Orion Office REIT Inc. (ONL) | Investment Case

1. Company Snapshot

1.a. Company Description

Orion Office REIT specializes in the ownership, acquisition and management of a diversified portfolio of mission-critical and corporate headquarters office buildings in high-quality suburban markets across the U.S. The portfolio is leased primarily on a single-tenant net lease basis to creditworthy tenants.The company's team of experienced industry leaders employs a proven, cycle-tested investment evaluation framework which serves as the lens through which capital allocation decisions are made for the current portfolio and future acquisitions.

Show Full description

1.b. Last Insights on ONL

Negative drivers behind Orion Office REIT Inc.'s recent 3 months performance include high capital expenditures, negative dividend coverage, and a depressed 35% FFO-yield. The company's Q1 2025 earnings showed slight occupancy improvement, but this was offset by elevated capital expenditures. Additionally, management's aggressive leasing and selling of assets is coming at a price, and the company's pivot towards flex, laboratory, medical, and governmental properties has not yet yielded significant results.

1.c. Company Highlights

Last Price	2.06
Change Percentage	-2.37%
Open	2.1
Previous Close	2.11
Market Cap ( Millions)	116
Volume	333697
Year High	4.25
Year Low	1.46
M A 50	2.47
M A 200	2.42

FCF Yield	-3.23%
Dividend Yield	7.77%
ROE	-18.77%
Debt / Equity	0.00%
Net Debt / EBIDTA	87.00%
Price To Book	0.18
Price Earnings Ratio	-0.85
Price To FCF	-30.99
Price To sales	0.77
EV / EBITDA	-2.22

2. Orion Properties' Q3 2025 Earnings: A Step in the Right Direction

Orion Properties reported total revenues of $37.1 million in the third quarter, down from $39.2 million in the same quarter of 2024. Core funds from operations (FFO) for the quarter was $11 million or $0.19 per share, compared to $12 million or $0.21 per share in 2024. The actual EPS came out at -$0.33, relative to estimates at $0.16, indicating a challenging quarter. The company's financial performance was impacted by the disposition of properties, with 7 vacant or soon-to-be vacant properties and 1 stabilized traditional office property sold for $64.4 million.

Publication Date: Nov -23

                                    📋 Highlights
                                    Significant Leasing Progress::
                                                Leased 303,000 sq ft at >10-year WALT, plus 57,000 sq ft post-quarter, and completed 919,000 sq ft YTD.
Portfolio Stability::
                                                Portfolio WALT rose to 5.8 years (up from 3.5 years at spin) with a 500,000 sq ft leasing pipeline.
Property Sales Momentum::
                                                Sold 761,000 sq ft of vacant/soon-vacant properties for $64.4M and has agreements to sell 500,000 sq ft more for $46.6M.
FFO Guidance Upgrade::
                                                Raised 2025 core FFO to $0.74–$0.76/share (from $0.67–$0.71/share), despite Q3 revenue decline to $37.1M.

                                

Operational Highlights

The company leased 303,000 square feet of space at a weighted average lease term (WALT) of over 10 years, and an additional 57,000 square feet was signed after quarter-end. The portfolio's WALT is now 5.8 years, up from 3.5 years at the time of its spin. Rent spreads on lease renewals were positive, up over 2% for renewals and over 4% for total leasing activity, indicating a stable demand for its properties.

Guidance and Outlook

Orion improved its guidance outlook for the rest of the year, raising its full-year core FFO guidance to $0.74 to $0.76 per share, up from $0.67 to $0.71 per share. The company expects 2025 to represent a trough for its core FFO, with recent leasing and capital initiatives translating into improved recurring earnings in 2026 and beyond. Analysts estimate next year's revenue growth at -5.3%, indicating a continued challenging environment.

Valuation and Dividend

The company's valuation metrics indicate a potentially attractive dividend yield. With a dividend yield of 7.21%, the stock may appeal to income investors. However, the P/E Ratio is -0.92, and the EV/EBITDA is -2.46, indicating that the company's earnings are not currently driving its valuation. The company's net debt to annualized year-to-date adjusted EBITDA is 6.7x, and total liquidity is $273 million, providing a reasonable level of financial flexibility.

Capital Allocation

Orion's Board of Directors declared a quarterly cash dividend of $0.02 per share for the fourth quarter of 2025, maintaining its commitment to returning capital to shareholders. The company's capital allocation strategy is focused on deleveraging and investing in its properties to drive long-term value creation.

