Orion Properties Inc. Quarterly report [Sections 13 or 15(d)]

Quarterly report [Sections 13 or 15(d)]

Real Estate Investments and Related Intangibles

Real Estate Investments and Related Intangibles

9 Months Ended

Sep. 30, 2026

Real Estate [Abstract]

Real Estate Investments and Related Intangibles

Note 3 – Real Estate Investments and Related Intangibles

Property Acquisitions

During the nine months ended September 30, 2026, the Company acquired a 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 nine months ended September 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 nine months ended September 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 nine months ended September 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 September 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 September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Total dispositions	—		3		10		7
Aggregate gross sales price	$	—	$	21,750	$	83,700	$	48,680

Gain on disposition of real estate assets	$	—	$	3,265	$	28,826	$	4,156
Property count	—		1		10		4

Impairments on disposition of real estate assets	$	—	$	5,233	$	—	$	6,399
Property count	—		2		—		3

As of September 30, 2026, the Company had no properties classified as held for sale.

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 September 30, 2026):


	Weighted Average Useful Life (Years)	September 30, 2026		December 31, 2025
Intangible lease assets:
In-place leases, net of accumulated amortization of $151,669 and $152,989, respectively	11.9	$	36,345	$	43,906
Leasing commissions, net of accumulated amortization of $8,628 and $7,522, respectively	12.4	29,207		25,171
Above-market lease assets, net of accumulated amortization of $12,752 and $12,451, respectively	14.8	611		1,194
Deferred lease incentives, net of accumulated amortization of $1,770 and $1,295, respectively	12.3	7,891		5,676
Total intangible lease assets, net		$	74,054	$	75,947

Intangible lease liabilities:
Below-market lease liabilities, net of accumulated amortization of $21,696 and $20,211, respectively	15.4	$	16,964	$	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 September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Amortization of in-place leases included in depreciation and amortization expense	$	3,714	$	5,601	$	12,763	$	18,169
Amortization of leasing commissions included in depreciation and amortization expense	$	853	$	719	$	2,474	$	2,576
Amortization of above-market lease assets included as a decrease to rental revenue	$	187	$	198	$	583	$	650
Amortization of below-market lease liabilities included as an increase to rental revenue	$	466	$	510	$	1,486	$	1,637
Amortization of deferred lease incentives included as a decrease to rental revenue	$	207	$	175	$	590	$	394

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 September 30, 2026 (in thousands):


	Remainder of 2026		2027		2028		2029		2030		2031
In-place leases:
Total projected to be included in amortization expense	$	2,739	$	7,944	$	5,902	$	3,182	$	2,761	$	2,387
Leasing commissions:
Total projected to be included in amortization expense	$	859	$	3,394	$	3,097	$	2,796	$	2,736	$	2,663
Above-market lease assets:
Total projected to be deducted from rental revenue	$	98	$	237	$	115	$	63	$	63	$	34
Deferred lease incentives:
Total projected to be deducted from rental revenue	$	208	$	832	$	803	$	784	$	781	$	779
Below-market lease liabilities:
Total projected to be added to rental revenue	$	443	$	1,766	$	1,682	$	1,500	$	1,425	$	1,135

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
							Nine Months Ended
Investment	September 30, 2026		September 30, 2026		December 31, 2025		September 30, 2026		September 30, 2025
Unconsolidated Joint Venture	20%	6	$	—	$	—	$	—	$	(773)

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(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 $121.8 million as of November 5, 2026, experienced a payment default at maturity in February 2026, and have been in and out of default since then as the lenders have provided short-term extensions to accommodate potential sales or refinancing of the collateralized properties. The six single-tenant properties securing the notes are 100% occupied and the tenants are fully performing under their respective leases. Due to the notes being beyond their initially stated maturity, the lenders are sweeping excess cash flows from the six properties, after debt service and property operating expenses, to repay principal. The Company is seeking to work with the lenders and its joint venture partner to sell or refinance the joint venture properties in an orderly manner, repay the mortgage notes and recover as much of its member loan to the Unconsolidated Joint Venture (the “Member Loan”) and equity in the Unconsolidated Joint Venture as possible. The Company cannot provide any assurance the Unconsolidated Joint Venture will be able to repay all or any portion of this debt obligation, complete the disposition or refinancing of any of the six properties on favorable terms, in a timely manner, or at all, or that the lenders will not seek to enforce their foreclosure or other remedies due to the notes being beyond their initially stated maturity, and the Company may be unable to recover its original investment in the Unconsolidated Joint Venture. 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 gross amount receivable on 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 cumulative losses, including impairment losses, exceeded the carrying

amount of its investment. Accordingly, the Company has suspended recognition of its share of additional losses from the Unconsolidated Joint Venture 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 nine months ended September 30, 2026. Additionally, since January 1, 2026, the Company has been recording management fees from the Unconsolidated Joint Venture and interest income on the Member Loan on a cash basis rather than an accrual basis.