties in The Woodlands, Texas
Orion also executed a 5.4-year extension covering 5,000 square
feet at the Company’s other property in The Woodlands, Texas.
Furthermore, Orion is in various stages of negotiation and
documentation for additional leases and renewals at multiple
properties.
On January 1, 2022, the leases with tenants at Orion’s
Northbrook, Illinois and Berkeley, Missouri properties expired as
scheduled, and those properties are currently vacant.
Acquisitions and Dispositions As previously disclosed,
Orion and Arch Street Capital Advisors have entered into a joint
venture focused on the acquisition of long-term net leased,
single-tenant office properties (the “Joint Venture”). Orion’s 20%
interest in the Joint Venture was assumed from Realty Income as
part of the Company’s spin-off.
Through March 31, 2022, the Joint Venture has acquired six
assets for approximately $227.1 million. Orion is actively
reviewing a number of potential property acquisitions for both its
balance sheet and the Joint Venture.
Orion has agreed to sell three assets, representing 185,000
square feet, for approximately $13.0 million.
Balance Sheet As of March 31, 2022, the Company has total
debt of $648.3 million, comprised of $175.0 million under the bank
term loan, $91.0 million under the Company’s $425.0
million-capacity revolving credit facility, $355.0 million under
the CMBS loan, and $27.3 million which represents Orion’s pro rata
share of indebtedness of the Joint Venture.
As previously disclosed, in February Orion refinanced its
short-term bridge loan with a $355.0 million five-year, 4.971%
fixed rate CMBS loan that is collateralized by 19 properties.
As of March 31, 2022, Orion had $353.2 million of liquidity,
comprised of $19.2 million cash on hand and $334.0 million of
undrawn availability on the Company’s revolving credit
facility.
Dividend On May 3, 2022, Orion’s Board of Directors
declared a quarterly cash dividend of $0.10 per share for the
second quarter of 2022, payable on July 15, 2022, to stockholders
of record as of June 30, 2022. The dividend was sized to permit
future growth by preserving meaningful free cash flow for
reinvestment into the current portfolio and for accretive
investments.
2022 Outlook The Company’s first quarter 2022 performance
is in line with expectations and our guidance for fiscal year 2022
remains unchanged. As a reminder, the Company estimates the
following guidance for fiscal year 2022:
Low
High
Core FFO per share
$1.66
-
$1.74
General and Administrative Expenses
$17 million
-
$18 million
Net Debt to Adjusted EBITDA
4.7x
-
5.5x
Webcast and Conference Call Information Orion will host a
webcast and conference call to review its financial results at
10:00 a.m. ET on Thursday, May 5, 2022. The call will be led by
Paul McDowell, Chief Executive Officer and President, and Gavin
Brandon, Chief Financial Officer, Executive Vice President and
Treasurer. To participate, the webcast may be accessed live by
visiting the “Investors” section of Orion’s website at
https://www.onlreit.com/investors. To join the conference call,
callers from the United States and Canada should dial
1-877-407-3982, and international callers should dial
1-201-493-6780, ten minutes prior to the scheduled call time.
Replay Information A replay of the call may be accessed
via the web by visiting the “Investors” section of Orion’s website
at https://www.onlreit.com/investors. The conference call replay
will be available after 1:00 p.m. ET on Thursday, May 5, 2022
through 11:59 a.m. ET on Thursday, May 19, 2022. To access the
replay, callers may dial 1-844-512-2921 (domestic) or
1-412-317-6671 (international) and use passcode, 13728684.
Non-GAAP Financial Measures To supplement the
presentation of the Company’s financial results prepared in
accordance with U.S. generally accepted accounting principles
("GAAP"), this press release and the accompanying quarterly
supplemental information as of and for the period ended March 31,
2022 contain certain financial measures that are not prepared in
accordance with GAAP, including Funds from Operations (“FFO”), Core
Funds from Operations (“Core FFO”), Funds Available for
Distribution (“FAD”), Earnings Before Interest, Taxes, Depreciation
and Amortization for Real Estate (“EBITDAre”), and Adjusted EBITDA.
