Orion Office REIT Inc.® Announces Fourth Quarter 2021 Operating Results
Orion Office REIT Inc. (NYSE: ONL) released its fourth quarter 2021 financial results, marking a period of transition following its spin-off from Realty Income. The company reported a net loss of $(54.9) million, or $(0.97) per share, while core FFO was $26.8 million, or $0.47 per share. The weighted average lease term increased to 4.1 years as Orion signed key lease extensions, including an 11-year deal with Merrill Lynch. The total debt stood at $647.3 million, but the company secured a $355 million refinance, enhancing its liquidity to $346.4 million.
- Weighted average lease term increased to 4.1 years.
- Secured $355 million refinance, enhancing liquidity to $346.4 million.
- Core FFO per share was $0.47 for Q4 2021.
- Net loss attributable to common stockholders was $(54.9) million, or $(0.97) per share.
- EBITDA for Q4 2021 was a loss of $(25.0) million.
“We are excited by the progress we have made to position Orion for future success. Since the spin, we have executed lease extensions with high quality tenants at some of our largest properties, increasing the Company’s weighted average lease term to 4.1 years as of
“Additionally, we refinanced the short-term bridge loan we entered into at the time of the spin-off from
Fourth Quarter 2021 Financial and Operating Highlights
-
Completed spin-off from
Realty Income -
Net loss attributable to common stockholders of
$(54.9) million $(0.97) -
Core FFO of
$26.8 million $0.47 -
Signed 11-year extension with Merrill Lynch at the property in
Hopewell, NJ -
Acquired through the Arch Street Joint Venture a 127,000 square foot office building in
St. Louis, MO leased to Spire Energy as its corporate headquarters
Subsequent to Quarter-End Highlights
-
Refinanced short-term bridge loan with
$355.0 million 4.971% fixed rate CMBS loan -
Signed lease extensions and expansions with key tenants at properties in
Plano, TX ;The Woodlands, TX ; andAugusta, GA
Fourth Quarter 2021 Financial Results
Revenues
Revenues for the fourth quarter 2021 were
Net Loss and Net Loss Per Share
Net loss attributable to common stockholders for the fourth quarter 2021 was
EBITDA, EBITDAre and Adjusted EBITDA
For the fourth quarter of 2021, EBITDA was a loss of
Funds from Operations (“FFO") and FFO per Share
FFO for the fourth quarter 2021 was
Core FFO and Core FFO per Share
Core FFO for the fourth quarter 2021 was
Funds Available for Distribution (“FAD”) and FAD per Share
FAD for the fourth quarter 2021 was
Real Estate Portfolio
As of
Leasing Activity
In
On
Orion believes that lease maturities and vacant assets may represent a value creation opportunity in the coming years for the Company. Orion will employ active asset management strategies and leverage its tenant and broker relationships to attract and retain high-quality creditworthy tenants, drive re-leasing and renewal activity and maximize tenant retention rates.
Subsequent to year end, at one of the Company’s properties in
Acquisitions and Dispositions
On
Orion is actively reviewing a number of potential property acquisitions for both its balance sheet and the Joint Venture.
Orion has also made solid progress on selling non-core assets and is in various stages of negotiation and agreement to sell three properties for approximately
Balance Sheet
As of
Subsequent to year end, Orion refinanced its short-term bridge loan with a
As of
Dividend
On
2022 Outlook
Based on current economic conditions and the Company’s financial condition, Orion is providing the following guidance for fiscal year 2022:
|
Low |
|
High |
|||
Core FFO per share |
|
- |
|
|||
General and Administrative Expenses |
|
- |
|
|||
Net Debt to Adjusted EBITDA |
4.7x |
- |
5.5x |
Webcast and Conference Call Information
Orion will host a webcast and conference call to review its financial results at
To join the conference call, callers from
Replay Information
A replay of the call may be accessed via the web by visiting the “Investors” section of Orion’s website at https://www.onlreit.com/investors. The conference call replay will be available after
Non-GAAP Financial Measures
To supplement the presentation of the Company’s financial results prepared in accordance with
About
About the Data
This data and other information described herein are as of and for the three months ended
In compliance with the applicable GAAP requirements, results for the three months ended
Definitions
Annualized Base Rent is the monthly aggregate cash amount charged to tenants under our leases (including monthly base rent receivables and certain contractually obligated reimbursements by our tenants), as of the final date of the applicable period, multiplied by 12, including the Company's pro rata share of such amounts related to the Unconsolidated Joint Venture.
