Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2022 | Oct. 28, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-40873 | |
Entity Registrant Name | Orion Office REIT Inc. | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 87-1656425 | |
Entity Address, Address Line One | 2325 E. Camelback Road, Suite 850 | |
Entity Address, City or Town | Phoenix | |
Entity Address, State or Province | AZ | |
Entity Address, Postal Zip Code | 85016 | |
City Area Code | (602) | |
Local Phone Number | 698-1002 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | ONL | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 56,635,038 | |
Entity Central Index Key | 0001873923 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
ORION OFFICE REIT, CONSOLIDATED
ORION OFFICE REIT, CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Real estate investments, at cost: | ||
Land | $ 243,726 | $ 250,194 |
Buildings, fixtures and improvements | 1,137,177 | 1,231,551 |
Total real estate investments, at cost | 1,380,903 | 1,481,745 |
Less: accumulated depreciation | 126,097 | 128,109 |
Total real estate investments, net | 1,254,806 | 1,353,636 |
Accounts receivable, net | 21,923 | 17,916 |
Intangible lease assets, net | 223,528 | 298,107 |
Cash and cash equivalents | 23,282 | 29,318 |
Real estate assets held for sale, net | 6,383 | 0 |
Other assets, net | 91,632 | 60,501 |
Total assets | 1,621,554 | 1,759,478 |
LIABILITIES AND EQUITY | ||
Bridge facility, net | 0 | 354,357 |
Mortgages payable, net | 351,994 | 0 |
Accounts payable and accrued expenses | 22,038 | 17,379 |
Below-market lease liabilities, net | 15,611 | 20,609 |
Distributions payable | 5,664 | 0 |
Other liabilities, net | 21,085 | 16,355 |
Total liabilities | 620,870 | 671,190 |
Common stock, $0.001 par value, 100,000,000 shares authorized 56,635,038 and 56,625,650 shares issued and outstanding as of each of September 30, 2022 and December 31, 2021, respectively | 57 | 57 |
Additional paid-in capital | 1,146,431 | 1,145,278 |
Accumulated other comprehensive income | 7,057 | 299 |
Accumulated deficit | (154,273) | (58,715) |
Total stockholders’ equity | 999,272 | 1,086,919 |
Non-controlling interest | 1,412 | 1,369 |
Total equity | 1,000,684 | 1,088,288 |
Total liabilities and equity | 1,621,554 | 1,759,478 |
Credit facility term loan | ||
LIABILITIES AND EQUITY | ||
Credit facilities | 173,478 | 172,490 |
Credit facility revolver | ||
LIABILITIES AND EQUITY | ||
Credit facilities | $ 31,000 | $ 90,000 |
ORION OFFICE REIT, CONSOLIDAT_2
ORION OFFICE REIT, CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Shares issued (in shares) | 56,635,038 | 56,625,650 |
Common stock, shares outstanding (in shares) | 56,635,038 | 56,625,650 |
ORION OFFICE REIT, CONSOLIDAT_3
ORION OFFICE REIT, CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Total revenues | $ 51,769,000 | $ 13,315,000 | $ 157,824,000 | $ 38,930,000 |
Operating expenses: | ||||
Property operating | 15,303,000 | 1,660,000 | 45,773,000 | 4,611,000 |
General and administrative | 4,672,000 | 594,000 | 11,480,000 | 1,665,000 |
Depreciation and amortization | 32,693,000 | 5,912,000 | 100,874,000 | 17,855,000 |
Impairments | 44,801,000 | 0 | 54,161,000 | 0 |
Transaction related | 194,000 | 0 | 398,000 | 0 |
Spin related | 0 | 2,797,000 | 964,000 | 2,797,000 |
Total operating expenses | 97,663,000 | 10,963,000 | 213,650,000 | 26,928,000 |
Other (expenses) income: | ||||
Interest expense, net | (7,904,000) | (276,000) | (22,618,000) | (1,080,000) |
Gain on disposition of real estate assets | 1,059,000 | 0 | 1,059,000 | 0 |
Loss on extinguishment of debt, net | 0 | (3,499,000) | (468,000) | (3,499,000) |
Other income, net | 31,000 | 0 | 118,000 | 0 |
Equity in loss of unconsolidated joint venture | (157,000) | 0 | (252,000) | 0 |
Total other (expenses) income, net | (6,971,000) | (3,775,000) | (22,161,000) | (4,579,000) |
(Loss) income before taxes | (52,865,000) | (1,423,000) | (77,987,000) | 7,423,000 |
Provision for income taxes | (164,000) | 0 | (494,000) | 0 |
Net (loss) income | (53,029,000) | (1,423,000) | (78,481,000) | 7,423,000 |
Net income attributable to non-controlling interest | (18,000) | 0 | (43,000) | 0 |
Net (loss) income attributable to common stockholders | $ (53,047,000) | $ (1,423,000) | $ (78,524,000) | $ 7,423,000 |
Weighted-average shares outstanding - basic (in shares) | 56,635,038 | 56,625,650 | 56,630,086 | 56,625,650 |
Weighted-average shares outstanding - diluted (in shares) | 56,635,038 | 56,625,650 | 56,630,086 | 56,625,650 |
Basic net (loss) income per share attributable to common stockholders (in dollars per share) | $ (0.94) | $ (0.03) | $ (1.39) | $ 0.13 |
Diluted net (loss) income per share attributable to common stockholders (in dollars per share) | $ (0.94) | $ (0.03) | $ (1.39) | $ 0.13 |
Rental | ||||
Total revenues | $ 51,580,000 | $ 13,315,000 | $ 157,256,000 | $ 38,930,000 |
Fee income from unconsolidated joint venture | ||||
Total revenues | $ 189,000 | $ 0 | $ 568,000 | $ 0 |
ORION OFFICE REIT, CONSOLIDAT_4
ORION OFFICE REIT, CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | ||
Statement of Comprehensive Income [Abstract] | |||||
Net (loss) income | $ (53,029) | $ (1,423) | $ (78,481) | $ 7,423 | |
Total other comprehensive income (loss) | |||||
Unrealized gain on interest rate derivatives | 1,885 | 0 | 7,229 | 0 | |
Reclassification of previous unrealized (gain) loss on interest rate derivatives into net (loss) income | (679) | 0 | (471) | 0 | |
Total other comprehensive income (loss) | 1,206 | 0 | 6,758 | 0 | |
Total comprehensive (loss) income | (51,823) | (1,423) | (71,723) | 7,423 | |
Comprehensive income attributable to non-controlling interest | [1] | (18) | 0 | (43) | 0 |
Total comprehensive (loss) income | $ (51,841) | $ (1,423) | $ (71,766) | $ 7,423 | |
[1]Represents comprehensive income attributable to a consolidated joint venture partner. |
ORION OFFICE REIT, CONSOLIDAT_5
ORION OFFICE REIT, CONSOLIDATED AND COMBINED STATEMENTS OF EQUITY - USD ($) $ in Thousands | Total | Total Stockholders' and Parent Company Equity | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Net Parent Investment | Non-Controlling Interests |
Beginning balance (in shares) at Dec. 31, 2020 | 0 | |||||||
Beginning balance at Dec. 31, 2020 | $ 497,118 | $ 497,118 | $ 0 | $ 0 | $ 0 | $ 0 | $ 497,118 | $ 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net (loss) income | 4,551 | 4,551 | 4,551 | |||||
Distributions, net | (14,122) | (14,122) | (14,122) | |||||
Ending balance (in shares) at Mar. 31, 2021 | 0 | |||||||
Ending balance at Mar. 31, 2021 | 487,547 | 487,547 | $ 0 | 0 | 0 | 0 | 487,547 | 0 |
Beginning balance (in shares) at Dec. 31, 2020 | 0 | |||||||
Beginning balance at Dec. 31, 2020 | 497,118 | 497,118 | $ 0 | 0 | 0 | 0 | 497,118 | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net (loss) income | 7,423 | |||||||
Other comprehensive income, net | 0 | |||||||
Ending balance (in shares) at Sep. 30, 2021 | 100,000 | |||||||
Ending balance at Sep. 30, 2021 | 502,655 | 502,655 | $ 0 | 1 | 0 | 0 | 502,654 | 0 |
Beginning balance (in shares) at Mar. 31, 2021 | 0 | |||||||
Beginning balance at Mar. 31, 2021 | 487,547 | 487,547 | $ 0 | 0 | 0 | 0 | 487,547 | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net (loss) income | 4,296 | 4,296 | 4,296 | |||||
Contributions, net | 3,746 | 3,746 | 3,746 | |||||
Ending balance (in shares) at Jun. 30, 2021 | 0 | |||||||
Ending balance at Jun. 30, 2021 | 495,589 | 495,589 | $ 0 | 0 | 0 | 0 | 495,589 | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net (loss) income | (1,423) | (1,423) | (1,423) | |||||
Contributions, net | 8,488 | 8,488 | 8,488 | |||||
Other comprehensive income, net | 0 | |||||||
Issuance of common stock, net (in shares) | 100,000 | |||||||
Issuance of common stock, net | 1 | 1 | ||||||
Ending balance (in shares) at Sep. 30, 2021 | 100,000 | |||||||
Ending balance at Sep. 30, 2021 | 502,655 | 502,655 | $ 0 | 1 | 0 | 0 | $ 502,654 | 0 |
Beginning balance (in shares) at Dec. 31, 2021 | 56,625,650 | |||||||
Beginning balance at Dec. 31, 2021 | 1,088,288 | 1,086,919 | $ 57 | 1,145,278 | 299 | (58,715) | 1,369 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net (loss) income | (9,882) | (9,906) | (9,906) | 24 | ||||
Distributions, net | (5,707) | (5,707) | (5,707) | |||||
Equity-based compensation, net | 270 | 270 | 270 | |||||
Other comprehensive income, net | 4,057 | 4,057 | 4,057 | |||||
Ending balance (in shares) at Mar. 31, 2022 | 56,625,650 | |||||||
Ending balance at Mar. 31, 2022 | 1,077,026 | 1,075,633 | $ 57 | 1,145,548 | 4,356 | (74,328) | 1,393 | |
Beginning balance (in shares) at Dec. 31, 2021 | 56,625,650 | |||||||
Beginning balance at Dec. 31, 2021 | 1,088,288 | 1,086,919 | $ 57 | 1,145,278 | 299 | (58,715) | 1,369 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net (loss) income | (78,481) | |||||||
Other comprehensive income, net | 6,758 | |||||||
Ending balance (in shares) at Sep. 30, 2022 | 56,635,038 | |||||||
Ending balance at Sep. 30, 2022 | 1,000,684 | 999,272 | $ 57 | 1,146,431 | 7,057 | (154,273) | 1,412 | |
Beginning balance (in shares) at Mar. 31, 2022 | 56,625,650 | |||||||
Beginning balance at Mar. 31, 2022 | 1,077,026 | 1,075,633 | $ 57 | 1,145,548 | 4,356 | (74,328) | 1,393 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net (loss) income | (15,570) | (15,571) | (15,571) | 1 | ||||
Distributions, net | $ (5,663) | (5,663) | (5,663) | |||||
Equity-based compensation, net (in shares) | 9,388 | |||||||
Equity-based compensation, net | $ 439 | 439 | 439 | |||||
Other comprehensive income, net | 1,495 | 1,495 | 1,495 | |||||
Ending balance (in shares) at Jun. 30, 2022 | 56,635,038 | |||||||
Ending balance at Jun. 30, 2022 | 1,057,727 | 1,056,333 | $ 57 | 1,145,987 | 5,851 | (95,562) | 1,394 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net (loss) income | (53,029) | (53,047) | (53,047) | 18 | ||||
Distributions, net | (5,664) | (5,664) | (5,664) | |||||
Equity-based compensation, net | 444 | 444 | 444 | |||||
Other comprehensive income, net | 1,206 | 1,206 | 1,206 | |||||
Ending balance (in shares) at Sep. 30, 2022 | 56,635,038 | |||||||
Ending balance at Sep. 30, 2022 | $ 1,000,684 | $ 999,272 | $ 57 | $ 1,146,431 | $ 7,057 | $ (154,273) | $ 1,412 |
ORION OFFICE REIT, CONSOLIDAT_6
ORION OFFICE REIT, CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (78,481) | $ 7,423 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization | 100,874 | 17,855 |
Non-cash revenue adjustments | (2,683) | (583) |
Amortization of net premiums on mortgages payable | 0 | (60) |
Impairments | 54,161 | 0 |
Gain on disposition of real estate assets | (1,059) | 0 |
Loss on extinguishment of debt, net | 468 | 3,499 |
Amortization of deferred financing costs | 3,295 | 0 |
Equity-based compensation | 1,153 | 0 |
Equity in loss of unconsolidated joint venture | 252 | 0 |
Changes in assets and liabilities: | ||
Accounts receivable, net and other assets, net | 502 | (288) |
Accounts payable, accrued expenses and other liabilities, net | 7,435 | 1,652 |
Net cash provided by operating activities | 85,917 | 29,498 |
Cash flows from investing activities: | ||
Capital expenditures and leasing costs | (7,392) | (160) |
Proceeds from disposition of real estate | 22,281 | 0 |
Return of investment from unconsolidated joint venture | 1,798 | 0 |
Net cash provided by (used in) investing activities | 16,687 | (160) |
Cash flows from financing activities: | ||
Repayment of bridge facility, including debt extinguishment costs | (355,026) | 0 |
Proceeds from mortgages payable | 355,000 | 0 |
Payments on mortgages payable | 0 | (26,851) |
Proceeds from credit facility revolver | 70,000 | 0 |
Repayments of credit facility revolver | (129,000) | 0 |
Distributions paid | (11,327) | 0 |
Distributions to parent company, net | 0 | (1,887) |
Payments of deferred financing costs | (3,096) | 0 |
Other financing activities | (46) | 0 |
Payments upon extinguishment of mortgage notes payable | 0 | (3,984) |
Net cash used in financing activities | (73,495) | (32,722) |
Net change in cash and cash equivalents and restricted cash | 29,109 | (3,384) |
Cash and cash equivalents and restricted cash at the beginning of the period | 29,318 | 3,915 |
Cash and cash equivalents and restricted cash at the end of the period | 58,427 | 531 |
Reconciliation of Cash and Cash Equivalents and Restricted Cash | ||
Cash and cash equivalents at beginning of period | 29,318 | 0 |
Restricted cash at beginning of period | 0 | 3,915 |
Cash and cash equivalents and restricted cash at the beginning of the period | 29,318 | 3,915 |
Cash and cash equivalents at end of period | 23,282 | 0 |
Restricted cash at the end of the period | 35,145 | 531 |
Cash and cash equivalents and restricted cash at the end of the period | $ 58,427 | $ 531 |
VEREIT OFFICE ASSETS, COMBINED
VEREIT OFFICE ASSETS, COMBINED AND CONSOLIDATED STATEMENT OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Total revenues | $ 51,769,000 | $ 13,315,000 | $ 157,824,000 | $ 38,930,000 |
Operating expenses: | ||||
Property operating | 15,303,000 | 1,660,000 | 45,773,000 | 4,611,000 |
General and administrative | 4,672,000 | 594,000 | 11,480,000 | 1,665,000 |
Provisions for impairment | 44,801,000 | 0 | 54,161,000 | 0 |
Other (expenses) income: | ||||
Other income, net | 31,000 | 0 | 118,000 | 0 |
Loss on extinguishment of debt, net | 0 | (3,499,000) | (468,000) | (3,499,000) |
Equity in income of unconsolidated joint venture | (157,000) | 0 | (252,000) | 0 |
Total other (expenses) income, net | (6,971,000) | (3,775,000) | (22,161,000) | (4,579,000) |
Income before taxes | (52,865,000) | (1,423,000) | (77,987,000) | 7,423,000 |
Provision for income taxes | (164,000) | 0 | (494,000) | 0 |
Net (loss) income | (53,029,000) | (1,423,000) | (78,481,000) | 7,423,000 |
Net loss attributable to non-controlling interest | (18,000) | 0 | (43,000) | 0 |
Net (loss) income attributable to common stockholders | (53,047,000) | (1,423,000) | (78,524,000) | 7,423,000 |
VEREIT Office Assets | ||||
Total revenues | 40,655,000 | 121,990,000 | ||
Operating expenses: | ||||
Property operating | 9,997,000 | 30,811,000 | ||
General and administrative | 1,483,000 | 5,058,000 | ||
Depreciation and amortization | 14,790,000 | 44,234,000 | ||
Provisions for impairment | 6,440,000 | 28,064,000 | ||
Total operating expenses | 32,710,000 | 108,167,000 | ||
Other (expenses) income: | ||||
Other income, net | 95,000 | 146,000 | ||
Interest expense | (1,706,000) | (5,522,000) | ||
Loss on extinguishment of debt, net | (5,000) | (85,000) | ||
Equity in income of unconsolidated joint venture | 211,000 | 621,000 | ||
Total other (expenses) income, net | (1,405,000) | (4,840,000) | ||
Income before taxes | 6,540,000 | 8,983,000 | ||
Provision for income taxes | (156,000) | (469,000) | ||
Net (loss) income | 6,384,000 | 8,514,000 | ||
Net loss attributable to non-controlling interest | 10,000 | 41,000 | ||
Net (loss) income attributable to common stockholders | 6,394,000 | 8,555,000 | ||
Rental | ||||
Total revenues | 51,580,000 | 13,315,000 | 157,256,000 | 38,930,000 |
Rental | VEREIT Office Assets | ||||
Total revenues | 40,494,000 | 121,389,000 | ||
Fee income from unconsolidated joint venture | ||||
Total revenues | $ 189,000 | 0 | $ 568,000 | 0 |
Fee income from unconsolidated joint venture | VEREIT Office Assets | ||||
Total revenues | $ 161,000 | $ 601,000 |
VEREIT OFFICE ASSETS, COMBINE_2
VEREIT OFFICE ASSETS, COMBINED AND CONSOLIDATED STATEMENT OF EQUITY - USD ($) $ in Thousands | Total | VEREIT Office Assets |
Beginning balance at Dec. 31, 2020 | $ 1,161,434 | |
Increase (Decrease) in Partners' Capital [Roll Forward] | ||
Contributions, net | 18,927 | |
Distributions, net | $ (14,122) | |
Net (loss) income | 4,551 | (9,866) |
Ending balance at Mar. 31, 2021 | 1,170,495 | |
Beginning balance at Dec. 31, 2020 | 1,161,434 | |
Increase (Decrease) in Partners' Capital [Roll Forward] | ||
Net (loss) income | 7,423 | 8,514 |
Ending balance at Sep. 30, 2021 | 1,170,936 | |
Beginning balance at Mar. 31, 2021 | 1,170,495 | |
Increase (Decrease) in Partners' Capital [Roll Forward] | ||
Contributions, net | 3,746 | |
Distributions, net | (4,395) | |
Net (loss) income | 4,296 | 11,996 |
Ending balance at Jun. 30, 2021 | 1,178,096 | |
Increase (Decrease) in Partners' Capital [Roll Forward] | ||
Contributions, net | 8,488 | |
Distributions, net | (13,544) | |
Net (loss) income | $ (1,423) | 6,384 |
Ending balance at Sep. 30, 2021 | $ 1,170,936 |
VEREIT OFFICE ASSETS COMBINED A
VEREIT OFFICE ASSETS COMBINED AND CONSOLIDATED STATEMENT OF CASH FLOWS $ in Thousands | 9 Months Ended |
Sep. 30, 2021 USD ($) | |
Cash flows from operating activities: | |
Net income | $ 7,423 |
Adjustments to reconcile net income to net cash provided by operating activities: | |
Depreciation and amortization | 17,855 |
Impairments | 0 |
Loss on extinguishment of debt, net | 3,499 |
Equity in loss of unconsolidated joint venture | 0 |
Changes in assets and liabilities: | |
Accounts payable and accrued expenses | 1,652 |
Net cash provided by operating activities | 29,498 |
Cash flows from investing activities: | |
Capital expenditures and leasing costs | (160) |
Return of investment from unconsolidated joint venture | 0 |
Net cash provided by (used in) investing activities | (160) |
Cash flows from financing activities: | |
Payments on mortgage notes payable | (26,851) |
Net cash used in financing activities | (32,722) |
Net change in cash and cash equivalents and restricted cash | (3,384) |
Cash and cash equivalents and restricted cash at the beginning of the period | 3,915 |
Cash and cash equivalents and restricted cash at the end of the period | 531 |
Supplemental disclosures: | |
Cash paid for interest | 1,200 |
VEREIT Office Assets | |
Cash flows from operating activities: | |
Net income | 8,514 |
Adjustments to reconcile net income to net cash provided by operating activities: | |
Depreciation and amortization | 44,167 |
Impairments | 28,064 |
Loss on extinguishment of debt, net | 85 |
Equity in loss of unconsolidated joint venture | (621) |
Distributions from unconsolidated joint venture | 621 |
Changes in assets and liabilities: | |
Rents and tenant receivables, operating lease right-of-use and other assets, net | 1,214 |
Accounts payable and accrued expenses | (3,276) |
Deferred rent, operating lease and other liabilities | 550 |
Net cash provided by operating activities | 79,318 |
Cash flows from investing activities: | |
Capital expenditures and leasing costs | (4,531) |
Real estate developments | (240) |
Investments in unconsolidated joint venture | (2,180) |
Return of investment from unconsolidated joint venture | 1,026 |
Proceeds from the settlement of property-related insurance claims | 70 |
Net cash provided by (used in) investing activities | (5,855) |
Cash flows from financing activities: | |
Payments on mortgage notes payable | (74,600) |
Refunds of deferred financing costs | 280 |
Net contributions from parent | 989 |
Net cash used in financing activities | (73,331) |
Net change in cash and cash equivalents and restricted cash | 132 |
Cash and cash equivalents and restricted cash at the beginning of the period | 3,414 |
Cash and cash equivalents and restricted cash at the end of the period | 3,546 |
Supplemental disclosures: | |
Cash paid for interest | 5,886 |
Non-cash investing and financing activities: | |
Accrued capital expenditures and real estate developments | $ 926 |
Orion Office REIT, Organization
Orion Office REIT, Organization | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Note 1 – Organization Organization Orion Office REIT Inc. (the “Company”, “Orion”, “we” or “us”) was incorporated in the state of Maryland on July 1, 2021 and was capitalized on July 15, 2021. On April 29, 2021, Realty Income Corporation (“Realty Income”) entered into an Agreement and Plan of Merger (as amended, the “Merger Agreement”) with VEREIT, Inc. (“VEREIT”), its operating partnership, VEREIT Operating Partnership, L.P. (“VEREIT OP”), Rams MD Subsidiary I, Inc., a wholly owned subsidiary of Realty Income (“Merger Sub 1”), and Rams Acquisition Sub II, LLC, a wholly owned subsidiary of Realty Income (“Merger Sub 2”). On November 1, 2021, pursuant to the Merger Agreement, Merger Sub 2 merged with and into VEREIT OP, with VEREIT OP continuing as the surviving partnership, and immediately thereafter, VEREIT merged with and into Merger Sub 1, with Merger Sub 1 continuing as the surviving corporation (together, the “Mergers”, and such effective time of the Mergers, the “Merger Effective Time”). Upon the Merger Effective Time, as part of the Mergers, Realty Income acquired certain office real properties and related assets previously owned by subsidiaries of VEREIT (collectively, “VEREIT Office Assets”). Following the Merger Effective Time, in accordance with the Merger Agreement, Realty Income contributed the portion of the combined business comprising certain office real properties and related assets previously owned by subsidiaries of Realty Income (collectively, “Realty Income Office Assets”) and VEREIT Office Assets (the “Separation”) to the Company and its operating partnership, Orion Office REIT LP (“Orion OP”). On November 12, 2021, following the Separation, in accordance with the Merger Agreement and that certain Separation and Distribution Agreement dated as of November 11, 2021, by and among Realty Income, the Company and Orion OP (the “Separation and Distribution Agreement”), Realty Income effected a special distribution to its stockholders (including the former holders of VEREIT common stock and certain former VEREIT OP common unitholders prior to the Mergers) of all of the outstanding shares of common stock of the Company (the “Distribution”). Approximately $595.0 million was distributed by the Company to Realty Income in accordance with the Separation and Distribution Agreement. In connection with the Separation and the Distribution, the Company entered into certain agreements with Realty Income to govern the ongoing relationships between the Company and Realty Income and to provide mechanisms for an orderly transition to the Company’s status as an independent, publicly traded company, including the Separation and Distribution Agreement and a transition services agreement to provide certain administrative and other services between the parties for a limited time. Following the Distribution, the Company became independent and publicly traded and has been operating in a manner so as to qualify and has elected to be taxed as a REIT, commencing with the Company’s initial taxable year ended December 31, 2021. The Company’s common stock, par value $0.001 per share, trades on the New York Stock Exchange (the “NYSE”) under the symbol “ONL”. At September 30, 2022, the Company owned and operated 87 office properties and related assets previously owned by Realty Income and VEREIT, totaling approximately 10.0 million leasable square feet located within 29 states. In addition, the Company owns an equity interest in OAP/VER Venture, LLC (the “Arch Street Joint Venture”), an unconsolidated joint venture with an affiliate of Arch Street Capital Partners, LLC (“Arch Street Capital Partners”). As of September 30, 2022, the Arch Street Joint Venture owned a portfolio consisting of six office properties totaling approximately 1.0 million leasable square feet located within six states. |
Orion Office REIT, Summary of S
