Orion Office REIT Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Orion Office REIT, Real Estate Investments and Related Intangibles (Tables)

Orion Office REIT, Real Estate Investments and Related Intangibles (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of Finite-Lived Intangible Assets

Intangible lease assets consisted of the following (amounts in thousands, except weighted-average useful life):


	Weighted-Average Useful Life (Years)	December 31, 2021		December 31, 2020
Intangible lease assets:
In-place leases, net of accumulated amortization of $65,247 and $71,633, respectively	4.8	$	272,743	$	25,800
Leasing commissions, net of accumulated amortization of $456	13.4	10,349		—
Above-market lease assets, net of accumulated amortization of $6,239 and $7,166, respectively	5.0	15,015		2,880
Total intangible lease assets, net		$	298,107	$	28,680

Intangible lease liabilities:
Below-market leases, net of accumulated amortization of $14,459 and $13,482, respectively	7.5	$	20,609	$	7,221

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

The following table provides the projected amortization expense and adjustments to rental revenue related to the intangible lease assets and liabilities for the next five years as of December 31, 2021 (amounts in thousands):


	2022		2023		2024		2025		2026
In-place leases:
Total projected to be included in amortization expense	$	94,659	$	73,859	$	49,213	$	21,652	$	15,499
Leasing commissions:
Total projected to be included in amortization expense	$	850	$	850	$	841	$	836	$	836
Above-market lease assets and deferred lease incentives:
Total projected to be deducted from rental revenue	$	5,171	$	4,791	$	2,998	$	860	$	682
Below-market lease liabilities:
Total projected to be added to rental revenue	$	6,443	$	6,091	$	3,786	$	1,036	$	817

Real Estate Investment Financial Statements, Disclosure

The following is a summary of the Company’s investment in one unconsolidated entity, Arch Street Joint Venture, as of December 31, 2021 and for the year ended December 31, 2021 (dollar amounts in thousands):

Ownership % (1)

Number of Properties

Carrying Amount of
Investment

Equity in Income

Year Ended (2)

Investment

December 31, 2021

Arch Street Joint Venture (3) (4)

20%

18,631

(56)

____________________________________

(1)The Company’s ownership interest reflects its legal ownership interest. Legal ownership may, at times, not equal the Company’s economic interest in the listed properties because of various provisions in certain joint venture agreements regarding capital contributions, distributions of cash flow based on capital account balances and allocations of profits and losses. As a result, the Company’s actual economic interest (as distinct from its legal ownership interest) in certain of the properties could fluctuate from time to time and may not wholly align with its legal ownership interests.

(2)The interest in the Arch Street Joint Venture was acquired by Realty Income as part of the Mergers, and was transferred to the Company upon the consummation of the Distribution. Therefore, the Company’s equity in income reflects operations following the Merger Effective Time.

(3)During year ended December 31, 2021, the Arch Street Joint Venture acquired one property from a third party for a purchase price of $30.5 million.

(4)The total carrying amount of the Company’s investment in the unconsolidated joint venture was greater than the underlying equity in net assets by $2.1 million as of December 31, 2021. This difference related to a step up in the fair value of the investment in the unconsolidated joint venture in connection with the Mergers. The step up in fair value was allocated to the Company’s investment in the unconsolidated joint venture and is amortized in accordance with the Company’s depreciation policy.