Cash Cap Rate for real estate properties equals the estimated future 12-month Cash NOI, excluding any rent concessions or abatements, at the time of the acquisition or disposition divided by the purchase or sale price. For any properties acquired or disposed of as a portfolio, the amount presented represents the portfolio cash cap rate. For certain properties, the Cash Cap Rate may be equal to future 12-month contractual rental revenue, excluding any rent concessions or abatements, divided by the purchase price or sale price, as the majority of the Company's properties are subject to Net Leases.
CPI refers to a lease in which base rent is adjusted based on changes in a consumer price index.
Double
Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate ("EBITDAre") and Adjusted EBITDA
Due to certain unique operating characteristics of real estate companies, as discussed below, the
In addition to EBITDAre, we use Adjusted EBITDA as a non-GAAP supplemental performance measure to evaluate the operating performance of the Company. Adjusted EBITDA, as defined by the Company, represents EBITDAre, modified to exclude non-routine items such as acquisition-related expenses and transaction costs. We also exclude certain non-cash items such as impairments of intangible and right of use assets, gains or losses on derivatives, gains or losses on the extinguishment or forgiveness of debt, amortization of intangibles, above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities and our pro rata share of Adjusted EBITDA adjustments related to the Unconsolidated Joint Venture. Management believes that excluding these costs from EBITDAre provides investors with supplemental performance information that is consistent with the performance models and analysis used by management, and provides investors a view of the performance of our portfolio over time. Therefore, EBITDAre and Adjusted EBITDA should not be considered as an alternative to net income, as computed in accordance with GAAP. The Company uses Adjusted EBITDA as one measure of its operating performance when formulating corporate goals and evaluating the effectiveness of the Company's strategies. EBITDAre and Adjusted EBITDA may not be comparable to similarly titled measures of other companies.
Occupancy Rate equals the sum of Leased Square Feet divided by Rentable Square Feet and includes the Company's pro rata share of such amounts related to the Unconsolidated Joint Venture, in each case, as of an applicable date.
Enterprise Value equals the sum of the Implied Equity Market Capitalization and Net Debt, in each case, as of an applicable date.
Fixed Charge Coverage Ratio is (a) the sum of (i) Interest Expense, excluding non-cash amortization and (ii) secured debt principal amortization on Adjusted Principal Outstanding, divided by (b) Adjusted EBITDA. Management believes that Fixed Charge Coverage Ratio is a useful supplemental measure of our ability to satisfy fixed financing obligations.
Fixed Dollar or Percent Increase refers to a lease that requires contractual rent increases during the initial term of the lease agreement. A Fixed Dollar or Percent Increase lease may include a period of free rent at the beginning or end of the lease.
Flat refers to a lease that requires equal rent payments, with no contractual increases, throughout the initial term of the lease agreement. A Flat Lease may include a period of free rent at the beginning or end of the lease.
Funds Available for Distribution ("FAD")
Funds available for distribution, as defined by the Company, represents Core FFO, as defined below, modified to exclude capital expenditures, as well as certain non-cash items such as amortization of deferred financing costs, amortization of above market leases and deferred lease incentives, net of amortization of below market lease liabilities, straight-line rental revenue, equity-based compensation, equity in income or losses of the Unconsolidated Joint Venture and our pro rata share of FAD adjustments related to the Unconsolidated Joint Venture. Management believes that adjusting these items from Core FFO provides investors with supplemental performance information that is consistent with the performance models and analysis used by management and provides useful information regarding the Company's ability to fund its dividend.
However, not all REITs calculate FAD and those that do may not calculate FAD the same way, so comparisons with other REITs may not be meaningful. FAD should not be considered as an alternative to net income (loss) or cash flow provided by operating activities as determined under GAAP.
Nareit Funds from Operations ("Nareit FFO" or "FFO") and Core Funds from Operations ("Core FFO")
Due to certain unique operating characteristics of real estate companies, as discussed below, Nareit has promulgated a supplemental performance measure known as FFO, which we believe to be an appropriate supplemental performance measure to reflect the operating performance of a REIT. FFO is not equivalent to our net income or loss as determined under GAAP.
Nareit defines FFO as net income or loss computed in accordance with GAAP adjusted for gains or losses from disposition of real estate assets, depreciation and amortization of real estate assets, impairment write-downs on real estate, and our pro rata share of FFO adjustments related to the Unconsolidated Joint Venture. We calculate FFO in accordance with Nareit's definition described above.