Orion Office REIT, Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 - Summary of Significant Accounting Policies Basis of Accounting The consolidated and combined statements of the Company presented herein include the accounts of the Company and its consolidated subsidiaries. All intercompany transactions have been eliminated upon consolidation. The financial statements are prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The consolidated and combined financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. These adjustments are considered to be of a normal, recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These financial statements should be read in conjunction with the Company’s audited consolidated and combined financial statements and notes thereto as of and for the year ended December 31, 2021, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 24, 2022. Information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to the rules and regulations of the SEC and U.S. GAAP. Principles of Consolidation and Combination and Basis of Presentation The consolidated and combined statements of the Company include the accounts of Realty Income Office Assets presented on a combined basis for the three and nine months ended September 30, 2021 as the ownership interests were under common control and ownership of Realty Income during that period. For the three and nine months ended September 30, 2022, the consolidated financial statements include the accounts of the Company and its consolidated subsidiaries and a consolidated joint venture, which accounts include the Realty Income Office Assets and the VEREIT Office Assets. The portion of the consolidated joint venture not owned by the Company is presented as non-controlling interest in the Company’s consolidated balance sheets, statements of operations, statements of comprehensive income (loss) and statements of equity. For legal entities being evaluated for consolidation, the Company must first determine whether the interests that it holds and fees it receives qualify as variable interests in the entity. A variable interest is an investment or other interest that will absorb portions of an entity’s expected losses or receive portions of the entity’s expected residual returns. The Company’s evaluation includes consideration of fees paid to the Company where the Company acts as a decision maker or service provider to the entity being evaluated. If the Company determines that it holds a variable interest in an entity, it evaluates whether that entity is a variable interest entity (“VIE”). VIEs are entities where investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or where equity investors, as a group, lack one of the following characteristics: (a) the power to direct the activities that most significantly impact the entity’s economic performance, (b) the obligation to absorb the expected losses of the entity, or (c) the right to receive the expected returns of the entity. The Company consolidates entities that are not VIEs if it has a majority voting interest or other rights that result in effectively controlling the entity. The Company then qualitatively assesses whether it is (or is not) the primary beneficiary of a VIE, which is generally defined as the party who has a controlling financial interest in the VIE. Consideration of various factors include, but are not limited to, the Company’s ability to direct the activities that most significantly impact the entity’s economic performance and its obligation to absorb losses from or right to receive benefits of the VIE that could potentially be significant to the VIE. The Company continually evaluates the need to consolidate VIEs based on standards set forth in U.S. GAAP. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding real estate investment impairments. Reclassification Acquisition, disposition, and leasing deal related costs incurred by the Company, previously included in the acquisition related line on the statements of operations, have been presented in the transaction related line for prior periods presented to be consistent with the current period presentation. Spin related costs are costs incurred by the Company in connection with the Separation and the Distribution. These costs were previously included in the transaction costs line on the statements of operations and have been presented in the spin related line for prior periods presented to be consistent with the current period presentation. These reclassifications had no effect on the reported results of operations. Revenue Recognition Rental Revenue The Company continually reviews receivables related to rent, straight-line rent and property operating expense reimbursements and determines collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. The review includes a binary assessment of whether or not substantially all of the amounts due under a tenant’s lease agreement are probable of collection. For leases that are deemed probable of collection, revenue continues to be recorded on a straight-line basis over the lease term. For leases that are deemed not probable of collection, revenue is recorded as cash is received and the Company reduces rental revenue for any straight-line rent receivables. The Company recognizes all changes in the collectability assessment for an operating lease as an adjustment to rental revenue. During the three and nine months ended September 30, 2022, the Company recorded a reduction to rental revenue of $0.5 million for property operating expense reimbursements not probable of collection. During the three and nine months ended September 30, 2021, the Company did not record any reductions to rental revenue for amounts not probable of collection. For operating leases with minimum scheduled rent increases, the Company recognizes rental revenue on a straight-line basis, including the effect of any free rent periods, over the lease term when collectability of lease payments is probable. Variable lease payments are recognized as rental revenue in the period when the changes in facts and circumstances on which the variable lease payments are based occur. Variable lease payments, including contingent rent, which is paid by a tenant when the tenant’s sales exceed an agreed upon minimum amount, are recognized once tenant sales exceed contractual tenant lease thresholds and is calculated by multiplying the sales in excess of the minimum amount by a percentage defined in the lease. Certain of the Company’s leases also contain provisions for tenants to reimburse the Company for real estate taxes, insurance and maintenance and other property operating expenses. Such reimbursements are included in rental revenue and amounts paid directly by tenants are recorded on a net basis, as applicable (i.e., the property operating expenses paid directly by tenants are not included in the Company’s financial statements). Rental revenue also includes lease termination income collected from tenants to allow for the tenant to vacate their space prior to their scheduled termination dates, as well as amortization of above and below-market leases and lease incentives. During the nine months ended September 30, 2022, the Company recognized $0.9 million of lease termination income. During the three months ended September 30, 2022 and the three and nine months ended September 30, 2021, the Company did not recognize any lease termination income. Fee Income from Unconsolidated Joint Venture The Company provides various services to its unconsolidated joint venture entity in exchange for market-based fees. Total asset and property management fees earned in connection with this entity was $0.2 million and $0.6 million for the three and nine months ended September 30, 2022, respectively. No such fee income was earned for the three and nine months ended September 30, 2021. Cash and Cash Equivalents Cash and cash equivalents include cash in bank accounts, as well as investments in highly-liquid funds with original maturities of three months or less. The Company deposits cash with high quality financial institutions. These deposits are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to an insurance limit of $250,000. At times, the Company’s cash and cash equivalents may exceed federally insured levels. Although the Company bears risk on amounts in excess of those insured by the FDIC, it has not experienced and does not anticipate any losses due to the high quality of the institutions where the deposits are held. Restricted Cash The Company had $35.1 million in restricted cash as of September 30, 2022, primarily comprised of reserves held by the lender under the CMBS Loan (as defined in Note 6 – Debt, Net) for future rent concessions and tenant improvement allowances. The Company did not have any restricted cash balances as of December 31, 2021. Restricted cash is included in other assets, net on the Company’s consolidated balance sheets. Recent Accounting Pronouncements In July 2021, the FASB issued ASU 2021-05 establishing Topic 842, Lessors - Certain Leases with Variable Lease Payments. ASU 2021-05 further clarifies ASC 842 classification guidance as it relates to a lessor’s accounting for certain leases with variable lease payments. This guidance requires a lessor to classify a lease with variable payments that do not depend on an index or rate as an operating lease if either a sales-type lease or direct financing lease classification would trigger a day-one loss. The adoption of ASU 2021-05 did not have a material impact on our consolidated and combined statements. In March 2020, the FASB issued ASU 2020-04 establishing Topic 848, Reference Rate Reform. ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance is optional and is effective between March 12, 2020 and December 31, 2022. The guidance may be elected over time as reference rate reform activities occur. We have evaluated the impact that the expected market transition from the London Interbank Offered Rate, commonly referred to as LIBOR, to alternative references rates will have on our financial statements as well as the applicability of the aforementioned expedients and exceptions provided in ASU 2020-04 and do not expect it to have a material impact on our consolidated and combined statements. |
Orion Office REIT, Real Estate
Orion Office REIT, Real Estate Investments and Related Intangibles | 9 Months Ended |
Sep. 30, 2022 | |
Real Estate [Abstract] | |
Real Estate Investments and Related Intangibles | Note 3 – Real Estate Investments and Related Intangibles Property Acquisitions During the three months ended September 30, 2022, the Company had no acquisitions. During the nine months ended September 30, 2022, the Company acquired for no consideration the fee interest in one parcel of land in connection with the maturity of the tax advantaged bond and ground lease structure. As a result of the transaction, $4.7 million that was previously classified as a finance lease right-of-use asset with respect to such land parcel previously subject to the ground lease was reclassified from other assets, net to real estate investments in the Company’s consolidated balance sheet as of September 30, 2022. During the three and nine months ended September 30, 2021, the Company had no acquisitions. Property Dispositions and Real Estate Assets Held for Sale During the nine months ended September 30, 2022, the Company disposed of five properties for an aggregate gross sales price of $23.1 million. The Company recorded a loss of $1.1 million related to two dispositions, which is included in impairments in the accompanying consolidated and combined statements of operations. Additionally, the Company recorded a gain of $1.1 million related to the remaining three dispositions, which is included in gain on disposition of real estate assets in the accompanying consolidated and combined statements of operations. During the nine months ended September 30, 2021, the Company had no dispositions. As of September 30, 2022, there were three properties classified as held for sale with a carrying value of $6.4 million, included in real estate assets held for sale, net, primarily comprised of land of $1.2 million and building, fixtures and improvements, net of $5.2 million, in the accompanying consolidated balance sheets, and which are expected to be sold in the next 12 months as part of the Company’s portfolio management strategy. During the nine months ended September 30, 2022, the Company recorded a loss of $6.0 million related to held for sale properties, which is included in impairments in the accompanying consolidated and combined statements of operations. Intangible Lease Assets Intangible lease assets consisted of the following (amounts in thousands, except weighted-average useful life): Weighted-Average Useful Life (Years) September 30, 2022 December 31, 2021 Intangible lease assets: In-place leases, net of accumulated amortization of $129,123 and $65,247, respectively 5.2 $ 199,336 $ 272,743 Leasing commissions, net of accumulated amortization of $1,244 and $456, respectively 12.7 11,776 10,349 Above-market lease assets, net of accumulated amortization of $10,127 and $6,239, respectively 5.4 11,127 15,015 Deferred lease incentives, net of accumulated amortization of $36 4.5 1,289 — Total intangible lease assets, net $ 223,528 $ 298,107 Intangible lease liabilities: Below-market leases, net of accumulated amortization of $15,706 and $14,459, respectively 8.1 $ 15,611 $ 20,609 The aggregate amount of amortization of above-market and below-market leases included as a net increase to rental revenue was $0.3 million and $0.9 million for the three and nine months ended September 30, 2022, respectively, and $0.3 million and $0.8 million for the three and nine months ended September 30, 2021, respectively. The aggregate amount of amortization of deferred lease incentives included as a net decrease to rental revenue was less than $0.1 million for the three and nine months ended September 30, 2022, as compared to no impact to rental revenue for the three and nine months ended September 30, 2021. The aggregate amount of in-place leases, leasing commissions and other lease intangibles amortized and included in depreciation and amortization expense was $23.7 million and $73.5 million for the three and nine months ended September 30, 2022, respectively, and $1.6 million and $4.8 million for the three and nine months ended September 30, 2021, respectively. 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 September 30, 2022 (amounts in thousands) : Remainder of 2022 2023 2024 2025 2026 2027 In-place leases: Total projected to be included in amortization expense $ 21,496 $ 73,615 $ 49,213 $ 21,652 $ 15,499 $ 7,441 Leasing commissions: Total projected to be included in amortization expense $ 288 $ 1,153 $ 1,110 $ 1,042 $ 1,042 $ 1,039 Above-market lease assets: Total projected to be deducted from rental revenue $ 1,282 $ 4,791 $ 2,998 $ 860 $ 682 $ 237 Deferred lease incentives: Total projected to be deducted from rental revenue $ 76 $ 306 $ 306 $ 289 $ 191 $ 119 Below-market lease liabilities: Total projected to be added to rental revenue $ 1,543 $ 5,994 $ 3,786 $ 1,036 $ 817 $ 655 Investment in Unconsolidated Joint Venture The following is a summary of the Company’s investment in one unconsolidated entity, the Arch Street Joint Venture, as of September 30, 2022 and December 31, 2021 and for the nine months ended September 30, 2022 and 2021 (dollar amounts in thousands): Ownership % (1) Number of Properties Carrying Amount of Equity in Loss Nine Months Ended (2) Investment September 30, 2022 September 30, 2022 December 31, 2021 September 30, 2022 September 30, 2021 Arch Street Joint Venture (3) (4) 20% 6 $ 16,544 18,631 $ (252) — ____________________________________ (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 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 loss reflects operations following the Merger Effective Time. (3) During the nine months ended September 30, 2022, the Arch Street Joint Venture did not acquire any properties. (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 $1.2 million as of September 30, 2022. This difference is 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 being amortized in accordance with the Company’s depreciation policy. |
Orion Office REIT, Receivables
Orion Office REIT, Receivables and Other Assets | 9 Months Ended |
Sep. 30, 2022 | |
Receivables [Abstract] | |
Receivables and Other Assets | Note 4 – Receivables and Other Assets : Accounts receivable, net consisted of the following as of September 30, 2022 and December 31, 2021 (in thousands): September 30, 2022 December 31, 2021 Accounts receivable, net $ 11,567 $ 10,194 Straight-line rent receivable, net 10,356 7,722 Total $ 21,923 $ 17,916 Other assets, net consisted of the following as of September 30, 2022 and December 31, 2021 (in thousands): September 30, 2022 December 31, 2021 Restricted cash $ 35,145 $ — Right-of-use assets, net (1) 25,567 30,958 Investment in unconsolidated entity 16,544 18,631 Derivative assets 7,057 299 Deferred costs, net (2) 4,616 6,246 Prepaid expenses 2,058 3,730 Other assets, net 645 637 Total $ 91,632 $ 60,501 _______________________________________________ (1) Amortization expense for below market right-of-use asset was less than $0.1 million for the three and nine months ended September 30, 2022. There was no amortization expense for below market right-of-use asset for the three and nine months ended September 30, 2021. Includes right-of-use finance leases of $9.0 million, right-of-use operating leases of $9.6 million, and a below-market right-of-use asset of $7.1 million, net of $0.2 million in accumulated amortization as of September 30, 2022. Includes right-of-use finance leases of $13.8 million, right-of-use operating leases of $10.2 million, and a below-market right-of-use asset of $7.1 million, net of less than $0.1 million in accumulated amortization as of December 31, 2021. (2) Amortization expense for deferred costs related to the revolving credit facility totaled $0.5 million and $1.6 million for the three and nine months ended September 30, 2022, respectively, as compared to no amortization expense for deferred costs for the three and nine months ended September 30, 2021. Accumulated amortization for deferred costs related to the revolving credit facility was $1.9 million and $0.3 million as of September 30, 2022 and December 31, 2021, respectively. |
Orion Office REIT, Fair Value M
Orion Office REIT, Fair Value Measures | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measures | Note 5 – Fair Value Measures Items Measured at Fair Value on a Recurring Basis The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021, aggregated by the level in the fair value hierarchy within which those instruments fall (in thousands): Level 1 Level 2 Level 3 Balance as of September 30, 2022 Assets: Derivative assets $ — $ 7,057 $ — $ 7,057 Level 1 Level 2 Level 3 Balance as of December 31, 2021 Assets: Derivative assets $ — $ 299 $ — $ 299 Derivative Assets – The Company’s derivative financial instruments relate to interest rate swap agreements entered into in order to hedge interest rate volatility with respect to the Company’s borrowings under the Term Loan Facility (as defined in Note 6 - Debt, Net). The valuation of derivative instruments is determined using a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves and implied volatilities. In addition, credit valuation adjustments are incorporated into the fair values to account for the Company’s potential nonperformance risk and the performance risk of the counterparties. Although the Company determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with those derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. However, as of September 30, 2022 and December 31, 2021, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of the Company’s derivatives. As a result, the Company determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. Items Measured at Fair Value on a Non-Recurring Basis Certain financial and nonfinancial assets and liabilities are measured at fair value on a non-recurring basis and are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. Real Estate and Other Investments – The Company performs quarterly impairment review procedures for real estate investments, leasehold improvements and property and equipment, right of use assets and its investment in the unconsolidated entity, primarily through continuous monitoring of events and changes in circumstances that could indicate the carrying value of such assets may not be recoverable. As part of the Company’s impairment review procedures, net real estate assets representing ten properties were deemed to be impaired resulting in impairment charges of $54.2 million during the nine months ended September 30, 2022, that relate to adjustments to expected sales prices for certain non-core assets which have been identified by management for potential sale or management determined would not be re-leased by the existing tenant. There were no impairment charges recorded during the nine months ended September 30, 2021.The following table summarizes our provisions for impairment during the periods indicated below (dollars in thousands): Nine Months Ended September 30, 2022 Number of properties 10 Carrying value of impaired properties $ 98,633 Provisions for impairment (54,161) Estimated fair value $ 44,472 The Company estimates fair values using Level 2 and Level 3 inputs and uses a combined income and market approach, specifically using discounted cash flow analysis and/or recent comparable sales transactions. The evaluation of real estate assets for potential impairment requires the Company’s management to exercise significant judgment and make certain key assumptions, including the following: (1) capitalization rate; (2) discount rates; (3) number of years the property will be held; (4) property operating expenses; and (5) re-leasing assumptions including number of months to re-lease, market rental revenue and required tenant improvements. There are inherent uncertainties in making these estimates such as market conditions and performance and sustainability of the Company’s tenants. For the Company’s impairment tests for the real estate assets during the nine months ended September 30, 2022, the fair value measurement for eight impaired properties was determined by applying an estimated sales price based on market data and two impaired properties by applying a discount rate of 8.5% and capitalization rate of 8.0%. During the nine months ended September 30, 2022, impairment charges of $44.0 million were recorded for held and used properties, $1.6 million for held for sale properties, and $8.6 million for disposed properties. The following table presents certain of the Company’s assets measured at fair value on a non-recurring basis as of September 30, 2022, aggregated by the level in the fair value hierarchy within which those assets fall (in thousands): Level 1 Level 2 (1) Level 3 (1) Balance as of September 30, 2022 Assets of properties held and used $ — $ 1,000 $ 22,339 $ 23,339 Assets of properties held for sale (2) — 4,782 — 4,782 $ — $ 5,782 $ 22,339 $ 28,121 ______________________________________________ (1) The fair value of the level 2 category was derived using negotiated sales prices and the fair value of the level 3 category was derived using discounted cash flow analysis and management estimates of selling prices. (2) An additional property is included in real estate assets held for sale, net on the balance sheets at a carrying value of $1.6 million. Real Estate and Other Investments – Separation Fair Value Assessment – Following the Mergers, Realty Income performed a purchase price allocation assessing the value of the assets acquired and liabilities assumed at the date of acquisition of VEREIT. The assessment of fair value is preliminary and is based on information that was available to Realty Income management at the time the consolidated and combined statements were prepared. Measurement period adjustments, if any, will be recorded in the period in which they are determined, as if they had been completed at the acquisition date. The finalization of Realty Income’s purchase accounting assessment could result in changes in the valuation of real estate assets and liabilities up to one year after the date of the Mergers, and these changes could be material. Fair Value of Financial Instruments The fair value of short-term financial instruments such as cash and cash equivalents, restricted cash, accounts receivable, and accounts payable approximate their carrying value in the accompanying consolidated balance sheets due to their short-term nature. The fair values of the Company’s financial instruments are reported below (dollar amounts in thousands): Level Carrying Amount at September 30, 2022 Fair Value at September 30, 2022 Carrying Amount at December 31, 2021 Fair Value at December 31, 2021 Liabilities (1) : Bridge facility 2 — — $ 355,000 $ 355,000 Mortgages payable 2 355,000 334,473 — — Credit facility term loan 2 175,000 175,000 175,000 175,000 Credit facility revolver 2 31,000 31,000 90,000 90,000 Total $ 561,000 $ 540,473 $ 620,000 $ 620,000 _______________________________________________ (1) Current and prior period liabilities’ carrying and fair values exclude net deferred financing costs. Debt – The fair value is estimated by an independent third party using a discounted cash flow analysis, based on management’s estimates of credit spreads and observable market interest rates, representing level 2 on the fair value hierarchy. |
Orion Office REIT, Debt, Net
