Form type: 10-Q
Period end: 2026-06-30
| Three Months Ended June 30, 2026 | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 | |
|---|---|---|---|---|
| Fee and other income | 206,000.00 | 203,000.00 | ||
| Lease revenues | 34,098,000.00 | 37,102,000.00 | ||
| Total Revenue | ||||
| Total COGS | ||||
| Gross Profit | ||||
| Depreciation and amortization | 13,520,000.00 | 14,928,000.00 | ||
| General and administrative | 4,611,000.00 | 4,838,000.00 | ||
| Income tax expense (benefit) | 71,000.00 | 67,000.00 | ||
| Net income attributable to noncontrolling interests | 4,000.00 | 2,000.00 | ||
| Other income (expense), net | -21,270,000.00 | 7,100,000.00 | ||
| Other operating costs | 312,000.00 | 19,578,000.00 | ||
| Property operating expenses | 12,477,000.00 | 15,895,000.00 | ||
| Total Expenses | ||||
| Net Income | - | - | ||
| Net income (loss) available to common stockholders | - | |||
| Basic earnings per share |
| June 30, 2026 | December 31, 2025 | |
|---|---|---|
| Assets | ||
| Accounts receivable | 5,290,000.00 | 4,899,000.00 |
| Cash and cash equivalents | 16,870,000.00 | 22,362,000.00 |
| Deferred costs | 5,399,000.00 | 1,158,000.00 |
| Intangible assets, net | 77,872,000.00 | 75,947,000.00 |
| Loans receivable, net | 0.00 | 678,000.00 |
| Operating lease right-of-use assets | 9,900,000.00 | 9,400,000.00 |
| Other assets (derived) | 50,147,000.00 | 59,615,000.00 |
| Real estate investments, net | 927,938,000.00 | 958,166,000.00 |
| Restricted cash and equivalents | 46,659,000.00 | 38,277,000.00 |
| Total Assets | ||
| Liabilities | ||
| Accounts payable and accrued liabilities | 25,471,000.00 | 40,219,000.00 |
| Debt | 433,802,000.00 | 463,957,000.00 |
| Distributions payable | 1,141,000.00 | 1,208,000.00 |
| Operating lease liabilities | 10,097,000.00 | 9,638,000.00 |
| Other liabilities (derived) | 35,535,000.00 | 30,965,000.00 |
| Total Liabilities | ||
| Equity | ||
| Stockholders equity | 632,752,000.00 | 623,213,000.00 |
| Total stockholders equity attributable to parent | ||
| Noncontrolling interests | 1,277,000.00 | 1,302,000.00 |
| Total Equity | ||
| Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 | |
|---|---|---|
| Operating activities | ||
| Net income | 11,001,000.00 | -34,464,000.00 |
| Depreciation and amortization | 26,679,000.00 | 30,950,000.00 |
| Stock-based compensation | 1,682,000.00 | 1,526,000.00 |
| Changes in operating assets and liabilities, net | -31,007,000.00 | 11,304,000.00 |
| Net cash from operating activities | ||
| Investing activities | ||
| Investing activities, net | 34,419,000.00 | 3,489,000.00 |
| Net cash from investing activities | ||
| Financing activities | ||
| Financing activities, net | -39,884,000.00 | -16,501,000.00 |
| Net cash from financing activities | - | - |
| Net change in cash | - | |
| Cash at beginning of period | 57,170,000.00 | |
| Cash at end of period | 53,474,000.00 | |
| Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 | |
|---|---|---|
| Balance at beginning of period | 624,515,000.00 | 765,256,000.00 |
| Net income | 11,001,000.00 | -34,464,000.00 |
| Other equity movements | -1,487,000.00 | -1,462,000.00 |
| Balance at end of period | 634,029,000.00 | 729,330,000.00 |
Orion Properties Inc. is a public reporting company classified under Real Estate Investment Trusts. The accompanying condensed financial statements as of and for the period ended June 30, 2026 are unaudited and have been prepared from the Company's books and records. In the opinion of management, these interim statements reflect all adjustments necessary for a fair presentation of the Company's financial position and results of operations, and the results for the interim period are not necessarily indicative of the results that may be expected for the full year.
Total revenue for the period was $34,304,000, consisting of lease revenues of $34,098,000, a decrease of 8.1% from $37,102,000 in the prior period, and fee and other income of $206,000, an increase of 1.5% from $203,000 in the prior period. Net income for the period was $24,579,000, of which $4,000 was attributable to noncontrolling interests, compared with $2,000 in the prior period. Basic earnings per share for the period was $0.43, computed using weighted-average basic shares outstanding of 56,946,000.