Please see the attachments to this press release for how Orion
defines these non-GAAP financial measures and a reconciliation to
the most directly comparable GAAP measure.
About Orion Office REIT Inc. Orion Office REIT Inc.
(NYSE: ONL) is an internally-managed real estate investment trust
engaged in the ownership, acquisition and management of a
diversified portfolio of mission-critical and headquarters office
buildings located in high-quality suburban markets across the U.S.
and leased primarily on a single-tenant net lease basis to
creditworthy tenants. The company was founded on July 1, 2021,
spun-off from Realty Income (NYSE: O) on November 12, 2021 and
began trading on the New York Stock Exchange on November 15, 2021.
The company is headquartered in Phoenix, Arizona and has an office
in New York, New York. For additional information on the company
and its properties, please visit onlreit.com.
About the Data
This data and other information described herein are as of and
for the three months ended March 31, 2022, unless otherwise
indicated. Future performance may not be consistent with past
performance and is subject to change and inherent risks and
uncertainties. This information should be read in conjunction with
the financial statements and the Management's Discussion and
Analysis of Financial Condition and Results of Operations sections
contained in Orion Office REIT Inc.'s (the "Company," "Orion,"
"us," "our" and "we") Quarterly Report on Form 10-Q for the quarter
ended March 31, 2022 and Annual Report on Form 10-K for the year
ended December 31, 2021.
Definitions
Annualized Base Rent is the monthly aggregate cash amount
charged to tenants under our leases (including monthly base rent
receivables and certain contractually obligated reimbursements by
our tenants), as of the final date of the applicable period,
multiplied by 12, including the Company's pro rata share of such
amounts related to the Unconsolidated Joint Venture. Annualized
Base Rent is not indicative of future performance.
Cash Cap Rate for real estate properties equals the
estimated future 12-month Cash NOI, excluding any rent concessions
or abatements, at the time of the acquisition or disposition
divided by the purchase or sale price. For any properties acquired
or disposed of as a portfolio, the amount presented represents the
portfolio cash cap rate. For certain properties, the Cash Cap Rate
may be equal to future 12-month contractual rental revenue,
excluding any rent concessions or abatements, divided by the
purchase price or sale price, as the majority of the Company's
properties are subject to Net Leases.
CPI refers to a lease in which base rent is adjusted
based on changes in a consumer price index.
Double Net Lease ("NN") is a lease under which the tenant
agrees to pay all operating expenses associated with the property
(e.g., real estate taxes, insurance, maintenance), but excludes
some or all major repairs (e.g., roof, structure, parking lot, in
each case, as further defined in the applicable lease).
Earnings Before Interest, Taxes, Depreciation and
Amortization for Real Estate ("EBITDAre") and Adjusted
EBITDA
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
Earnings Before Interest, Taxes, Depreciation and Amortization for
Real Estate. Nareit defines EBITDAre as net income or loss computed
in accordance with GAAP, adjusted for interest expense, income tax
expense (benefit), depreciation and amortization, impairment
write-downs on real estate, gains or losses from disposition of
property and our pro rata share of EBITDAre adjustments related to
the Unconsolidated Joint Venture. We calculated EBITDAre in
accordance with Nareit's definition described above.
In addition to EBITDAre, we use Adjusted EBITDA as a non-GAAP
supplemental performance measure to evaluate the operating
performance of the Company. Adjusted EBITDA, as defined by the
Company, represents EBITDAre, modified to exclude non-routine items
such as acquisition-related expenses and transaction costs. We also
exclude certain non-cash items such as impairments of intangible
and right of use assets, gains or losses on derivatives, gains or
losses on the extinguishment or forgiveness of debt, amortization
of intangibles, above-market lease assets and deferred lease
incentives, net of amortization of below-market lease liabilities
and our pro rata share of Adjusted EBITDA adjustments related to
the Unconsolidated Joint Venture. Management believes that
excluding these costs from EBITDAre provides investors with
supplemental performance information that is consistent with the
performance models and analysis used by management, and provides
investors a view of the performance of our portfolio over time.