Orion Office REIT, Debt, Net | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Debt, Net | Note 6 – Debt, Net As of September 30, 2022, the Company had $556.5 million of debt outstanding, including net deferred financing costs, with a weighted-average years to maturity of 3.2 years and a weighted-average interest rate of 4.45%. The following table summarizes the carrying value of debt as of September 30, 2022 and December 31, 2021, and the debt activity for the nine months ended September 30, 2022 (in thousands): Nine Months Ended September 30, 2022 Balance as of December 31, 2021 Debt Issuances Repayments, Extinguishment and Assumptions Accretion and Amortization Balance as of September 30, 2022 Mortgages payable: Outstanding balance $ — $ 355,000 $ — $ — $ 355,000 Deferred costs — (3,446) — 440 (3,006) Mortgages payable, net — 351,554 — 440 351,994 Bridge facility: Outstanding balance 355,000 — (355,000) — — Deferred costs (643) — 442 201 — Bridge facility, net 354,357 — (354,558) 201 — Credit facility term loan: Outstanding balance 175,000 — — — 175,000 Deferred costs (2,510) (36) — 1,024 (1,522) Credit facility term loan, net 172,490 (36) — 1,024 173,478 Credit facility revolver: Outstanding balance 90,000 70,000 (129,000) — 31,000 Credit facility revolver, net 90,000 70,000 (129,000) — 31,000 Total debt $ 616,847 $ 421,518 $ (483,558) $ 1,665 $ 556,472 Credit Agreement In connection with the Separation and the Distribution, on November 12, 2021, the Company, as parent, and Orion OP, as borrower, entered into (i) a credit agreement (the “Revolver/Term Loan Credit Agreement”) providing for a three-year, $425 million senior revolving credit facility (the “Revolving Facility”), including a $25 million letter of credit sub-facility, and a two-year, $175.0 million senior term loan facility (the “Term Loan Facility,” and together with the Revolving Facility, the “Revolver/Term Loan Facilities”) with Wells Fargo Bank, National Association, as administrative agent, and the lenders and issuing banks party thereto and (ii) a credit agreement (the “Bridge Credit Agreement,” and together with the Revolver/Term Loan Credit Agreement, the “Credit Agreements”) providing for a 6-month, $355.0 million senior bridge term loan facility (the “Bridge Facility,” and together with the Revolver/Term Loan Facilities, the “Facilities”) with Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto. On November 12, 2021, Orion OP borrowed $90.0 million under the Revolving Facility, and each of the Term Loan Facility and the Bridge Facility was fully drawn. Approximately $595.0 million of the net proceeds of the Facilities was distributed by the Company to Realty Income in accordance with the Separation and Distribution Agreement. Orion OP retained the remaining net proceeds of such borrowings as working capital for the general corporate purposes of the Company, Orion OP and Orion OP’s subsidiaries. In February 2022, as further described below, the Company refinanced the Bridge Facility in full with the $355.0 million CMBS Loan (defined below), and the Bridge Credit Agreement was terminated. As of September 30, 2022, the Company had borrowed and outstanding $31.0 million under the Revolving Facility and had $394.0 million of availability under the Revolving Facility. The interest rate applicable to the loans under the Facilities may, at the election of Orion OP, be determined on the basis of LIBOR or a base rate, in either case, plus an applicable margin. Under the Revolver/Term Loan Facilities, the applicable margin is (1) in the case of the Revolving Facility, 2.50% for LIBOR loans and 1.50% for base rate loans and (2) in the case of the Term Loan Facility, 2.50% for LIBOR loans and 1.50% for base rate loans. Loans under the Revolver/Term Loan Facilities may be prepaid, and unused commitments under the Revolver/Term Loan Facilities may be reduced, at any time, in whole or in part, without premium or penalty (except for LIBOR breakage costs). To the extent that amounts under the Revolving Facility remain unused, Orion OP is required to pay a quarterly commitment fee on the unused portion of the Revolving Facility in an amount equal to 0.25% per annum of the unused portion of the Revolving Facility. The Revolver/Term Loan Facilities are guaranteed pursuant to a Guaranty (the “Revolver/Term Loan Guaranty”) by the Company and, subject to certain exceptions, substantially all of Orion OP’s existing and future subsidiaries (including substantially all of its subsidiaries that directly or indirectly own unencumbered real properties), other than certain joint ventures and subsidiaries that own real properties subject to certain other indebtedness (such subsidiaries of Orion OP, the “Subsidiary Guarantors”). The Revolver/Term Loan Facilities are secured by, among other things, first priority pledges of the equity interests in the Subsidiary Guarantors. The Revolver/Term Loan Facilities require that Orion OP comply with various covenants, including, without limitation, covenants restricting, subject to certain exceptions, liens, investments, mergers, asset sales and the payment of certain dividends. In addition, the Revolver/Term Loan Facilities require that Orion OP satisfy certain financial covenants, including a: • ratio of total debt to total asset value of not more than 0.60 to 1.00; • ratio of adjusted EBITDA to fixed charges of not less than 1.50 to 1.00; • ratio of secured debt to total asset value of not more than 0.45 to 1.00; • ratio of unsecured debt to unencumbered asset value of not more than 0.60 to 1.00; and • ratio of net operating income from all unencumbered real properties to unsecured interest expense of not less than 2.00 to 1.00. As of September 30, 2022, Orion OP was in compliance with these financial covenants. The Revolver/Term Loan Facilities include customary representations and warranties of the Company and Orion OP, which must be true and correct in all material respects as a condition to future extensions of credit under the Revolver/Term Loan Facilities. The Revolver/Term Loan Facilities also include customary events of default, the occurrence of which, following any applicable grace period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations of Orion OP under the Revolver/Term Loan Facilities to be immediately due and payable and foreclose on the collateral securing the Revolver/Term Loan Facilities. CMBS Loan On February 10, 2022, certain indirect subsidiaries of the Company (the “Mortgage Borrowers”) obtained a $355.0 million fixed rate mortgage loan (the “CMBS Loan”) from Wells Fargo Bank, National Association (together with its successor, the “Lender”), which is secured by the Mortgage Borrowers’ fee simple or ground lease interests in 19 properties owned indirectly by the Company (collectively, the “Mortgaged Properties”). During March 2022, Wells Fargo effected a securitization of the CMBS Loan. The CMBS Loan bears interest at a fixed rate of 4.971% per annum and matures on February 11, 2027. The CMBS Loan requires monthly payments of interest only and all principal is due at maturity. The proceeds of the CMBS Loan were used to repay the Bridge Facility. Upon closing of the CMBS Loan, the Mortgage Borrowers funded $35.5 million of loan reserves primarily for future rent concessions and tenant improvement allowances under the leases with respect to the 19 Mortgaged Properties. These amounts, as well as the transaction expenses incurred in connection with the CMBS Loan, were funded with cash on hand and borrowings under the Company’s Revolving Facility. The CMBS Loan is secured by, among other things, first priority mortgages and deeds of trust granted by the Mortgage Borrowers and encumbering the Mortgaged Properties. The CMBS Loan is generally not freely prepayable by the Mortgage Borrowers without payment of certain prepayment premiums and costs. The CMBS Loan may be prepaid in whole, but not in part, except as provided in the loan agreement governing the CMBS Loan (the “CMBS Loan Agreement”), at any time following the Prepayment Lockout Release Date (as defined in the CMBS Loan Agreement) (generally in March 2024, two years after the Loan has been fully securitized), subject to the payment of a yield maintenance premium and the satisfaction of other terms and conditions set forth in the CMBS Loan Agreement. Further, releases of individual properties are permitted in connection with an arms’ length third party sale upon repayment of the Release Price (as defined in the CMBS Loan Agreement) for the applicable individual property and subject to payment of the applicable yield maintenance premium and the satisfaction of other terms and conditions set forth in the CMBS Loan Agreement. The CMBS Loan Agreement also contains customary cash management provisions, including certain trigger events (such as failure of the Mortgage Borrowers to satisfy a minimum debt yield) which allow the Lender to retain any excess cash flow as additional collateral for the Loan, until such trigger event is cured. In connection with the CMBS Loan Agreement, the Company (as the guarantor) delivered a customary non-recourse carveout guaranty to the Lender (the “Guaranty”), under which the Company guaranteed the obligations and liabilities of the Mortgage Borrowers to the Lender with respect to certain non-recourse carveout events and the circumstances under which the CMBS Loan will be fully recourse to the Mortgage Borrowers, and which includes requirements for the Company to maintain a net worth of no less than $355.0 million and liquid assets of no less than $10.0 million, in each case, exclusive of the values of the collateral for the CMBS Loan. As of September 30, 2022, the Company was in compliance with these financial covenants. The Mortgage Borrowers and the Company also provided a customary environmental indemnity agreement, pursuant to which the Mortgage Borrowers and the Company agreed to protect, defend, indemnify, release and hold harmless the Lender from and against certain environmental liabilities relating to the Mortgaged Properties. The CMBS Loan Agreement includes customary representations, warranties and covenants of the Mortgage Borrowers and the Company. The CMBS Loan Agreement also includes customary events of default, the occurrence of which, following any applicable grace period, would permit the Lender to, among other things, declare the principal, accrued interest and other obligations of the Mortgage Borrowers to be immediately due and payable and foreclose on the Mortgaged Properties. The Company’s mortgages payable consisted of the following as of September 30, 2022 (dollar amounts in thousands): Encumbered Properties Net Carrying Value of Collateralized Properties (1) Outstanding Balance Weighted-Average Weighted-Average Years to Maturity Fixed-rate debt 19 $ 472,268 $ 355,000 4.97 % 4.4 _______________________________________________ (1) Net carrying value is real estate assets, including right-of-use assets, net of real estate liabilities. The table above does not include mortgage notes associated with the unconsolidated joint venture of $136.7 million. |
Orion Office REIT, Derivative a
Orion Office REIT, Derivative and Hedging Activities | 9 Months Ended |
Sep. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative and Hedging Activities | Note 7 – Derivatives and Hedging Activities Cash Flow Hedges of Interest Rate Risk As of each of September 30, 2022 and December 31, 2021, the Company had interest rate swap agreements with an aggregate notional amount of $175.0 million, which were designated as cash flow hedges under U.S. GAAP. The interest rate swap agreements were effective on December 1, 2021 and mature on November 12, 2023. The interest rate swap agreements were entered into in order to hedge interest rate volatility with respect to the Company’s borrowings under the Term Loan Facility. The table below presents the fair value of the Company’s derivative financial instrument designated as a cash flow hedge as well as its classification in the Company’s consolidated balance sheets as of September 30, 2022 and December 31, 2021 (in thousands): Derivatives Designated as Hedging Instruments Balance Sheet Location September 30, 2022 December 31, 2021 Interest rate swaps Other assets, net $ 7,057 $ 299 During the three and nine months ended September 30, 2022, the Company recorded unrealized gains of $1.9 million and $7.2 million, respectively, for changes in the fair value of its cash flow hedge in accumulated other comprehensive income. There were no similar amounts recorded during the three and nine months ended September 30, 2021, as the interest rate swap agreement did not exist during such periods. During the three and nine months ended September 30, 2022, the Company reclassified previous gains of $0.7 million and $0.5 million, respectively, from accumulated other comprehensive income into interest expense as a result of the hedged transactions impacting earnings. There were no similar amounts recorded during the three and nine months ended September 30, 2021. During the next twelve months, the Company estimates that an additional $6.3 million will be reclassified from other comprehensive income as a decrease to interest expense. Derivatives Not Designated as Hedging Instruments As of each of September 30, 2022 and December 31, 2021, the Company had no interest rate swaps that were not designated as qualifying hedging relationships. Tabular Disclosure of Offsetting Derivatives The table below details a gross presentation, the effects of offsetting and a net presentation of the Company’s derivatives as of September 30, 2022 and December 31, 2021 (in thousands). The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. Offsetting of Derivative Assets and Liabilities Gross Amounts of Recognized Assets Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Consolidated Balance Sheets Net Amounts of Assets Presented in the Consolidated Balance Sheets Net Amounts of Liabilities Presented in the Consolidated Balance Sheets Financial Instruments Cash Collateral Received Net Amount September 30, 2022 $ 7,057 $ — $ — $ 7,057 $ — $ — $ — $ 7,057 December 31, 2021 $ 299 $ — $ — $ 299 $ — $ — $ — $ 299 |
Orion Office REIT, Supplemental
Orion Office REIT, Supplemental Cash Flow Disclosures | 9 Months Ended |
Sep. 30, 2022 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Disclosures | Note 8 – Supplemental Cash Flow Disclosures Supplemental cash flow information was as follows during the periods indicated below (in thousands): Nine Months Ended September 30, 2022 2021 Supplemental disclosures: Cash paid for interest $ 18,729 $ 1,200 Cash paid for income taxes $ 678 $ — Non-cash investing and financing activities: Accrued capital expenditures and leasing costs $ 1,251 $ — Distributions declared and unpaid $ 5,664 $ — Land acquired upon finance lease termination $ 4,707 $ — |
Orion Office REIT, Accounts Pay
Orion Office REIT, Accounts Payable and Accrued Expenses | 9 Months Ended |
Sep. 30, 2022 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Expenses | Note 9 – Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consisted of the following as of September 30, 2022 and December 31, 2021 (in thousands): September 30, 2022 December 31, 2021 Accrued real estate and other taxes $ 12,506 $ 10,322 Accrued other 6,871 4,159 Accrued interest 1,729 1,093 Accounts payable 932 1,805 Total $ 22,038 $ 17,379 |
Orion Office REIT, Commitment a
Orion Office REIT, Commitment and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 10 – Commitments and Contingencies Leasing As part of its ordinary re-leasing activities, the Company has agreed and anticipates that it will continue to agree to provide rent concessions to tenants and incur leasing costs with respect to its properties, including tenant improvement allowances, landlord agreements to pay for certain improvements, as well as leasing commissions. These rent concession and leasing cost commitments could be significant. Litigation From time to time, the Company may be party to various legal proceedings which it believes are routine in nature and incidental to the operation of its business. The Company does not believe that any such legal proceedings will have a material adverse effect upon its consolidated and combined position or results of operations. Environmental Matters In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. The Company has not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition, in each case, that it believes will have a material adverse effect upon its consolidated and combined position or results of operations. |
Orion Office REIT, Leases
Orion Office REIT, Leases | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Leases | Note 11 – Leases Lessor As of September 30, 2022, the Company’s operating leases have non-cancelable lease terms ranging from 0.1 years to 15.5 years. Certain leases with tenants include options to extend or terminate the lease agreements or to purchase the underlying assets. Lease agreements may also contain rent increases that are based on an index or rate (e.g., the consumer price index or LIBOR). The following table presents future minimum base rent payments due to the Company over the next five years and thereafter as of September 30, 2022 (in thousands). Future Minimum October 1, 2022 - December 31, 2022 $ 35,475 2023 135,118 2024 104,498 2025 66,646 2026 63,461 2027 43,872 Thereafter 160,315 Total $ 609,385 Lessee The Company is the lessee under ground lease arrangements and corporate office leases, which meet the criteria under U.S. GAAP for an operating lease. As of September 30, 2022, the Company’s operating leases had remaining lease terms ranging from 0.1 years to 62.3 years, which includes options to extend. Under the operating leases, the Company pays rent and may also pay variable costs, including property operating expenses and common area maintenance. The weighted-average discount rate used to measure the lease liability for the Company’s operating leases was 3.21% as of September 30, 2022. As the Company’s leases do not provide an implicit rate, the Company used an estimated incremental borrowing rate based on the information available at the lease guidance adoption date or the Merger Effective Time, as applicable, in determining the present value of lease payments. Operating lease costs were $0.3 million and $0.8 million for the three and nine months ended September 30, 2022, respectively, and less than $0.1 million for each of the three and nine months ended September 30, 2021. No cash paid for operating lease liabilities was capitalized for the three and nine months ended September 30, 2022 and 2021. The following table reflects the maturity analysis of payments due from the Company over the next five years and thereafter for ground and corporate office lease obligations as of September 30, 2022 (in thousands). Future Minimum Lease Payments October 1, 2022 - December 31, 2022 229 2023 778 2024 453 2025 442 2026 442 2027 445 Thereafter 12,939 Total 15,728 Less: imputed interest 6,018 Total $ 9,710 |
Leases | Note 11 – Leases Lessor As of September 30, 2022, the Company’s operating leases have non-cancelable lease terms ranging from 0.1 years to 15.5 years. Certain leases with tenants include options to extend or terminate the lease agreements or to purchase the underlying assets. Lease agreements may also contain rent increases that are based on an index or rate (e.g., the consumer price index or LIBOR). The following table presents future minimum base rent payments due to the Company over the next five years and thereafter as of September 30, 2022 (in thousands). Future Minimum October 1, 2022 - December 31, 2022 $ 35,475 2023 135,118 2024 104,498 2025 66,646 2026 63,461 2027 43,872 Thereafter 160,315 Total $ 609,385 Lessee The Company is the lessee under ground lease arrangements and corporate office leases, which meet the criteria under U.S. GAAP for an operating lease. As of September 30, 2022, the Company’s operating leases had remaining lease terms ranging from 0.1 years to 62.3 years, which includes options to extend. Under the operating leases, the Company pays rent and may also pay variable costs, including property operating expenses and common area maintenance. The weighted-average discount rate used to measure the lease liability for the Company’s operating leases was 3.21% as of September 30, 2022. As the Company’s leases do not provide an implicit rate, the Company used an estimated incremental borrowing rate based on the information available at the lease guidance adoption date or the Merger Effective Time, as applicable, in determining the present value of lease payments. Operating lease costs were $0.3 million and $0.8 million for the three and nine months ended September 30, 2022, respectively, and less than $0.1 million for each of the three and nine months ended September 30, 2021. No cash paid for operating lease liabilities was capitalized for the three and nine months ended September 30, 2022 and 2021. The following table reflects the maturity analysis of payments due from the Company over the next five years and thereafter for ground and corporate office lease obligations as of September 30, 2022 (in thousands). Future Minimum Lease Payments October 1, 2022 - December 31, 2022 229 2023 778 2024 453 2025 442 2026 442 2027 445 Thereafter 12,939 Total 15,728 Less: imputed interest 6,018 Total $ 9,710 |
Orion Office REIT, Stockholders
Orion Office REIT, Stockholders' Equity | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Stockholders' Equity | Note 12 – Stockholders’ Equity Common Stock The Company was initially capitalized on July 15, 2021 with the issuance of 100,000 shares of common stock ($0.01 par value per share) to Realty Income for a total of $1,000. On November 10, 2021, the Company issued 56,525,650 additional shares of common stock to Realty Income, such that Realty Income owned 56,625,650 shares of the Company’s common stock. Also on November 10, 2021, in connection with the filing of the Company’s Articles of Amendment, the Company changed the par value of its common stock from $0.01 per share to $0.001 per share. On November 12, 2021, Realty Income effected the Distribution. On August 2, 2022, the Company’s Board of Directors declared a quarterly dividend of $0.10 per share for the third quarter of 2022, which was paid on October 17, 2022, to stockholders of record as of September 30, 2022. On May 3, 2022, the Company’s Board of Directors declared a quarterly dividend of $0.10 per share for the second quarter of 2022, which was paid on July 15, 2022, to stockholders of record as of June 30, 2022. On March 22, 2022, the Company’s Board of Directors declared a quarterly dividend of $0.10 per share for the first quarter of 2022, which was paid on April 15, 2022, to stockholders of record as of March 31, 2022. Stock Warrants On November 12, 2021, in connection with the Distribution, Orion OP entered into an Amended and Restated Limited Liability Company Agreement (the “LLCA”) of the Arch Street Joint Venture, by and between Orion OP and OAP Holdings LLC (the “Arch Street Partner”), an affiliate of Arch Street Capital Partners, pursuant to which the Arch Street Partner consented to the transfer of the equity interests of the Arch Street Joint Venture previously held by VEREIT Real Estate, L.P. to Orion OP. Also on November 12, 2021, in connection with the entry into the LLCA, the Company granted certain affiliates of the Arch Street Partner warrants to purchase up to 1,120,000 shares of the Company’s common stock (the “Arch Street Warrants”). The Arch Street Warrants entitle the respective holders to purchase shares of the Company’s common stock at a price per share equal to $22.42, at any time. The Arch Street Warrants may be exercised, in whole or in part, through a cashless exercise, in which case the holder would receive upon such exercise the net number of shares of Company common stock determined according to the formula set forth in the Arch Street Warrants. The Arch Street Warrants expire on the earlier of (a) ten years after issuance and (b) if the Arch Street Joint Venture is terminated, the later of the termination of the Arch Street Joint Venture and seven years after issuance. |
Orion Office REIT, Equity Based
Orion Office REIT, Equity Based Compensation | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Equity Based Compensation | Note 13 - Equity-Based Compensation The Company has an equity-based incentive award plan (the “Equity Plan”) for officers, employees, non-employee directors and consultants who provide services to the Company. Awards under the Equity Plan are accounted for under U.S. GAAP as share-based payments. The expense for such awards is recognized over the vesting period or when the requirements for exercise of the award have been met. Under the Equity Plan, the Company may grant various types of awards, including restricted stock units that will vest if the recipient maintains employment with the Company over the requisite service period (the “Time-Based Restricted Stock Units”) and restricted stock units that may vest in a number ranging from 0% to 100% of the total number of units granted, based on the Company’s total shareholder return measured on an absolute basis (“TSR-Based Restricted Stock Units”) and certain operational performance metrics (“Metrics-Based Restricted Stock Units”), in each case during a three-year performance period, subject to the recipient’s continued service with the Company (collectively, the “Performance-Based Restricted Stock Units”). During the nine months ended September 30, 2022, the Company granted Time-Based Restricted Stock Units and Performance-Based Restricted Stock Units to certain officers and employees of the Company. The fair value of the Time-Based Restricted Stock Units granted to non-executive directors and employees under the Equity Plan is determined using the closing stock price on the grant date and is expensed over the requisite service period on a straight-line basis. The fair value of the TSR-Based Restricted Stock Units granted to employees under the Equity Plan is determined using a Monte Carlo simulation which takes into account multiple input variables that determine the probability of satisfying the required total shareholder return, and such fair value is expensed over the performance period. The fair value of the Metrics-Based Restricted Stock Units is determined using the closing stock price on the grant date and is expensed over the requisite service period to the extent that the likelihood of achieving the performance metrics is probable. As of September 30, 2022, the Company determined that the likelihood of achieving the performance metrics was improbable and recognized no compensation expense related to the Metrics-Based Restricted Stock Units. Time-Based Restricted Stock Units and Performance-Based Restricted Stock Units do not provide for any rights of a common stockholder prior to the vesting of such restricted stock units. Equity-based compensation expense related to Orion Time-Based Restricted Stock Units and Performance-Based Restricted Stock Units for the three and nine months ended September 30, 2022, was $0.4 million and $0.8 million, respectively. As of September 30, 2022, total unrecognized compensation expense related to Time-Based Restricted Stock Units and Performance-Based Restricted Stock Units was approximately $2.6 million, with an aggregate weighted-average remaining term of 2.2 years. The Company is also required under GAAP to recognize equity-based compensation expense for awards to its employees of Realty Income time-based restricted stock units and stock options granted in connection with the Mergers. Equity-based compensation expense for the three and nine months ended September 30, 2022, related to such Realty Income equity-based compensation awards, was $0.1 million and $0.3 million, respectively. As of September 30, 2022, total unrecognized compensation expense related to Realty Income time-based restricted stock units and stock options was approximately $0.3 million, with an aggregate weighted-average remaining term of 1.2 years. |
Orion Office REIT, Net Income (
Orion Office REIT, Net Income (Loss) Per Share | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share | Note 14 - Net Income (Loss) Per Share The computation of basic and diluted earnings per share is as follows for the three and nine months ended September 30, 2022 and September 30, 2021 (in thousands, except share and per share data): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Net (loss) income $ (53,029) $ (1,423) $ (78,481) $ 7,423 (Income) loss attributable to non-controlling interests (18) — (43) — Net (loss) income available to common stockholders used in basic and diluted net income per share (53,047) (1,423) (78,524) 7,423 Weighted average number of Common Stock outstanding - basic 56,635,038 56,625,650 56,630,086 56,625,650 Effect of dilutive securities (1) — — — — Weighted average number of common shares - diluted 56,635,038 56,625,650 56,630,086 56,625,650 Basic and diluted net (loss) income per share attributable to common stockholders $ (0.94) $ (0.03) $ (1.39) $ 0.13 _______________________________________________ (1) As of September 30, 2021, there were no adjustments to the weighted average common shares outstanding used in the diluted calculation given there were no potentially dilutive shares. The following were excluded from diluted net (loss) income per share attributable to common stockholders, as the effect would have been antidilutive: Nine Months Ended September 30, 2022 2021 Weighted average unvested Time-Based Restricted Stock Units and Performance-Based Restricted Stock Units (1) — — Weighted average stock warrants 1,120,000 — _______________________________________________ (1) Net of assumed repurchases in accordance with the treasury stock method. |
