Orion Office REIT Inc. 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, 2023

The following table summarizes the Company’s property dispositions for the years ended December 31, 2023, 2022 and 2021 (dollars in thousands):


	Year Ended December 31,
	2023		2022		2021
Total dispositions	6		11		—
Aggregate gross sales price	$	25,425	$	33,098	$	—

Gain on disposition of real estate assets	$	31	$	2,352	$	—
Property count	3		5		—

Impairments on disposition of real estate assets	$	575	$	5,089	$	—
Property count	3		6		—

Schedule of Finite-Lived Intangible Assets

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


	Weighted-Average Useful Life (Years)	December 31, 2023		December 31, 2022
Intangible lease assets:
In-place leases, net of accumulated amortization of $193,470 and $144,798, respectively	6.4	$	103,997	$	177,698
Leasing commissions, net of accumulated amortization of $3,033 and $1,553, respectively	12.4	13,539		13,614
Above-market lease assets, net of accumulated amortization of $10,372 and $11,391, respectively	7.0	5,006		9,826
Deferred lease incentives, net of accumulated amortization of $419 and $116, respectively	10.5	3,822		1,694
Total intangible lease assets, net		$	126,364	$	202,832

Intangible lease liabilities:
Below-market leases, net of accumulated amortization of $23,176 and $17,249, respectively	10.8	$	8,074	$	14,068

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, 2023 (in thousands):


	2024		2025		2026		2027		2028
In-place leases:
Total projected to be included in amortization expense	$	49,028	$	21,608	$	15,499	$	7,441	$	4,592
Leasing commissions:
Total projected to be included in amortization expense	$	1,497	$	1,430	$	1,426	$	1,399	$	1,251
Above-market lease assets:
Total projected to be deducted from rental revenue	$	2,960	$	850	$	682	$	237	$	115
Deferred lease incentives:
Total projected to be deducted from rental revenue	$	489	$	473	$	375	$	351	$	338
Below-market lease liabilities:
Total projected to be added to rental revenue	$	3,786	$	1,036	$	817	$	655	$	571

Schedule of Company's Investment in Unconsolidated Joint Venture

The following is a summary of the Company’s investment in the Arch Street Joint Venture, as of December 31, 2023 and 2022 and for the years ended December 31, 2023, 2022 and 2021 (dollars in thousands):


	Ownership % (1)	Number of Properties	Carrying Value of Investment				Equity in Loss, Net
							Year Ended (2)
Investment	December 31, 2023		December 31, 2023		December 31, 2022		December 31, 2023		December 31, 2022		December 31, 2021
Arch Street Joint Venture (3) (4)	20%	6	$	13,549	$	15,824	$	(435)	$	(524)	$	(56)

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(1)The Company’s ownership interest reflects its legal ownership interest. The Company’s legal ownership interest may, at times, not equal the Company’s economic interest because of various provisions in the joint venture agreement 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 interest.

(2)The interest in the Arch Street Joint Venture was acquired by Realty Income as part of the merger transaction with VEREIT and was transferred to the Company upon the consummation of the Distribution. Therefore, the Company’s equity in loss, net reflects operations following November 1, 2021.

(3)During the years ended December 31, 2023 and 2022, the Arch Street Joint Venture did not acquire any properties. During the 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 value of the Company’s investment in the Arch Street Joint Venture was greater than the underlying equity in net assets by $0.4 million and $0.9 million as of December 31, 2023 and 2022, respectively. This difference is related to a step up in the fair value of the investment in the Arch Street Joint Venture in connection with the Separation and the Distribution. The step up in fair value was allocated based on the underlying assets and liabilities of the Arch Street Joint Venture and is being amortized over the estimated useful lives of the respective assets and liabilities in accordance with the Company’s accounting policies.