Total debt at period end was $506,046,000, comprising debt of $433,802,000 and operating lease liabilities of $10,097,000, together with other liability balances. Debt decreased 9.9% from $481,587,000 at the prior period end, while operating lease liabilities increased 0.5% from $10,047,000. Operating lease right-of-use assets were $9,900,000 at period end, an increase of 1.0% from $9,800,000 in the prior period. The Company's market risk arises primarily from interest rate risk relating to variable-rate borrowings, and to meet its short- and long-term liquidity requirements the Company borrows funds at a combination of fixed and variable rates. From time to time, the Company may enter into interest rate hedge contracts such as swaps, caps, collars, treasury locks, options and forwards in order to mitigate interest rate risk with respect to various debt instruments, and it would not hold or issue these derivative contracts for trading or speculative purposes.
Total equity at period end was $634,029,000, comprising stockholders' equity of $632,752,000 and noncontrolling interests of $1,277,000. Stockholders' equity decreased 13.1% from $728,012,000 at the prior period end, and noncontrolling interests decreased 3.1% from $1,318,000. Distributions payable at period end were $1,141,000, an increase of 1.3% from $1,126,000 at the prior period end.
| Current | Prior | |
|---|---|---|
| Debt | 433,802,000.00 | 463,957,000.00 |
| Operating lease liabilities | 10,097,000.00 | 9,638,000.00 |
| Total debt | 443,899,000.00 | 473,595,000.00 |
| Current | Prior | |
|---|---|---|
| Real estate investments, net | 927,938,000.00 | 958,166,000.00 |
| Total property and equipment | 927,938,000.00 | 958,166,000.00 |
| Current | Prior | |
|---|---|---|
| Stockholders equity | 632,752,000.00 | 623,213,000.00 |
| Total stockholders' equity | 632,752,000.00 | 623,213,000.00 |
Orion Properties Inc. is a public reporting company classified under Real Estate Investment Trusts. The following discussion compares our results of operations for the period ended June 30, 2026 to the comparable prior-year period. For the current period, we generated net income attributable to the company resulting in basic earnings per share of $0.43 on weighted-average basic shares outstanding of 56,946,000. Total revenues were $34,304,000 and net income was $24,579,000 for the current period.
Lease revenues decreased 8.1% to $34,098,000 for the current period from $37,102,000 in the prior-year period, driven primarily by [COMPLETE: description of lease revenue drivers, such as property dispositions or vacancies]. Fee and other income increased 1.5% to $206,000 from $203,000 in the prior-year period. Property operating expenses decreased 21.5% to $12,477,000 from $15,895,000, depreciation and amortization decreased 9.4% to $13,520,000 from $14,928,000, and general and administrative expenses decreased 4.7% to $4,611,000 from $4,838,000. Other operating costs decreased 98.4% to $312,000 from $19,578,000 in the prior-year period, primarily reflecting [COMPLETE: description of drivers of the decline in other operating costs]. Other income (expense), net shifted to income of $21,270,000 in the current period from expense of $7,100,000 in the prior-year period, attributable to [COMPLETE: description of drivers of other income (expense), net]. Income tax expense increased 6.0% to $71,000 from $67,000, and net income attributable to noncontrolling interests was $4,000 compared to $2,000 in the prior-year period. In the prior fiscal year, as of December 31, 2025, we recorded a $10.8 million impairment charge on our investment in the Unconsolidated Joint Venture and thereby wrote the carrying value of such investment to zero, and we recorded a loan loss reserve for the entire $5.5 million gross amount receivable on the Member Loan. We are seeking to work with the lenders and our joint venture partner to sell the joint venture properties in an orderly manner, repay the mortgage notes and recover as much of the Member Loan and equity in the Unconsolidated Joint Venture as possible.
As of June 30, 2026, cash and cash equivalents were $16,870,000, a decrease of 3.0% from $17,384,000 in the prior period, while restricted cash and equivalents increased 29.3% to $46,659,000 from $36,090,000. Our debt was $433,802,000 as of the current period, a decrease of 9.9% from $481,587,000 in the prior period, and our total liabilities were $506,046,000. As of December 31, 2025, our debt included fixed-rate debt with a fair value and carrying value of $365.9 million and $373.0 million, respectively. To meet our short- and long-term liquidity requirements, we borrow funds at a combination of fixed and variable rates. The agent for the mortgage lenders is currently sweeping cash flows from the properties, and the lenders have various rights and remedies that are customary in a non-recourse mortgage financing, such as the right to collect default interest, institute a proceeding for foreclosure and apply for the appointment of a receiver. Accounts payable and accrued liabilities decreased 29.3% to $25,471,000 from $36,031,000, and stockholders' equity was $632,752,000 as of the current period compared to $728,012,000 in the prior period. Management believes that our existing cash and cash equivalents, together with cash flows from operations and available borrowing capacity, will be sufficient to meet our liquidity and capital requirements for at least the next twelve months. [COMPLETE: confirmation of the sufficiency assessment and any material capital commitments]
Our primary market risk exposure is interest rate risk on cash, cash equivalents, and short-term investments, and our market risk arises primarily from interest rate risk relating to variable-rate borrowings. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to manage our overall borrowing costs, and to achieve these objectives we may from time to time enter into interest rate hedge contracts such as swaps, caps, collars, treasury locks, options and forwards. We would not hold or issue these derivative contracts for trading or speculative purposes. We do not have material foreign currency or commodity price exposure.
