Orion Properties Inc.

Greetings. Welcome to Orion Properties' first quarter 2026 earnings call. As a reminder, this conference is being recorded. I would now like to turn the call over to Paul Hughes, General Counsel. Thank you. You may begin.

Thank you and good morning, everyone. Yesterday, Orion released its results for the quarter ended March 31, 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 estimates 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. The risks are discussed in our earnings release as well as in our form 10Q and other SEC filings. And Orion undertakes no duty to update any forward-looking statements made during this call. We will 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 McDowell, and Chief Financial Officer, Gavin Brandon. And joining us for the Q&A session will be Chris Day, our Chief Operating Officer. With that, I am now going to turn the call over to Paul McDowell.

Good morning, everyone, and thank you for joining us. I would like to start the call today with a few comments about Orion's strategic options review process, which is ongoing and progressing well. The Board and management continue to work closely and diligently with Orion's financial advisors at Wells Fargo and J.P. Morgan. and we remain open and fully committed to pursuing any actionable proposals that maximize shareholder value. We are conducting this process in a customary and thorough manner, and it will take time to conclude. While we have made significant progress so far, we are not yet in a position to comment on any specifics. We also can't comment on when the process will conclude though we are working as expeditiously as possible. I also want to emphasize that the execution of our business plan continues to be positive. Our improving results reflect ongoing confidence in our standalone prospects should the strategic review determine that is the best path forward. We appreciate your patience while we work through the strategic options process and will have more to say at the appropriate time. The remainder of today's call will focus on our operating performance and the meaningful progress we continue to make on our business plan. Our strategy remains centered on the stabilization of the portfolio through increased leasing activity, the timely disposition of non-core assets, managing leverage, and very selective capital recycling into new DUA assets. We expect these efforts to result in core FFO per share growth in 2026 and beyond. During the first quarter, we continued to build on the 2 million square feet we leased over the past two years by completing 355,000 square feet of leasing activity. The leasing highlight for this quarter is 172,000 square foot full building lease of 12 years at our previously vacant Irving, Texas property. During 2024 and 25, we strategically invested capital of about $5 per square foot to enhance the common areas and improve the overall appearance of this core property, enabling us to launch an aggressive leasing effort and secure a full building tenant. Importantly, our weighted average lease term, or WALT, averaged nearly 12 years on new leases signed during the quarter. Overall, the average vault for the consolidated portfolio continues to move in the right direction and is approaching six years. Cash rent spreads on the first quarter renewals were up for the fourth consecutive quarter at 2.5%. As we have said many times before, rent spreads can and will be volatile quarter over quarter though we feel positive about current trends overall. Our leasing efforts and non-core asset dispositions have resulted in our consolidated portfolio occupancy rate rising to 83.1% at the end of the first quarter, up from 73.7% in the first quarter of last year. Like rent spreads, our occupancy will show some volatility quarter to quarter, as we have leases role in our largely single tenant portfolio, though we see occupancy continuing to improve overall in coming years. Beyond the leasing completed year to date, our pipeline remains in excess of 1 million square feet that is in either discussion or documentation stages. This includes several full building leases, as well as some possible longer duration renewals and new leases with terms materially greater than the average of our portfolio. Overall, we are quite pleased with leasing velocity to start the year. A second part of our strategy towards stabilization has been through the timely and strategic sale of non-core properties. Since our spinoff, we have sold 38 properties totaling 4.1 million square feet. This includes first quarter sales of two vacant Northeast properties, one in Massachusetts and one in Pennsylvania for aggregate gross proceeds of 13.1 million, as well as the second quarter sales of the 37.4 acre Deerfield, Illinois properties for 13.1 million. and the 120,000 square foot property in Glen Burnie, Maryland for $22.5 million. Regarding the Glen Burnie disposition, this was a very successful and accretive disposition for Orion as the tenant's lease was terminated a few days prior to the sale and pricing represented a 5% capitalization rate on expiring rent or $188 per square foot. In addition, We are currently under contract to sell an additional three properties for gross proceeds of $46 million, nearly all of which will be used to reduce debt. Our overall focus on selling properties, primarily with difficult releasing prospects and high carrying costs, has proven very effective. These sale transactions continue to substantially reduce the carry costs associated with vacant properties. Our 2025 and 2026 vacant or near-term vacant property sales are estimated to save more than $12 million in annual carrying costs. Our ongoing targeted disposition efforts are expected to enable us to continue to reduce debt levels while still funding vital tenant improvement allowances, leasing commissions, and other capital expenditures in support of our strong leasing activity. Beyond continuing to reduce leverage, we also continue to search for and actively evaluate opportunities to recycle a modest percentage of asset sale proceeds into accretive cash-flowing acquisitions. We employed this targeted approach with the $15 million acquisition of the Barilla America headquarters and R&D facility in Northbrook, Illinois, during the first quarter. It remains our intention to continue shifting our portfolio concentration towards 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. Our experience is that these assets tend to exhibit stronger renewal trends, higher tenant investments, and more durable cash flows. At quarter end, approximately 37.1% of our consolidated portfolio by annualized base rent consisted of dedicated use assets versus 32.2% at the end of the first quarter 2025. And we expect this percentage will continue to increase over time through disposition activity of traditional office, and targeted acquisitions of DUA properties. We continue to evolve the portfolio toward stabilization and have positioned the company for meaningful per share core FFO growth in the coming years. For the balance of 2026, our benchmarks will be to remain focused on improving portfolio quality, lengthen wall, renew tenants, and fill or sell vacant space, all while prudently managing expenses and leverage as we work to maximize Orion's value for investors and potential strategic partners. With that, I'll turn the call over to Gavin.