Therefore, EBITDAre and Adjusted EBITDA should not be considered as
an alternative to net income, as computed in accordance with GAAP.
The Company uses Adjusted EBITDA as one measure of its operating
performance when formulating corporate goals and evaluating the
effectiveness of the Company's strategies. EBITDAre and Adjusted
EBITDA may not be comparable to similarly titled measures of other
companies.
Occupancy Rate equals the sum of Leased Square Feet
divided by Rentable Square Feet and includes the Company's pro rata
share of such amounts related to the Unconsolidated Joint Venture,
in each case, as of an applicable date.
Enterprise Value equals the sum of the Implied Equity
Market Capitalization and Net Debt, in each case, as of an
applicable date.
Fixed Charge Coverage Ratio is (a) the sum of (i)
Interest Expense, excluding non-cash amortization and (ii) secured
debt principal amortization on Adjusted Principal Outstanding,
divided by (b) Adjusted EBITDA. Management believes that Fixed
Charge Coverage Ratio is a useful supplemental measure of our
ability to satisfy fixed financing obligations.
Fixed Dollar or Percent Increase refers to a lease that
requires contractual rent increases during the initial term of the
lease agreement. A Fixed Dollar or Percent Increase lease may
include a period of free rent at the beginning or end of the
lease.
Flat refers to a lease that requires equal rent payments,
with no contractual increases, throughout the initial term of the
lease agreement. A Flat Lease may include a period of free rent at
the beginning or end of the lease.
Funds Available for Distribution ("FAD")
Funds available for distribution, as defined by the Company,
represents Core FFO, as defined below, modified to exclude capital
expenditures, as well as certain non-cash items such as
amortization of deferred financing costs, amortization of above
market leases and deferred lease incentives, net of amortization of
below market lease liabilities, straight-line rental revenue,
equity-based compensation, equity in income or losses of the
Unconsolidated Joint Venture and our pro rata share of FAD
adjustments related to the Unconsolidated Joint Venture. Management
believes that adjusting these items from Core FFO provides
investors with supplemental performance information that is
consistent with the performance models and analysis used by
management and provides useful information regarding the Company's
ability to fund its dividend.
However, not all REITs calculate FAD and those that do may not
calculate FAD the same way, so comparisons with other REITs may not
be meaningful. FAD should not be considered as an alternative to
net income (loss) or cash flow provided by operating activities as
determined under GAAP.
Nareit Funds from Operations ("Nareit FFO" or "FFO") and Core
Funds from Operations ("Core FFO")
Due to certain unique operating characteristics of real estate
companies, as discussed below, Nareit 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 a REIT. FFO is not equivalent to our net
income or loss as determined under GAAP.
Nareit defines FFO as net income or loss computed in accordance
with 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 our pro rata 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 non-recurring or infrequent items such as acquisition-related
expenses, transaction costs and gains or losses on extinguishment
of swaps and/or debt. Core FFO allows for a comparison of the
performance of our operations with other publicly-traded REITs, as
Core FFO, or an equivalent measure, is routinely reported by
publicly-traded REITs, and we believe 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 defined by 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.
GAAP is an abbreviation for generally accepted accounting
principles in the United States.
Gross Lease is a lease under which the landlord is
responsible for all expenses associated with the property (e.g.,
real estate taxes, insurance, maintenance and repairs).
Gross Real Estate Investments represent total gross real
estate and related assets of Operating Properties and the Company's
pro rata share of such amounts related to properties owned by the
Unconsolidated Joint Venture, net of gross intangible lease
liabilities. Gross Real Estate Investments should not be considered
as an alternative to the Company's real estate investments balance
as determined in accordance with GAAP or any other GAAP financial
measures and should only be considered together with, and as a
supplement to, the Company's financial information prepared in
accordance with GAAP.
Implied Equity Market Capitalization equals shares of
common stock outstanding as of an applicable date, multiplied by
the closing sale price of the Company's stock as reported on the
New York Stock Exchange on such date.
