Greetings. Welcome to Orion Office REIT's First Quarter 2022 Earnings Conference Call. As a reminder, this conference is being recorded. I would now like to turn your call over to your host, Paul Hughes, General Counsel for Orion. Thank you.

Thank you, operator. Good morning everyone. Yesterday, Orion released its financial results for the quarter ended March 31, 2022. Filed its Form 10-Q with the Securities and Exchange Commission and posted its earnings supplement to its website. These documents are available in the Investors section of the company's website at www.onlreit.com. I would like to remind everyone that certain statements made in the course of this call are not strictly historical information and constitute forward-looking statements. These statements, which include the company's guidance estimates for calendar year 2022, are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The risks and uncertainties of these forward-looking statements are discussed in our earnings release as well as in our Form 10-Q and other SEC filings. You should not place undue reliance on these forward-looking statements, and the company undertakes no duty to update any forward-looking statements that may be made during the course of this call. Additionally, during this conference call today, we will be discussing certain non-GAAP financial measures, such as funds from operations, or FFO, and core funds from operations, or core FFO. Our presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. The company's earnings release and supplement include a reconciliation of these non-GAAP financial measures to the most directly comparable measures prepared in accordance with GAAP. Hosting the call today are Paul McDowell, the company's Chief Executive Officer; Gavin Brandon, the company's Chief Financial Officer; and joining us for the Q&A session is Gary Landriau, our Chief Investment Officer; and Chris Day, our Chief Operating Officer. With that, I am now going to turn the call over to Paul McDowell. Paul?

Good morning, everyone, and welcome to Orion Office REIT's First Quarter 2022 Earnings Call. On behalf of our team, I want to thank you all for joining us today. Given that it has been only about four weeks since our year-end call, my remarks will be brief, and I will focus today on continuing to articulate our business strategy, discuss our performance during our first full quarter of operations and highlight the progress we continue to make. I will then turn the call over to Gavin to provide an update on our financial results. In late March, we held our first earnings call since we spun off from Realty Income on November 12, 2021. As we detailed previously, at our inception, we inherited a portfolio that need some intensive asset management, so we can ultimately grow the business by focusing on retaining tenants, leasing vacant space, growing our joint venture with Arch Street Capital buying select assets for the balance sheet and selling noncore assets to maximize long-term value. Today, I will reiterate a few facts about Orion's differentiated strategy. Orion is unique in that we are the only public net lease REIT that is exclusively focused on owning a diversified portfolio of mission-critical and corporate headquarters office buildings located in high-quality suburban markets throughout the United States. The portfolio consists of 92 properties and 6 unconsolidated joint venture properties, representing 10.6 million square feet that is 88.3% occupied. The properties are leased predominantly to creditworthy tenants on a net lease basis. As a percentage of annualized base rent as of March 31, 2022, there was 67% investment grade tenancy across the portfolio, and over 80% of our leases are either triple or double net. Our assets are also diversified by tenant, tenant industry and geography. No tenant industry makes…

Thanks, Paul. I'll begin by discussing Orion's GAAP results for the first quarter of 2022, which as Paul mentioned is our first full quarter operating as a public company. Orion generated total revenue for the first quarter of 2022 of $53.2 million and reported a net loss attributable to common stockholders of $9.9 million or $0.17 per share. Core funds from operations was $28 million or $0.49 per share and adjusted EBITDA was $34.9 million. G&A in the first quarter of 2022 was $3.5 million, CapEx this quarter was $1.4 million, including tenant improvements of $400,000 and other property improvements of $1 million. Leasing commissions associated with the company's leasing activity or an additional $1 million. As we have discussed CapEx timing will be dependent on when leases are signed and work is completed on properties and likely will increase over time as our leases roll over. Turning to the balance sheet, we entered the quarter with $648.3 million of outstanding debt, including Orion's proportionate share of debt in the joint venture, which is consistent with last quarter. As we noted on the last call in February, we refinanced our outstanding bridge loan with a $355 million five-year 4.971% fixed rate CMBS loan. As of March 31, 2022, we had total liquidity of $353.2 million consisting of $334 million of available capacity on our $425 million revolving credit facility and $19.2 million in cash and cash equivalents. We also have no debt maturity this year. Our net debt-to-adjusted EBITDA was 4.51x at quarter-end. And we expect to remain within the estimated range of 4.7x to 5.5x as of December 31, 2022 that we guided to on the last call. We also wanted to highlight that Orion’s Board of Directors declared a quarterly dividend of $0.10 per share for the second quarter of 2022 to be paid on July 15 to stockholders of record as of June 30, 2022. Overall with our current liquidity, anticipated proceeds from dispositions and the cash flow the business is generating itself, we believe we are in a strong financial position to achieve our near and longer term objectives. We continue to make steady and consistent progress in our focus areas and are looking forward to building on the momentum we have generated thus far in 2022. Turning to our outlook for the remainder of 2022. We believe our first quarter performance keeps us on track with the full year 2022 guidance we provided with an estimated core FFO range of $1.66 to $1.74 per share. Based on our initial results in April second quarter 2022 is also tracking well. From an expense perspective, we still anticipate G&A range of $17 million to $18 million for the full year of 2022. With that we’ll open the line up for questions. Operator?