Orion Office REIT, Subsequent E
Orion Office REIT, Subsequent Events | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 15 – Subsequent Events Distributions On November 1, 2022, the Company’s Board of Directors declared a quarterly dividend of $0.10 per share for the fourth quarter of 2022, payable on January 17, 2023, to stockholders of record as of December 30, 2022. Dispositions Through November 1, 2022, the Company closed on the sale of two additional non-core office properties for an aggregate gross sales price of approximately $5.3 million. |
VEREIT Office Assets, Organizat
VEREIT Office Assets, Organization and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Entity Information [Line Items] | |
Organization and Summary of Significant Accounting Policies | Note 1 – Organization Organization Orion Office REIT Inc. (the “Company”, “Orion”, “we” or “us”) was incorporated in the state of Maryland on July 1, 2021 and was capitalized on July 15, 2021. On April 29, 2021, Realty Income Corporation (“Realty Income”) entered into an Agreement and Plan of Merger (as amended, the “Merger Agreement”) with VEREIT, Inc. (“VEREIT”), its operating partnership, VEREIT Operating Partnership, L.P. (“VEREIT OP”), Rams MD Subsidiary I, Inc., a wholly owned subsidiary of Realty Income (“Merger Sub 1”), and Rams Acquisition Sub II, LLC, a wholly owned subsidiary of Realty Income (“Merger Sub 2”). On November 1, 2021, pursuant to the Merger Agreement, Merger Sub 2 merged with and into VEREIT OP, with VEREIT OP continuing as the surviving partnership, and immediately thereafter, VEREIT merged with and into Merger Sub 1, with Merger Sub 1 continuing as the surviving corporation (together, the “Mergers”, and such effective time of the Mergers, the “Merger Effective Time”). Upon the Merger Effective Time, as part of the Mergers, Realty Income acquired certain office real properties and related assets previously owned by subsidiaries of VEREIT (collectively, “VEREIT Office Assets”). Following the Merger Effective Time, in accordance with the Merger Agreement, Realty Income contributed the portion of the combined business comprising certain office real properties and related assets previously owned by subsidiaries of Realty Income (collectively, “Realty Income Office Assets”) and VEREIT Office Assets (the “Separation”) to the Company and its operating partnership, Orion Office REIT LP (“Orion OP”). On November 12, 2021, following the Separation, in accordance with the Merger Agreement and that certain Separation and Distribution Agreement dated as of November 11, 2021, by and among Realty Income, the Company and Orion OP (the “Separation and Distribution Agreement”), Realty Income effected a special distribution to its stockholders (including the former holders of VEREIT common stock and certain former VEREIT OP common unitholders prior to the Mergers) of all of the outstanding shares of common stock of the Company (the “Distribution”). Approximately $595.0 million was distributed by the Company to Realty Income in accordance with the Separation and Distribution Agreement. In connection with the Separation and the Distribution, the Company entered into certain agreements with Realty Income to govern the ongoing relationships between the Company and Realty Income and to provide mechanisms for an orderly transition to the Company’s status as an independent, publicly traded company, including the Separation and Distribution Agreement and a transition services agreement to provide certain administrative and other services between the parties for a limited time. Following the Distribution, the Company became independent and publicly traded and has been operating in a manner so as to qualify and has elected to be taxed as a REIT, commencing with the Company’s initial taxable year ended December 31, 2021. The Company’s common stock, par value $0.001 per share, trades on the New York Stock Exchange (the “NYSE”) under the symbol “ONL”. At September 30, 2022, the Company owned and operated 87 office properties and related assets previously owned by Realty Income and VEREIT, totaling approximately 10.0 million leasable square feet located within 29 states. In addition, the Company owns an equity interest in OAP/VER Venture, LLC (the “Arch Street Joint Venture”), an unconsolidated joint venture with an affiliate of Arch Street Capital Partners, LLC (“Arch Street Capital Partners”). As of September 30, 2022, the Arch Street Joint Venture owned a portfolio consisting of six office properties totaling approximately 1.0 million leasable square feet located within six states. |
VEREIT Office Assets | |
Entity Information [Line Items] | |
Organization and Summary of Significant Accounting Policies | Note 1 – Organization and Summary of Significant Accounting Policies Organization On April 29, 2021, Realty Income Corporation (“Realty Income”) entered into an Agreement and Plan of Merger (as amended, the “Merger Agreement”) with VEREIT, Inc. (“VEREIT”), its operating partnership, VEREIT Operating Partnership, L.P. (“VEREIT OP”), Rams MD Subsidiary I, Inc., a wholly owned subsidiary of Realty Income (“Merger Sub 1”), and Rams Acquisition Sub II, LLC, a wholly owned subsidiary of Realty Income (“Merger Sub 2”). On November 1, 2021, pursuant to the Merger Agreement, Merger Sub 2 merged with and into VEREIT OP, with VEREIT OP continuing as the surviving partnership, and immediately thereafter, VEREIT merged with and into Merger Sub 1, with Merger Sub 1 continuing as the surviving corporation (together, the “Mergers”, and such effective time of the Mergers, the “Merger Effective Time”). Upon the Merger Effective Time, as part of the Mergers, Realty Income acquired certain office real properties and related assets previously owned by subsidiaries of VEREIT (collectively, “VEREIT Office Assets”). Following the Merger Effective Time, in accordance with the Merger Agreement, Realty Income contributed the portion of the combined business which comprised certain office real properties and related assets previously owned by subsidiaries of Realty Income (collectively, “Realty Income Office Assets”) and the VEREIT Office Assets (the “Separation”) to Orion Office REIT Inc. (the “Company”) and its operating partnership, Orion Office REIT LP (“Orion OP”). On November 12, 2021, following the Separation, in accordance with the Merger Agreement and that certain Separation and Distribution Agreement dated as of November 11, 2021, by and among Realty Income, the Company and Orion OP, Realty Income effected a special distribution to its stockholders (including the former holders of VEREIT common stock and certain former VEREIT OP common unitholders prior to the Mergers) of all of the outstanding shares of common stock of the Company (the “Distribution”). Following the Distribution, the Company operates as a separate, publicly-traded company and has been operating in a manner so as to qualify and has elected to be taxed as a REIT, commencing with the Company’s initial taxable year ended December 31, 2021. VEREIT Office Assets included the combined accounts related to certain of the office properties of VEREIT, historically operated through subsidiaries of VEREIT, and contained certain corporate costs. As of September 30, 2021, VEREIT Office Assets had one reportable segment which owned 52 properties, which included one property owned by a consolidated joint venture, totaling approximately 7.5 million leasable square feet located in 25 states in the United States and Puerto Rico, and an investment in one unconsolidated joint venture that owned five office properties totaling approximately 0.8 million leasable square feet located within five states. Summary of Significant Accounting Policies Principles of Combination and Basis of Accounting and Presentation The accompanying combined and consolidated financial statements were prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and include the accounts of VEREIT Office Assets on a combined and consolidated basis as the ownership interests were under common control and ownership of VEREIT, including a consolidated joint venture. Any applicable intercompany accounts and transactions have been eliminated in consolidation and combination. The portion of the consolidated joint venture not previously owned by VEREIT, is presented as non-controlling interest in VEREIT Office Assets’ combined and consolidated statements of operations. The information furnished includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair presentation of results for the interim periods. The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results for the entire year or any subsequent interim period. These combined and consolidated financial statements should be read in conjunction with the audited combined and consolidated financial statements of VEREIT Office Assets and notes thereto as of and for the ten months ended October 31, 2021, included in the Form 10-K for Orion Office REIT Inc. filed on March 24, 2022. Information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to the rules and regulations of the SEC and GAAP. For legal entities being evaluated for consolidation, VEREIT Office Assets must have first determined whether the interests that it held and fees it received qualified as variable interests in the entity. A variable interest is an investment or other interest that would absorb portions of an entity’s expected losses or received portions of the entity’s expected residual returns. VEREIT Office Assets’ evaluation included consideration of fees paid to VEREIT Office Assets where VEREIT’s management, on behalf of VEREIT Office Assets, acted as a decision maker or service provider to the entity being evaluated. If VEREIT Office Assets determined that it held a variable interest in an entity, it evaluated whether that entity is a variable interest entity (“VIE”). VIEs were entities where investors lacked sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or where equity investors, as a group, lack one of the following characteristics: (a) the power to direct the activities that most significantly impact the entity’s economic performance, (b) the obligation to absorb the expected losses of the entity, or (c) the right to receive the expected returns of the entity. VEREIT Office Assets consolidated entities that are not VIEs if it had a majority voting interest or other rights that resulted in effectively controlling the entity. VEREIT Office Assets then qualitatively assessed whether it is (or is not) the primary beneficiary of a VIE, which was generally defined as the party who had a controlling financial interest in the VIE. Consideration of various factors included, but were not limited to, VEREIT Office Assets’ ability to direct the activities that most significantly impacted the entity’s economic performance and its obligation to absorb losses from or right to receive benefits of the VIE that could potentially be significant to the VIE. VEREIT Office Assets consolidated any VIEs when the Company is determined to be the primary beneficiary of the VIE and the difference between consolidating the VIE and accounting for it using the equity method could be material to VEREIT Office Assets’ combined and consolidated financial statements. VEREIT Office Assets continually evaluated the need to consolidate these VIEs based on standards set forth in GAAP. These combined and consolidated financial statements were derived from the books and records of VEREIT and were carved out from VEREIT at a carrying value reflective of historical cost in such VEREIT records. VEREIT Office Assets’ historical financial results reflect charges for certain corporate costs and, we believe such charges are reasonable. Costs of the services that were charged to VEREIT Office Assets were based on either actual costs incurred or a proportion of costs estimated to be applicable to this entity, based on VEREIT Office Assets’ pro rata share of VEREIT’s annualized rental income. Annualized rental income is rental revenue on a straight-line basis, which includes the effect of rent escalations and any tenant concessions, such as free rent, and excludes any adjustments to rental income due to changes in the collectability assessment, contingent rent, such as percentage rent, and operating expense reimbursements. The historical combined and consolidated financial information presented may therefore not be indicative of the results of operations, financial position or cash flows that would have been obtained if there had been an independent, stand-alone public company during the periods presented or of the Company’s future performance as an independent, stand-alone company. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Real Estate Investments Real estate and related assets acquired were recorded at cost and accumulated depreciation and amortization were assessed based on the period of future benefit of the asset. Depreciation and amortization were computed using a straight-line method over the estimated useful life of 40 years for buildings and building improvements, 15 years for land improvements and the remaining lease term for tenant improvements and intangible lease assets. VEREIT management performed quarterly impairment review procedures, primarily through continuous monitoring of events and changes in circumstances that could have indicated the carrying value of its real estate assets may not be recoverable. Impairment indicators that VEREIT management considered included, but were not limited to, decrease in operating income, bankruptcy or other credit concerns of a property’s major tenant or tenants or a significant decrease in a property’s revenues due to lease terminations, vacancies or reduced lease rates. When impairment indicators were identified or if a property was considered to have a more likely than not probability of being disposed of within the next 12 to 24 months, VEREIT management assessed the recoverability of the assets by determining whether the carrying value of the assets would be recovered through the undiscounted future cash flows expected from the use of the assets and their eventual disposition. GAAP required VEREIT Office Assets to utilize the expected holding period of its properties when assessing recoverability. In the event that such expected undiscounted future cash flows did not exceed the carrying value, the real estate assets had been adjusted to their respective fair values and an impairment loss was recognized. There were inherent uncertainties in making estimates of expected future cash flows such as market conditions and performance and sustainability of the tenants. Investment in Unconsolidated Joint Venture As of September 30, 2021, VEREIT Office Assets owned a 20% ownership interest in an unconsolidated joint venture, the Arch Street Joint Venture, that owned five properties with total real estate investments, at cost, of $196.1 million and total debt outstanding of $118.4 million, which was non-recourse to VEREIT Office Assets. VEREIT Office Assets accounted for its investment in the unconsolidated joint venture using the equity method of accounting as VEREIT Office Assets had the ability to exercise significant influence, but not control, over operating and financing policies of the joint venture. The equity method of accounting required the investment to be initially recorded at cost and subsequently adjusted for VEREIT Office Assets’ share of equity in the joint venture’s earnings and distributions. VEREIT Office Assets recorded its proportionate share of net income (loss) from the unconsolidated joint venture in equity in income of unconsolidated joint venture in the combined and consolidated statements of operations. VEREIT Office Assets was required to determine whether an event or change in circumstances had occurred that may have had a significant adverse effect on the fair value of its investment in the unconsolidated joint venture. If an event or change in circumstance had occurred, VEREIT Office Assets’ management was required to evaluate its investment in the unconsolidated joint venture for potential impairment and determine if the carrying value of its investment exceeded its fair value. An impairment charge was recorded when an impairment is deemed to be other-than-temporary. To determine whether an impairment was other-than-temporary, VEREIT Office Assets’ management considered whether it had the ability and intent to hold the investment until the carrying value was fully recovered. The evaluation of an investment in an unconsolidated joint venture for potential impairment required VEREIT Office Assets’ management to exercise significant judgment and to make certain assumptions. The use of different judgments and assumptions could have resulted in different conclusions. No impairments were identified during the three and nine months ended September 30, 2021. Goodwill Impairment VEREIT evaluated goodwill for impairment annually or more frequently when an event occurred or circumstances changed that indicated the carrying value may not be recoverable. To determine whether it was necessary to perform a quantitative goodwill impairment test, VEREIT first assessed qualitative factors, including macro-economic conditions such as deterioration in the entity’s operating environment or industry or market considerations; entity-specific events such as increasing costs, declining financial performance, or loss of key personnel; or other events such as an expectation that a reporting unit would be sold or sustained decrease in VEREIT’s stock price on either an absolute basis or relative to peers. If an entity believed, as a result of its qualitative assessment, that it was more-likely-than-not (i.e. greater than 50% chance) that the fair value of a reporting unit was less than its carrying amount, the quantitative impairment test was required. Otherwise, no quantitative testing was required. If it was determined, as a result of the qualitative assessment, that it was more-likely-than-not that the fair value was less than the carrying amount, the provisions of guidance required that the fair value be compared to the carrying value. Goodwill was considered impaired if the carrying value exceeds the fair value. No impairments of VEREIT’s goodwill were recorded during the three and nine months ended September 30, 2021. The results of the VEREIT impairment tests carried over to VEREIT Office Assets, therefore no impairments were recorded in the accompanying combined and consolidated statements of operations. Cash and Cash Equivalents VEREIT Office Assets considered all highly liquid instruments with maturities when purchased of three months or less to be cash equivalents. VEREIT Office Assets considered investments in highly liquid money market accounts to be cash equivalents. Restricted Cash As of September 30, 2021, restricted cash included $3.4 million in lender reserves. Reserves related to lease expirations, as well as maintenance, structural and debt service reserves. Rent and Tenant Receivables and Other Assets, Net Rent and tenant receivables and other assets, net primarily included amounts to be collected in future periods related to the recognition of rental income on a straight-line basis over the lease term and cost recoveries due from tenants. Prepaid expenses as of the balance sheet date related to future periods and will be expensed or reclassified to another account during the period to which the costs related. Any amounts with no future economic benefit were charged to earnings when identified. Deferred Financing Costs Deferred financing costs represented commitment fees, legal fees and other costs associated with obtaining commitments for financing. Deferred financing costs were presented on the combined and consolidated balance sheet as a direct deduction from the carrying amount of the related debt liability. These costs were amortized to interest expense over the terms of the respective financing agreements and used the straight-line method, which approximated the effective interest method. Unamortized deferred financing costs were written off when the associated debt was refinanced or repaid before maturity. Costs incurred in connection with potential financing transactions that were not completed were expensed in the period in which it is determined the financing would not be completed. Leases - Lessor At the inception of a new lease arrangement, including new leases that arise from amendments, the terms and conditions were assessed to determine the proper lease classification. When the terms of a lease effectively transfer control of the underlying asset, the lease was classified as a sales-type lease. When a lease does not effectively transfer control of the underlying asset to the lessee, but a guarantee was obtained for the value of the asset from a third party, the lease was classified as a direct financing lease. All other leases were classified as operating leases. As of September 30, 2021, VEREIT Office Assets did not classify any leases as sales-type or direct financing leases. For operating leases with minimum scheduled rent increases, rental revenue was recognized on a straight-line basis, and included the effect of any free rent periods, over the lease term when collectability of lease payments was probable. Variable lease payments were recognized as rental revenue in the period when the changes in facts and circumstances on which the variable lease payments were based occur. VEREIT Office Assets adopted Accounting Standards Codification Topic 842, Leases effective as of January 1, 2019. Two separate lease components were identified as follows: (i) land lease component and (ii) single property lease component comprised of building, land improvements and tenant improvements. The leases also contained provisions for tenants to reimburse VEREIT Office Assets for real estate taxes and insurance, which are considered noncomponents of the lease, and maintenance and other property operating expenses, which were considered to be non-lease components. VEREIT Office Assets elected the practical expedient to combine lease and non-lease components and the non-lease components were included with the single property lease component as the predominant component. VEREIT Office Assets continually reviewed receivables related to rent, straight-line rent and property operating expense reimbursements and determined collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property was located. The review included a binary assessment of whether or not substantially all of the amounts due under a tenant’s lease agreement were probable of collection. For leases that were deemed probable of collection, revenue continued to be recorded on a straight-line basis over the lease term. For leases that were deemed not probable of collection, revenue was recorded as cash was received. All changes in the collectability assessment for an operating lease were recognized as an adjustment to rental income. During the year ended December 31, 2020, there was a global outbreak of a new strain of coronavirus, COVID-19. The global and domestic response to the COVID-19 outbreak continued to evolve during the three and nine months ended September 30, 2021. Federal, state, and local authorities had responded in a variety of ways, including temporary closure of or imposed limitations on the operations of certain non-essential businesses. Since the COVID-19 outbreak began, each of VEREIT Office Assets’ tenants had almost entirely continued to meet its payment obligations under its respective lease. In consideration of each tenant’s payment history, among other factors, there had been no changes in the collectability assessment for any of VEREIT Office Assets’ operating leases. Leases - Lessee To account for leases for which VEREIT Office Assets is the lessee, contracts must have been analyzed upon inception to determine if the arrangement was, or contained, a lease. A lease conveyed the right to control the use of an identified asset for a period of time in exchange for consideration. Lease classification tests and measurement procedures were performed at the lease commencement date. The lease liability was initially measured as the present value of the lease payments over the lease term, discounted using the interest rate implicit in the lease, if that rate was readily determinable; otherwise, the lessee’s incremental borrowing rate was used. The incremental borrowing rate was determined based on the estimated rate of interest that the lessee would pay to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. The lease term was the noncancelable period of the lease and included any renewal and termination options VEREIT Office Assets was reasonably certain to exercise. The lease liability balance was amortized using the effective interest method. The lease liability was remeasured when the contract was modified, upon the resolution of a contingency such that variable payments became fixed or if the assessment of exercising an extension, termination or purchase option changed. The operating lease right-of-use (“ROU”) asset balance was initially measured as the lease liability amount, adjusted for any lease payments made prior to the commencement date, initial direct costs, estimated costs to dismantle, remove, or restore the underlying asset and incentives received. Income Taxes As of September 30, 2021, VEREIT Office Assets was owned by VEREIT, which had elected to be taxed as a REIT for U.S. federal income tax purposes under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, commencing with the taxable year ended December 31, 2011. VEREIT believed it was organized and operating in such a manner as to qualify to be taxed as a REIT for the taxable year ended December 31, 2021. As a REIT, VEREIT was generally not subject to federal income tax on taxable income that it had distributed to its stockholders so long as it had distributed annually at least 90% of its REIT taxable income (computed without regard to the deduction for dividends paid and excluding net capital gains). Accordingly, no provision had been made for federal income taxes in the accompanying combined and consolidated financial statements of VEREIT Office Assets. During the three and nine months ended September 30, 2021, VEREIT Office Assets recognized state and local income and franchise tax expense of approximately $0.2 million and $0.5 million, respectively. Amounts were included in provision for income taxes in the accompanying combined and consolidated statements of operations. VEREIT Office Assets had no unrecognized tax benefits as of or during the three and nine months ended September 30, 2021. Any interest and penalties related to unrecognized tax benefits was recognized in provision for income taxes in the accompanying combined and consolidated statements of operations. As of September 30, 2021, VEREIT Office Assets had no material uncertain income tax positions. |