Industry is derived from the Global Industry
Classification Standard ("GICS") Methodology that was developed by
Morgan Stanley Capital International ("MSCI") in collaboration with
S&P Dow Jones Indices to establish a global, accurate, complete
and widely accepted approach to defining industries and classifying
securities by industry.
Interest Coverage Ratio equals Adjusted EBITDA divided by
Interest Expense, excluding non-cash amortization. Management
believes that Interest Coverage Ratio is a useful supplemental
measure of our ability to service our debt obligations.
Interest Expense, excluding non-cash amortization is a
non-GAAP measure that represents interest expense incurred on the
outstanding principal balance of our debt and the Company's pro
rata share of the Unconsolidated Joint Venture's interest expense
incurred on its outstanding principal balance. This measure
excludes the amortization of deferred financing costs, premiums and
discounts, which is included in interest expense in accordance with
GAAP. Interest Expense, excluding non-cash amortization should not
be considered as an alternative to the Company's interest expense
as determined in accordance with GAAP or any other GAAP financial
measures and should only be considered together with and as a
supplement to the Company's financial information prepared in
accordance with GAAP.
Investment-Grade Tenants are those with a Standard &
Poor’s credit rating of BBB- or higher or a Moody’s credit rating
of Baa3 or higher. The ratings may reflect those assigned by
Standard & Poor’s or Moody’s to the lease guarantor or the
parent company, as applicable.
Leased Square Feet is Rentable Square Feet leased and
includes such amounts related to the Unconsolidated Joint
Venture.
Modified Gross Lease is a lease under which the landlord
is responsible for most expenses associated with the property
(e.g., real estate taxes, insurance, maintenance and repairs), but
passes through some operating expenses to the tenant.
Net Debt, Principal Outstanding and Adjusted Principal
Outstanding
Principal Outstanding is a non-GAAP measure that represents the
Company's outstanding principal debt balance, excluding certain
GAAP adjustments, such as premiums and discounts, financing and
issuance costs, and related accumulated amortization. Adjusted
Principal Outstanding includes the Company's pro rata share of the
Unconsolidated Joint Venture's outstanding principal debt balance.
We believe that the presentation of Principal Outstanding and
Adjusted Principal Outstanding, which show our contractual debt
obligations, provides useful information to investors to assess our
overall financial flexibility, capital structure and leverage.
Principal Outstanding and Adjusted Principal Outstanding should not
be considered as alternatives to the Company's consolidated debt
balance as determined in accordance with GAAP or any other GAAP
financial measures and should only be considered together with, and
as a supplement to, the Company's financial information prepared in
accordance with GAAP.
Net Debt is a non-GAAP measure used to show the Company's
Adjusted Principal Outstanding, less all cash and cash equivalents
and the Company's pro rata share of the Unconsolidated Joint
Venture's cash and cash equivalents. We believe that the
presentation of Net Debt provides useful information to investors
because our management reviews Net Debt as part of its management
of our overall liquidity, financial flexibility, capital structure
and leverage.
Net Debt Leverage Ratio equals Net Debt divided by Gross
Real Estate Investments.
Net Operating Income ("NOI") and Cash NOI
NOI is a non-GAAP performance measure used to evaluate the
operating performance of a real estate company. NOI represents
total revenues less property operating expenses and excludes fee
revenue earned for services to the Unconsolidated Joint Venture,
impairment, depreciation and amortization, general and
administrative expenses, acquisition-related expenses and
transaction costs. Cash NOI excludes the impact of certain GAAP
adjustments included in rental revenue, such as straight-line rent
adjustments and amortization of above-market intangible lease
assets and below-market lease intangible liabilities. Cash NOI
includes the pro rata share of such amounts from properties owned
by the Unconsolidated Joint Venture. It is management's view that
NOI and Cash NOI provide investors relevant and useful information
because it reflects only income and operating expense items that
are incurred at the property level and presents them on an
unleveraged basis. NOI and Cash NOI should not be considered as an
alternative to operating income in accordance with GAAP. Further,
NOI and Cash NOI may not be comparable to similarly titled measures
of other companies.
Operating Properties refers to all properties owned and
consolidated by the Company as of the applicable date.
