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DATE

Friday, Aug. 7, 2026, at 10 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer-Paul H. McDowell
• Chief Financial Officer-Gavin Brandon
• Chief Operating Officer-Christopher Haviland Day
• General Counsel-Paul C. Hughes

TAKEAWAYS

• Total Revenue -- $34.3 million, representing a decrease from $37.3 million in the prior year quarter.
• Core FFO -- $0.20 per diluted share, remaining flat compared to the second quarter of 2025.
• Net Income -- $0.43 per diluted share, driven primarily by a $28.8 million gain on real estate dispositions.
• Adjusted EBITDA -- $17.2 million, compared to $18.0 million in the same quarter of the prior year.
• Year-to-Date Leasing -- 673,000 square feet, reflecting steady progress against the company's stabilization goals.
• Quarterly Leasing -- 202,000 square feet, completed during the second quarter.
• Post-Quarter Leasing -- 116,000 square feet, including the company's first new lease at its Tulsa property.
• Occupancy Rate -- 78.1%, increasing from 76.8% in the second quarter of 2025 despite scheduled move-outs.
• Weighted Average Lease Term (WALT) -- 6.2 years, extending from 5.5 years at the end of the second quarter of 2025.
• Renewal Rent Spreads -- negative 7.7% for starting rents but positive 2.1% when comparing current ending rents to new ending rents in the second quarter.
• Year-to-Date Rent Spreads -- negative 0.2% for renewals and positive 7.1% when comparing current ending rents to new ending rents.
• Disposition Proceeds -- $83.7 million, generated from the sale of four properties and a 37.4-acre campus in Deerfield, Illinois.
• Debt Reduction -- $60.7 million, including a $35.7 million prepayment on the CMBS loan during the second quarter.
• Net Debt to Adjusted EBITDA -- 5.4x, improving by nearly one full turn from 6.4x in the prior year quarter.
• Dedicated Use Assets (DUA) -- 38.7% of annualized base rent, increasing from 32.6% a year ago as the company shifts focus away from traditional office space.
• Interest Expense Reduction -- $700,000 for the second quarter and $1.6 million year to date compared to 2025.
• Operating Expense Savings -- $12 million annually, estimated to be saved following the sale of vacant or near-term vacant properties.
• Total Liquidity -- $176.5 million, comprised of $63.5 million in cash and $113.0 million in available revolver capacity.
• Full-Year Core FFO Guidance -- $0.72 to $0.77 per diluted share, raised from the previous range of $0.69 to $0.76.
• Full-Year Leverage Guidance -- 6.0 to 6.8x Net Debt to Adjusted EBITDA, lowered from the previous range of 6.5 to 7.3x.
• G&A Expense Guidance -- $19.8 million to $20.8 million, remaining unchanged from previous estimates.
• Future CapEx Outlook -- $30 million to $40 million, expected for the remainder of the year to support building updates and tenant improvements.

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RISKS

• McDowell stated, "we can offer no assurance that this process will result in Orion concluding any particular transaction," regarding the strategic review initiated in January.
• Day warned that for one asset under contract for sale, "the government's looking to downsize on that asset," creating risk around the future government tenancy.
• Management noted that the unconsolidated joint venture mortgage debt "experienced a payment default at maturity in February 2026," and lenders have implemented an excess cash flow sweep.

SUMMARY

Management of Orion Properties Inc. (ONL -0.18%) reported on the company's ongoing strategic review process, which has included broad outreach to solicit transaction proposals from third parties. The company focused on portfolio stabilization through increased leasing velocity and the disposition of noncore assets to facilitate debt reduction. The company stated its intention to continue shifting its portfolio concentration toward dedicated use assets while managing property operating expenses through the sale of high-carrying-cost vacant properties. Management confirmed that its 2026 financial guidance was updated to reflect improved leasing expectations and successful expense reductions.

• CEO McDowell noted that the strategic review remains ongoing as the company believes it is in "shareholders' interest to see that work through to its reasonable conclusion rather than set arbitrary deadlines."
• The company reported that its leasing pipeline remains strong at over 1.1 million square feet, or 17% of the total portfolio, currently in discussion or documentation stages.
• CEO McDowell attributed the improvement in leverage to $84 million in gross proceeds from first-half dispositions, which allowed for the repayment of $61 million in debt.
• CFO Brandon stated that the sale of vacant properties in 2025 and 2026 is "estimated to save more than $12 million in annual carrying costs."
• Regarding the dedicated use asset strategy, CEO McDowell noted that long-term goals are to have "well more than a majority of the portfolio" in these assets, though the timeline depends on future capital access.
• COO Day addressed the vacant property strategy, stating the company evaluates assets based on whether they have the "long term demand factors" to justify additional leasing investment.