VEREIT Office Assets, Real Esta
VEREIT Office Assets, Real Estate Investments and Related Intangibles | 9 Months Ended |
Sep. 30, 2022 | |
Entity Information [Line Items] | |
Real Estate Investments and Related Intangibles | Note 3 – Real Estate Investments and Related Intangibles Property Acquisitions During the three months ended September 30, 2022, the Company had no acquisitions. During the nine months ended September 30, 2022, the Company acquired for no consideration the fee interest in one parcel of land in connection with the maturity of the tax advantaged bond and ground lease structure. As a result of the transaction, $4.7 million that was previously classified as a finance lease right-of-use asset with respect to such land parcel previously subject to the ground lease was reclassified from other assets, net to real estate investments in the Company’s consolidated balance sheet as of September 30, 2022. During the three and nine months ended September 30, 2021, the Company had no acquisitions. Property Dispositions and Real Estate Assets Held for Sale During the nine months ended September 30, 2022, the Company disposed of five properties for an aggregate gross sales price of $23.1 million. The Company recorded a loss of $1.1 million related to two dispositions, which is included in impairments in the accompanying consolidated and combined statements of operations. Additionally, the Company recorded a gain of $1.1 million related to the remaining three dispositions, which is included in gain on disposition of real estate assets in the accompanying consolidated and combined statements of operations. During the nine months ended September 30, 2021, the Company had no dispositions. As of September 30, 2022, there were three properties classified as held for sale with a carrying value of $6.4 million, included in real estate assets held for sale, net, primarily comprised of land of $1.2 million and building, fixtures and improvements, net of $5.2 million, in the accompanying consolidated balance sheets, and which are expected to be sold in the next 12 months as part of the Company’s portfolio management strategy. During the nine months ended September 30, 2022, the Company recorded a loss of $6.0 million related to held for sale properties, which is included in impairments in the accompanying consolidated and combined statements of operations. Intangible Lease Assets Intangible lease assets consisted of the following (amounts in thousands, except weighted-average useful life): Weighted-Average Useful Life (Years) September 30, 2022 December 31, 2021 Intangible lease assets: In-place leases, net of accumulated amortization of $129,123 and $65,247, respectively 5.2 $ 199,336 $ 272,743 Leasing commissions, net of accumulated amortization of $1,244 and $456, respectively 12.7 11,776 10,349 Above-market lease assets, net of accumulated amortization of $10,127 and $6,239, respectively 5.4 11,127 15,015 Deferred lease incentives, net of accumulated amortization of $36 4.5 1,289 — Total intangible lease assets, net $ 223,528 $ 298,107 Intangible lease liabilities: Below-market leases, net of accumulated amortization of $15,706 and $14,459, respectively 8.1 $ 15,611 $ 20,609 The aggregate amount of amortization of above-market and below-market leases included as a net increase to rental revenue was $0.3 million and $0.9 million for the three and nine months ended September 30, 2022, respectively, and $0.3 million and $0.8 million for the three and nine months ended September 30, 2021, respectively. The aggregate amount of amortization of deferred lease incentives included as a net decrease to rental revenue was less than $0.1 million for the three and nine months ended September 30, 2022, as compared to no impact to rental revenue for the three and nine months ended September 30, 2021. The aggregate amount of in-place leases, leasing commissions and other lease intangibles amortized and included in depreciation and amortization expense was $23.7 million and $73.5 million for the three and nine months ended September 30, 2022, respectively, and $1.6 million and $4.8 million for the three and nine months ended September 30, 2021, respectively. 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 September 30, 2022 (amounts in thousands) : Remainder of 2022 2023 2024 2025 2026 2027 In-place leases: Total projected to be included in amortization expense $ 21,496 $ 73,615 $ 49,213 $ 21,652 $ 15,499 $ 7,441 Leasing commissions: Total projected to be included in amortization expense $ 288 $ 1,153 $ 1,110 $ 1,042 $ 1,042 $ 1,039 Above-market lease assets: Total projected to be deducted from rental revenue $ 1,282 $ 4,791 $ 2,998 $ 860 $ 682 $ 237 Deferred lease incentives: Total projected to be deducted from rental revenue $ 76 $ 306 $ 306 $ 289 $ 191 $ 119 Below-market lease liabilities: Total projected to be added to rental revenue $ 1,543 $ 5,994 $ 3,786 $ 1,036 $ 817 $ 655 Investment in Unconsolidated Joint Venture The following is a summary of the Company’s investment in one unconsolidated entity, the Arch Street Joint Venture, as of September 30, 2022 and December 31, 2021 and for the nine months ended September 30, 2022 and 2021 (dollar amounts in thousands): Ownership % (1) Number of Properties Carrying Amount of Equity in Loss Nine Months Ended (2) Investment September 30, 2022 September 30, 2022 December 31, 2021 September 30, 2022 September 30, 2021 Arch Street Joint Venture (3) (4) 20% 6 $ 16,544 18,631 $ (252) — ____________________________________ (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 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 loss reflects operations following the Merger Effective Time. (3) During the nine months ended September 30, 2022, the Arch Street Joint Venture did not acquire any properties. (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 $1.2 million as of September 30, 2022. This difference is 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 being amortized in accordance with the Company’s depreciation policy. |
VEREIT Office Assets | |
Entity Information [Line Items] | |
Real Estate Investments and Related Intangibles | Real Estate Investments and Related Intangibles Property Acquisitions/Dispositions There were no property acquisitions or dispositions during the nine months ended September 30, 2021. Consolidated Joint Venture VEREIT Office Assets had an interest in one consolidated joint venture that owned one property as of September 30, 2021. As of September 30, 2021, the consolidated joint venture had total assets of $30.7 million, of which $27.8 million were real estate investments, net of accumulated depreciation and amortization. The property was secured by a mortgage note payable, which was non-recourse to VEREIT Office Assets and had a net balance of $14.8 million as of December 31, 2020. During the nine months ended September 30, 2021, VEREIT, on behalf of VEREIT Office Assets, repaid the balance of the mortgage note in full and there were no amounts outstanding as of September 30, 2021. The joint venture partner was the managing member of the joint venture. However, in accordance with the joint venture agreement, VEREIT Office Assets had the ability to control operating and financing policies of the consolidated joint venture and the joint venture partner must have obtained VEREIT Office Assets’ approval for any major transactions. VEREIT Office Assets and the joint venture partner were subject to the provisions of the joint venture agreement, which included provisions for when additional contributions may be required to fund certain cash shortfalls. Impairments VEREIT management performed quarterly impairment review procedures for real estate investments, leasehold improvements and property and equipment and right of use assets, primarily through continuous monitoring of events and changes in circumstances that could indicate the carrying value of its real estate assets may not be recoverable. |
VEREIT Office Assets, Commitmen
VEREIT Office Assets, Commitment and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Entity Information [Line Items] | |
Commitments and Contingencies | Note 10 – Commitments and Contingencies Leasing As part of its ordinary re-leasing activities, the Company has agreed and anticipates that it will continue to agree to provide rent concessions to tenants and incur leasing costs with respect to its properties, including tenant improvement allowances, landlord agreements to pay for certain improvements, as well as leasing commissions. These rent concession and leasing cost commitments could be significant. Litigation From time to time, the Company may be party to various legal proceedings which it believes are routine in nature and incidental to the operation of its business. The Company does not believe that any such legal proceedings will have a material adverse effect upon its consolidated and combined position or results of operations. Environmental Matters In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. The Company has not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition, in each case, that it believes will have a material adverse effect upon its consolidated and combined position or results of operations. |
VEREIT Office Assets | |
Entity Information [Line Items] | |
Commitments and Contingencies | Commitments and Contingencies Litigation VEREIT Office Assets was party to various legal proceedings which it believed are routine in nature and incidental to the operation of its business. VEREIT Office Assets did not believe that any of these outstanding claims against it were expected to have a material adverse effect upon its consolidated financial position or results of operations. Environmental Matters In connection with the ownership and operation of real estate, VEREIT Office Assets may have potentially been liable for costs and damages related to environmental matters. VEREIT Office Assets was not been notified by any governmental authority of any non-compliance, liability or other claim, and was not aware of any other environmental condition, in each case, that it believed would have a material adverse effect upon its results of operations. |
VEREIT Office Assets, Leases
VEREIT Office Assets, Leases | 9 Months Ended |
Sep. 30, 2022 | |
Entity Information [Line Items] | |
Leases | Note 11 – Leases Lessor As of September 30, 2022, the Company’s operating leases have non-cancelable lease terms ranging from 0.1 years to 15.5 years. Certain leases with tenants include options to extend or terminate the lease agreements or to purchase the underlying assets. Lease agreements may also contain rent increases that are based on an index or rate (e.g., the consumer price index or LIBOR). The following table presents future minimum base rent payments due to the Company over the next five years and thereafter as of September 30, 2022 (in thousands). Future Minimum October 1, 2022 - December 31, 2022 $ 35,475 2023 135,118 2024 104,498 2025 66,646 2026 63,461 2027 43,872 Thereafter 160,315 Total $ 609,385 Lessee The Company is the lessee under ground lease arrangements and corporate office leases, which meet the criteria under U.S. GAAP for an operating lease. As of September 30, 2022, the Company’s operating leases had remaining lease terms ranging from 0.1 years to 62.3 years, which includes options to extend. Under the operating leases, the Company pays rent and may also pay variable costs, including property operating expenses and common area maintenance. The weighted-average discount rate used to measure the lease liability for the Company’s operating leases was 3.21% as of September 30, 2022. As the Company’s leases do not provide an implicit rate, the Company used an estimated incremental borrowing rate based on the information available at the lease guidance adoption date or the Merger Effective Time, as applicable, in determining the present value of lease payments. Operating lease costs were $0.3 million and $0.8 million for the three and nine months ended September 30, 2022, respectively, and less than $0.1 million for each of the three and nine months ended September 30, 2021. No cash paid for operating lease liabilities was capitalized for the three and nine months ended September 30, 2022 and 2021. The following table reflects the maturity analysis of payments due from the Company over the next five years and thereafter for ground and corporate office lease obligations as of September 30, 2022 (in thousands). Future Minimum Lease Payments October 1, 2022 - December 31, 2022 229 2023 778 2024 453 2025 442 2026 442 2027 445 Thereafter 12,939 Total 15,728 Less: imputed interest 6,018 Total $ 9,710 |
Leases | Note 11 – Leases Lessor As of September 30, 2022, the Company’s operating leases have non-cancelable lease terms ranging from 0.1 years to 15.5 years. Certain leases with tenants include options to extend or terminate the lease agreements or to purchase the underlying assets. Lease agreements may also contain rent increases that are based on an index or rate (e.g., the consumer price index or LIBOR). The following table presents future minimum base rent payments due to the Company over the next five years and thereafter as of September 30, 2022 (in thousands). Future Minimum October 1, 2022 - December 31, 2022 $ 35,475 2023 135,118 2024 104,498 2025 66,646 2026 63,461 2027 43,872 Thereafter 160,315 Total $ 609,385 Lessee The Company is the lessee under ground lease arrangements and corporate office leases, which meet the criteria under U.S. GAAP for an operating lease. As of September 30, 2022, the Company’s operating leases had remaining lease terms ranging from 0.1 years to 62.3 years, which includes options to extend. Under the operating leases, the Company pays rent and may also pay variable costs, including property operating expenses and common area maintenance. The weighted-average discount rate used to measure the lease liability for the Company’s operating leases was 3.21% as of September 30, 2022. As the Company’s leases do not provide an implicit rate, the Company used an estimated incremental borrowing rate based on the information available at the lease guidance adoption date or the Merger Effective Time, as applicable, in determining the present value of lease payments. Operating lease costs were $0.3 million and $0.8 million for the three and nine months ended September 30, 2022, respectively, and less than $0.1 million for each of the three and nine months ended September 30, 2021. No cash paid for operating lease liabilities was capitalized for the three and nine months ended September 30, 2022 and 2021. The following table reflects the maturity analysis of payments due from the Company over the next five years and thereafter for ground and corporate office lease obligations as of September 30, 2022 (in thousands). Future Minimum Lease Payments October 1, 2022 - December 31, 2022 229 2023 778 2024 453 2025 442 2026 442 2027 445 Thereafter 12,939 Total 15,728 Less: imputed interest 6,018 Total $ 9,710 |
VEREIT Office Assets | |
Entity Information [Line Items] | |
Leases | Leases Lessor As of September 30, 2021, VEREIT Office Assets was the lessor for its 52 office properties. VEREIT Office Assets’ operating leases have non-cancelable lease terms ranging from 0.08 years to 11.67 years as of September 30, 2021. Certain leases with tenants included options to extend or terminate the lease agreements or to purchase the underlying assets. Lease agreements may have also contained rent increases that were based on an index or rate (e.g., the consumer price index or LIBOR). VEREIT Office Assets believed the residual value risk was not a primary risk because of the long-lived nature of the assets. The components of rental revenue from VEREIT Office Assets’ operating leases were as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2021 Fixed: Cash rent $ 32,431 $ 96,855 Straight-line rent (165) (1,624) Lease intangible amortization 70 (12) Property operating cost reimbursements 1,004 2,925 Total fixed 33,340 98,144 Variable (1) 7,154 23,245 Total rental revenue $ 40,494 $ 121,389 ____________________________________ (1) Includes costs reimbursed related to property operating expenses, common area maintenance and percentage rent. Lessee VEREIT Office Assets was the lessee under one ground lease arrangement, which met the criteria of an operating lease. As of September 30, 2021, VEREIT Office Assets’ lease had a remaining lease term of 35.9 years, which included options to extend. Under the ground lease arrangement, VEREIT Office Assets paid variable costs, which included property operating expenses and common area maintenance. The discount rate for VEREIT Office Assets’ operating lease was 5.17% as of September 30, 2021. As VEREIT Office Assets’ lease did not provide an implicit rate, VEREIT Office Assets used an estimated incremental borrowing rate based on the information available at the adoption date in determining the present value of lease payments. Operating lease costs for the three and nine months ended September 30, 2021 were $0.1 million and $0.2 million, respectively. No cash paid for operating lease liabilities was capitalized. |
Leases | Leases Lessor As of September 30, 2021, VEREIT Office Assets was the lessor for its 52 office properties. VEREIT Office Assets’ operating leases have non-cancelable lease terms ranging from 0.08 years to 11.67 years as of September 30, 2021. Certain leases with tenants included options to extend or terminate the lease agreements or to purchase the underlying assets. Lease agreements may have also contained rent increases that were based on an index or rate (e.g., the consumer price index or LIBOR). VEREIT Office Assets believed the residual value risk was not a primary risk because of the long-lived nature of the assets. The components of rental revenue from VEREIT Office Assets’ operating leases were as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2021 Fixed: Cash rent $ 32,431 $ 96,855 Straight-line rent (165) (1,624) Lease intangible amortization 70 (12) Property operating cost reimbursements 1,004 2,925 Total fixed 33,340 98,144 Variable (1) 7,154 23,245 Total rental revenue $ 40,494 $ 121,389 ____________________________________ (1) Includes costs reimbursed related to property operating expenses, common area maintenance and percentage rent. Lessee VEREIT Office Assets was the lessee under one ground lease arrangement, which met the criteria of an operating lease. As of September 30, 2021, VEREIT Office Assets’ lease had a remaining lease term of 35.9 years, which included options to extend. Under the ground lease arrangement, VEREIT Office Assets paid variable costs, which included property operating expenses and common area maintenance. The discount rate for VEREIT Office Assets’ operating lease was 5.17% as of September 30, 2021. As VEREIT Office Assets’ lease did not provide an implicit rate, VEREIT Office Assets used an estimated incremental borrowing rate based on the information available at the adoption date in determining the present value of lease payments. Operating lease costs for the three and nine months ended September 30, 2021 were $0.1 million and $0.2 million, respectively. No cash paid for operating lease liabilities was capitalized. |
VEREIT Office Assets, Subsequen
VEREIT Office Assets, Subsequent Events | 9 Months Ended |
Sep. 30, 2022 | |
Entity Information [Line Items] | |
Subsequent Events | Note 15 – Subsequent Events Distributions On November 1, 2022, the Company’s Board of Directors declared a quarterly dividend of $0.10 per share for the fourth quarter of 2022, payable on January 17, 2023, to stockholders of record as of December 30, 2022. Dispositions Through November 1, 2022, the Company closed on the sale of two additional non-core office properties for an aggregate gross sales price of approximately $5.3 million. |
VEREIT Office Assets | |
Entity Information [Line Items] | |
Subsequent Events | Subsequent Events VEREIT Office Assets evaluated subsequent events through December 1, 2021 and no items have come to the attention of management that require recognition or disclosure, except as set forth below. Debt Subsequent to September 30, 2021, each of the outstanding mortgage notes of VEREIT Office Assets were repaid in full by VEREIT on behalf of VEREIT Office Assets. Mergers, Separation and Distribution On November 1, 2021, the Mergers were completed. Following the Merger Effective Time, the Separation was completed. On November 12, 2021, following the Separation, the Distribution was completed. |
Orion Office REIT, Summary of_2
Orion Office REIT, Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Accounting, Principles of Consolidation and Combination and Basis of Presentation | Basis of Accounting The consolidated and combined statements of the Company presented herein include the accounts of the Company and its consolidated subsidiaries. All intercompany transactions have been eliminated upon consolidation. The financial statements are prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The consolidated and combined financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. These adjustments are considered to be of a normal, recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These financial statements should be read in conjunction with the Company’s audited consolidated and combined financial statements and notes thereto as of and for the year ended December 31, 2021, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 24, 2022. Information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to the rules and regulations of the SEC and U.S. GAAP. Principles of Consolidation and Combination and Basis of Presentation The consolidated and combined statements of the Company include the accounts of Realty Income Office Assets presented on a combined basis for the three and nine months ended September 30, 2021 as the ownership interests were under common control and ownership of Realty Income during that period. For the three and nine months ended September 30, 2022, the consolidated financial statements include the accounts of the Company and its consolidated subsidiaries and a consolidated joint venture, which accounts include the Realty Income Office Assets and the VEREIT Office Assets. The portion of the consolidated joint venture not owned by the Company is presented as non-controlling interest in the Company’s consolidated balance sheets, statements of operations, statements of comprehensive income (loss) and statements of equity. For legal entities being evaluated for consolidation, the Company must first determine whether the interests that it holds and fees it receives qualify as variable interests in the entity. A variable interest is an investment or other interest that will absorb portions of an entity’s expected losses or receive portions of the entity’s expected residual returns. The Company’s evaluation includes consideration of fees paid to the Company where the Company acts as a decision maker or service provider to the entity being evaluated. If the Company determines that it holds a variable interest in an entity, it evaluates whether that entity is a variable interest entity (“VIE”). VIEs are entities where investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or where equity investors, as a group, lack one of the following characteristics: (a) the power to direct the activities that most significantly impact the entity’s economic performance, (b) the obligation to absorb the expected losses of the entity, or (c) the right to receive the expected returns of the entity. The Company consolidates entities that are not VIEs if it has a majority voting interest or other rights that result in effectively controlling the entity. The Company then qualitatively assesses whether it is (or is not) the primary beneficiary of a VIE, which is generally defined as the party who has a controlling financial interest in the VIE. Consideration of various factors include, but are not limited to, the Company’s ability to direct the activities that most significantly impact the entity’s economic performance and its obligation to absorb losses from or right to receive benefits of the VIE that could potentially be significant to the VIE. The Company continually evaluates the need to consolidate VIEs based on standards set forth in U.S. GAAP. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding real estate investment impairments. |