Property Operating Expense includes reimbursable and
non-reimbursable costs to operate a property, including real estate
taxes, utilities, insurance, repairs, maintenance, legal, property
management fees, etc.
Rentable Square Feet is leasable square feet of Operating
Properties and the Company's pro rata share of leasable square feet
of properties owned by the Unconsolidated Joint Venture.
Triple Net Lease ("NNN") is a lease under which the
tenant agrees to pay all expenses associated with the property
(e.g., real estate taxes, insurance, maintenance and repairs in
accordance with the lease terms).
Unconsolidated Joint Venture includes the Company's
investment in the Arch Street unconsolidated joint venture formed
to acquire and own real estate properties.
Unencumbered Asset Ratio equals unencumbered Gross Real
Estate Investments divided by Gross Real Estate Investments.
Management believes that Unencumbered Asset Ratio is a useful
supplemental measure of our overall liquidity and leverage.
Weighted Average Remaining Lease Term is the number of
years remaining on each respective lease as of the applicable date,
weighted based on Annualized Base Rent and includes the years
remaining on each of the respective leases of the Unconsolidated
Joint Venture, weighted based on the Company's pro rata share of
Annualized Base Rent related to the Unconsolidated Joint
Venture.
Forward-Looking Statements
Information set forth in this press release contains
“forward-looking statements” which reflect the Company's
expectations and projections regarding future events and plans, the
Company's future financial condition, results of operations,
liquidity and business, including leasing and occupancy,
acquisitions, dispositions, rent receipts, the payment of future
dividends, the Company’s future growth and the impact of the
coronavirus (COVID-19) on the Company's business. 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 the Company 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 the Company's business, financial condition, liquidity
and results of operations to differ materially from those expressed
or implied in the forward-looking statements. Further, information
regarding historical rent collections should not serve as an
indication of future rent collections.
The following factors, among others, could cause actual results
to differ materially from those set forth in the forward-looking
statements:
- the risk of rising interest rates, including that our borrowing
costs may increase and we may be unable to refinance our debt
obligations on favorable terms or at all;
- the risk of inflation, including that our operating costs, such
as insurance premiums, utilities, real estate taxes and capital
expenditures and repair and maintenance costs, may rise;
- conditions associated with the global market, including an
oversupply of office space, client credit risk and general economic
conditions;
- the extent to which the ongoing COVID-19 pandemic or any future
pandemic or outbreak of a highly infectious or contagious disease
or fear of such pandemics or outbreaks impacts our business,
operating results, financial condition and prospects, which is
highly uncertain and cannot be predicted with confidence, including
the scope, severity and duration of the COVID-19 pandemic and its
impact on the U.S. economy and potential changes in client behavior
that could adversely affect the use of and demand for office
space;
- our ability to acquire new properties and sell non-core assets
on favorable terms and in a timely manner, or at all;
- our ability to comply with the terms of our credit agreements
or to meet the debt obligations on certain of our properties;
- our ability to access the capital markets to raise additional
equity or refinance maturing debt on favorable terms 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;
- the risk of client defaults on their lease obligations, which
are heightened due to our focus on single tenant properties;
- our ability to renew leases with existing clients or re-let
space to new clients on favorable terms or at all;
- the cost of rent concessions, client improvement allowances and
leasing commissions;
- the potential for termination of existing leases pursuant to
client termination rights;
- the amount, growth and relative inelasticity of our
expenses;
- risks associated with the ownership and development of real
property;
- risks associated with our joint venture with an affiliate of
Arch Street Capital Partners and any potential future equity
investments;
- our ability to close pending real estate transactions, which
may be subject to conditions that are outside of our control;
- risks associated with acquisitions, including the integration
of the office portfolios of Realty Income and VEREIT into
Orion;
- Realty Income’s inability or failure to perform under the
various transaction agreements effecting the Separation and the
Distribution;
- risks associated with the fact that we have a limited operating
history and our future performance is difficult to predict;
- our properties may be subject to impairment charges;
- risks resulting from losses in excess or insured limits or
uninsured losses; and
- risks associated with the potential volatility of our common
stock.