INDUSTRY GLOSSARY

• Annualized Base Rent (ABR): The monthly aggregate cash rent charged to tenants multiplied by 12.
• CMBS Loan: A commercial mortgage-backed security loan, which is typically a non-recourse debt instrument secured by a specific pool of real estate assets.
• Core FFO: A non-GAAP measure that adjusts Funds From Operations by excluding non-routine items like transaction expenses and non-cash charges.
• Dedicated Use Assets (DUA): Specialized property types such as medical, lab, government, or R&D facilities that are not easily replicated in a work-from-home or generic office setting.
• Rent Spreads: The percentage difference between the rent on a newly signed lease and the rent on the previous lease for the same space.

Full Conference Call Transcript

Operator: Greetings. Welcome to Orion Properties Second Quarter 26 Earnings Call. As a reminder, this conference is being recorded. I would now like to turn the call over to Paul C. Hughes, general counsel.

Paul C. Hughes: Thank you.

Operator: You may begin.

Paul C. Hughes: Thank you, and good morning, everyone. Yesterday, Orion released its results for the quarter ended 06/30/2026, filed its Form 10 Q with the Securities and Exchange Commission and posted its earnings supplement to its website at onlreit.com. During the call today, we will be discussing Orion's guidance for calendar year 2026 and other forward looking statements. Which are based on management's current expectations and are subject to certain risks that could cause actual results to differ materially from our estimates. These risks are discussed in our earnings release as well as in our Form 10 Q and other SEC filings. And Orion undertakes no duty to update any forward looking statements made during this call.

We will also be discussing non GAAP financial measures such as funds from operations or FFO and core funds from operations or core FFO. These non GAAP financial measures are not a substitute for financial information presented in accordance with GAAP and Orion's earnings release and supplement include a reconciliation of our non GAAP financial measures to the most directly comparable GAAP measure. Hosting the call today are Orion's Chief Executive Officer, Paul H. McDowell and Chief Financial Officer, Gavin Brandon. Joining us for the Q and A session will be Christopher Haviland Day, our Chief Operating Officer. With that, I will turn the call over to Paul H. McDowell.

Paul H. McDowell: Good morning, everyone. And thank you for joining us on Orion's second quarter earnings call. I will start with a few words on our continuing strategic options process that began in late January. Since that announcement, in concert with our financial advisors at Wells Fargo and JPMorgan, we have conducted a robust effort including broad outreach to solicit proposals from interested parties. Those efforts have been supported by a virtual data room containing comprehensive property and corporate data for those participants that sign nondisclosure 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.

Rest assured, we are moving as expeditiously as possible although we can offer no assurance that this process will result in Orion concluding any particular transaction. Beyond the ongoing strategic review efforts, the team has continued to execute and deliver strong results against our business plan, which is reflected in our second quarter results. Our strategy remains centered on 4 priorities. Stabilizing the portfolio through increased leasing activity, the timely disposition of noncore assets, prudent leverage management, and selective capital recycling into dedicated use assets. As we have consistently communicated, we expect these efforts to drive core FFO per share growth in 2026 and beyond while maintaining prudent levels of leverage.

So far this year, we have been successful on each of those priorities. From a leasing perspective, we have completed 673 thousand square feet of leasing including 202 thousand square feet completed in the second quarter and a 116 thousand square feet after quarter end including our first new lease at our Tulsa property. The weighted average lease term for the consolidated portfolio stands at 6.2 years at the end of the second quarter up from 5.5 years at the end of the second quarter last year continuing our steady improvement of this crucial metric. Cash rent spreads on second quarter renewals were down 7.7% when comparing ending rents in the current term to starting rents in the new term.

However, rent spreads are up 2.1% when comparing current ending rents to new ending rents driven by escalations over the new lease term. For the year to date period, cash rent spreads are very slightly down by 0.2% on renewals and up 7.1% when comparing current ending rents to new ending rents. Although volatile, leasing concessions are so far trending lower this year than last on a per square foot basis.

Due to a few scheduled move outs, and select opportunistic dispositions, offset to some extent by our leasing efforts, our consolidated portfolio occupancy rate of 78.1% at the end of the second quarter was down as expected from the end of the first quarter but up from 76.8% at the end of the second quarter of last year. As we have said many times, rent spreads and occupancy rates can and will be volatile from quarter to quarter given our largely single tenant portfolio though we remain positive about the overall trends, which continue to see steady improvement.