In addition to FFO, we use Core FFO as a non-GAAP supplemental financial performance measure to evaluate the operating performance of the Company. Core FFO, as defined by the Company, excludes from FFO non-recurring or infrequent items such as acquisition-related expenses, transaction costs and gains or losses on extinguishment of swaps and/or debt. Core FFO allows for a comparison of the performance of our operations with other publicly-traded REITs, as Core FFO, or an equivalent measure, is routinely reported by publicly-traded REITs, and we believe often used by analysts and investors for comparison purposes.
For all of these reasons, we believe FFO and Core FFO, in addition to net income (loss), as defined by GAAP, are helpful supplemental performance measures and useful in understanding the various ways in which our management evaluates the performance of the Company over time. However, not all REITs calculate FFO and Core FFO the same way, so comparisons with other REITs may not be meaningful. FFO and Core FFO should not be considered as alternatives to net income (loss) and are not intended to be used as a liquidity measure indicative of cash flow available to fund our cash needs. Neither the
GAAP is an abbreviation for generally accepted accounting principles in
Gross Lease is a lease under which the landlord is responsible for all expenses associated with the property (e.g., real estate taxes, insurance, maintenance and repairs).
Gross Real Estate Investments represent total gross real estate and related assets of
Implied Equity Market Capitalization equals shares of common stock outstanding as of an applicable date, multiplied by the closing sale price of the Company's stock as reported on the
Industry is derived from the Global Industry Classification Standard ("GICS") Methodology that was developed by
Interest Coverage Ratio equals Adjusted EBITDA divided by Interest Expense, excluding non-cash amortization. Management believes that Interest Coverage Ratio is a useful supplemental measure of our ability to service our debt obligations.
Interest Expense, excluding non-cash amortization is a non-GAAP measure that represents interest expense incurred on the outstanding principal balance of our debt and the Company's pro rata share of the Unconsolidated Joint Venture's interest expense incurred on its outstanding principal balance. This measure excludes the amortization of deferred financing costs, premiums and discounts, which is included in interest expense in accordance with GAAP. Interest Expense, excluding non-cash amortization should not be considered as an alternative to the Company's interest expense as determined in accordance with GAAP or any other GAAP financial measures and should only be considered together with and as a supplement to the Company's financial information prepared in accordance with GAAP.
Investment-Grade Tenants are those with a Standard & Poor’s credit rating of BBB- or higher or a Moody’s credit rating of Baa3 or higher. The ratings may reflect those assigned by Standard & Poor’s or Moody’s to the lease guarantor or the parent company, as applicable.
Leased Square Feet is Rentable Square Feet leased and includes such amounts related to the Unconsolidated Joint Venture.
Modified Gross Lease is a lease under which the landlord is responsible for most expenses associated with the property (e.g., real estate taxes, insurance, maintenance and repairs), but passes through some operating expenses to the tenant.
Net Debt, Principal Outstanding and Adjusted Principal Outstanding
Principal Outstanding is a non-GAAP measure that represents the Company's outstanding principal debt balance, excluding certain GAAP adjustments, such as premiums and discounts, financing and issuance costs, and related accumulated amortization. Adjusted Principal Outstanding includes the Company's pro rata share of the Unconsolidated Joint Venture's outstanding principal debt balance. We believe that the presentation of Principal Outstanding and Adjusted Principal Outstanding, which show our contractual debt obligations, provides useful information to investors to assess our overall financial flexibility, capital structure and leverage. Principal Outstanding and Adjusted Principal Outstanding should not be considered as alternatives to the Company's consolidated debt balance as determined in accordance with GAAP or any other GAAP financial measures and should only be considered together with, and as a supplement to, the Company's financial information prepared in accordance with GAAP.
Net Debt is a non-GAAP measure used to show the Company's Adjusted Principal Outstanding, less all cash and cash equivalents and the Company's pro rata share of the Unconsolidated Joint Venture's cash and cash equivalents. We believe that the presentation of Net Debt provides useful information to investors because our management reviews Net Debt as part of its management of our overall liquidity, financial flexibility, capital structure and leverage.
Net Debt Leverage Ratio equals Net Debt divided by Gross Real Estate Investments.
Net Operating Income ("NOI") and Cash NOI
NOI is a non-GAAP performance measure used to evaluate the operating performance of a real estate company. NOI represents total revenues less property operating expenses and excludes fee revenue earned for services to the Unconsolidated Joint Venture, impairment, depreciation and amortization, general and administrative expenses, acquisition-related expenses and transaction costs. Cash NOI excludes the impact of certain GAAP adjustments included in rental revenue, such as straight-line rent adjustments and amortization of above-market intangible lease assets and below-market lease intangible liabilities. Cash NOI includes the pro rata share of such amounts from properties owned by the Unconsolidated Joint Venture. It is management's view that NOI and Cash NOI provide investors relevant and useful information because it reflects only income and operating expense items that are incurred at the property level and presents them on an unleveraged basis. NOI and Cash NOI should not be considered as an alternative to operating income in accordance with GAAP. Further, NOI and Cash NOI may not be comparable to similarly titled measures of other companies.
