Orion Office REIT (US:ONL)2023-03-09 19:42Financial Data and Key Metrics Changes - For Q4 2022, the company generated total revenues of $50.3 million and reported a net loss attributable to common stockholders of $19 million, or a loss of $0.33 per share [8] - For the full year 2022, total revenues were $208.1 million with a net loss of $97.5 million, or a loss of $1.72 per share; Core Funds from Operations (FFO) was $101.8 million or $1.80 per share, exceeding guidance by $0.02 per share [8][42] - Adjusted EBITDA for Q4 was $30.7 million, while for the full year it was $132.2 million [8] Business Line Data and Key Metrics Changes - The company leased 805,000 square feet of space in 2022 with positive cash rent spreads of over 4% and a weighted average lease term of more than seven years [6] - The portfolio ended the year with 81 properties and six unconsolidated joint venture properties, totaling 9.7 million square feet, with an occupancy rate of 89%, up from 88.2% in the previous quarter [5] Market Data and Key Metrics Changes - The company has a diversified tenant base with 73.3% of annualized base rent from investment-grade tenants and approximately 83.4% of leases being triple or double net [38] - The largest markets by state are Texas and New Jersey, representing 15% and 12% of annualized base rent, respectively, with 33% of annualized base rent derived from Sunbelt markets [38] Company Strategy and Development Direction - The company aims to focus on owning mission-critical suburban office properties in high-quality suburban markets, with a strategy to sell vacant and non-core assets to reduce carry costs [37][39] - The company plans to maintain leasing momentum while addressing the challenges posed by the current economic environment, including rising interest rates and inflation [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term value of their core assets despite current headwinds, emphasizing the importance of tenant retention and proactive lease negotiations [5][24] - For 2023, the company expects occupancy to remain stable but may experience temporary declines due to lease expirations, particularly with the Walgreens leases [18][42] Other Important Information - The company declared a quarterly cash dividend of $0.10 per share for Q1 2023, indicating a strong financial position to achieve near and long-term objectives [9] - The company has reduced debt by approximately $90 million or 15% since its spin-off, with a net debt to gross real estate investments ratio of 31% [7][41] Q&A Session Summary Question: What is the outlook for G&A expenses? - Management indicated that G&A expenses are expected to normalize, with an additional year of stock-based compensation impacting 2023 [51] Question: How is the company handling property sales? - The company is selling properties through various channels, including auctions, which may impact pricing; they expect to sell a significant number of properties in 2023 [12][58] Question: What is the status of the Walgreens campus sale? - The company has entered into a definitive agreement to sell the Walgreens campus, with leases expiring in August 2023 [58]