Our primary market risk exposure is interest rate risk on our cash, cash equivalents, and short-term investments. As of June 30, 2026, we held cash and cash equivalents of $16.9 million and restricted cash and equivalents of $46.7 million, compared to $17.4 million and $36.1 million, respectively, at the prior year end. Changes in market interest rates affect the interest income we earn on these balances, and a decline in prevailing rates would reduce such income. In addition, we had total debt outstanding of $433.8 million as of June 30, 2026, a decrease of 9.9% from $481.6 million at the prior year end. [COMPLETE: description of fixed-rate versus variable-rate composition of outstanding debt and related sensitivity analysis, including the estimated impact of a hypothetical change in interest rates].
Interest rate risk also affects our financing arrangements and those of our joint venture investments. The agent for the mortgage lenders is currently sweeping cash flows from the properties, and the lenders have various rights and remedies that are customary in a non-recourse mortgage financing, such as the right to collect default interest, institute a proceeding for foreclosure and apply for the appointment of a receiver. As of December 31, 2025, we recorded a $10.8 million impairment charge on our investment in the Unconsolidated Joint Venture and thereby wrote the carrying value of such investment to zero, and we have recorded a loan loss reserve for the entire $5.5 million gross amount receivable on the Member Loan. We are seeking to work with the lenders and our joint venture partner to sell the joint venture properties in an orderly manner, repay the mortgage notes and recover as much of the Member Loan and equity in the Unconsolidated Joint Venture as possible.
We do not have material foreign currency or commodity price exposure. Accordingly, we do not currently use derivative financial instruments to hedge foreign currency or commodity price risks. There can be no assurance that future changes in market interest rates will not have a material effect on our results of operations, financial condition, or cash flows.
Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of June 30, 2026. Based on that evaluation, management concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective at the reasonable assurance level. [COMPLETE: Management review and adoption of this conclusion language prior to filing.]
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our certifying officers are responsible for establishing and maintaining disclosure controls and procedures and internal control over financial reporting, as defined in Exchange Act Rules 13a-15(f) and 15d-15(f).
There were no changes in our internal control over financial reporting during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
From time to time, we are involved in legal proceedings arising in the ordinary course of business. Management does not currently believe that any pending matter is material to our financial statements, although an adverse outcome in any such matter could nonetheless negatively affect our results of operations or financial condition.
We also face risks arising from litigation and other contingencies in the ordinary course of our business. We will continue to monitor developments in any pending or future proceedings and assess their potential impact on our business.
We are a public reporting company classified under Real Estate Investment Trusts, and our results of operations depend substantially on income generated from our real estate portfolio. Orion Properties Inc. is a public reporting company classified under Real Estate Investment Trusts. For the period ended June 30, 2026, we generated revenue of $34,304,000 and net income of $24,579,000. Our lease revenues declined 8.1% to $34,098,000 from $37,102,000 in the prior period, and our real estate investments, net, decreased 13.6% to $927,938,000 from $1,073,927,000. A continued decline in lease revenues or in the carrying value of our real estate investments could adversely affect our financial condition, results of operations, and ability to make distributions to stockholders.
The market risk associated with financial instruments and derivative financial instruments is the risk of loss from adverse changes in market prices or interest rates, and our market risk arises primarily from interest rate risk relating to variable-rate borrowings. To meet our short- and long-term liquidity requirements, we borrow funds at a combination of fixed and variable rates. As of June 30, 2026, our outstanding debt was $433,802,000, compared to $481,587,000 in the prior period, and our total liabilities were $506,046,000. As of December 31, 2025, our debt included fixed-rate debt with a fair value and carrying value of $365.9 million and $373.0 million, respectively. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to manage our overall borrowing costs, and to achieve these objectives we may from time to time enter into interest rate hedge contracts such as swaps, caps, collars, treasury locks, options and forwards; we would not hold or issue these derivative contracts for trading or speculative purposes. We are also exposed to interest rate risk on our cash, cash equivalents, and short-term investments, although we do not have material foreign currency or commodity price exposure. Notwithstanding these risk management practices, adverse changes in interest rates could increase our borrowing costs and negatively affect our earnings and cash flows.
We are involved in legal proceedings arising in the ordinary course of business from time to time. Although management does not currently believe any pending matter is material to the financial statements, an unfavorable outcome in any such proceeding could result in liabilities, defense costs, or reputational harm that adversely affects our business, financial condition, or results of operations. [COMPLETE: description of any material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K, or a statement that no material changes have occurred]
The following disclosure is provided pursuant to Item 408(a) of Regulation S-K regarding the adoption or termination of Rule 10b5-1 trading arrangements by directors and officers of Orion Properties Inc. during the quarter ended June 30, 2026. [COMPLETE: Rule 10b5-1 trading arrangement adoptions and terminations from the D&O questionnaires]