Operating Properties refers to all properties owned and consolidated by the Company as of the applicable date.
Property Operating Expense includes reimbursable and non-reimbursable costs to operate a property, including real estate taxes, utilities, insurance, repairs, maintenance, legal, property management fees, etc.
Rentable Square Feet is leasable square feet of
Triple
Unconsolidated Joint Venture includes the Company's investment in the Arch Street unconsolidated joint venture formed to acquire and own real estate properties.
Unencumbered Asset Ratio equals unencumbered Gross Real Estate Investments divided by Gross Real Estate Investments. Management believes that Unencumbered Asset Ratio is a useful supplemental measure of our overall liquidity and leverage.
Weighted Average Remaining Lease Term is the number of years remaining on each respective lease as of the applicable date, weighted based on Annualized Base Rent and includes the years remaining on each of the respective leases of the Unconsolidated Joint Venture, weighted based on the Company's pro rata share of Annualized Base Rent related to the Unconsolidated Joint Venture.
Forward-Looking Statements
Information set forth in this press release contains “forward-looking statements” which reflect the Company's expectations and projections regarding future events and plans, the Company's future financial condition, results of operations, liquidity and business, including leasing and occupancy, acquisitions, dispositions, rent receipts, the payment of future dividends, the Company’s future growth and the impact of the coronavirus (COVID-19) on the Company's business. Generally, the words "anticipates," "assumes," "believes," "continues," "could," "estimates," "expects," "goals," "intends," "may," "plans," "projects," "seeks," "should," "targets," "will," “guidance,” variations of such words and similar expressions identify forward-looking statements. These forward-looking statements are based on information currently available to the Company and involve a number of known and unknown assumptions and risks, uncertainties and other factors, which may be difficult to predict and beyond the Company's control, that could cause actual events and plans or could cause the Company's business, financial condition, liquidity and results of operations to differ materially from those expressed or implied in the forward-looking statements. Further, information regarding historical rent collections should not serve as an indication of future rent collections.
The following factors, among others, could cause actual results to differ materially from those set forth in the forward-looking statements:
- the risk of rising interest rates, including that our borrowing costs may increase and we may be unable to refinance our debt obligations on favorable terms or at all;
- the risk of inflation, including that our operating costs, such as insurance premiums, utilities, real estate taxes and capital expenditures and repair and maintenance costs, may rise;
- conditions associated with the global market, including an oversupply of office space, client credit risk and general economic conditions;
-
the extent to which the ongoing COVID-19 pandemic or any future pandemic or outbreak of a highly infectious or contagious disease or fear of such pandemics or outbreaks impacts our business, operating results, financial condition and prospects, which is highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the COVID-19 pandemic and its impact on the
U.S. economy and potential changes in client behavior that could adversely affect the use of and demand for office space; - our ability to acquire new properties and sell non-core assets on favorable terms and in a timely manner, or at all; our ability to comply with the terms of our credit agreements or to meet the debt obligations on certain of our properties;
- our ability to access the capital markets to raise additional equity or refinance maturing debt on favorable terms or at all;
- changes in the real estate industry and in performance of the financial markets and interest rates and our ability to effectively hedge against interest rate changes;
- the risk of client defaults on their lease obligations, which are heightened due to our focus on single tenant properties;
- our ability to renew leases with existing clients or re-let space to new clients on favorable terms or at all;
- the cost of rent concessions, client improvement allowances and leasing commissions; the potential for termination of existing leases pursuant to client termination rights;
- the amount, growth and relative inelasticity of our expenses; risks associated with the ownership and development of real property;
-
risks associated with our joint venture with an affiliate of
Arch Street Capital Partners and any potential future equity investments; -
the ability to satisfy conditions necessary to close pending transactions and the ability to successfully integrate pending transactions; risks associated with acquisitions, including the integration of the office portfolios of
Realty Income and VEREIT into Orion; - Realty Income’s inability or failure to perform under the various transaction agreements effecting the Separation and the Distribution;
- risks associated with the fact that we have a limited operating history and our future performance is difficult to predict;
- our properties may be subject to impairment charges;
- risks resulting from losses in excess or insured limits or uninsured losses; and
- risks associated with the potential volatility of our common stock.