Additional factors that may affect future results are contained
in the Company's filings with the SEC, which are available at the
SEC’s website at www.sec.gov. The Company disclaims 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
required by law.
ORION OFFICE REIT INC.
CONSOLIDATED BALANCE
SHEETS
(In thousands, except for share
and per share data) (Unaudited)
March 31, 2022
December 31, 2021
Assets
Real estate investments, at cost:
Land
$
254,786
$
250,194
Buildings, fixtures and improvements
1,231,469
1,231,551
Total real estate investments, at cost
1,486,255
1,481,745
Less: accumulated depreciation and
amortization
137,217
128,109
Total real estate investments, net
1,349,038
1,353,636
Accounts receivable, net
22,032
17,916
Intangible lease assets, net
272,623
298,107
Cash and cash equivalents
18,585
29,318
Other assets, net
92,671
60,501
Total assets
$
1,754,949
$
1,759,478
Liabilities and Equity
Bridge facility, net
$
—
$
354,357
Mortgages payable, net
351,648
—
Credit facility term loan, net
172,793
172,490
Credit facility revolver
91,000
90,000
Accounts payable and accrued expenses
17,929
17,379
Below-market lease liabilities, net
18,993
20,609
Distributions payable
5,663
—
Other liabilities, net
19,897
16,355
Total liabilities
677,923
671,190
Common stock
57
57
Additional paid-in capital
1,145,548
1,145,278
Accumulated other comprehensive income
(loss)
4,356
299
Accumulated deficit (Total)
(74,328
)
(58,715
)
Total stockholders' equity
1,075,633
1,086,919
Non-controlling interests
1,393
1,369
Total equity
1,077,026
1,088,288
Total liabilities and equity
$
1,754,949
$
1,759,478
ORION OFFICE REIT INC.
CONSOLIDATED STATEMENT OF
OPERATIONS
(In thousands, except for share
and per share data) (Unaudited)
Three Months Ended
March 31, 2022
Revenues:
Rental
$
53,017
Fee income from unconsolidated joint
venture
189
Total revenues
53,206
Operating expenses:
Property operating
15,314
General and administrative
3,517
Depreciation and amortization
34,353
Impairments
1,602
Acquisition-related
63
Transaction costs
756
Total operating expenses
55,605
Other (expense) income:
Interest expense
(6,847
)
Loss on extinguishment and forgiveness of
debt, net
(468
)
Other income, net
39
Equity in income of unconsolidated joint
venture
(41
)
Total other (expenses) income, net
(7,317
)
Loss before taxes
(9,716
)
Provision for income taxes
(166
)
Net loss
(9,882
)
Net income attributable to non-controlling
interest
(24
)
Net loss attributable to common
stockholders
$
(9,906
)
Weighted-average shares outstanding -
basic and diluted
56,626
Basic and diluted net (loss) income per
share attributable to common stockholders
$
(0.17
)
ORION OFFICE REIT INC.
FFO, CORE FFO and FAD
(In thousands, except for share
and per share data) (Unaudited)
Three Months Ended
March 31, 2022
Net loss
$
(9,906
)
Depreciation and amortization of real
estate assets
34,337
Impairment of real estate
1,602
Proportionate share of Unconsolidated
Joint Venture adjustments for items above, as applicable
680
FFO attributable to common
stockholders
$
26,713
Adjustments:
Acquisition-related expenses
63
Transaction costs
756
Loss on extinguishment of debt, net
468
Core funds from operations attributable
to common stockholders
$
28,000
Adjustments:
Amortization of deferred financing
costs
1,171
Amortization of above and below market
leases and deferred lease incentives, net
(320
)
Straight-line rental revenue
(896
)
Equity-Based Compensation
270
Equity in income of Unconsolidated Joint
Venture
41
Capital expenditures and leasing costs
(2,401
)
Other adjustments, net
63
Proportionate share of Unconsolidated
Joint Venture adjustments for the items above, as applicable
9
Funds available for
distribution
$
25,937
Weighted-average shares outstanding -
basic and diluted
56,626
FFO attributable to common stockholders
per share
$
0.47
Core FFO attributable to common
stockholders per share
$
0.49
FAD per share
$
0.46
_______________________________________________
(1)
Refer to the Statement of
Operations for basic and diluted net income (loss) per share
attributable to common stockholders.