Reclassification | Reclassification Acquisition, disposition, and leasing deal related costs incurred by the Company, previously included in the acquisition related line on the statements of operations, have been presented in the transaction related line for prior periods presented to be consistent with the current period presentation. Spin related costs are costs incurred by the Company in connection with the Separation and the Distribution. These costs were previously included in the transaction costs line on the statements of operations and have been presented in the spin related line for prior periods presented to be consistent with the current period presentation. These reclassifications had no effect on the reported results of operations. |
Revenue Recognition | Revenue Recognition Rental Revenue The Company continually reviews receivables related to rent, straight-line rent and property operating expense reimbursements and determines collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. The review includes a binary assessment of whether or not substantially all of the amounts due under a tenant’s lease agreement are probable of collection. For leases that are deemed probable of collection, revenue continues to be recorded on a straight-line basis over the lease term. For leases that are deemed not probable of collection, revenue is recorded as cash is received and the Company reduces rental revenue for any straight-line rent receivables. The Company recognizes all changes in the collectability assessment for an operating lease as an adjustment to rental revenue. During the three and nine months ended September 30, 2022, the Company recorded a reduction to rental revenue of $0.5 million for property operating expense reimbursements not probable of collection. During the three and nine months ended September 30, 2021, the Company did not record any reductions to rental revenue for amounts not probable of collection. For operating leases with minimum scheduled rent increases, the Company recognizes rental revenue on a straight-line basis, including the effect of any free rent periods, over the lease term when collectability of lease payments is probable. Variable lease payments are recognized as rental revenue in the period when the changes in facts and circumstances on which the variable lease payments are based occur. Variable lease payments, including contingent rent, which is paid by a tenant when the tenant’s sales exceed an agreed upon minimum amount, are recognized once tenant sales exceed contractual tenant lease thresholds and is calculated by multiplying the sales in excess of the minimum amount by a percentage defined in the lease. Certain of the Company’s leases also contain provisions for tenants to reimburse the Company for real estate taxes, insurance and maintenance and other property operating expenses. Such reimbursements are included in rental revenue and amounts paid directly by tenants are recorded on a net basis, as applicable (i.e., the property operating expenses paid directly by tenants are not included in the Company’s financial statements). Rental revenue also includes lease termination income collected from tenants to allow for the tenant to vacate their space prior to their scheduled termination dates, as well as amortization of above and below-market leases and lease incentives. During the nine months ended September 30, 2022, the Company recognized $0.9 million of lease termination income. During the three months ended September 30, 2022 and the three and nine months ended September 30, 2021, the Company did not recognize any lease termination income. Fee Income from Unconsolidated Joint Venture The Company provides various services to its unconsolidated joint venture entity in exchange for market-based fees. Total asset and property management fees earned in connection with this entity was $0.2 million and $0.6 million for the three and nine months ended September 30, 2022, respectively. No such fee income was earned for the three and nine months ended September 30, 2021. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash in bank accounts, as well as investments in highly-liquid funds with original maturities of three months or less. The Company deposits cash with high quality financial institutions. These deposits are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to an insurance limit of $250,000. At times, the Company’s cash and cash equivalents may exceed federally insured levels. Although the Company bears risk on amounts in excess of those insured by the FDIC, it has not experienced and does not anticipate any losses due to the high quality of the institutions where the deposits are held. |
Restricted cash | Restricted Cash The Company had $35.1 million in restricted cash as of September 30, 2022, primarily comprised of reserves held by the lender under the CMBS Loan (as defined in Note 6 – Debt, Net) for future rent concessions and tenant improvement allowances. The Company did not have any restricted cash balances as of December 31, 2021. Restricted cash is included in other assets, net on the Company’s consolidated balance sheets. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In July 2021, the FASB issued ASU 2021-05 establishing Topic 842, Lessors - Certain Leases with Variable Lease Payments. ASU 2021-05 further clarifies ASC 842 classification guidance as it relates to a lessor’s accounting for certain leases with variable lease payments. This guidance requires a lessor to classify a lease with variable payments that do not depend on an index or rate as an operating lease if either a sales-type lease or direct financing lease classification would trigger a day-one loss. The adoption of ASU 2021-05 did not have a material impact on our consolidated and combined statements. In March 2020, the FASB issued ASU 2020-04 establishing Topic 848, Reference Rate Reform. ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance is optional and is effective between March 12, 2020 and December 31, 2022. The guidance may be elected over time as reference rate reform activities occur. We have evaluated the impact that the expected market transition from the London Interbank Offered Rate, commonly referred to as LIBOR, to alternative references rates will have on our financial statements as well as the applicability of the aforementioned expedients and exceptions provided in ASU 2020-04 and do not expect it to have a material impact on our consolidated and combined statements. |
VEREIT Office Assets, Organiz_2
VEREIT Office Assets, Organization and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Entity Information [Line Items] | |
Basis of Accounting and Presentation | Basis of Accounting The consolidated and combined statements of the Company presented herein include the accounts of the Company and its consolidated subsidiaries. All intercompany transactions have been eliminated upon consolidation. The financial statements are prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The consolidated and combined financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. These adjustments are considered to be of a normal, recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These financial statements should be read in conjunction with the Company’s audited consolidated and combined financial statements and notes thereto as of and for the year ended December 31, 2021, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 24, 2022. Information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to the rules and regulations of the SEC and U.S. GAAP. Principles of Consolidation and Combination and Basis of Presentation The consolidated and combined statements of the Company include the accounts of Realty Income Office Assets presented on a combined basis for the three and nine months ended September 30, 2021 as the ownership interests were under common control and ownership of Realty Income during that period. For the three and nine months ended September 30, 2022, the consolidated financial statements include the accounts of the Company and its consolidated subsidiaries and a consolidated joint venture, which accounts include the Realty Income Office Assets and the VEREIT Office Assets. The portion of the consolidated joint venture not owned by the Company is presented as non-controlling interest in the Company’s consolidated balance sheets, statements of operations, statements of comprehensive income (loss) and statements of equity. For legal entities being evaluated for consolidation, the Company must first determine whether the interests that it holds and fees it receives qualify as variable interests in the entity. A variable interest is an investment or other interest that will absorb portions of an entity’s expected losses or receive portions of the entity’s expected residual returns. The Company’s evaluation includes consideration of fees paid to the Company where the Company acts as a decision maker or service provider to the entity being evaluated. If the Company determines that it holds a variable interest in an entity, it evaluates whether that entity is a variable interest entity (“VIE”). VIEs are entities where investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or where equity investors, as a group, lack one of the following characteristics: (a) the power to direct the activities that most significantly impact the entity’s economic performance, (b) the obligation to absorb the expected losses of the entity, or (c) the right to receive the expected returns of the entity. The Company consolidates entities that are not VIEs if it has a majority voting interest or other rights that result in effectively controlling the entity. The Company then qualitatively assesses whether it is (or is not) the primary beneficiary of a VIE, which is generally defined as the party who has a controlling financial interest in the VIE. Consideration of various factors include, but are not limited to, the Company’s ability to direct the activities that most significantly impact the entity’s economic performance and its obligation to absorb losses from or right to receive benefits of the VIE that could potentially be significant to the VIE. The Company continually evaluates the need to consolidate VIEs based on standards set forth in U.S. GAAP. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding real estate investment impairments. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash in bank accounts, as well as investments in highly-liquid funds with original maturities of three months or less. The Company deposits cash with high quality financial institutions. These deposits are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to an insurance limit of $250,000. At times, the Company’s cash and cash equivalents may exceed federally insured levels. Although the Company bears risk on amounts in excess of those insured by the FDIC, it has not experienced and does not anticipate any losses due to the high quality of the institutions where the deposits are held. |
Restricted Cash | Restricted Cash The Company had $35.1 million in restricted cash as of September 30, 2022, primarily comprised of reserves held by the lender under the CMBS Loan (as defined in Note 6 – Debt, Net) for future rent concessions and tenant improvement allowances. The Company did not have any restricted cash balances as of December 31, 2021. Restricted cash is included in other assets, net on the Company’s consolidated balance sheets. |
VEREIT Office Assets | |
Entity Information [Line Items] | |
Basis of Accounting and Presentation | The accompanying combined and consolidated financial statements were prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and include the accounts of VEREIT Office Assets on a combined and consolidated basis as the ownership interests were under common control and ownership of VEREIT, including a consolidated joint venture. Any applicable intercompany accounts and transactions have been eliminated in consolidation and combination. The portion of the consolidated joint venture not previously owned by VEREIT, is presented as non-controlling interest in VEREIT Office Assets’ combined and consolidated statements of operations. The information furnished includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair presentation of results for the interim periods. The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results for the entire year or any subsequent interim period. These combined and consolidated financial statements should be read in conjunction with the audited combined and consolidated financial statements of VEREIT Office Assets and notes thereto as of and for the ten months ended October 31, 2021, included in the Form 10-K for Orion Office REIT Inc. filed on March 24, 2022. Information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to the rules and regulations of the SEC and GAAP |
Principles of Combination | For legal entities being evaluated for consolidation, VEREIT Office Assets must have first determined whether the interests that it held and fees it received qualified as variable interests in the entity. A variable interest is an investment or other interest that would absorb portions of an entity’s expected losses or received portions of the entity’s expected residual returns. VEREIT Office Assets’ evaluation included consideration of fees paid to VEREIT Office Assets where VEREIT’s management, on behalf of VEREIT Office Assets, acted as a decision maker or service provider to the entity being evaluated. If VEREIT Office Assets determined that it held a variable interest in an entity, it evaluated whether that entity is a variable interest entity (“VIE”). VIEs were entities where investors lacked sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or where equity investors, as a group, lack one of the following characteristics: (a) the power to direct the activities that most significantly impact the entity’s economic performance, (b) the obligation to absorb the expected losses of the entity, or (c) the right to receive the expected returns of the entity. VEREIT Office Assets consolidated entities that are not VIEs if it had a majority voting interest or other rights that resulted in effectively controlling the entity. VEREIT Office Assets then qualitatively assessed whether it is (or is not) the primary beneficiary of a VIE, which was generally defined as the party who had a controlling financial interest in the VIE. Consideration of various factors included, but were not limited to, VEREIT Office Assets’ ability to direct the activities that most significantly impacted the entity’s economic performance and its obligation to absorb losses from or right to receive benefits of the VIE that could potentially be significant to the VIE. VEREIT Office Assets consolidated any VIEs when the Company is determined to be the primary beneficiary of the VIE and the difference between consolidating the VIE and accounting for it using the equity method could be material to VEREIT Office Assets’ combined and consolidated financial statements. VEREIT Office Assets continually evaluated the need to consolidate these VIEs based on standards set forth in GAAP. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Real Estate Investments | Real Estate Investments Real estate and related assets acquired were recorded at cost and accumulated depreciation and amortization were assessed based on the period of future benefit of the asset. Depreciation and amortization were computed using a straight-line method over the estimated useful life of 40 years for buildings and building improvements, 15 years for land improvements and the remaining lease term for tenant improvements and intangible lease assets. VEREIT management performed quarterly impairment review procedures, primarily through continuous monitoring of events and changes in circumstances that could have indicated the carrying value of its real estate assets may not be recoverable. Impairment indicators that VEREIT management considered included, but were not limited to, decrease in operating income, bankruptcy or other credit concerns of a property’s major tenant or tenants or a significant decrease in a property’s revenues due to lease terminations, vacancies or reduced lease rates. |
Investment in Unconsolidated Joint Venture | Investment in Unconsolidated Joint Venture As of September 30, 2021, VEREIT Office Assets owned a 20% ownership interest in an unconsolidated joint venture, the Arch Street Joint Venture, that owned five properties with total real estate investments, at cost, of $196.1 million and total debt outstanding of $118.4 million, which was non-recourse to VEREIT Office Assets. |
Goodwill Impairment | Goodwill ImpairmentVEREIT evaluated goodwill for impairment annually or more frequently when an event occurred or circumstances changed that indicated the carrying value may not be recoverable. To determine whether it was necessary to perform a quantitative goodwill impairment test, VEREIT first assessed qualitative factors, including macro-economic conditions such as deterioration in the entity’s operating environment or industry or market considerations; entity-specific events such as increasing costs, declining financial performance, or loss of key personnel; or other events such as an expectation that a reporting unit would be sold or sustained decrease in VEREIT’s stock price on either an absolute basis or relative to peers. If an entity believed, as a result of its qualitative assessment, that it was more-likely-than-not (i.e. greater than 50% chance) that the fair value of a reporting unit was less than its carrying amount, the quantitative impairment test was required. Otherwise, no quantitative testing was required. If it was determined, as a result of the qualitative assessment, that it was more-likely-than-not that the fair value was less than the carrying amount, the provisions of guidance required that the fair value be compared to the carrying value. Goodwill was considered impaired if the carrying value exceeds the fair value. No impairments of VEREIT’s goodwill were recorded during the three and nine months ended September 30, 2021. The results of the VEREIT impairment tests carried over to VEREIT Office Assets, therefore no impairments were recorded in the accompanying combined and consolidated statements of operations |
Cash and Cash Equivalents | Cash and Cash Equivalents VEREIT Office Assets considered all highly liquid instruments with maturities when purchased of three months or less to be cash equivalents. VEREIT Office Assets considered investments in highly liquid money market accounts to be cash equivalents. |
Restricted Cash | Restricted CashAs of September 30, 2021, restricted cash included $3.4 million in lender reserves. Reserves related to lease expirations, as well as maintenance, structural and debt service reserves. |
Rent and Tenant Receivables and Other Assets, Net | Rent and Tenant Receivables and Other Assets, Net Rent and tenant receivables and other assets, net primarily included amounts to be collected in future periods related to the recognition of rental income on a straight-line basis over the lease term and cost recoveries due from tenants. Prepaid expenses as of the balance sheet date related to future periods and will be expensed or reclassified to another account during the period to which the costs related. Any amounts with no future economic benefit were charged to earnings when identified. |
Deferred Financing Costs | Deferred Financing Costs Deferred financing costs represented commitment fees, legal fees and other costs associated with obtaining commitments for financing. Deferred financing costs were presented on the combined and consolidated balance sheet as a direct deduction from the carrying amount of the related debt liability. These costs were amortized to interest expense over the terms of the respective financing agreements and used the straight-line method, which approximated the effective interest method. Unamortized deferred financing costs were written off when the associated debt was refinanced or repaid before maturity. Costs incurred in connection with potential |
Leases - Lessor | Leases - Lessor At the inception of a new lease arrangement, including new leases that arise from amendments, the terms and conditions were assessed to determine the proper lease classification. When the terms of a lease effectively transfer control of the underlying asset, the lease was classified as a sales-type lease. When a lease does not effectively transfer control of the underlying asset to the lessee, but a guarantee was obtained for the value of the asset from a third party, the lease was classified as a direct financing lease. All other leases were classified as operating leases. As of September 30, 2021, VEREIT Office Assets did not classify any leases as sales-type or direct financing leases. For operating leases with minimum scheduled rent increases, rental revenue was recognized on a straight-line basis, and included the effect of any free rent periods, over the lease term when collectability of lease payments was probable. Variable lease payments were recognized as rental revenue in the period when the changes in facts and circumstances on which the variable lease payments were based occur. VEREIT Office Assets adopted Accounting Standards Codification Topic 842, Leases effective as of January 1, 2019. Two separate lease components were identified as follows: (i) land lease component and (ii) single property lease component comprised of building, land improvements and tenant improvements. The leases also contained provisions for tenants to reimburse VEREIT Office Assets for real estate taxes and insurance, which are considered noncomponents of the lease, and maintenance and other property operating expenses, which were considered to be non-lease components. VEREIT Office Assets elected the practical expedient to combine lease and non-lease components and the non-lease components were included with the single property lease component as the predominant component. VEREIT Office Assets continually reviewed receivables related to rent, straight-line rent and property operating expense reimbursements and determined collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property was located. The review included a binary assessment of whether or not substantially all of the amounts due under a tenant’s lease agreement were probable of collection. For leases that were deemed probable of collection, revenue continued to be recorded on a straight-line basis over the lease term. For leases that were deemed not probable of collection, revenue was recorded as cash was received. All changes in the collectability assessment for an operating lease were recognized as an adjustment to rental income. |
Leases - Lessee | Leases - Lessee To account for leases for which VEREIT Office Assets is the lessee, contracts must have been analyzed upon inception to determine if the arrangement was, or contained, a lease. A lease conveyed the right to control the use of an identified asset for a period of time in exchange for consideration. Lease classification tests and measurement procedures were performed at the lease commencement date. The lease liability was initially measured as the present value of the lease payments over the lease term, discounted using the interest rate implicit in the lease, if that rate was readily determinable; otherwise, the lessee’s incremental borrowing rate was used. The incremental borrowing rate was determined based on the estimated rate of interest that the lessee would pay to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. The lease term was the noncancelable period of the lease and included any renewal and termination options VEREIT Office Assets was reasonably certain to exercise. The lease liability balance was amortized using the effective interest method. The lease liability was remeasured when the contract was modified, upon the resolution of a contingency such that variable payments became fixed or if the assessment of exercising an extension, termination or purchase option changed. The operating lease right-of-use (“ROU”) asset balance was initially measured as the lease liability amount, adjusted for any lease payments made prior to the commencement date, initial direct costs, estimated costs to dismantle, remove, or restore the underlying asset and incentives received. |
Income Taxes | Income TaxesAs of September 30, 2021, VEREIT Office Assets was owned by VEREIT, which had elected to be taxed as a REIT for U.S. federal income tax purposes under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, commencing with the taxable year ended December 31, 2011. VEREIT believed it was organized and operating in such a manner as to qualify to be taxed as a REIT for the taxable year ended December 31, 2021. As a REIT, VEREIT was generally not subject to federal income tax on taxable income that it had distributed to its stockholders so long as it had distributed annually at least 90% of its REIT taxable income (computed without regard to the deduction for dividends paid and excluding net capital gains). Accordingly, no provision had been made for federal income taxes in the accompanying combined and consolidated financial statements of VEREIT Office Assets |
Orion Office REIT, Real Estat_2
Orion Office REIT, Real Estate Investments and Related Intangibles (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Real Estate [Abstract] | |
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) September 30, 2022 December 31, 2021 Intangible lease assets: In-place leases, net of accumulated amortization of $129,123 and $65,247, respectively 5.2 $ 199,336 $ 272,743 Leasing commissions, net of accumulated amortization of $1,244 and $456, respectively 12.7 11,776 10,349 Above-market lease assets, net of accumulated amortization of $10,127 and $6,239, respectively 5.4 11,127 15,015 Deferred lease incentives, net of accumulated amortization of $36 4.5 1,289 — Total intangible lease assets, net $ 223,528 $ 298,107 Intangible lease liabilities: Below-market leases, net of accumulated amortization of $15,706 and $14,459, respectively 8.1 $ 15,611 $ 20,609 |