Additional factors that may affect future results are contained in the Company's filings with the
|
||||
CONSOLIDATED BALANCE SHEETS |
||||
(In thousands, except for share and per share data) (Unaudited) |
||||
|
|
|
||
Assets |
|
|
||
Real estate investments, at cost: |
|
|
||
Land |
|
$ |
250,194 |
|
Buildings, fixtures and improvements |
|
|
1,231,551 |
|
Total real estate investments, at cost |
|
|
1,481,745 |
|
Less: accumulated depreciation and amortization |
|
|
128,109 |
|
Total real estate investments, net |
|
|
1,353,636 |
|
Accounts receivable, net |
|
|
17,916 |
|
Intangible lease assets, net |
|
|
298,107 |
|
Cash and cash equivalents |
|
|
29,318 |
|
Other assets, net |
|
|
60,501 |
|
Total assets |
|
$ |
1,759,478 |
|
|
|
|
||
|
|
|
||
Liabilities and Equity |
|
|
||
Bridge facility, net |
|
$ |
354,357 |
|
Credit facility term loan, net |
|
|
172,490 |
|
Credit facility revolver |
|
|
90,000 |
|
Mortgages payable, net |
|
|
— |
|
Accounts payable and accrued expenses |
|
|
17,379 |
|
Below-market lease liabilities, net |
|
|
20,609 |
|
Distributions payable |
|
|
— |
|
Other liabilities, net |
|
|
16,355 |
|
Total liabilities |
|
|
671,190 |
|
|
|
|
||
Net parent investment |
|
|
— |
|
Common stock |
|
|
57 |
|
Additional paid-in capital |
|
|
1,145,278 |
|
Accumulated other comprehensive income (loss) |
|
|
299 |
|
Accumulated deficit |
|
|
(58,715 |
) |
Total stockholders' equity |
|
|
1,086,919 |
|
Non-controlling interests |
|
|
1,369 |
|
Total equity |
|
|
1,088,288 |
|
Total liabilities and equity |
|
$ |
1,759,478 |
|
|
||||||||||||||||
CONSOLIDATED STATEMENT OF OPERATIONS |
||||||||||||||||
(In thousands, except for share and per share data) (Unaudited) |
||||||||||||||||
|
|
Quarter Ended
|
|
|
|
Pro Forma
|
|
|
||||||||
Revenues: |
|
|
|
|
|
|
|
|
||||||||
Rental |
|
$ |
40,530 |
|
|
$ |
36,648 |
|
|
$ |
(270 |
) |
|
$ |
36,378 |
|
Fee income from unconsolidated joint venture |
|
|
271 |
|
|
|
271 |
|
|
|
(183 |
) |
|
|
88 |
|
Total revenues |
|
|
40,801 |
|
|
|
36,919 |
|
|
|
(453 |
) |
|
|
36,466 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
||||||||
Transaction costs |
|
|
5,112 |
|
|
|
5,112 |
|
|
|
(5,112 |
) |
|
|
— |
|
Property operating |
|
|
8,801 |
|
|
|
8,367 |
|
|
|
— |
|
|
|
8,367 |
|
General and administrative |
|
|
2,167 |
|
|
|
1,999 |
|
|
|
— |
|
|
|
1,999 |
|
Depreciation and amortization |
|
|
26,067 |
|
|
|
24,083 |
|
|
|
— |
|
|
|
24,083 |
|
Impairments |
|
|
49,859 |
|
|
|
49,859 |
|
|
|
(49,859 |
) |
|
|
— |
|
Total operating expenses |
|
|
92,006 |
|
|
|
89,420 |
|
|
|
(54,971 |
) |
|
|
34,449 |
|
Other (expense) income: |
|
|
|
|
|
|
|
|
||||||||
Interest expense |
|
|
(3,187 |
) |
|
|
(3,187 |
) |
|
|
— |
|
|
|
(3,187 |
) |
(Loss) gain on extinguishment and forgiveness of debt, net |
|
|
(283 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Other income, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Equity in income of unconsolidated joint venture |
|
|
(56 |
) |
|
|
(56 |
) |
|
|
— |
|
|
|
(56 |
) |
Total other (expenses) income, net |
|
|
(3,526 |
) |
|
|
(3,243 |
) |
|
|
— |
|
|
|
(3,243 |
) |
(Loss) income before taxes |
|
|
(54,731 |
) |
|
|
(55,744 |
) |
|
|
54,518 |
|
|
|
(1,226 |
) |
Provision for income taxes |
|
|
(157 |
) |
|
|
(157 |
) |
|
|
— |
|
|
|
(157 |
) |
Net (loss) income |
|
|
(54,888 |
) |
|
|
(55,901 |
) |
|
|
54,518 |
|
|
|
(1,383 |
) |
Net (income) loss attributable to non-controlling interest |
|
|
(17 |
) |
|
|
(17 |