Thank you. [Operator Instructions] Our first question today is coming from Mitch Germain from JMP Securities. Your line is now live.

Good morning.

Good morning, Mitch.

So your net debt is 4.5 today, you’re guiding higher. So are you assuming deployment or is that just really the capital needs that are required for the existing portfolio?

I think it’s a combination of things and Gavin can jump in here if necessary. It’s a combination of things. One is, we will be spending money expected onto the portfolio and in CapEx and TIs and LCs and the like. And then secondly, we may have some acquisition activity where we borrow money on our line of credit to buy the asset.

Considering your vacancy and your portfolio in general, how much of your portfolio in your mind is considered non-core that over time you’d like to potentially recycle?

Well, that’s a bit of a moving target, Mitch. We have guided before that we have anywhere from 10 to 15 properties that we think are – would fall into the non-core bucket. And I would sort of put the non-core bucket into two different sectors. One sector is properties that we wouldn’t want to own on a long-term basis. The second is where we may have realized the full value where there’s a long-term lease in place, and we can find ourselves with a very tight cap rate to sell that asset and then recycle that capital into assets that we think have got better long-term yield perspective. So, we have, I would say anywhere between 10 and 15 assets that fall into those buckets at the moment.

Helpful. And then last question for me. Any change in sentiment with regards to the conversations you’re having with tenants. I mean, we continue to see different strains of the virus numbers increasing recently. They seem to ebb and flow. Curious if that is continuing to impact some of the tenant decision making?

We haven’t seen it directly in that way, Mitch, where the tenant says I was considering leasing – releasing this space from you, but now new variants are coming in place and, we’re going to step away. I will say what we have noticed. And we’ve mentioned it, I think previously is that the decision making process at companies is taking longer than it ever has before. So while we often ultimately end up with the renewal that decision making from our first discussion with the tenant about a potential renewal to signing the lease has been extended.

Helpful. Thank you.

Thank you. The next question is coming from Eddie Riley from EF Hutton. Your line is now live.

Hey guys, just to piggyback on that last question. The timing of the decision making for the tenants, has that – have you seen that compress a little bit maybe from last – from last quarter? Has anything changed there at all?

Yes. This is Gary Landriau. I can’t say things have changed much. It is a bit fluid and there is a range of timelines that these tenants are on. I don’t think there’s a way to give you a simple answer. I don’t see a lot of change.

Okay. Got you. Got you. And you guys mentioned that you’re kind of on track to produce your guidance for the full year. Should we be expecting maybe three or so property sales per quarter going forward?

Yes. I’m not sure I would necessarily put it in the – in some defined schedule that we’ll do three in the second quarter, three in the third quarter, so on and so forth. They may come in a bit more batches. I will tell you that we mentioned that we have three properties under contract for sale now, and those will close over a variety of time periods. We also have got offers or discussing LOIs on probably another four or five properties at the moment right now. So we’re trying to move these sales as expeditiously as we can. But they don’t fall in any set timeline. But the expectation is that we will start to have sales flowing through in the next couple of quarters and that will likely pick up over time.

Okay. Got it. Thank you.

Thank you. We have reached the end of our question-and-answer session. I’d like to turn the floor back over to Mr. McDowell for any further closing comments.

Thank you everyone for joining us today. And we look forward to talking to you after we report our second quarter results. Have a good day.

Thank you. That does conclude today’s teleconference webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.