Orion Office REIT Q2 Earnings Call Highlights

Orion Office REIT NYSE: ONL reported second-quarter 2026 results that included stable Core FFO per share, lower leverage and updated full-year guidance, while the company continued its strategic review process and advanced portfolio repositioning efforts. Chief Executive Officer Paul McDowell said the strategic options review, announced in late January, remains underway with financial advisers Wells Fargo and JPMorgan. The company has conducted broad outreach to interested parties and made property and corporate information available through a virtual data room to parties that executed non-disclosure agreements.

“With several parties continuing to conduct diligence, we believe it is in shareholders’ interest to see that work through to its reasonable conclusion rather than set arbitrary deadlines,” McDowell said. He added that Orion cannot assure investors that the process will result in any particular transaction. In response to an analyst question, McDowell said the company will announce the outcome once the review concludes, including if it elects to continue pursuing its independent business plan.

Second-Quarter Results and Updated Outlook For the quarter ended June 30, Orion reported revenue of $34.3 million, compared with $37.3 million in the year-earlier period. Net income totaled $24.6 million, or $0.43 per share, and included a $28.8 million gain primarily related to the sale of two operating properties. Core FFO was $11.8 million, or $0.20 per share, essentially unchanged from the second quarter of 2025. Adjusted EBITDA was $17.2 million, compared with $18 million a year earlier. Chief Financial Officer Gavin Brandon said general and administrative expense declined to $4.6 million from $4.8 million, reflecting lower headcount through attrition and other actions. G&A included approximately $100,000 of strategic-review costs during the quarter and $200,000 year to date. Capital expenditures and leasing costs were $8.9 million, down from $15.6 million a year earlier. McDowell said the company had spent about $27 million year to date on a broad category of capital expenditures, including building and site upgrades, tenant improvements, lease incentives and leasing commissions. He said additional capital expenditures for the remainder of 2026 could range from $30 million to $40 million, an expectation incorporated into guidance. Orion raised and narrowed its 2026 Core FFO outlook to $0.72 to $0.77 per diluted share, from a prior range of $0.69 to $0.76. The company lowered its expected net debt-to-adjusted EBITDA range to 6.0x to 6.8x, from 6.5x to 7.3x, while reaffirming G&A guidance of $19.8 million to $20.8 million. Brandon attributed the updated guidance to reduced operating expenses, improved leasing expectations, lease termination income, and property tax appeals and refunds.