Orion Properties’ Leasing Pipeline and Success Rate Signals Don’t Match in 2025 Earnings Calls

Date of Call: Mar 6, 2026

Financials Results

• Revenue: $35.2M for Q4 2025, down from $38.4M in Q4 2024; $147.6M for full year 2025, down from $164.9M in 2024
• EPS: Core FFO of $0.19 per share for Q4 2025, up from $0.18 per share in Q4 2024; Core FFO of $0.78 per share for full year 2025, down from $1.01 in 2024 (includes $0.09 per share from lease terminations)

Guidance:

• Core FFO for 2026 expected to range from $0.69 to $0.76 per diluted share (2025 core FFO excluding lease termination income was $0.69).
• G&A for 2026 expected to range from $19.8M to $20.8M, in line or slightly better than 2025 excluding noncash compensation.
• Net debt to adjusted EBITDA for 2026 expected to range from 6.5x to 7.3x.

Business Commentary:

Leasing Activity and Portfolio Stabilization:

• Orion Properties completed over 900,000 square feet of leasing in 2025, on top of 1.1 million square feet leased in 2024, and signed an additional 183,000 square feet after year-end.
• The company's weighted average lease term (WALT) for new leases in 2025 averaged nearly 10 years, compared to the portfolio average of about 6 years.
• The significant leasing momentum is attributed to an improving market backdrop and successful leasing efforts that have enhanced the quality and stability of the lease roll.

Occupancy and Lease Expiration Improvement:

• Orion's lease rate improved by 600 basis points year-over-year to over 80% at year-end, and occupancy improved by 500 basis points to 78.7%.
• Scheduled lease expirations in 2026 are $11.4 million in annualized base rent, a reduction from $16.2 million in 2025 and $39.4 million in 2024.
• The improvement is due to successful leasing activities and strategic noncore dispositions, positioning the company to drive further occupancy gains and revenue stabilization.

Disposition Strategy and Proceeds Utilization:

• Orion sold 10 properties totaling 960,000 square feet for approximately $81 million in 2025 and an additional 516,000 square feet for over $13 million post-year-end.
• The sales are part of a strategy to shift the portfolio away from traditional suburban office properties towards Dedicated Use Assets (DUAs), which include medical, lab, R&D, flex, and government properties.
• The proceeds from these sales have been used to maintain reasonable debt levels, fund capital expenditures, and support leasing activities while also exploring opportunities for targeted acquisitions.

Balance Sheet and Debt Management:

• Orion refinanced its debt with a new $215 million secured revolving facility maturing in February 2029 and extended its $355 million CMBS loan to August 2030.
• The company's net debt to adjusted EBITDA was 6.8x at year-end, with total liquidity of $145.9 million.
• These actions provide financial flexibility to execute the business plan and manage leverage while supporting ongoing leasing efforts and capital recycling.

Core FFO Growth Outlook:

• Core FFO for 2026 is expected to range from $0.69 to $0.76 per diluted share, indicating a path for meaningful growth from a core FFO standpoint over the next several years.
• The growth is supported by the stabilization of the portfolio, improved leasing activity, and the strategic shift towards DUAs, which are expected to exhibit more durable cash flows.

Sentiment Analysis:

Overall Tone: Positive

• Management stated 'the progress we've made... has materially derisked and stabilized our portfolio, and we are finally set for meaningful growth from a core FFO standpoint over the next several years.' The tone was optimistic about leasing momentum, portfolio improvement, and expected FFO growth, despite acknowledging some market volatility.

Q&A:

• Question from Mitch Germain (Citizens JMP Securities, LLC): What is -- it seems like your leasing pipeline is almost 2x higher relative to last quarter. Is that just an overall conviction that you're seeing in office leasing? Is it really kind of the tide really turning a bit more positively here?
  Response: Attributed increase to both market improvement and portfolio size; noted leasing momentum is volatile quarter-over-quarter.

• Question from Mitch Germain (Citizens JMP Securities, LLC): And from a historical context... have you thought about like what the percentage is that you've seen historically in your ability to take the pipeline into a lease?
  Response: Did not calculate a specific rate but stated success rate has improved significantly over the past two years, with faster tenant decision-making.

• Question from Mitch Germain (Citizens JMP Securities, LLC): Last one for me, the Barilla transaction. Maybe... is that a broker that brought it to you?... what percentage of the asset is office versus nontraditional...
  Response: Transaction came through a broker; property is roughly half test/R&D and half office space.

• Question from Matthew Erdner (JonesTrading Institutional Services, LLC): It's good to see you guys back in the market acquiring properties. How should we think about the pace of the remaining... vacant properties being disposed of throughout the year? And then what should we look for you guys to kind of go out and acquire more properties?
  Response: Future vacant property sales will depend on vacancy generation and leasing confidence; capital from sales may be recycled into acquisitions, debt repayment, or tenant improvements.

• Question from Matthew Erdner (JonesTrading Institutional Services, LLC): And then I guess, just looking at the upcoming lease maturities... What kind of opportunity does this present to you guys in terms of being able to go out there and kind of grow these cash spreads and generate that FFO growth.
  Response: Expect core FFO to grow meaningfully as portfolio stabilizes; renewal rent trends are mixed but hope for continued increases as market recovers, though volatility is expected.

Contradiction Point 1

Cause of Leasing Pipeline Fluctuation

Contradiction on whether pipeline changes reflect weak demand or are due to portfolio size and lease closures.

Mitch Germain (Citizens JMP Securities, LLC) - Mitch Germain (Citizens JMP Securities, LLC)

2025Q4: The increase is due to both a small portfolio size, where leasing activity on a few properties can cause large quarterly movements, and an improving market backdrop. - Paul McDowell(CEO)

Why is the leasing pipeline nearly double compared to last quarter—is this due to increased conviction in office leasing or a positive shift in market conditions? - Mitch Germain (Citizens JMP Securities, LLC)

2025Q3: The pipeline decrease is not due to weak demand; improved demand continues. It is due to some properties moving from the pipeline to signed leases, and a smaller portfolio with less expected rollover next year due to sales of vacant space. - Paul McDowell(CEO)

Contradiction Point 2

Leasing Success Rate and Market Outlook

Contradiction between a specific, improving success rate and a general statement about volatile, mixed trends.

Mitch Germain (Citizens JMP Securities, LLC) - Mitch Germain (Citizens JMP Securities, LLC)

2025Q4: The success rate in turning inquiries into signed leases has improved significantly over the past two years, with 2025 leasing volume ... more than double that of 2023. - Paul McDowell(CEO)

Why is the leasing pipeline nearly double Q2's, and is this due to increased conviction in office leasing or a broader market improvement? - Mitch Germain (Citizens JMP Securities, LLC)

2025Q3: The pipeline decrease is not due to weak demand; improved demand continues. - Paul McDowell(CEO)

Contradiction Point 3

Leasing Success Rate Trends

Inconsistent portrayal of leasing success rate's historical status and recent improvement.

Mitch Germain (Citizens JMP Securities, LLC) - Mitch Germain (Citizens JMP Securities, LLC)

2025Q4: While not calculated specifically, the success rate has improved markedly... Tenant decision-making has accelerated. - Paul McDowell(CEO)

What is the historical success rate of converting the leasing pipeline to signed leases? - Paul H. McDowell (CEO, President & Director) [Implied from prepared remarks]

2025Q2: Leasing momentum is strong... contributing to an operating property occupancy of 77.4% and a lease rate of 79.1%. The weighted average lease term increased to 5.5 years. - Paul McDowell(CEO)

Contradiction Point 4

Future Vacant Property Disposition Strategy

Contradiction on the active evaluation and timing of vacant property sales.

Matthew Erdner (JonesTrading Institutional Services, LLC) - Matthew Erdner (JonesTrading Institutional Services, LLC)

2025Q4: Future vacant sales will be evaluated based on leasing confidence; some vacancy is held for lease-up. - Paul McDowell(CEO)

How should we think about the pace of disposing remaining vacant properties and the criteria for acquiring new properties throughout the year? - Paul H. McDowell (CEO, President & Director) [Implied from prepared remarks]

2025Q2: Orion is accelerating asset sales, closing on 4 vacant properties in Q2 and expecting to sell 5 more in H2. - Paul McDowell(CEO)

Contradiction Point 5

Tenant Decision-Making Timeline

Timeline lengthened then shortened, contradicting market stability.

Mitch Germain (Citizens JMP Securities, LLC, Research Division) - Mitch Germain (Citizens JMP Securities, LLC, Research Division)

2025Q4: Tenant decision-making timelines have shortened. - Paul McDowell(CEO)

Is your leasing pipeline almost double last quarter's due to overall conviction in office leasing or a more positive market shift? - Mitch Germain (Citizens Capital Markets)

2025Q1: Decision-making periods for tenants have remained long for the past six to twelve months... No significant change in decision speed has been noticed recently. - Paul McDowell(CEO)