) |
|
|
— |
|
|
|
(17 |
) |
Net (loss) income attributable to common stockholders |
|
$ |
(54,905 |
) |
|
$ |
(55,918 |
) |
|
$ |
54,518 |
|
|
$ |
(1,400 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares outstanding - basic and diluted |
|
|
56,626 |
|
|
|
56,626 |
|
|
|
56,626 |
|
|
|
56,626 |
|
Basic and diluted net (loss) income per share attributable to common stockholders |
|
$ |
(0.97 |
) |
|
$ |
(0.99 |
) |
|
$ |
0.96 |
|
|
$ |
(0.02 |
) |
|
_____________________________________ | |
| (1) | Represents results of operations in accordance with GAAP and includes only the Company's office properties formerly owned by |
|
| (2) | Represents results of operations for all of the Company's properties for the period from |
|
| (3) | Adjustments include lease termination income ( |
|
| (4) | Represents results of operations for all of the Company’s properties for the period from |
|
||||||||||||||||
EBITDA, EBITDAre AND ADJUSTED EBITDA |
||||||||||||||||
(In thousands) (Unaudited) |
||||||||||||||||
|
|
Quarter Ended
|
|
|
|
Pro Forma
|
|
|
||||||||
Net (loss) income |
|
$ |
(54,905 |
) |
|
$ |
(55,918 |
) |
|
$ |
54,518 |
|
|
$ |
(1,400 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
||||||||
Interest expense |
|
|
3,187 |
|
|
|
3,187 |
|
|
|
— |
|
|
|
3,187 |
|
Depreciation and amortization |
|
|
26,067 |
|
|
|
24,083 |
|
|
|
— |
|
|
|
24,083 |
|
Provision for income taxes |
|
|
157 |
|
|
|
157 |
|
|
|
— |
|
|
|
157 |
|
Proportionate share of Unconsolidated Joint Venture adjustments for items above, as applicable |
|
|
501 |
|
|
|
501 |
|
|
|
— |
|
|
|
501 |
|
EBITDA |
|
$ |
(24,993 |
) |
|
$ |
(27,990 |
) |
|
$ |
54,518 |
|
|
$ |
26,528 |
|
Impairment of real estate |
|
|
49,859 |
|
|
|
49,859 |
|
|
|
(49,859 |
) |
|
|
— |
|
EBITDAre |
|
$ |
24,866 |
|
|
$ |
21,869 |
|
|
$ |
4,659 |
|
|
$ |
26,528 |
|
Transaction costs |
|
|
5,112 |
|
|
|
5,112 |
|
|
|
(5,112 |
) |
|
|
— |
|
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities |
|
|
(295 |
) |
|
|
(213 |
) |
|
|
— |
|
|
|
(213 |
) |
(Gain) loss on extinguishment and forgiveness of debt, net |
|
|
283 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Proportionate share of Unconsolidated Joint Venture adjustments for items above, as applicable |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
— |
|
|
|
(1 |
) |
Adjusted EBITDA |
|
$ |
29,965 |
|
|
$ |
26,767 |
|
|
$ |
(453 |
) |
|
$ |
26,314 |
|
| ____________________________________ | ||
| (1) |
Adjustments include lease termination income ( |
|
||||||||||||||||
FFO, CORE FFO and FAD |
||||||||||||||||
(In thousands, except for share and per share data) (Unaudited) |
||||||||||||||||
|
|
Quarter Ended
|
|
|
|
Pro Forma
|
|
|
||||||||
Net (loss) income |
|
$ |
(54,905 |
) |
|
$ |
(55,918 |
) |
|
$ |
54,518 |
|
|
$ |
(1,400 |
) |
Depreciation and amortization of real estate assets |
|
|
26,060 |
|
|
|
24,076 |
|
|
|
— |
|
|
|
24,076 |
|
Impairment of real estate |
|
|
49,859 |
|
|
|
49,859 |
|
|
|
(49,859 |
) |
|
|
— |
|
Proportionate share of Unconsolidated Joint Venture adjustments for items above, as applicable |
|
|
397 |
|
|
|
397 |
|
|
|
— |
|
|
|
397 |
|
FFO attributable to common stockholders |
|
$ |
21,411 |
|
|
$ |
18,414 |
|
|
$ |
4,659 |
|
|
$ |
23,073 |
|
Adjustments: |
|
|
|
|
|
|
|
|
||||||||
Transaction costs |
|
|
5,112 |
|
|
|
5,112 |
|
|
|
(5,112 |
) |
|
|
— |
|
Loss on extinguishment of debt, net |
|
|