3. NewsRoom

Orion Properties: About That Going Concern Statement

Dec -01

Source: seekingalpha.com

Orion Properties Announces that Director Nomination Notice from Kawa is Invalid

Nov -26

Source: businesswire.com

Bank of Montreal Can Purchases New Holdings in Orion Office REIT Inc. $ONL

Nov -22

Source: defenseworld.net

Orion Properties Confirms Receipt of Director Nominees

Nov -19

Source: businesswire.com

Orion Properties: The 'Going Concern' Warning Just Became Impossible To Overlook

Nov -18

Source: seekingalpha.com

Orion Properties Inc. (ONL) Q3 2025 Earnings Call Transcript

Nov -07

Source: seekingalpha.com

Gladstone Commercial (NASDAQ:GOOD) versus Orion Office REIT (NYSE:ONL) Head-To-Head Comparison

Nov -02

Source: defenseworld.net

ONL Therapeutics Announces Randomization of First Patient in Global Phase 2 GALAXY Trial of Xelafaslatide (ONL1204) in Patients with Geographic Atrophy (GA) Associated with Dry AMD

Oct -28

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.50%)

6. Segments

Rental

Expected Growth: 4.5%

Growing demand for office spaces, increasing popularity of flexible workspaces, and Orion Office REIT Inc.'s strategic property management are expected to drive rental growth.

Fee Income from Unconsolidated Joint Venture

Expected Growth: 4.5%

Fee income from unconsolidated joint ventures is expected to grow driven by increasing demand for property management services, expansion of Orion Office REIT Inc.'s joint venture portfolio, and rising fees from existing partnerships.

7. Detailed Products

Office Spaces

Orion Office REIT Inc. offers a range of office spaces for lease, from small suites to entire floors, catering to businesses of all sizes and industries.

Industrial Properties

The company provides industrial properties for lease, including warehouses, distribution centers, and manufacturing facilities, suitable for various industrial uses.

Retail Spaces

Orion Office REIT Inc. offers retail spaces for lease, ranging from small shops to large anchor stores, in prime locations with high foot traffic.

Flex Spaces

The company provides flexible spaces that combine office and industrial uses, ideal for businesses requiring a mix of administrative and operational areas.

Land Leasing

Orion Office REIT Inc. offers land leasing opportunities for businesses seeking to develop their own properties or expand existing facilities.

8. Orion Office REIT Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Orion Office REIT Inc. is medium due to the availability of alternative investment options in the real estate market.

Bargaining Power Of Customers

The bargaining power of customers is low as Orion Office REIT Inc. has a diversified portfolio of properties, making it less dependent on individual customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium as Orion Office REIT Inc. relies on a network of contractors and suppliers for property maintenance and development.

Threat Of New Entrants

The threat of new entrants is high due to the relatively low barriers to entry in the real estate investment trust (REIT) industry.

Intensity Of Rivalry

The intensity of rivalry is high due to the competitive nature of the REIT industry, with many established players vying for market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	39.77%
Debt Cost	7.56%
Equity Weight	60.23%
Equity Cost	8.31%
WACC	8.01%
Leverage	66.04%

11. Quality Control: Orion Office REIT Inc. passed 3 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Easterly Government Properties

A-Score: 5.8/10

Value: 5.5

Growth: 4.8

Quality: 5.4

Yield: 10.0

Momentum: 1.0

Volatility: 8.3

1-Year Total Return ->

Paramount Group

A-Score: 5.5/10

Value: 8.0

Growth: 3.2

Quality: 5.8

Yield: 3.0

Momentum: 8.0

Volatility: 5.3

1-Year Total Return ->

JBG SMITH

A-Score: 5.4/10

Value: 5.3

Growth: 2.9

Quality: 2.3

Yield: 8.0

Momentum: 7.5

Volatility: 6.3

1-Year Total Return ->

Orion Office REIT

A-Score: 5.0/10

Value: 7.8

Growth: 4.2

Quality: 3.6

Yield: 10.0

Momentum: 1.5

Volatility: 3.0

1-Year Total Return ->

Franklin Street Properties

A-Score: 4.8/10

Value: 8.2

Growth: 0.6

Quality: 3.1

Yield: 7.0

Momentum: 5.0

Volatility: 5.0

1-Year Total Return ->

Hudson Pacific Properties

A-Score: 3.2/10

Value: 6.6

Growth: 2.0

Quality: 2.2

Yield: 4.0

Momentum: 1.5

Volatility: 2.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-6.60%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

8.01%

Orion Office REIT Inc. - US68629Y1038

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on ONL

1.c. Company Highlights

Cheaper

Weak Momentum

More Volatile

Lower Quality

Revenues Beats

Medium Volatility

2. Orion Properties' Q3 2025 Earnings: A Step in the Right Direction

Operational Highlights

Guidance and Outlook

Valuation and Dividend

Capital Allocation

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.50%)

6. Segments

Rental

Expected Growth: 4.5%

Fee Income from Unconsolidated Joint Venture

Expected Growth: 4.5%

7. Detailed Products

Office Spaces

Industrial Properties

Retail Spaces

Flex Spaces

Land Leasing

8. Orion Office REIT Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Orion Office REIT Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

2.06$

Current Price

2.06$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA