Greetings. Welcome to Orion Office REIT's Third Quarter 2022 Financial Results. 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. Please go ahead.

Thank you, operator. Good morning, everyone. Yesterday, Orion released its financial results for the quarter ended September 30, 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. Forward-looking statements made during today's call, such as the company's guidance estimates for calendar year 2022, are subject to a number of risks and uncertainties that could cause actual results to differ materially from our expectations. These risks and uncertainties are discussed in our earnings release as well as in our Form 10-Q and other SEC filings. The company undertakes no duty to update any forward-looking statements that may be made during the course of today's call. Additionally, during the 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. The company's earned release and supplement include a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures. 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 are 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 Third Quarter 2022 Earnings Call. On behalf of our team, I want to thank you all for joining us. On the call today, I will discuss our performance in only our third full quarter of operations as well as highlight the ongoing progress we are making on Orion's portfolio. I will then turn the call over to Gavin to provide an update on our financial results and guidance. As we've detailed since November 2021, following our spin-off from Realty Income, we are working hard to reposition and align the suburban office portfolio that we inherited from the merger of Realty Income and VEREIT. Orion is uniquely positioned as 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. While Orion owns a significant number of high-quality stabilized assets, a sizable portion of our portfolio requires pruning, intensive asset management, repositioning and capital to address lease maturities and vacancies. These efforts are complicated by the current economic backdrop of rising interest rates, inflation, recession fears and return to the office hesitancy, all of which have caused businesses to hesitate when signing new leases or extending current ones. While these trends have been widely reported for several quarters, we began to notice an uptick in the impact on our portfolio toward the end of the third quarter, and it has continued into the fourth. Since our spin-off late last year, we have consistently commented that our efforts to stabilize and right-size our portfolio would take time and consist of multiple challenges along the way that could impact the timing of our progress. Despite these recent negative trends due to demographic and long-term changes and the quality of our assets, we remain optimistic about our long-term prospects for owning a large suburban net lease office portfolio in attractive markets that will provide solutions for the workforce of tomorrow, which will, in turn, result in the growth of Orion. Turning to some updates on the portfolio. At quarter-end, we owned 87 properties and 6 unconsolidated joint venture properties representing 10.1 million square feet and was 88.2% occupied. Properties are leased predominantly to creditworthy tenants, primarily on a net lease basis. As a percentage of annualized base rent, there was 69.9% investment-grade tenancy across the portfolio and approximately 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 up more than 13.1% of annualized base rent and no single tenant makes up more than 11.5% of annualized base rent. Our largest markets by state are Texas and New Jersey, which represent 14.6% and 11.4% of annualized base rent, respectively. Approximately 31.8% of our annualized base rent is derived from Sun Belt markets, a proportion we intend to grow over time. As I mentioned, companies are continuously recalibrating their expectations for space and growth. While we believe the rapidly slowing economic environment and continued employee hesitancy to return to the office is temporary, the result is that some of the anticipated leasing we expected to realize is either going to be delayed, reduced or eliminated. When our tenants do renew, they continue to lock in multiple-year extensions. In the third quarter, we had a tenant renew in 35,000 square feet for 5 years at our property in Grangeville, Idaho. Subsequent to quarter-end, we executed a new 5.4-year lease and 78,000 square feet at one of our properties in Brownsville, Texas. Overall, since the spin, we've had good leasing momentum, executing on close to 1.2 million square feet. This year so far, we have completed about 500,000 square feet of renewal, expansion and new leases. Notwithstanding our slow third quarter in terms of signing new leases and lease renewals, we continue to have an active pipeline of several hundred thousand square feet of leases in various stages of negotiation and documentation. As we have said on previous calls, tenant retention will continue to be lumpy quarter-to-quarter. Specifically, we had 2 scheduled lease expirations during the quarter, totaling about 49,000 square feet, and we had 10 vacant assets at quarter-end, though our occupancy improved slightly from 86.4% last quarter to 88.2% this quarter, driven by our progress in selling vacant assets. Additionally, our portfolio's weighted average lease term declined slightly to 3.9 years. One of our main asset management strategies is to sell vacant and identified non-core assets that do not fit our long-term investment objectives. The sale of these assets will allow us to both reduce carry costs and avoid uncertainty and significant capital expenditures associated with retenanting. This initiative continues to progress well. To date, we have closed on 7 dispositions totaling 539,000 square feet for an aggregate sale price of $28.4 million, equating to a price per square foot of approximately $53, both reducing existing vacancy and avoiding near-term vacancy as the leases expire. We also have 4 additional properties totaling about 278,000 square feet under contract for sale for an aggregate sale price of approximately $15.9 million, equating to a price per square foot of about $57. A couple of these properties are currently vacant, while the remainder have short lease terms where we know the tenant will not renew. We are also actively marketing and planning to auction a number of other assets for sale totaling over 900,000 square feet that fall into the same category. We anticipate that several of these sales will occur as we head into the next year, allowing us to continue to earn rent before the sale closes. While it remains our goal to reach stabilization and enhance our portfolio's weighted average lease term by addressing the portfolio's vacancies and significant lease rollover in the next several years, we now believe it could take somewhat longer than initially anticipated given the changing economic environment. Notwithstanding the headwinds, our portfolio continues to have positive net cash flow and our available capital to execute on our business plan continues to grow with over $418 million in total liquidity. That liquidity, coupled with our experience, expertise and the underlying strength of many of the properties we own in the portfolio, will continue to serve as a strong core platform. Given the macroeconomic environment, we remain highly disciplined and strategic when it comes to adding new properties to our core portfolio. Longer-term, we remain excited about Orion's growth prospects and opportunity set. Our acquisition pipeline continues to be active for both the joint venture as well as Orion's own balance sheet, with some indications that seller pricing expectations are beginning to become more rational. Regarding capital allocation decisions, we carefully evaluate where best to apply our operating cash flow, the proceeds from our property sales and borrowings under the revolver with our Board on a regular basis. While current market conditions are dynamic, our long-term plans remain firmly in place. We have a strong portfolio of occupied assets, some of which will require significant capital outlays as we renew our tenants in place. We have several current or near-term vacancies where we believe the quality and location of the properties merit holding these assets, repositioning them as necessary and retenanting them in a way that makes sense. These assets will also take significant amounts of capital to carry and then attract new occupancy. Our belief is that over time, our shareholders' best interest will be served by preserving and then growing our core portfolio. All that said, while the need for capital to execute on our business plan is critically important, our Board believes, along with management, that under certain circumstances of sustained market weakness, our company's shares may offer a compelling investment. To that point, they have approved a $50 million share repurchase program. As I wrap it up, I want to emphasize that market disruptions notwithstanding, we are continuing to make steady progress in actively managing the portfolio and recycling capital. We remain committed to delivering long-term value for our shareholders through our ongoing efforts. With that, I will now turn the call over to Gavin, who will discuss our third quarter 2022 financial highlights, our balance sheet, dividend and outlook for the remainder of the year. Gavin?