283 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Core funds from operations attributable to common stockholders |
|
$ |
26,806 |
|
|
$ |
23,526 |
|
|
$ |
(453 |
) |
|
$ |
23,073 |
|
Adjustments: |
|
|
|
|
|
|
|
|
||||||||
Amortization of deferred financing costs |
|
|
729 |
|
|
|
729 |
|
|
|
— |
|
|
|
729 |
|
Amortization of above and below market leases and deferred lease incentives, net of amortization of below-market lease liabilities |
|
|
(295 |
) |
|
|
(213 |
) |
|
|
— |
|
|
|
(213 |
) |
Straight-line rental revenue |
|
|
(575 |
) |
|
|
(638 |
) |
|
|
— |
|
|
|
(638 |
) |
Equity-Based Compensation |
|
|
180 |
|
|
|
180 |
|
|
|
— |
|
|
|
180 |
|
Equity in income of Unconsolidated Joint Venture |
|
|
56 |
|
|
|
56 |
|
|
|
— |
|
|
|
56 |
|
Capital expenditures |
|
|
(9,933 |
) |
|
|
(9,933 |
) |
|
|
— |
|
|
|
(9,933 |
) |
Other adjustments, net |
|
|
96 |
|
|
|
95 |
|
|
|
— |
|
|
|
95 |
|
Proportionate share of Unconsolidated Joint Venture adjustments for the items above, as applicable |
|
|
(3 |
) |
|
|
(3 |
) |
|
|
— |
|
|
|
(3 |
) |
Funds available for distribution |
|
$ |
17,061 |
|
|
$ |
13,799 |
|
|
$ |
(453 |
) |
|
$ |
13,346 |
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares outstanding - basic and diluted |
|
|
56,626 |
|
|
|
56,626 |
|
|
|
56,626 |
|
|
|
56,626 |
|
|
|
|
|
|
|
|
|
|
||||||||
FFO attributable to common stockholders per share |
|
$ |
0.38 |
|
|
$ |
0.33 |
|
|
$ |
0.08 |
|
|
$ |
0.41 |
|
Core FFO attributable to common stockholders per share |
|
$ |
0.47 |
|
|
$ |
0.42 |
|
|
$ |
(0.01 |
) |
|
$ |
0.41 |
|
FAD per share |
|
$ |
0.30 |
|
|
$ |
0.24 |
|
|
$ |
(0.01 |
) |
|
$ |
0.24 |
|
| ____________________________________ | ||
| (1) |
Adjustments include lease termination income ( |
|
| (2) | Refer to the Statement of Operations for basic and diluted net income (loss) per share attributable to common stockholders. |
|
||||
FINANCIAL AND OPERATIONS STATISTICS AND RATIOS |
||||
(Dollars in thousands) (Unaudited) |
||||
|
|
Three Months Ended |
||
|
|
|
||
Interest expense - as reported |
|
$ |
3,187 |
|
Adjustments: |
|
|
||
Amortization of deferred financing costs and other non-cash charges |
|
|
(729 |
) |
Proportionate share of Unconsolidated Joint Venture Interest Expense, excluding non-cash amortization |
|
|
64 |
|
Interest Expense, excluding non-cash amortization (2) |
|
$ |
2,522 |
|
Interest Coverage Ratio |
|
|
|
Pro Forma
|
|
|
||||
Interest Expense, excluding non-cash amortization (2) |
|
$ |
2,522 |
|
$ |
— |
|
|
$ |
2,522 |
Adjusted EBITDA (3) |
|
|
26,767 |
|
|
(453 |
) |
|
|
26,314 |
Interest Coverage Ratio |
|
10.61x |
|
|
|
10.43x |
||||
|
|
|
|
|
|
|
||||
Fixed Charge Coverage Ratio |
|
|
|
|
|
|
||||
Interest Expense, excluding non-cash amortization |
|
$ |
2,522 |
|
$ |
— |
|
|
$ |
2,522 |
Total fixed charges |
|
|
2,522 |
|
|
— |
|
|
|
2,522 |
Adjusted EBITDA (3) |
|
|
26,767 |
|
|
(453 |
) |
|
|
26,314 |
Fixed Charge Coverage Ratio |
|
10.61x |
|
|
|
10.43x |
||||
|
____________________________________ | |
(1) |
|
Adjustments include lease termination income ( |
(2) |
|
Refer to the Statement of Operations for interest expense calculated in accordance with GAAP and to the table above for the required reconciliation to the most directly comparable GAAP financial measure. |
(3) |
|
Refer to the Statement of Operations for net income calculated in accordance with GAAP and to the EBITDAre and Adjusted EBITDA tables above for the required reconciliation to the most directly comparable GAAP financial measure. |
