Orion Office REIT Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Real Estate Investments and Related Intangibles (Tables)

Real Estate Investments and Related Intangibles (Tables)

6 Months Ended

Jun. 30, 2024

The following table summarizes the Company’s property dispositions for the three and six months ended June 30, 2024 and 2023 (dollars in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Total dispositions	1		—		1		—
Aggregate gross sales price	$	2,100	$	—	$	2,100	$	—




Impairments on disposition of real estate assets	$	20	$	—	$	20	$	—

Schedule of Intangible Lease Assets and Liabilities

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


	Weighted-Average Useful Life (Years)	June 30, 2024		December 31, 2023
Intangible lease assets:
In-place leases, net of accumulated amortization of $193,359 and $193,470, respectively	7.2	$	74,462	$	103,997
Leasing commissions, net of accumulated amortization of $3,854 and $3,033, respectively	12.1	16,429		13,539
Above-market lease assets, net of accumulated amortization of $11,889 and $10,372, respectively	8.1	3,434		5,006
Deferred lease incentives, net of accumulated amortization of $665 and $419, respectively	10.6	3,652		3,822
Total intangible lease assets, net		$	97,977	$	126,364

Intangible lease liabilities:
Below-market leases, net of accumulated amortization of $24,243 and $23,176, respectively	13.3	$	5,536	$	8,074

Schedule of Future Amortization Expense of Intangible Lease Assets and Liabilities

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 June 30, 2024 (in thousands):


	Remainder of 2024		2025		2026		2027		2028		2029
In-place leases:
Total projected to be included in amortization expense	$	19,860	$	21,612	$	15,232	$	7,337	$	4,592	$	1,872
Leasing commissions:
Total projected to be included in amortization expense	$	826	$	1,624	$	1,620	$	1,593	$	1,373	$	1,084
Above-market lease assets:
Total projected to be deducted from rental revenue	$	1,391	$	849	$	680	$	237	$	115	$	63
Deferred lease incentives:
Total projected to be deducted from rental revenue	$	248	$	480	$	383	$	359	$	346	$	335
Below-market lease liabilities:
Total projected to be added to rental revenue	$	1,248	$	1,036	$	817	$	655	$	571	$	389

Schedule of Company's Investment in Joint Venture

The following is a summary of the Company’s investment in the Arch Street Joint Venture, as of June 30, 2024 and December 31, 2023 and for the six months ended June 30, 2024 and 2023 (dollars in thousands):


	Ownership % (1)	Number of Properties	Carrying Value of Investment				Equity in Loss, Net
							Six Months Ended
Investment	June 30, 2024		June 30, 2024		December 31, 2023		June 30, 2024		June 30, 2023
Arch Street Joint Venture (2) (3)	20%	6	$	12,382	$	13,549	$	(279)	$	(218)

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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)During the three and six months ended June 30, 2024 and 2023, the Arch Street Joint Venture did not acquire any properties.

(3)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 $0.2 million and $0.4 million as of June 30, 2024 and December 31, 2023, 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.