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 September 30, 2022 (amounts in thousands) : Remainder of 2022 2023 2024 2025 2026 2027 In-place leases: Total projected to be included in amortization expense $ 21,496 $ 73,615 $ 49,213 $ 21,652 $ 15,499 $ 7,441 Leasing commissions: Total projected to be included in amortization expense $ 288 $ 1,153 $ 1,110 $ 1,042 $ 1,042 $ 1,039 Above-market lease assets: Total projected to be deducted from rental revenue $ 1,282 $ 4,791 $ 2,998 $ 860 $ 682 $ 237 Deferred lease incentives: Total projected to be deducted from rental revenue $ 76 $ 306 $ 306 $ 289 $ 191 $ 119 Below-market lease liabilities: Total projected to be added to rental revenue $ 1,543 $ 5,994 $ 3,786 $ 1,036 $ 817 $ 655 |
Schedule of Company's Investment in Unconsolidated Joint Venture | The following is a summary of the Company’s investment in one unconsolidated entity, the Arch Street Joint Venture, as of September 30, 2022 and December 31, 2021 and for the nine months ended September 30, 2022 and 2021 (dollar amounts in thousands): Ownership % (1) Number of Properties Carrying Amount of Equity in Loss Nine Months Ended (2) Investment September 30, 2022 September 30, 2022 December 31, 2021 September 30, 2022 September 30, 2021 Arch Street Joint Venture (3) (4) 20% 6 $ 16,544 18,631 $ (252) — ____________________________________ (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 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 loss reflects operations following the Merger Effective Time. (3) During the nine months ended September 30, 2022, the Arch Street Joint Venture did not acquire any properties. (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 $1.2 million as of September 30, 2022. This difference is 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 being amortized in accordance with the Company’s depreciation policy. |
Orion Office REIT, Receivable_2
Orion Office REIT, Receivables and Other Assets (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Receivables [Abstract] | |
Schedule of Accounts Receivables, Net | Accounts receivable, net consisted of the following as of September 30, 2022 and December 31, 2021 (in thousands): September 30, 2022 December 31, 2021 Accounts receivable, net $ 11,567 $ 10,194 Straight-line rent receivable, net 10,356 7,722 Total $ 21,923 $ 17,916 |
Schedule of Other Assets, Net | Other assets, net consisted of the following as of September 30, 2022 and December 31, 2021 (in thousands): September 30, 2022 December 31, 2021 Restricted cash $ 35,145 $ — Right-of-use assets, net (1) 25,567 30,958 Investment in unconsolidated entity 16,544 18,631 Derivative assets 7,057 299 Deferred costs, net (2) 4,616 6,246 Prepaid expenses 2,058 3,730 Other assets, net 645 637 Total $ 91,632 $ 60,501 _______________________________________________ (1) Amortization expense for below market right-of-use asset was less than $0.1 million for the three and nine months ended September 30, 2022. There was no amortization expense for below market right-of-use asset for the three and nine months ended September 30, 2021. Includes right-of-use finance leases of $9.0 million, right-of-use operating leases of $9.6 million, and a below-market right-of-use asset of $7.1 million, net of $0.2 million in accumulated amortization as of September 30, 2022. Includes right-of-use finance leases of $13.8 million, right-of-use operating leases of $10.2 million, and a below-market right-of-use asset of $7.1 million, net of less than $0.1 million in accumulated amortization as of December 31, 2021. (2) Amortization expense for deferred costs related to the revolving credit facility totaled $0.5 million and $1.6 million for the three and nine months ended September 30, 2022, respectively, as compared to no amortization expense for deferred costs for the three and nine months ended September 30, 2021. Accumulated amortization for deferred costs related to the revolving credit facility was $1.9 million and $0.3 million as of September 30, 2022 and December 31, 2021, respectively. |
Orion Office REIT, Fair Value_2
Orion Office REIT, Fair Value Measures (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value Measurements, Recurring | The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021, aggregated by the level in the fair value hierarchy within which those instruments fall (in thousands): Level 1 Level 2 Level 3 Balance as of September 30, 2022 Assets: Derivative assets $ — $ 7,057 $ — $ 7,057 Level 1 Level 2 Level 3 Balance as of December 31, 2021 Assets: Derivative assets $ — $ 299 $ — $ 299 |
Schedule of Provisions for Impairment | The following table summarizes our provisions for impairment during the periods indicated below (dollars in thousands): Nine Months Ended September 30, 2022 Number of properties 10 Carrying value of impaired properties $ 98,633 Provisions for impairment (54,161) Estimated fair value $ 44,472 |
Schedule of Assets Measured at Fair Value on a Non-recurring Basis | The following table presents certain of the Company’s assets measured at fair value on a non-recurring basis as of September 30, 2022, aggregated by the level in the fair value hierarchy within which those assets fall (in thousands): Level 1 Level 2 (1) Level 3 (1) Balance as of September 30, 2022 Assets of properties held and used $ — $ 1,000 $ 22,339 $ 23,339 Assets of properties held for sale (2) — 4,782 — 4,782 $ — $ 5,782 $ 22,339 $ 28,121 ______________________________________________ (1) The fair value of the level 2 category was derived using negotiated sales prices and the fair value of the level 3 category was derived using discounted cash flow analysis and management estimates of selling prices. |
Schedule of Fair Value, by Balance Sheet Grouping | The fair values of the Company’s financial instruments are reported below (dollar amounts in thousands): Level Carrying Amount at September 30, 2022 Fair Value at September 30, 2022 Carrying Amount at December 31, 2021 Fair Value at December 31, 2021 Liabilities (1) : Bridge facility 2 — — $ 355,000 $ 355,000 Mortgages payable 2 355,000 334,473 — — Credit facility term loan 2 175,000 175,000 175,000 175,000 Credit facility revolver 2 31,000 31,000 90,000 90,000 Total $ 561,000 $ 540,473 $ 620,000 $ 620,000 _______________________________________________ (1) Current and prior period liabilities’ carrying and fair values exclude net deferred financing costs. |
Orion Office REIT, Debt, Net (T
Orion Office REIT, Debt, Net (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The following table summarizes the carrying value of debt as of September 30, 2022 and December 31, 2021, and the debt activity for the nine months ended September 30, 2022 (in thousands): Nine Months Ended September 30, 2022 Balance as of December 31, 2021 Debt Issuances Repayments, Extinguishment and Assumptions Accretion and Amortization Balance as of September 30, 2022 Mortgages payable: Outstanding balance $ — $ 355,000 $ — $ — $ 355,000 Deferred costs — (3,446) — 440 (3,006) Mortgages payable, net — 351,554 — 440 351,994 Bridge facility: Outstanding balance 355,000 — (355,000) — — Deferred costs (643) — 442 201 — Bridge facility, net 354,357 — (354,558) 201 — Credit facility term loan: Outstanding balance 175,000 — — — 175,000 Deferred costs (2,510) (36) — 1,024 (1,522) Credit facility term loan, net 172,490 (36) — 1,024 173,478 Credit facility revolver: Outstanding balance 90,000 70,000 (129,000) — 31,000 Credit facility revolver, net 90,000 70,000 (129,000) — 31,000 Total debt $ 616,847 $ 421,518 $ (483,558) $ 1,665 $ 556,472 |
Schedule of Mortgage Notes Payable | The Company’s mortgages payable consisted of the following as of September 30, 2022 (dollar amounts in thousands): Encumbered Properties Net Carrying Value of Collateralized Properties (1) Outstanding Balance Weighted-Average Weighted-Average Years to Maturity Fixed-rate debt 19 $ 472,268 $ 355,000 4.97 % 4.4 _______________________________________________ (1) Net carrying value is real estate assets, including right-of-use assets, net of real estate liabilities. |
Orion Office REIT, Derivative_2
Orion Office REIT, Derivative and Hedging Activities (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments | The table below presents the fair value of the Company’s derivative financial instrument designated as a cash flow hedge as well as its classification in the Company’s consolidated balance sheets as of September 30, 2022 and December 31, 2021 (in thousands): Derivatives Designated as Hedging Instruments Balance Sheet Location September 30, 2022 December 31, 2021 Interest rate swaps Other assets, net $ 7,057 $ 299 |
Schedule of Derivative Offsetting Assets | The table below details a gross presentation, the effects of offsetting and a net presentation of the Company’s derivatives as of September 30, 2022 and December 31, 2021 (in thousands). The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. Offsetting of Derivative Assets and Liabilities Gross Amounts of Recognized Assets Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Consolidated Balance Sheets Net Amounts of Assets Presented in the Consolidated Balance Sheets Net Amounts of Liabilities Presented in the Consolidated Balance Sheets Financial Instruments Cash Collateral Received Net Amount September 30, 2022 $ 7,057 $ — $ — $ 7,057 $ — $ — $ — $ 7,057 December 31, 2021 $ 299 $ — $ — $ 299 $ — $ — $ — $ 299 |
Schedule of Derivative Offsetting Liabilities | The table below details a gross presentation, the effects of offsetting and a net presentation of the Company’s derivatives as of September 30, 2022 and December 31, 2021 (in thousands). The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. Offsetting of Derivative Assets and Liabilities Gross Amounts of Recognized Assets Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Consolidated Balance Sheets Net Amounts of Assets Presented in the Consolidated Balance Sheets Net Amounts of Liabilities Presented in the Consolidated Balance Sheets Financial Instruments Cash Collateral Received Net Amount September 30, 2022 $ 7,057 $ — $ — $ 7,057 $ — $ — $ — $ 7,057 December 31, 2021 $ 299 $ — $ — $ 299 $ — $ — $ — $ 299 |
Orion Office REIT, Supplement_2
Orion Office REIT, Supplemental Cash Flow Disclosures (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of Supplemental Cash Flow Information | Supplemental cash flow information was as follows during the periods indicated below (in thousands): Nine Months Ended September 30, 2022 2021 Supplemental disclosures: Cash paid for interest $ 18,729 $ 1,200 Cash paid for income taxes $ 678 $ — Non-cash investing and financing activities: Accrued capital expenditures and leasing costs $ 1,251 $ — Distributions declared and unpaid $ 5,664 $ — Land acquired upon finance lease termination $ 4,707 $ — |
Orion Office REIT, Accounts P_2
Orion Office REIT, Accounts Payable and Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consisted of the following as of September 30, 2022 and December 31, 2021 (in thousands): September 30, 2022 December 31, 2021 Accrued real estate and other taxes $ 12,506 $ 10,322 Accrued other 6,871 4,159 Accrued interest 1,729 1,093 Accounts payable 932 1,805 Total $ 22,038 $ 17,379 |
Orion Office REIT, Leases (Tabl
Orion Office REIT, Leases (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Schedule of Operating Lease Payments to be Received | The following table presents future minimum base rent payments due to the Company over the next five years and thereafter as of September 30, 2022 (in thousands). Future Minimum October 1, 2022 - December 31, 2022 $ 35,475 2023 135,118 2024 104,498 2025 66,646 2026 63,461 2027 43,872 Thereafter 160,315 Total $ 609,385 |
Schedule of Operating Lease Liability, Maturity | The following table reflects the maturity analysis of payments due from the Company over the next five years and thereafter for ground and corporate office lease obligations as of September 30, 2022 (in thousands). Future Minimum Lease Payments October 1, 2022 - December 31, 2022 229 2023 778 2024 453 2025 442 2026 442 2027 445 Thereafter 12,939 Total 15,728 Less: imputed interest 6,018 Total $ 9,710 |
Orion Office REIT, Net Income_2
Orion Office REIT, Net Income (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The computation of basic and diluted earnings per share is as follows for the three and nine months ended September 30, 2022 and September 30, 2021 (in thousands, except share and per share data): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Net (loss) income $ (53,029) $ (1,423) $ (78,481) $ 7,423 (Income) loss attributable to non-controlling interests (18) — (43) — Net (loss) income available to common stockholders used in basic and diluted net income per share (53,047) (1,423) (78,524) 7,423 Weighted average number of Common Stock outstanding - basic 56,635,038 56,625,650 56,630,086 56,625,650 Effect of dilutive securities (1) — — — — Weighted average number of common shares - diluted 56,635,038 56,625,650 56,630,086 56,625,650 Basic and diluted net (loss) income per share attributable to common stockholders $ (0.94) $ (0.03) $ (1.39) $ 0.13 _______________________________________________ (1) As of September 30, 2021, there were no adjustments to the weighted average common shares outstanding used in the diluted calculation given there were no potentially dilutive shares. |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following were excluded from diluted net (loss) income per share attributable to common stockholders, as the effect would have been antidilutive: Nine Months Ended September 30, 2022 2021 Weighted average unvested Time-Based Restricted Stock Units and Performance-Based Restricted Stock Units (1) — — Weighted average stock warrants 1,120,000 — _______________________________________________ (1) Net of assumed repurchases in accordance with the treasury stock method. |
VEREIT Office Assets, Leases (T
VEREIT Office Assets, Leases (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
VEREIT Office Assets | |
Entity Information [Line Items] | |
Schedule of Lease Income | The components of rental revenue from VEREIT Office Assets’ operating leases were as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2021 Fixed: Cash rent $ 32,431 $ 96,855 Straight-line rent (165) (1,624) Lease intangible amortization 70 (12) Property operating cost reimbursements 1,004 2,925 Total fixed 33,340 98,144 Variable (1) 7,154 23,245 Total rental revenue $ 40,494 $ 121,389 ____________________________________ |
Orion Office REIT, Organizati_2
Orion Office REIT, Organization (Details) $ / shares in Units, ft² in Millions, $ in Millions | Nov. 12, 2021 USD ($) | Sep. 30, 2022 ft² state property $ / shares | Dec. 31, 2021 $ / shares | Nov. 10, 2021 $ / shares | Jul. 15, 2021 $ / shares |
Real Estate Properties [Line Items] | |||||
Distributions to realty income | $ | $ 595 | ||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.01 | |
Number of Properties | property | 87 | ||||
Area of real estate property | ft² | 10 | ||||
Number of states with real estate properties owned | state | 29 | ||||
Arch Street Joint Venture | |||||
Real Estate Properties [Line Items] | |||||
Number of Properties | property | 6 | ||||
Area of real estate property | ft² | 1 | ||||
Number of states with real estate properties owned | state | 6 |
Orion Office REIT, Summary of_3
Orion Office REIT, Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Product Information [Line Items] | ||||||
Lease termination income | $ 0 | $ 900 | $ 0 | |||
Total asset and property management fees | $ 51,769 | 13,315 | 157,824 | 38,930 | ||
Property management fee revenue | 200 | 0 | 600 | 0 | ||
Restricted cash | 35,145 | 531 | 35,145 | 531 | $ 0 | $ 3,915 |
Reduction to rental revenue | 500 | 0 | 500 | 0 | ||
Fee income from unconsolidated joint venture | ||||||
Product Information [Line Items] | ||||||
Total asset and property management fees | $ 189 | $ 0 | $ 568 | $ 0 |
Orion Office REIT, Real Estat_3
Orion Office REIT, Real Estate Investments and Related Intangibles - Property Acquisitions (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 acquistion | Sep. 30, 2021 acquistion | Sep. 30, 2022 USD ($) landParcel | Sep. 30, 2021 acquistion property | |
Real Estate [Abstract] | ||||
Number of real estate acquisitions | acquistion | 0 | 0 | 0 | |
Payments to acquire property | $ 0 | |||
Number of properties acquired | 1 | 0 | ||
Finance lease ROU asset reclassified to real estate investments | $ 4,700,000 |
Orion Office REIT, Real Estat_4
Orion Office REIT, Real Estate Investments and Related Intangibles - Property Dispositions and Real Estate Assets Held for Sale (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) property | Sep. 30, 2021 USD ($) property | Dec. 31, 2021 USD ($) | |
Property, Plant and Equipment [Line Items] | |||||
Number of real estate properties disposed | property | 5 | 0 | |||
Aggregate sales price | $ 23,100,000 | ||||
Loss on dispositions | $ 1,100,000 | ||||
Number of properties sold at a loss | property | 2 | ||||
Gain on disposition of real estate assets | $ 1,059,000 | $ 0 | |||
Number of properties sold at a gain | property | 3 | ||||
Number of properties held for sale | property | 3 | ||||
Real estate assets held for sale, net | $ 6,383,000 | $ 6,383,000 | $ 0 | ||
Impairments | 44,801,000 | $ 0 | 54,161,000 | $ 0 | |
Held-for-sale | |||||
Property, Plant and Equipment [Line Items] | |||||
Impairments | 6,000,000 | ||||
Land | |||||
Property, Plant and Equipment [Line Items] | |||||
Real estate assets held for sale, net | 1,200,000 | 1,200,000 | |||
Building, Fixtures And Improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Real estate assets held for sale, net | $ 5,200,000 | $ 5,200,000 |
Orion Office REIT, Real Estat_5
Orion Office REIT, Real Estate Investments and Related Intangibles - Intangible Lease Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Real Estate [Line Items] | |||||
Intangible lease assets, net | $ 223,528 | $ 223,528 | $ 298,107 | ||
Weighted-Average Useful Life (Years) | 8 years 1 month 6 days | ||||
Below-market lease liabilities, net | 15,611 | $ 15,611 | 20,609 | ||
Below market-leases accumulated amortization | 15,706 | 15,706 | 14,459 | ||
Amortization of deferred lease incentives | 100 | $ 100 | |||
In-place leases: | |||||
Real Estate [Line Items] | |||||
Finite-Lived Intangible Asset, Useful Life | 5 years 2 months 12 days | ||||
Intangible lease assets, net | 199,336 | $ 199,336 | 272,743 | ||
Accumulated amortization | 129,123 | $ 129,123 | 65,247 | ||
Leasing commissions: | |||||
Real Estate [Line Items] | |||||
Finite-Lived Intangible Asset, Useful Life | 12 years 8 months 12 days | ||||
Intangible lease assets, net | 11,776 | $ 11,776 | 10,349 | ||
Accumulated amortization | 1,244 | $ 1,244 | 456 | ||
Above-market lease assets: | |||||
Real Estate [Line Items] | |||||
Finite-Lived Intangible Asset, Useful Life | 5 years 4 months 24 days | ||||
Intangible lease assets, net | 11,127 | $ 11,127 | 15,015 | ||
Accumulated amortization | 10,127 | $ 10,127 | 6,239 | ||
Deferred lease incentives | |||||
Real Estate [Line Items] | |||||
Finite-Lived Intangible Asset, Useful Life | 4 years 6 months | ||||
Intangible lease assets, net | 1,289 | $ 1,289 | $ 0 | ||
Accumulated amortization | 36 | 36 | |||
Above‑ and below-market leases | |||||
Real Estate [Line Items] | |||||
Amortization expense | 300 | $ 300 | 900 | $ 800 | |
In-place leases, leasing commissions and other lease intangibles | |||||
Real Estate [Line Items] | |||||
Amortization expense | $ 23,700 | $ 1,600 | $ 73,500 | $ 4,800 |
Orion Office REIT, Real Estat_6
Orion Office REIT, Real Estate Investments and Related Intangibles - Intangible Lease Assets and Liabilities (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Below-market lease liabilities: | |
Remainder of 2022 | $ 1,543 |
2023 | 5,994 |
2024 | 3,786 |
2025 | 1,036 |
2026 | 817 |
2027 | 655 |
In-place leases: | |
Real Estate [Line Items] | |
Remainder of 2022 | 21,496 |
2023 | 73,615 |
2024 | 49,213 |
2025 | 21,652 |
2026 | 15,499 |
2027 | 7,441 |
Leasing commissions: | |
Real Estate [Line Items] | |
Remainder of 2022 | 288 |
2023 | 1,153 |
2024 | 1,110 |
2025 | 1,042 |
2026 | 1,042 |
2027 | 1,039 |
Above-market lease assets: | |
Real Estate [Line Items] | |
Remainder of 2022 | 1,282 |
2023 | 4,791 |
2024 | 2,998 |
2025 | 860 |
2026 | 682 |
2027 | 237 |
Deferred lease incentives | |
Real Estate [Line Items] | |
Remainder of 2022 | 76 |
2023 | 306 |
2024 | 306 |
2025 | 289 |
2026 | 191 |
2027 | $ 119 |
Orion Office REIT, Real Estat_7
Orion Office REIT, Real Estate Investments and Related Intangibles - Schedule of Company's Investment in Unconsolidated Joint Venture (Details) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2022 USD ($) property | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Schedule of Equity Method Investments [Line Items] | |||
Number of Properties | property | 87 | ||
Arch Street Joint Venture | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership | 20% | ||
Number of Properties | property | 6 | ||
Carrying Amount of Investment | $ 16,544 | $ 18,631 | |
Equity in Loss | (252) | $ 0 | |
Difference between carrying amount and underlying equity | $ 1,200 |
Orion Office REIT, Receivable_3
Orion Office REIT, Receivables and Other Assets - Accounts Receivable, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Receivables [Abstract] | ||
Accounts receivable, net | $ 11,567 | $ 10,194 |
Straight-line rent receivable, net | 10,356 | 7,722 |
Total | $ 21,923 | $ 17,916 |
Orion Office REIT, Receivable_4
Orion Office REIT, Receivables and Other Assets - Other Assets (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Receivables [Abstract] | ||||||
Restricted cash | $ 35,145,000 | $ 531,000 | $ 35,145,000 | $ 531,000 | $ 0 | $ 3,915,000 |
Operating lease, right-of-use asset, statement of financial position [Extensible Enumeration] | Total | Total | Total | |||
Finance lease, right-of-use asset, statement of financial position [Extensible Enumeration] | Total | Total | Total | |||
Right-of-use assets, net | $ 25,567,000 | $ 25,567,000 | $ 30,958,000 | |||
Investment in unconsolidated entity | 16,544,000 | 16,544,000 | 18,631,000 | |||
Derivative assets | 7,057,000 | 7,057,000 | 299,000 | |||
Deferred costs, net | 4,616,000 | 4,616,000 | 6,246,000 | |||
Prepaid expenses | 2,058,000 | 2,058,000 | 3,730,000 | |||
Other assets, net | 645,000 | 645,000 | 637,000 | |||
Total | 91,632,000 | 91,632,000 | 60,501,000 | |||
Amortization expense for below market right-of-use, less than | 100,000 | 0 | 100,000 | 0 | ||
Finance Lease, Right-of-Use Asset, after Accumulated Amortization | 9,000,000 | 9,000,000 | 13,800,000 | |||
Operating lease, right-of-use asset | 9,600,000 | 9,600,000 | 10,200,000 | |||
Below market-leases accumulated amortization | 200,000 | 200,000 | 100,000 | |||
Below market lease, right-of-use asset | 7,100,000 | 7,100,000 | 7,100,000 | |||
Amortization of deferred costs | 500,000 | $ 0 | 1,600,000 | $ 0 | ||
Accumulated amortization of deferred costs | $ 1,900,000 | $ 1,900,000 | $ 300,000 |
Orion Office REIT, Fair Value_3
Orion Office REIT, Fair Value Measures - Items Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | $ 7,057 | $ 299 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 7,057 | 299 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | $ 0 | $ 0 |
Orion Office REIT, Fair Value_4
Orion Office REIT, Fair Value Measures - Narrative (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) property | Sep. 30, 2021 USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Number of properties | property | 10 | |||
Impairments | $ 44,801,000 | $ 0 | $ 54,161,000 | $ 0 |
Impairment, Long-Lived Asset, Held-for-Use | 44,000,000 | |||
Impairment of properties held for sale | 1,600,000 | |||
Impairment of properties disposed of | $ 8,600,000 | |||
Assets Impaired During The Nine Months Ended September 30 2022 | Estimated Sales Price | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Number of properties | property | 8 | |||
Assets Impaired During The Nine Months Ended September 30 2022 | Discount Rate and Capitalization Rate | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Number of properties | property | 2 | |||
Assets Impaired During The Nine Months Ended September 30 2022 | Weighted Average | Discount Rate | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Alternative investment, measurement input | 0.085 | 0.085 | ||
Assets Impaired During The Nine Months Ended September 30 2022 | Weighted Average | Capitalization Rate | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Alternative investment, measurement input | 0.080 | 0.080 |
Orion Office REIT, Fair Value_5
Orion Office REIT, Fair Value Measures - Provisions for Impairment (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) property | Sep. 30, 2021 USD ($) | |
Fair Value Disclosures [Abstract] | ||||
Number of properties | property | 10 | |||
Carrying value of impaired properties | $ 98,633,000 | $ 98,633,000 | ||
Provisions for impairment | (44,801,000) | $ 0 | (54,161,000) | $ 0 |
Estimated fair value | $ 44,472,000 | $ 44,472,000 |
Orion Office REIT, Fair Value_6
Orion Office REIT, Fair Value Measures - Assets at Fair Value Measured on a Non-recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets of properties held and used | $ 23,339 | |
Assets of properties held-for-sale | 4,782 | |
Assets | 28,121 | |
Real estate assets held for sale, net | 6,383 | $ 0 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets of properties held and used | 0 | |
Assets of properties held-for-sale | 0 | |
Assets | 0 | |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets of properties held and used | 1,000 | |
Assets of properties held-for-sale | 4,782 | |
Assets | 5,782 | |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets of properties held and used | 22,339 | |
Assets of properties held-for-sale | 0 | |
Assets | 22,339 | |
An additional property included in real estate held-for-sale, net | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Real estate assets held for sale, net | $ 1,600 |
Orion Office REIT, Fair Value_7
