Orion Office REIT (US:ONL)2024-08-08 20:21Portfolio Overview - As of June 30, 2024, Orion owned and operated a portfolio of 69 office properties totaling approximately 8.0 million leasable square feet across 29 states[6]. - The company has a 20% equity interest in an Unconsolidated Joint Venture that owns six office properties totaling approximately 1.0 million leasable square feet[6]. - The company had a total of 69 operating properties and 6 unconsolidated joint venture properties, with a total rentable square footage of 8,202,000[32]. - The company operates a total of 75 properties, with a total rentable square footage of 8,202 thousand square feet[38]. - The company maintains a diverse portfolio with properties located in multiple states across the U.S.[40]. Financial Performance - Total revenues for Q2 2024 were $40,124,000, a decrease of 15% compared to $47,197,000 in the previous quarter[10]. - Rental income for Q2 2024 was $39,923,000, down from $46,995,000 in Q1 2024, representing a decline of approximately 15%[10]. - Net loss attributable to common stockholders for Q2 2024 was $33,801,000, compared to a net loss of $26,232,000 in Q1 2024, reflecting an increase in losses of approximately 29%[10]. - Basic and diluted net loss per share attributable to common stockholders was $(0.60) for Q2 2024, compared to $(0.47) in the previous quarter[10]. - Total operating expenses for Q2 2024 were $64,762,000, slightly down from $65,247,000 in Q1 2024[10]. Assets and Liabilities - Total assets as of June 30, 2024, were $1,339,853,000, a decrease of 3.3% from $1,385,519,000 at the end of Q1 2024[9]. - Total liabilities decreased to $522,362,000 as of June 30, 2024, down from $529,568,000 at the end of Q1 2024[9]. - Cash and cash equivalents increased to $24,224,000 in Q2 2024, up from $23,618,000 in Q1 2024[9]. - Accumulated deficit increased to $(330,136,000) as of June 30, 2024, compared to $(290,710,000) at the end of Q1 2024[9]. Debt and Financing - Total secured debt as of June 30, 2024, was $382,286 thousand, with a weighted average interest rate of 5.11%[13]. - The company’s debt composition includes 72.6% fixed-rate debt and 27.4% variable-rate debt, with a weighted-average interest rate of 5.89%[17]. - The interest coverage ratio decreased to 2.71x as of June 30, 2024, down from 3.52x in the previous quarter[18]. - The company has entered into interest rate collar agreements on a total notional amount of $60.0 million to hedge against interest rate volatility on the credit facility revolver[16]. Operational Metrics - The company reported impairments of $5,680,000 in Q2 2024, a significant decrease from $19,685,000 in the previous quarter[10]. - Funds From Operations (FFO) attributable to common stockholders decreased to $10,925 thousand in Q2 2024 from $18,389 thousand in Q1 2024, a decline of 40.5%[11]. - Core FFO attributable to common stockholders was $14,171 thousand in Q2 2024, down from $20,365 thousand in Q1 2024, representing a decrease of 30.4%[11]. - The company's net operating income (NOI) for Q2 2024 was $24.2 million, down from $31.0 million in Q1 2024, reflecting a decrease of approximately 22.4%[22]. Tenant and Lease Information - Approximately 72.3% of the Annualized Base Rent was from Investment-Grade Tenants, with an Occupancy Rate of 79.7%[6]. - The weighted average lease term (by rentable square feet) for new leases was 15.1 years, indicating a long-term commitment from tenants[23]. - The company reported an occupancy rate of 79.7% and a leased rate of 81.4% as of June 30, 2024[32]. - The company has 51 leases with a credit rating of BBB or higher, indicating strong tenant quality[33]. Market and Economic Conditions - The company faces risks including rising interest rates, inflation, and changes in workplace practices affecting demand for office space[4]. - Future performance is subject to various risks and uncertainties, and historical rent collections may not indicate future performance[2]. Strategic Initiatives - The company has classified certain properties as Non-Operating Properties to enhance transparency in its portfolio[3]. - The company has rightsized its credit facility revolver to $350.0 million, reducing capacity by $75.0 million[16].