Net Debt |
|
|
||
CMBS bridge facility, net |
|
$ |
354,357 |
|
Credit facility term loan, net |
|
|
172,490 |
|
Credit facility revolver |
|
|
90,000 |
|
Total debt - as reported |
|
|
616,847 |
|
Deferred financing costs, net |
|
|
3,153 |
|
Principal Outstanding |
|
|
620,000 |
|
Proportionate share of Unconsolidated Joint Venture Principal Outstanding |
|
|
27,332 |
|
Adjusted Principal Outstanding |
|
$ |
647,332 |
|
Cash and cash equivalents |
|
|
(29,318 |
) |
Proportionate share of Unconsolidated Joint Venture cash and cash equivalents |
|
|
(590 |
) |
Net Debt |
$ |
617,424 |
||
|
|
|
||
Gross Real Estate Investments |
|
$ |
1,481,745 |
|
Adjustments: |
|
|
||
Intangible lease assets, net |
|
|
370,049 |
|
Gross intangible lease liabilities |
|
|
(35,068 |
) |
Proportionate share of Unconsolidated Joint Venture Gross Real Estate Investments |
|
|
45,401 |
|
Gross Real Estate Investments |
|
$ |
1,862,127 |
|
|
|
|
||
Net Debt Ratios |
|
|
||
Net Debt (1) |
|
$ |
617,424 |
|
Gross Real Estate Investments (1) |
|
|
1,862,127 |
|
Net Debt Leverage Ratio |
|
|
33.2 |
% |
|
|
|
||
Unencumbered Assets/Real Estate Assets (2) |
||||
Unencumbered Gross Real Estate Investments (1) |
|
$ |
1,816,726 |
|
Gross Real Estate Investments (1) |
|
|
1,862,127 |
|
Unencumbered Asset Ratio |
|
|
97.6 |
% |
|
______________________________________ | |
| (1) | Refer to the Balance Sheet for total debt and real estate investments, at cost calculated in accordance with GAAP and to the table above for the required reconciliation to the most directly comparable GAAP financial measure. | |
| (2) | On |
CORE FUNDS FROM OPERATIONS PER DILUTED SHARE - 2022 GUIDANCE
(Unaudited)
The Company expects its 2022 Core FFO per diluted share to be in a range between
-
General & Administrative Expenses:
$17 million $18 million - Net Debt to Adjusted EBITDA: 4.7x to 5.5x
The estimated net income per diluted share is not a projection and is provided solely to satisfy the disclosure requirements of the
The Company does not provide a reconciliation of Net Debt to Adjusted EBITDA guidance to the most directly comparable GAAP measure, due to the inherent difficulty and uncertainty in quantifying certain adjustments principally related to the Company’s investment in the unconsolidated joint venture.
|
|
Low |
|
High |
|
||||
Diluted net income per share attributable to common stockholders |
|
$ |
(0.90 |
) |
|
$ |
(0.83 |
) |
|
Depreciation and amortization of real estate assets |
|
|
2.50 |
|
|
|
2.50 |
|
|
Proportionate share of adjustments for unconsolidated joint venture |
|
|
0.05 |
|
|
|
0.06 |
|
|
FFO attributable to common stockholders per diluted share |
|
|
1.65 |
|
|
|
1.73 |
|
|
Adjustments (1) |
|
|
0.01 |
|
|
|
0.01 |
|
|
Core FFO attributable to common stockholders per diluted share |
|
$ |
1.66 |
|
|
$ |
1.74 |
|
|
|
_________________________ | |
| (1) | Includes non-routine items such as transaction and acquisition-related expenses. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20220324005352/en/
Investor Relations:
Email: investors@onlreit.com
Phone: 602-675-0338
Source:
FAQ
What were the key financial results for Orion Office REIT in Q4 2021?
How did Orion's weighted average lease term change after the spin-off?
What financial steps did Orion take to improve liquidity in 2021?
What was the total debt reported by Orion Office REIT as of December 31, 2021?
What key leasing activity occurred in late 2021 at Orion's properties?