Orion Office REIT, Fair Value Measures - Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Carrying Amount at September 30, 2022 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | $ 561,000 | $ 620,000 |
Fair Value at September 30, 2022 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 540,473 | 620,000 |
Level 2 | Bridge facility | Carrying Amount at September 30, 2022 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 0 | 355,000 |
Level 2 | Bridge facility | Fair Value at September 30, 2022 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 0 | 355,000 |
Level 2 | Mortgages payable | Carrying Amount at September 30, 2022 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 355,000 | 0 |
Level 2 | Mortgages payable | Fair Value at September 30, 2022 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 334,473 | 0 |
Level 2 | Credit facility term loan | Carrying Amount at September 30, 2022 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 175,000 | 175,000 |
Level 2 | Credit facility term loan | Fair Value at September 30, 2022 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 175,000 | 175,000 |
Level 2 | Credit facility revolver | Carrying Amount at September 30, 2022 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 31,000 | 90,000 |
Level 2 | Credit facility revolver | Fair Value at September 30, 2022 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | $ 31,000 | $ 90,000 |
Orion Office REIT, Debt, Net -
Orion Office REIT, Debt, Net - Narrative (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Debt Disclosure [Abstract] | ||
Total debt outstanding | $ 556,472 | $ 616,847 |
Debt instrument, term | 3 years 2 months 12 days | |
Weighted-Average Interest Rate | 4.45% |
Orion Office REIT, Debt, Net _2
Orion Office REIT, Debt, Net - Schedule of Debt (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Debt [Roll Forward] | |
Total debt, beginning balance | $ 616,847 |
Debt issuance principal amount | 421,518 |
Repayments, extinguishment and assumptions of debt, net | (483,558) |
Amortization of debt issuance costs and discounts | 1,665 |
Total debt, ending balance | 556,472 |
Mortgages payable | |
Debt [Roll Forward] | |
Outstanding balance, beginning | 0 |
Deferred costs, beginning balance | 0 |
Total debt, beginning balance | 0 |
Debt issuance outstanding balance amount | 355,000 |
Debt issuance, deferred cost | (3,446) |
Debt issuance principal amount | 351,554 |
Repayments, extinguishment and assumptions of debt, deferred costs, amount | 0 |
Repayments, extinguishment and assumptions of debt, net | 0 |
Amortization of debt issuance costs | 440 |
Amortization of debt issuance costs and discounts | 440 |
Outstanding balance, ending | 355,000 |
Deferred costs, ending balance | (3,006) |
Total debt, ending balance | 351,994 |
Bridge facility | |
Debt [Roll Forward] | |
Outstanding balance, beginning | 355,000 |
Deferred costs, beginning balance | (643) |
Total debt, beginning balance | 354,357 |
Debt issuance outstanding balance amount | 0 |
Debt issuance, deferred cost | 0 |
Debt issuance principal amount | 0 |
Repayments, extinguishment and assumptions | (355,000) |
Repayments, extinguishment and assumptions of debt, deferred costs, amount | 442 |
Repayments, extinguishment and assumptions of debt, net | (354,558) |
Amortization of debt issuance costs | 201 |
Amortization of debt issuance costs and discounts | 201 |
Outstanding balance, ending | 0 |
Deferred costs, ending balance | 0 |
Total debt, ending balance | 0 |
Credit facility term loan | |
Debt [Roll Forward] | |
Outstanding balance, beginning | 175,000 |
Deferred costs, beginning balance | (2,510) |
Total debt, beginning balance | 172,490 |
Debt issuance outstanding balance amount | 0 |
Debt issuance, deferred cost | (36) |
Debt issuance principal amount | (36) |
Repayments, extinguishment and assumptions | 0 |
Repayments, extinguishment and assumptions of debt, deferred costs, amount | 0 |
Repayments, extinguishment and assumptions of debt, net | 0 |
Amortization of debt issuance costs | 1,024 |
Amortization of debt issuance costs and discounts | 1,024 |
Outstanding balance, ending | 175,000 |
Deferred costs, ending balance | (1,522) |
Total debt, ending balance | 173,478 |
Credit facility revolver | |
Debt [Roll Forward] | |
Outstanding balance, beginning | 90,000 |
Total debt, beginning balance | 90,000 |
Debt issuance outstanding balance amount | 70,000 |
Debt issuance principal amount | 70,000 |
Repayments, extinguishment and assumptions | (129,000) |
Repayments, extinguishment and assumptions of debt, net | (129,000) |
Amortization of debt issuance costs and discounts | 0 |
Outstanding balance, ending | 31,000 |
Total debt, ending balance | $ 31,000 |
Orion Office REIT, Debt, Net _3
Orion Office REIT, Debt, Net - Credit Facility (Details) | 9 Months Ended | ||||
Nov. 12, 2021 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Feb. 10, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Debt Instrument [Line Items] | |||||
Debt instrument, term | 3 years 2 months 12 days | ||||
Proceeds from credit facility revolver | $ 70,000,000 | $ 0 | |||
Distributions to realty income | $ 595,000,000 | ||||
Mortgages payable | CMBS Loan | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, face amount | $ 355,000,000 | ||||
Credit facility revolver | |||||
Debt Instrument [Line Items] | |||||
Borrowing capacity | 425,000,000 | ||||
Proceeds from credit facility revolver | $ 90,000,000 | ||||
Credit facilities | 31,000,000 | $ 90,000,000 | |||
Remaining borrowing capacity | 394,000,000 | ||||
Commitment fee percentage | 0.25% | ||||
Credit facility revolver | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, term | 3 years | ||||
Covenant, total debt to total asset value, maximum | 0.60 | ||||
Covenant, adjusted EBITDA to fixed charges, minimum | 1.50 | ||||
Covenant, secured debt to total asset value, maximum | 0.45 | ||||
Covenant, unsecured debt to unencumbered asset value, maximum | 0.60 | ||||
Covenant, unencumbered real properties to unsecured interest expense, minimum | 2 | ||||
Credit facility revolver | Line of Credit | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Variable rate | 2.50% | ||||
Credit facility revolver | Line of Credit | Base Rate | |||||
Debt Instrument [Line Items] | |||||
Variable rate | 1.50% | ||||
Letter of Credit | |||||
Debt Instrument [Line Items] | |||||
Borrowing capacity | $ 25,000,000 | ||||
Credit facility term loan | |||||
Debt Instrument [Line Items] | |||||
Borrowing capacity | $ 175,000,000 | ||||
Credit facilities | $ 173,478,000 | $ 172,490,000 | |||
Credit facility term loan | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, term | 2 years | ||||
Credit facility term loan | Line of Credit | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Variable rate | 2.50% | ||||
Credit facility term loan | Line of Credit | Base Rate | |||||
Debt Instrument [Line Items] | |||||
Variable rate | 1.50% | ||||
Bridge facility | |||||
Debt Instrument [Line Items] | |||||
Borrowing capacity | $ 355,000,000 | ||||
Bridge facility | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, term | 6 months |
Orion Office REIT, Debt, Net _4
Orion Office REIT, Debt, Net - CMBS Loan (Details) $ in Millions | Feb. 10, 2022 USD ($) property | Sep. 30, 2022 USD ($) |
Unconsolidated Joint Venture | ||
Debt Instrument [Line Items] | ||
Outstanding Balance | $ 136.7 | |
CMBS Loan | ||
Debt Instrument [Line Items] | ||
Number properties used to secure debt | property | 19 | |
Debt Instrument, Interest Rate, Stated Percentage | 4.971% | |
Loan reserves, amount funded | $ 35.5 | |
Prepayment lockout period | 2 years | |
Covenant, net worth requirement, minimum | $ 355 | |
Covenant, liquid asset requirement, minimum | 10 | |
CMBS Loan | CMBS Loan | ||
Debt Instrument [Line Items] | ||
Debt instrument, face amount | $ 355 |
Orion Office REIT, Debt, Net _5
Orion Office REIT, Debt, Net - Schedule of Mortgage Notes Payable (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 USD ($) property | Dec. 31, 2021 USD ($) | |
Debt Instrument [Line Items] | ||
Net Carrying Value of Collateralized Properties | $ 1,254,806 | $ 1,353,636 |
Weighted-Average Interest Rate | 4.45% | |
Weighted-Average Years to Maturity | 3 years 2 months 12 days | |
Mortgages payable | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 19 | |
Net Carrying Value of Collateralized Properties | $ 472,268 | |
Outstanding Balance | $ 355,000 | |
Weighted-Average Interest Rate | 4.97% | |
Weighted-Average Years to Maturity | 4 years 4 months 24 days |
Orion Office REIT, Derivative_3
Orion Office REIT, Derivative and Hedging Activities - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 USD ($) derivative_instrument | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) derivative_instrument | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) derivative_instrument | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Unrealized gain on interest rate derivatives | $ 1,885 | $ 0 | $ 7,229 | $ 0 | |
Reclassification of previous unrealized (gain) loss on interest rate derivatives into net (loss) income | 679 | 0 | 471 | 0 | |
Amount to be reclassified in next twelve months | 6,300 | 6,300 | |||
Designated as Hedging Instrument | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Unrealized gain on interest rate derivatives | 1,900 | 7,200 | |||
Reclassification of previous unrealized (gain) loss on interest rate derivatives into net (loss) income | 700 | 0 | 500 | 0 | |
Interest Rate Swap | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Unrealized gain on interest rate derivatives | $ 0 | $ 0 | |||
Interest Rate Swap | Designated as Hedging Instrument | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Derivative, notional amount | $ 175,000 | $ 175,000 | $ 175,000 | ||
Interest Rate Swap | Not Designated as Hedging Instrument | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Number of interest rate swaps not designated as qualifying hedging relationships | derivative_instrument | 0 | 0 | 0 |
Orion Office REIT, Derivative_4
Orion Office REIT, Derivative and Hedging Activities - Derivatives Designated as Hedging Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Interest Rate Swap | Other assets, net | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Cash flow hedges derivative instruments at fair value, net | $ 7,057 | $ 299 |
Orion Office REIT, Derivative_5
Orion Office REIT, Derivative and Hedging Activities - Offsetting of Derivative Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Gross Amounts of Recognized Assets | $ 7,057 | $ 299 |
Gross Amounts of Recognized Liabilities | 0 | 0 |
Gross Amounts Offset in the Consolidated Balance Sheets | 0 | 0 |
Derivative assets | 7,057 | 299 |
Net Amounts of Liabilities Presented in the Consolidated Balance Sheets | 0 | 0 |
Financial Instruments | 0 | 0 |
Cash Collateral Received | 0 | 0 |
Net Amount | $ 7,057 | $ 299 |
Orion Office REIT, Supplement_3
Orion Office REIT, Supplemental Cash Flow Disclosures (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Supplemental disclosures: | ||
Cash paid for interest | $ 18,729 | $ 1,200 |
Cash paid for income taxes | 678 | 0 |
Non-cash investing and financing activities: | ||
Accrued capital expenditures and leasing costs | 1,251 | 0 |
Distributions declared and unpaid | 5,664 | 0 |
Land acquired upon finance lease termination | $ 4,707 | $ 0 |
Orion Office REIT, Accounts P_3
Orion Office REIT, Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Payables and Accruals [Abstract] | ||
Accrued real estate and other taxes | $ 12,506 | $ 10,322 |
Accrued other | 6,871 | 4,159 |
Accrued interest | 1,729 | 1,093 |
Accounts payable | 932 | 1,805 |
Total | $ 22,038 | $ 17,379 |
Orion Office REIT, Leases - Les
Orion Office REIT, Leases - Lessor Narrative (Details) | Sep. 30, 2022 |
Minimum | |
Lessor, Lease, Description [Line Items] | |
Lessor, operating leases, term | 1 month 6 days |
Maximum | |
Lessor, Lease, Description [Line Items] | |
Lessor, operating leases, term | 15 years 6 months |
Orion Office REIT, Leases - Fut
Orion Office REIT, Leases - Future Minimum Base Rent Payments (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Leases [Abstract] | |
October 1, 2022 - December 31, 2022 | $ 35,475 |
2023 | 135,118 |
2024 | 104,498 |
2025 | 66,646 |
2026 | 63,461 |
2027 | 43,872 |
Thereafter | 160,315 |
Total | $ 609,385 |
Orion Office REIT, Leases - L_2
Orion Office REIT, Leases - Lessee Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Lessee, Lease, Description [Line Items] | ||||
Lessee, operating lease, discount rate | 3.21% | 3.21% | ||
Operating lease, cost | $ 0.3 | $ 0.1 | $ 0.8 | $ 0.1 |
Minimum | ||||
Lessee, Lease, Description [Line Items] | ||||
Lessee, operating lease, remaining lease term | 1 month 6 days | 1 month 6 days | ||
Maximum | ||||
Lessee, Lease, Description [Line Items] | ||||
Lessee, operating lease, remaining lease term | 62 years 3 months 18 days | 62 years 3 months 18 days |
Orion Office REIT, Leases - F_2
Orion Office REIT, Leases - Future Minimum Lease Payments (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Leases [Abstract] | |
October 1, 2022 - December 31, 2022 | $ 229 |
2023 | 778 |
2024 | 453 |
2025 | 442 |
2026 | 442 |
2027 | 445 |
Thereafter | 12,939 |
Total | 15,728 |
Less: imputed interest | 6,018 |
Total | $ 9,710 |
Orion Office REIT, Stockholde_2
Orion Office REIT, Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | Nov. 01, 2022 | Oct. 17, 2022 | Aug. 02, 2022 | Jul. 15, 2022 | May 03, 2022 | Apr. 15, 2022 | Mar. 22, 2022 | Nov. 12, 2021 | Nov. 10, 2021 | Jul. 15, 2021 | Sep. 30, 2022 | Dec. 31, 2021 |
Class of Stock [Line Items] | ||||||||||||
Issuance of common stock, net (in shares) | 56,525,650 | 100,000 | ||||||||||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.01 | $ 0.001 | $ 0.001 | ||||||||
Proceeds from issuance of common stock | $ 1 | |||||||||||
Common stock, dividends, per share, declared (in dollars per share) | $ 0.10 | $ 0.10 | $ 0.10 | |||||||||
Common stock dividends paid (in usd per share) | $ 0.10 | $ 0.10 | ||||||||||
Warrants to purchase (in shares) | 1,120,000 | |||||||||||
Warrant, exercise price (in dollars per share) | $ 22.42 | |||||||||||
Subsequent Event | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Common stock, dividends, per share, declared (in dollars per share) | $ 0.10 | |||||||||||
Common stock dividends paid (in usd per share) | $ 0.10 | |||||||||||
Maximum | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Warrants expire term | 10 years | |||||||||||
Minimum | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Warrants expire term | 7 years | |||||||||||
Realty Income | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Common stock, shares owned by realty income (in shares) | 56,625,650 |
Orion Office REIT, Equity Bas_2
Orion Office REIT, Equity Based Compensation (Details) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 USD ($) | Sep. 30, 2022 USD ($) | |
Time-Based Restricted Stock Units and Restricted Stock Units | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting rights, percentage | 0% | |
Time-Based Restricted Stock Units and Restricted Stock Units | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting rights, percentage | 100% | |
Performance-Based Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Performance period | 3 years | |
Time-Based Restricted Stock Units and Performance-Based Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Equity-based compensation expense | $ 0.4 | $ 0.8 |
Unrecognized compensation expense | 2.6 | $ 2.6 |
Weighted-average remaining term (in years) | 2 years 2 months 12 days | |
Realty Income Time-Based Restricted Stock Units and Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Equity-based compensation expense | 0.1 | $ 0.3 |
Unrecognized compensation expense | $ 0.3 | $ 0.3 |
Weighted-average remaining term (in years) | 1 year 2 months 12 days |
Orion Office REIT, Net Income_3
Orion Office REIT, Net Income (Loss) Per Share - Computation of Basic and Diluted EPS (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Earnings Per Share [Abstract] | ||||||||
Net (loss) income | $ (53,029) | $ (15,570) | $ (9,882) | $ (1,423) | $ 4,296 | $ 4,551 | $ (78,481) | $ 7,423 |
Net income attributable to non-controlling interest | (18) | 0 | (43) | 0 | ||||
Net (loss) income available to common stockholders used in basic net income per share | (53,047) | (1,423) | (78,524) | 7,423 | ||||
Net (loss) income available to common stockholders used in diluted net income per share | $ (53,047) | $ (1,423) | $ (78,524) | $ 7,423 | ||||
Weighted average number of common stock outstanding - basic (in shares) | 56,635,038 | 56,625,650 | 56,630,086 | 56,625,650 | ||||
Effect of dilutive securities (in shares) | 0 | 0 | 0 | 0 | ||||
Weighted average number of common shares - diluted (in shares) | 56,635,038 | 56,625,650 | 56,630,086 | 56,625,650 | ||||
Basic net (loss) income per share attributable to common stockholders (in dollars per share) | $ (0.94) | $ (0.03) | $ (1.39) | $ 0.13 | ||||
Diluted net (loss) income per share attributable to common stockholders (in dollars per share) | $ (0.94) | $ (0.03) | $ (1.39) | $ 0.13 |
Orion Office REIT, Net Income_4
Orion Office REIT, Net Income (Loss) Per Share - Schedule of Antidilutive (Details) - shares | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Time-Based Restricted Stock Units and Performance-Based Restricted Stock Units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 0 |
Weighted average stock warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 1,120,000 | 0 |
Orion Office REIT, Subsequent_2
Orion Office REIT, Subsequent Events (Details) $ / shares in Units, $ in Millions | 9 Months Ended | |||||
Nov. 01, 2022 USD ($) property $ / shares | Aug. 02, 2022 $ / shares | May 03, 2022 $ / shares | Mar. 22, 2022 $ / shares | Sep. 30, 2022 USD ($) | Sep. 30, 2021 property | |
Subsequent Event [Line Items] | ||||||
Common stock, dividends, per share, declared (in dollars per share) | $ / shares | $ 0.10 | $ 0.10 | $ 0.10 | |||
Number of properties sold | property | 0 | |||||
Aggregate sales price | $ | $ 23.1 | |||||
Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Common stock, dividends, per share, declared (in dollars per share) | $ / shares | $ 0.10 | |||||
Number of properties sold | property | 2 | |||||
Aggregate sales price | $ | $ 5.3 |
VEREIT Office Assets, Organiz_3
VEREIT Office Assets, Organization and Summary of Significant Accounting Policies (Details) ft² in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 USD ($) ft² property state jointVenture | Sep. 30, 2021 USD ($) ft² property state segment jointVenture | Sep. 30, 2022 USD ($) ft² state property | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Real Estate Properties [Line Items] | |||||
Number of Properties | property | 87 | ||||
Area of real estate property | ft² | 10 | ||||
Number of states with real estate properties owned | state | 29 | ||||
Real Estate Investment Property, at Cost | $ 1,380,903,000 | $ 1,481,745,000 | |||
Total debt outstanding | 556,472,000 | 616,847,000 | |||
Restricted cash | $ 531,000 | $ 531,000 | $ 35,145,000 | $ 0 | $ 3,915,000 |
Arch Street Joint Venture | |||||
Real Estate Properties [Line Items] | |||||
Number of Properties | property | 6 | ||||
Ownership | 20% | ||||
VEREIT Office Assets | |||||
Real Estate Properties [Line Items] | |||||
Number of reportable segments | segment | 1 | ||||
Number of Properties | property | 52 | 52 | |||
Number of states with real estate properties owned | state | 25 | 25 | |||
Number of equity method investments | jointVenture | 1 | 1 | |||
Goodwill, impairment loss | $ 0 | $ 0 | |||
Restricted cash | 3,400,000 | 3,400,000 | |||
Franchise and state and local tax expense | $ 200,000 | $ 500,000 | |||
VEREIT Office Assets | Arch Street Joint Venture | |||||
Real Estate Properties [Line Items] | |||||
Ownership | 20% | 20% | |||
VEREIT Office Assets | Minimum | |||||
Real Estate Properties [Line Items] | |||||
Impairment considerations, disposal period (more likely than not) | 12 months | ||||
VEREIT Office Assets | Maximum | |||||
Real Estate Properties [Line Items] | |||||
Impairment considerations, disposal period (more likely than not) | 24 months | ||||
VEREIT Office Assets | Building and Building Improvements | |||||
Real Estate Properties [Line Items] | |||||
Real estate assets, useful life | 40 years | ||||
VEREIT Office Assets | Land Improvements | |||||
Real Estate Properties [Line Items] | |||||
Real estate assets, useful life | 15 years | ||||
VEREIT Office Assets | Consolidated Joint Venture | |||||
Real Estate Properties [Line Items] | |||||
Number of Properties | property | 1 | 1 | |||
Area of real estate property | ft² | 7.5 | 7.5 | |||
VEREIT Office Assets | Unconsolidated Joint Venture | |||||
Real Estate Properties [Line Items] | |||||
Area of real estate property | ft² | 0.8 | 0.8 | |||
Number of states with real estate properties owned | state | 5 | 5 | |||
Arch Street Joint Venture | Unconsolidated Joint Venture | |||||
Real Estate Properties [Line Items] | |||||
Number of Properties | property | 5 | 5 | |||
Real Estate Investment Property, at Cost | $ 196,100,000 | $ 196,100,000 | |||
Total debt outstanding | 118,400,000 | 118,400,000 | |||
VEREIT, Inc. | |||||
Real Estate Properties [Line Items] | |||||
Goodwill, impairment loss | $ 0 | $ 0 |
VEREIT Office Assets, Real Es_2
VEREIT Office Assets, Real Estate Investments and Related Intangibles - Consolidated Joint Ventures Narrative (Details) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2022 USD ($) landParcel property | Sep. 30, 2021 USD ($) jointVenture property | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Schedule of Equity Method Investments [Line Items] | ||||
Number of properties acquired | 1 | 0 | ||
Number of properties sold | property | 0 | |||
Number of properties | property | 87 | |||
Assets | $ 1,621,554 | $ 1,759,478 | ||
Real estate investments, net | $ 1,254,806 | $ 1,353,636 | ||
VEREIT Office Assets | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Number of properties | property | 52 | |||
VEREIT Office Assets | Joint ventures | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Number of joint ventures | jointVenture | 1 | |||
Number of properties | property | 1 | |||
Assets | $ 30,700 | |||
Real estate investments, net | $ 27,800 | |||
VEREIT Office Assets | Joint ventures | Mortgages payable | Consolidated Properties | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Net balance of mortgage note payable | $ 14,800 |
VEREIT Office Assets, Real Es_3
VEREIT Office Assets, Real Estate Investments and Related Intangibles - Impairments (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) property | Sep. 30, 2022 USD ($) property | Sep. 30, 2021 USD ($) property | |
Real Estate Properties [Line Items] | ||||
Number of properties | property | 10 | |||
Provisions for impairment | $ | $ 44,801,000 | $ 0 | $ 54,161,000 | $ 0 |
VEREIT Office Assets | ||||
Real Estate Properties [Line Items] | ||||
Number of properties | property | 3 | 4 | ||
Provisions for impairment | $ | $ 6,440,000 | $ 28,064,000 | ||
VEREIT Office Assets | Discount Rate | Assets Impaired During The Three Months Ended September 30, 2021 | Weighted Average | ||||
Real Estate Properties [Line Items] | ||||
Alternative investment, measurement input | 0.097 | 0.097 | ||
VEREIT Office Assets | Discount Rate | Assets Impaired During The Nine Months Ended September 30, 2021 | Weighted Average | ||||
Real Estate Properties [Line Items] | ||||
Alternative investment, measurement input | 0.090 | 0.090 | ||
VEREIT Office Assets | Capitalization Rate | Assets Impaired During The Three Months Ended September 30, 2021 | Weighted Average | ||||
Real Estate Properties [Line Items] | ||||
Alternative investment, measurement input | 0.092 | 0.092 | ||
VEREIT Office Assets | Capitalization Rate | Assets Impaired During The Nine Months Ended September 30, 2021 | Weighted Average | ||||
Real Estate Properties [Line Items] | ||||
Alternative investment, measurement input | 0.085 | 0.085 |
VEREIT Office Assets, Leases -
VEREIT Office Assets, Leases - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 USD ($) property | Sep. 30, 2021 USD ($) lease property | Sep. 30, 2022 USD ($) property | Sep. 30, 2021 USD ($) lease property | |
Lessor, Lease, Description [Line Items] | ||||
Number of Properties | property | 87 | 87 | ||
Lessee, operating lease, discount rate | 3.21% | 3.21% | ||
Operating lease, cost | $ | $ 0.3 | $ 0.1 | $ 0.8 | $ 0.1 |
Minimum | ||||
Lessor, Lease, Description [Line Items] | ||||
Lessor, operating leases, term | 1 month 6 days | 1 month 6 days | ||
Lessee, operating lease, remaining lease term | 1 month 6 days | 1 month 6 days | ||
Maximum | ||||
Lessor, Lease, Description [Line Items] | ||||
Lessor, operating leases, term | 15 years 6 months | 15 years 6 months | ||
Lessee, operating lease, remaining lease term | 62 years 3 months 18 days | 62 years 3 months 18 days | ||
VEREIT Office Assets | ||||
Lessor, Lease, Description [Line Items] | ||||
Number of Properties | property | 52 | 52 | ||
Number of properties subject to ground leases | lease | 1 | 1 | ||
Lessee, operating lease, remaining lease term | 35 years 10 months 24 days | 35 years 10 months 24 days | ||
Lessee, operating lease, discount rate | 5.17% | 5.17% | ||
Operating lease, cost | $ | $ 0.1 | $ 0.2 | ||
VEREIT Office Assets | Minimum | ||||
Lessor, Lease, Description [Line Items] | ||||
Lessor, operating leases, term | 29 days | 29 days | ||
VEREIT Office Assets | Maximum | ||||
Lessor, Lease, Description [Line Items] | ||||
Lessor, operating leases, term | 11 years 8 months 1 day | 11 years 8 months 1 day |
VEREIT Office Assets, Leases _2
VEREIT Office Assets, Leases - Rental Revenue (Details) - VEREIT Office Assets - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2021 | Sep. 30, 2021 | |
Lessor, Lease, Description [Line Items] | ||
Cash rent | $ 32,431 | $ 96,855 |
Straight-line rent | (165) | (1,624) |
Lease intangible amortization | 70 | (12) |
Property operating cost reimbursements | 1,004 | 2,925 |
Total fixed | 33,340 | 98,144 |
Variable | 7,154 | 23,245 |
Total rental revenue | $ 40,494 | $ 121,389 |