Financial Data and Key Metrics Changes - Total revenues for Q3 2025 were $37.1 million, down from $39.2 million in Q3 2024 [14] - Core FFO for the quarter was $11 million, or $0.19 per share, compared to $12 million, or $0.21 per share in the same quarter of 2024 [14] - Adjusted EBITDA was $17.4 million, down from $19.1 million in Q3 2024 [15] - Year-to-date core FFO for 2025 was $33.1 million, or $0.59 per share, including approximately $0.05 per share of lease-related termination income [14][15] - The company raised its full-year core FFO guidance to a range of $0.74-$0.76 per share, up from $0.67-$0.71 per share [20] Business Line Data and Key Metrics Changes - The company leased 303,000 sq ft of space in Q3 2025, with a weighted average lease term (WALT) of over 10 years [4] - Year-to-date leasing totaled 919,000 sq ft, in addition to 1.1 million sq ft leased last year [5] - Rent spreads on lease renewals were positive, up over 2% for renewals and over 4% for total leasing activity [6] - The operating property occupancy rate was 72.8% at quarter end, down from 73.7% at the end of 2024 [6] Market Data and Key Metrics Changes - The company has sold seven vacant or soon-to-be-vacant properties totaling 761,000 sq ft for a gross sales price of $64.4 million [8] - Agreements are in place to sell another four properties totaling over 500,000 sq ft for $46.6 million [9] - Approximately 33.9% of the portfolio by annualized base rent and 24.6% by square footage were dedicated use assets (DUAs) [12] Company Strategy and Development Direction - The company is focused on shifting its portfolio away from traditional office properties towards DUAs, which exhibit stronger renewal trends and more durable cash flows [11] - The strategy includes recycling capital from property dispositions into targeted acquisitions of DUAs [11] - The company aims to enhance the quality and durability of its portfolio, with a goal of increasing the WALT [4][12] Management's Comments on Operating Environment and Future Outlook - Management believes 2025 will represent a trough for core FFO, with expectations for accelerating earnings growth and rising occupancy in subsequent years [13][21] - The company is actively managing leverage while maintaining significant liquidity to support ongoing leasing efforts [12] - Management expressed confidence in the continued improvement of the leasing environment and the company's ability to execute its business plan [6][12] Other Important Information - The company ended the quarter with total liquidity of $273 million, including $33 million in cash and $240 million available on the credit facility revolver [17] - The board declared a quarterly cash dividend of $0.02 per share for Q4 2025 [19] Q&A Session Summary Question: Discussion on guidance and lease termination income - Management explained that lease termination income was a result of a negotiated settlement with a tenant, and that leasing efforts in Q3 and Q4 are contributing positively [24][25] Question: Leasing pipeline and demand - Management confirmed that demand for properties remains strong, and the slight decrease in the leasing pipeline is due to fewer expected vacancies and a smaller portfolio [26] Question: Acquisition pipeline and pricing - Management noted a strong pipeline of potential transactions but emphasized the need for selectivity based on pricing and property quality [28]

Financial Data and Key Metrics Changes - Total revenues for the second quarter were $37.3 million, down from $40.1 million in the same quarter of the prior year [14] - Core FFO for the quarter was $11.5 million or $0.20 per share, compared to $14.2 million or $0.25 per share in the same quarter of 2024 [14] - Adjusted EBITDA was $18 million versus $20.5 million in the same quarter of 2024 [15] - G&A expenses were $4.8 million, up from $4.5 million in the same quarter of 2024 [15] - CapEx and leasing costs increased to $15.6 million from $6.3 million in the same quarter of 2024, driven by accelerated leasing activity [15][16] Business Line Data and Key Metrics Changes - Leasing momentum continued with 639,000 square feet leased as of July 31, building on last year's total of 1,100,000 square feet [5] - The weighted average lease term increased to 5.5 years from 5.2 years last quarter and 4.2 years a year ago [7] - The operating property occupancy rate was 77.4%, an increase of 30 basis points sequentially, while the leased rate was 79.1%, up 170 basis points sequentially [7] Market Data and Key Metrics Changes - The company sold four vacant properties totaling 434,000 square feet for a gross sales price of $26.9 million, approximately $62 per square foot [9] - Agreements are in place to sell five traditional office properties totaling 540,000 square feet for $57 million, or $106 per square foot, expected to close in the second half of the year [9] Company Strategy and Development Direction - The company is shifting its portfolio focus from traditional suburban office properties to dedicated use assets (DUA), which include medical, lab, R&D flex, and non-CBD government properties [10][11] - Approximately 32.2% of the portfolio by annualized base rent and 25.3% by square footage were DUA properties at quarter end, with expectations for this percentage to increase over time [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about leasing activity and the potential for portfolio occupancy to rise after 2025 [8] - The company is committed to disciplined execution and portfolio stabilization, with a focus on enhancing asset value and maintaining liquidity [12][13] - The outlook for core FFO has been raised to a range of $0.67 to $0.71 per diluted share, up from $0.61 to $0.70 [18] Other Important Information - The company ended the quarter with total liquidity of $257.7 million, including $17.7 million in cash and $240 million available on the credit facility revolver [16] - The net debt to gross real estate assets was 32% at the end of the quarter [17] - A quarterly cash dividend of $0.02 per share was declared by the Board of Directors [18] Q&A Session Summary Question: Are there any questions at this time? - There were no questions during the Q&A session [20]

Group 1: Passive Income through REITs - Investing in real estate investment trusts (REITs) with high dividend yields can generate significant passive income, with an example showing an investment of $11,250 yielding over $1,000 annually [1] - The selected REITs include AGNC Investment, Realty Income, Healthpeak Properties, and EPR Properties, all of which pay monthly dividends, making them suitable for regular income [1][13] Group 2: AGNC Investment - AGNC Investment is a mortgage REIT that invests in residential mortgage-backed securities (MBS) backed by government agencies, making it a low-risk investment [2] - The company employs leverage to enhance returns, with potential returns in the low 20% range, sufficient to cover dividends and operating expenses [4] - AGNC has a higher risk profile due to market condition fluctuations that could affect returns and dividend maintenance [5] Group 3: Realty Income - Realty Income is known for its reliability, having declared its 659th consecutive monthly dividend and increased payments for 110 straight quarters, with a 4.3% compound annual growth rate [6][8] - The REIT's diversified portfolio of net lease properties provides stable rental income, as tenants cover all operating expenses [7] Group 4: Healthpeak Properties - Healthpeak Properties focuses on healthcare real estate, owning outpatient medical, lab, and senior housing properties, benefiting from the aging U.S. population [9][10] - The company has a strong financial profile, allowing for new investments, with $500 million to $1 billion available for expansion [10] Group 5: EPR Properties - EPR Properties specializes in experiential real estate, including movie theaters and fitness venues, generating steady rental income through net leases [11] - The REIT plans to invest $200 million to $300 million annually in new properties, with projects lined up to drive 3% to 4% annual cash flow growth [12]