Beyond the leasing completed year to date, our pipeline remains quite strong despite our smaller size at over 1.1 million square feet or over 17% of the total portfolio that is in either discussion or documentation stage including a substantial number of new long term leases for currently vacant space and some full building renewals. And as we look out, we continue to see improving demand for our and we are working hard to move forward on executing as much leasing as possible. The key message is that we continue to be quite pleased with our leasing velocity so far this year. Turning to dispositions.

We have been very successful this year and we have primarily utilized proceeds from opportunistic asset sale activity to continue to deleverage ending the quarter with net debt to annualized adjusted EBITDA at 5.4x almost a full turn better than last quarter and the same quarter a year ago. Specifically, during the first half of the year, we generated gross proceeds of $84 million on the sale of 4 properties plus the 37.4 acre Deerfield, Illinois campus.

Gavin Brandon: The second quarter sales activity generated an aggregate gross sales price of $70.6 million and included 2 strategic dispositions. 1 of which was sold to the existing tenant at a 5.6% cash capitalization rate and the other was a recently vacated asset sold to an adjacent user at an implied 5% cash capitalization rate on expiring rent. These sales have allowed us to repay roughly $61 million of debt including over $35 million on our CMBS loan in the second quarter. Our debt repayment and refinance efforts have also allowed us to steadily reduce interest expense by $700 thousand for the second quarter $1.6 million for the year to date period compared to the same period in 2025.

Paul H. McDowell: On another very positive note, the average sale price per square foot has steadily increased on the sale of vacant properties over the past year or so.

Gavin Brandon: These transactions continue to demonstrate our ability to monetize noncore assets and redeploy capital while improving the overall quality and durability of our remaining portfolio. Our continued focus on selling properties with re leasing prospects and high carrying costs has allowed us to continue to materially reduce property operating expenses. For example, our 2025 and 2026 vacant or near term vacant property sales are estimated to save more than $12 million in annual carrying costs.

Paul H. McDowell: These efforts have already contributed to an improvement in property operating costs of $3.4 million for the second quarter $5.1 million for the year to date period compared to the same periods in 2025. We remain committed to shifting our portfolio concentration toward dedicated use assets where our tenants perform work that cannot be replicated from home or relocated to a generic office setting, and away from traditional suburban office properties. These property types include medical, lab, R&D, flex, and government properties all of which we already own.

Gavin Brandon: At quarter end, these dedicated use assets or DUA represent 38.7% of annualized base rent of our consolidated portfolio compared to 37.1% at the end of last quarter and 32.6% at the end of the second quarter of 25, reflecting our sales of traditional office assets, and our purchase earlier this year of the Barilla DUA property. We expect this percentage to continue increasing over time through continued disposition activity of traditional office and targeted acquisitions of DUA properties.

Paul H. McDowell: Before I close, I do want to take a moment to reflect on the very significant progress we have made in Orion.

Gavin Brandon: Over the past 2 years, we have averaged about 1 million square feet of leasing per year, and are on track to lease about that much again this year. We have sold 39 properties since our spin, totaling more than 4.2 million square feet. Reducing property operating expenses by millions per year. We continue to work to manage overhead, significantly reducing headcount over the past 2 years including at the executive level. We successfully refinanced and extended both our revolving debt and our CMBS debt this year. We continue to manage leverage and have steadily reduced debt by $183 million since the spin. These combined efforts are showing up in our key metrics.

Such as WALT, occupancy, net debt to adjusted EBITDA, and G&A all of which are improved over the same period a year ago. Finally, we have significant confidence in our ability to meaningfully grow core FFO from here. For the balance of 2026, our operational focus remains on improving portfolio quality, lengthening WALT, renewing tenants, filling or selling vacant space, and prudently managing expenses and leverage as we work to maximize Orion's value for investors, and potential strategic partners. I firmly believe that if we continue to execute on our business plan, the market will finally begin to recognize the meaningful intrinsic value of this company that is not reflected in our current discounted valuation.

With that, I will turn the call over to Gavin.

Paul H. McDowell: Thanks, Paul.

Gavin Brandon: For the second quarter of 26 compared to the second quarter of 25, Orion had total revenues of $34.3 million compared to $37.3 million. Net income of $24.6 million or $0.43 per share for the second quarter of 26 and included a gain of $28.8 million primarily related to the opportunistic sale of 2 OR operating properties during the quarter. This nonrecurring gain does not impact our core FFO results which were $11.8 million or $0.20 per share basically flat compared to the same quarter in 2025. Adjusted EBITDA was $17.2 million versus $18 million in the same quarter of 2025.