ORION OFFICE REIT INC.
EBITDA, EBITDAre AND ADJUSTED
EBITDA
(In thousands) (Unaudited)
Three Months Ended
March 31, 2022
Net loss
$
(9,906
)
Adjustments:
Interest expense
6,847
Depreciation and amortization
34,353
Provision for income taxes
166
Proportionate share of Unconsolidated
Joint Venture adjustments for items above, as applicable
862
EBITDA
$
32,322
Impairment of real estate
1,602
EBITDAre
$
33,924
Acquisition-related expenses
63
Transaction costs
756
Amortization of above and below market
leases and deferred lease incentives, net
(320
)
Loss on extinguishment and forgiveness of
debt, net
468
Proportionate share of Unconsolidated
Joint Venture adjustments for items above, as applicable
(7
)
Adjusted EBITDA
$
34,884
ORION OFFICE REIT INC.
FINANCIAL AND OPERATIONS
STATISTICS AND RATIOS
(Dollars in thousands)
(Unaudited)
Three Months Ended
March 31, 2022
Interest expense - as reported
$
6,847
Adjustments:
Amortization of deferred financing costs
and other non-cash charges
(1,171
)
Proportionate share of Unconsolidated
Joint Venture Interest Expense, excluding non-cash amortization
115
Interest Expense, excluding non-cash
amortization
$
5,791
Interest Coverage Ratio
March 31, 2022
Interest Expense, excluding non-cash
amortization (1)
$
5,791
Adjusted EBITDA (2)
34,884
Interest Coverage Ratio
6.02x
Fixed Charge Coverage Ratio
Interest Expense, excluding non-cash
amortization (1)
$
5,791
Secured debt principal amortization
—
Total fixed charges
5,791
Adjusted EBITDA (2)
34,884
Fixed Charge Coverage Ratio
6.02x
_______________________________________________
(1)
Refer to the Statement of
Operations for interest expense calculated in accordance with GAAP
and to the table above for the required reconciliation to the most
directly comparable GAAP financial measure.
(2)
Refer to the Statement of
Operations for net income calculated in accordance with GAAP and to
the EBITDAre and Adjusted EBITDA tables above for the required
reconciliation to the most directly comparable GAAP financial
measure.
Net Debt
March 31, 2022
Mortgages payable, net
$
351,648
Credit facility term loan, net
172,793
Credit facility revolver
91,000
Total debt - as reported
615,441
Deferred financing costs, net
5,559
Principal Outstanding
621,000
Proportionate share of Unconsolidated
Joint Venture Principal Outstanding
27,332
Adjusted Principal Outstanding
$
648,332
Cash and cash equivalents
(18,585
)
Proportionate share of Unconsolidated
Joint Venture cash and cash equivalents
(652
)
Net Debt
$
629,095
March 31, 2022
Total real estate investments, at cost
- as reported
$
1,486,255
Adjustments:
Gross intangible lease assets
370,981
Gross intangible lease liabilities
(35,068
)
Proportionate share of Unconsolidated
Joint Venture Gross Real Estate Investments
45,413
Gross Real Estate Investments
$
1,867,581
March 31, 2022
Net Debt Ratios
Net Debt (1)
$
629,095
Gross Real Estate Investments (1)
1,867,581
Net Debt Leverage Ratio
33.7
%
Unencumbered Assets/Real Estate
Assets
Unencumbered Gross Real Estate Investments
(1)
$
1,267,128
Gross Real Estate Investments (1)
1,867,581
Unencumbered Asset Ratio
67.8
%
_______________________________________________
(1)
Refer to the Balance Sheet for
total debt and real estate investments, at cost calculated in
accordance with GAAP and to the table above for the required
reconciliation to the most directly comparable GAAP financial
measure.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220504006094/en/
Investor Relations: Email: investors@onlreit.com
Phone: 602-675-0338
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