Thanks, Paul. I will begin by discussing Orion's GAAP results for the third quarter of 2022, which is our third full quarter operating as a public company. Orion generated total revenues for the quarter of $51.8 million and reported a net loss attributable to common stockholders of $53 million or a loss of $0.94 per share. Core funds from operations was $24 million or $0.42 per share, and adjusted EBITDA was $32.1 million. General and Administrative expenses in the third quarter were $4.7 million, while Capital Expenditures, tenant and property improvements, and leasing costs were $3.7 million. As we have discussed, the timing of Capital Expenditures will depend on when leases are signed and work is completed on properties, likely increasing over time as our leases roll. Turning to the balance sheet, we ended the quarter with $588.3 million of outstanding debt, including Orion's proportionate share in the joint venture. During the quarter, we utilized a combination of proceeds from asset dispositions and cash flows from operations to repay $40 million outstanding on our revolving credit facility, bringing the balance down to $31 million from $71 million. It is worth noting that since the spin and through today, we have reduced debt by approximately $69 million or 11%. At quarter-end, we had total liquidity of $418 million, consisting of $394 million of available capacity on our revolving credit facility and $24 million in cash and cash equivalents, including Orion's proportionate share in the joint venture. We have no debt maturities this year, and over 94% of our debt is fixed rate or swapped to fixed rate. Our net debt to annualized adjusted EBITDA was 4.39x. The Orion Board of Directors declared a quarterly dividend of $0.10 per share for the fourth quarter of 2022, to be paid on January 17, 2023, to stockholders of record as of December 30, 2022. 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 weather the current and anticipated market volatility while setting out to achieve our near- and long-term objectives. As we look forward, we will reach our one-year anniversary as a public company in a few weeks and have further enhanced our financial flexibility through filing a shelf registration statement. While we do not currently have any plans to utilize the shelf, we believe it is prudent to have the option in Orion's financial toolbox, just as we have done with the share buyback program. Turning to our outlook for the remainder of the year. As we shared last quarter, our financial results will benefit in 2022 from some accounting adjustments and one-time items. These primarily include the finalization of purchase price allocations related to the spin-off from Realty Income, the timing of noncash amortization of stock-based compensation under GAAP, and an additional one-year delay in the requirement for an internal control audit and a delay in hiring for a number of roles that are now filled. As a result of our solid performance for the first 9 months of 2022, and greater certainty in our estimates for the remainder of the year, we have raised the lower end of our core FFO guidance. Importantly, the updated core FFO range should not be extrapolated to future years given the impact of lease expirations this year, coupled with anticipated expirations in the portfolio over the next 2 years, and the associated expected decline in revenue due to a smaller portfolio size. In addition, future years will also be affected by increased G&A related to the timing of certain expenses as well as the end of certain operating subsidies we have received from Realty Income as part of the spin-off. Specifically, our core FFO is now expected to range from $1.76 to $1.78 per share, up from last quarter's increased range of $1.74 to $1.78 per share. Our G&A is anticipated to range from $16 million to $16.5 million, consistent with the previous quarter. Our net debt to adjusted EBITDA is expected to range from 4.7x to 5.0x, also consistent with the previous quarter. With that, we will open the line for questions.

Your first question comes from Jyoti Yadav with JMP Securities.