G&A in the second quarter improved to $4.6 million compared to $4.8 million in the same quarter of 2025 as we benefited from the decision to continue to lower headcount through attrition and other means. G&A expense includes the ongoing cost related to the strategic review which we equate to approximately $100 thousand in the second quarter of 26 and $200 thousand year to date. CapEx and leasing costs in the second quarter were $8.9 million compared to $15.6 million in the same quarter of 25. As we have previously discussed, CapEx timing is dependent on when leases are executed and work is completed on properties. Turning to the balance sheet.

Our net debt to annualized adjusted EBITDA was 5.4 times at quarter end compared to 6.4x at the end of the second quarter of 25. As of June 30, we had total liquidity of $177 million, comprised of $63.5 million of cash and cash equivalents and restricted cash, and $113 million of available capacity under our credit facility revolver. Given our strong efforts to sell noncore and select operating properties, we have significantly lowered debt outstanding and extended maturities we ended the quarter with $436.6 million of outstanding debt compared to $483 million a year ago. Excluding a proportionate share of the unconsolidated joint venture's debt.

Our next significant maturity is not until February 2028, which we have an option to extend until February 2029. Our net debt to gross real estate assets was 27.9% at the end of the quarter compared to 29.5% a year ago. On August 5, Orion's Board of Directors declared a quarterly cash dividend of $0.02 per share for the third quarter of 26 payable on October 15, 2026 to stockholders on record as of September 30, 2026. Moving to our outlook for 2026. We are narrowing and raising the range for our core FFO lowering the range for our net debt to adjusted EBITDA, and reaffirming our expectations for G&A.

Core FFO for the year is now expected to range from $0.72 to $0.77 per diluted share up from our previously affirmed range of $0.69 to $0.76 per diluted share. Net debt to adjusted EBITDA is now expected to range from 6 to 6.8x, down from our previous range of 6.5 to 7.3x. These improvements in our guidance for the year are driven by several factors including recurring items such as actively reducing operating expenses and improved leasing expectations, as well as onetime items such as lease termination income and property tax appeals and refunds. Our G&A range of $19.8 million to $20.8 million is unchanged. With that, we will open the line for questions. Operator?

Operator: Thank you. You may press 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset Our first question is from Mitch Germain with Citizens JMP. Please proceed.

Mitch Germain: Congrats on the quarter. 1 asset for sale today, it seems like, I am curious about your decision to potentially sell an asset leased to the government, which kind of meets your criteria for the existing portfolio.

Christopher Haviland Day: Correct. Hey, Mitch. This is Christopher. Thanks for dialing in. The asset that we are under contract to sell it is 1 where the government's looking to downsize on that asset. So there is some risk around the government tenancy in that 1 asset. Plus it is in a very remote area, and it is 1 that you know, we analyze the disposition of it and thought that is the best overall outcome for that asset.

Mitch Germain: that is super helpful. There are 4 vacant assets in the portfolio. it is pretty amazing. I think at 1 point, you had 11 or 12. Tell me about the decision and process that you guys go through regarding a either to sell or to release.

Paul H. McDowell: Yeah. I mean, Mitch, it is been a pretty consistent process. That is you know, and it you know, it has evolved over time, as you might imagine. But, you know, we sort of look really hard at the asset and say, is this an asset that we think it is worth putting money into and leasing up over time, or is this an asset that is going to cost us either a lot of money to retenant or really just does not have in our view, the long term demand factors. Present. So you know, you we have obviously sold a lot of vacant assets, but we have also been pretty successful in leasing some assets up. You know?

For example, we thought it made sense to put money into our asset in Parsippany, New Jersey. We put that money in. That asset is leasing up pretty well. I think the same is true with our Buffalo property. You know, we looked at that property and thought, you know, that is a class a building in Downtown Buffalo. We think we can lease that up. We have migrated our tenant Ingram Micro into that building and we have got some strong momentum on leasing in the building from other tenants. So we, you know, we feel good about that.

So it is it is sort of an ongoing and dynamic process, and but we are fortunate in that we have moved most of the vacant properties off our balance sheet. And we have a few left. Some we have quite a bit of confidence about leasing up. For example, the Tulsa property, we just put our first lease into that property. And others were sort of evaluating whether we think in the long term we are going to get leasing momentum or not.

Mitch Germain: Got you. 57 assets, 6.4 million square feet. What percentage would you characterize to be, you know, kinda noncore at this point?

Paul H. McDowell: it is hard to it is hard to sort of you know, we make that judgment based upon you know, our expectations for long-term leases. I would say you know, it is just a few percent at this stage. We, you know, we feel pretty confident about the assets we have left. And our ability to keep those properties leased or to lease them up if they are vacant or become vacant. You know, we are always going to look at it. We may have some vacant sales. Over the course of the year, but, you know, we just have to see how leasing shapes up.

Mitch Germain: Great. Last 1 for me. Paul, I really truly appreciate the color and you are providing regarding your strategic review, not so many management teams are as transparent regarding the process. To that end, will there be a formal announcement I mean, obviously, if something happens, we will know. But will there be a formal announcement? Announcement if you decide to continue to operate? Is that the plan here?

Paul H. McDowell: Yeah. I mean, look, Mitch. Thank you very much for you know, for the transparency. We wanna be as transparent as we possibly can be. We know this process has been going on for a long time. You know, we do not control a lot of the timing. You know, we are interacting with third parties, and they control the timing to some degree. So we are we are trying to move as expeditiously as possible. When we come to a conclusion of the process, whatever that is, we will make an announcement. We just we are just not there yet. And when we do get there, we will let everyone know.

And that includes if we decide to move forward with our independent business plan. Thank you.

Operator: As a reminder, just press star 1 on your questions. There are no further questions at this time. I would like to turn the floor back over to Paul H. McDowell. Actually, we do have a question. I am sorry. From Matthew Gardner with Jones Trading. Please proceed.

Analyst: Hey, guys. Apologies. I thought I had dialed in. Thanks for taking the question. Congrats on the continued progress. You know, I thought you guys had a really good quarter. So I guess following up on kind of the portfolio, you said you had a few percentage left. You know, kind of piggybacking on that, you know, what percentage are you looking to get those dedicated use assets to in kind of the near term and then over the long term, call it, you know, 3 to 5 years out.

Paul H. McDowell: it is a good question. And I think a lot of it when you think about the longer term component, that is the 3-5 years out you know, that will be dependent to some degree on our access to outside, you know, to outside capital. You know, at the moment, you know, our share price does not support that, so we have to work within our existing portfolio. So to the extent we are working within our existing portfolio, the progress will be steady but incremental. As we recycle capital, you know, we will we will we sell assets, and we might you know, occasionally buy DUA assets. So we will slowly build that up over time.

To the extent we get access to outside capital, we would expect that transition to occur much more rapidly. So, you know, the longer term goals, of course, are to have well more than a majority of the portfolio in DUA assets. The timing of that is yet to be determined. Perfect. I appreciate the color there. And then I know that the CapEx is kind of a chunky number and can bounce around quarter to quarter. But do you guys have any idea of what you are expecting kind of across the remainder of the year? Yes. Just hang on just 1 second. Okay. Yeah.

So far this year, you know, we have spent about, call it, $27 million in CapEx. And that is you know, I use that we use that term broadly, meaning that includes building and site updates, you know, that we have done to you know, update our buildings, tenant improvements, and lease incentives. And then leasing commissions. it is a pretty volatile number because we do not know when tenants are going to draw down on existing obligations that we have, which is disclosed in our 10 q.

You know, we expect for the remainder of the year you know, that number could range that total number of additional CapEx from here could range from anywhere from $30 to $40 million. Okay. Got it. that is helpful. And we have modeled that in. So we are you know, this is an expectation. So our guidance incorporates those expectations. Okay. Perfect. that is very helpful. Then you talked a little bit about Tulsa starting to lease up. it is good to see somebody go in there. How are discussions going for the remainder of that building? And what is your confidence level there to kind of strengthen the occupancy at that specific site? Yeah.

I mean, I think our confidence is relatively high. it is a it is a very high quality building. it is, you know, it is a very high quality building in Downtown Tulsa. there is not a lot of competing product of that quality. So sort of if you are looking for class a space where the ones you go to look to. You know, we have got 1 lease done, and we are in discussion on at least 1 more of relatively significant size. So, you know, we sort of feel pretty good about that over time. Awesome. that is great. Well, thank you guys for taking the questions and speaking with me. And last minute. No problem.

Thank you very much.

Operator: I would now like to turn the floor back over to Paul H. McDowell for closing comments.

Paul H. McDowell: Thank you everyone for joining us on the call. And we look forward to updating you again at our third quarter call in the fall. Thank you.

Operator: This will conclude today's conference. You may disconnect at this time, and thank you for your participation.