This is Jyoti on for Mitch. So first thing I want to say, it's really great to see the dispositions come through. What can you call out about the profile of these buyers? And if these are just one-off sales?

Yes. The dispositions that we've been able to accomplish this year, we are very pleased about the pace at which we've been able to get some of these noncore assets off the balance sheet. The buyers of these have all been generally one-off transactions, so individual transactions. The buyers have generally been a combination of investors who look to reposition the asset for the long term and users who intend to buy the asset, reposition it, and use it themselves.

Okay. I understand. Secondly, I believe you mentioned in your opening remarks that these tenants have multiple renewal options. With the two leases signed, is that what you were referring to regarding the renewal option?

The lease we signed during the quarter was simply an extension option for five years, with no improvements or leasing commissions involved. The lease we finalized at the end of the third quarter was a new agreement with a new tenant in a building where they had previously been a subtenant.

Right. Okay. So would you say that a 5-year term is kind of a new normal for these renewals?

Typically, tenants look for a 5-year term, which is considered a shorter term. We always aim to encourage tenants to agree to longer terms with us. Over the year, we have had various successes in getting tenants to sign longer leases. In fact, we've signed leases exceeding 5 years, with some tenants committing to 10 years and others potentially extending to 15 years. The challenge lies in persuading tenants to agree to longer leases, which is often achieved by offering additional tenant improvements and landlord work in exchange for a longer lease term.

Next question comes from Edward Reily with EF Hutton.

I might have missed this, my call cut out a little bit. But you're talking about an uptick in the impact on your portfolio towards the end of Q3 and Q4. Just wondering if you could unpack that a little bit for me. Did it have to do with any behavioral decisions from tenants? Last quarter, you talked about tenants taking a longer amount of time to enter into leases, and if they were considering that it would be a shorter-term lease. I just want to unpack that a little bit.

Sure. I think that it's been widely reported that there are a lot of headwinds in the office market. Up until the third quarter, we had not seen too much of that in our portfolio. In other words, we were the tenants that reached the end of their lease term and moved out of our properties that we had expected that. The tenants that renewed with us, we had expected those renewals to come through and roughly under the terms in which they came through. Although, as we noted in the call last quarter, the decision-making process has continued to get elongated, and that's still the case. However, in the third quarter, we had our eye on some tenants that we expected to potentially fill some of our vacancy. We've also had some tenants come back to us and say they're not looking for as much space as they had anticipated during the renewal as we had anticipated earlier for the renewal. So I think inside of our portfolio, we're starting to see a little bit of what's been widely reported in the broader marketplace. That is tenants are taking longer. They are requesting smaller space. In some cases, they're changing their point of view entirely about whether or not to expand. We see some of those headwinds. We think they're transitory, but they're here now in our portfolio. As a result, some of the anticipated leasing we thought might occur towards the end of this year or beginning of next will be pushed out to some degree.

Okay. Got you. And given the smaller space required from some of the tenants, does this maybe open up an opportunity for shifting more towards a multi-tenant approach versus a single-tenant approach? And how are you guys thinking about that?

Well, I think we would like to maintain our business model of primarily owning single-tenant assets leased on a long-term basis to good credit quality tenants. But the keyword there is tenant. If we have the option to fill vacancy with tenants that are looking for less than a full building size, we are happy to do that and we will multi-tenant buildings to the extent that makes the most sense for us. We have done that, and we do own a few multi-tenant buildings now. My suspicion is over time, that will grow somewhat as we multi-tenant some of the vacant properties that we have. As I said, we prefer to maintain our single-tenant stance for the majority of the portfolio, but we'll take tenancy pretty much wherever we can find it.

Okay. Got you. And on the dispositions, and apologies if I missed this. Were those properties vacant, all of them, or were some filled? And I was wondering if you could maybe provide some information about the price per square foot on those that were vacant versus those properties that had tenants in them, if there were any.

Sure. To your first point, it was a combination. Some of the properties we sold had tenancy in place where the existing tenant continued to pay rent. However, in all cases, the lease was very, very short, usually well under a year. These were tenants that we knew were going to leave, and they had just a few months left on the lease. Then the property would go vacant. That was sort of one set, and that's probably about half of the properties we sold. The other half were actually vacant properties. With respect to price per square foot, given the short lease terms on the properties that had leases left versus the vacant, there's not a big disparity on the price per square foot. It's more about the location of the property, its size, and so on and so forth. Generally, we found that smaller-sized properties that we've sold trade at a higher per square foot value, not unexpectedly, and the larger properties trade at a somewhat lower per square foot value. Overall, we're pleased with where we are coming out with the sales of these properties. When we did the spin, we said we'd hope to be between $40 and $60 a foot on average for selling these properties, and we're right in the middle of that range. We feel pretty good about that. One more final point is that when we sell properties either with a short-term lease or a vacant property, it's not only the price we get per square foot, but it's the savings we get from not having to carry that asset vacant when we think it's unlikely to be on any type of reasonable economic terms.

I would like to turn the floor over to Mr. McDowell for closing remarks.

Thank you, everyone, for joining us, and we look forward to updating you on our year-end results in the new year.

This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.