Greetings. And welcome to Orion Office REIT's Fourth Quarter and Full Year 2022 Earnings Call. 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, Paul.

Thank you, operator. Good morning, everyone. Yesterday, Orion released its financial results for the quarter and year ended December 31, 2022, filed its Form 10-K 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 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-K and other SEC filings. The company undertakes no duty to update any forward-looking statements that may be made during today's call. Additionally, during the conference 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 earnings release and supplement include a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures. As discussed in the company’s earnings release and Form 10-K, we will be revising our definition of core FFO beginning in 2023 to exclude certain non-cash amortization charges which do not reflect the ongoing performance of our business. 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?

Thank you, Paul. Good morning, everyone. And welcome to Orion Office REIT’s 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 the fourth quarter and full year 2022, touch on our first full year of operations, and highlight the ongoing progress we're 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 I mentioned, 2022 was our first full year of operations following our spin-off from Realty Income. During the year, we made significant progress in our core strategy that focuses on owning mission-critical suburban office properties located in high-quality suburban markets throughout the United States. These accomplishments came against the backdrop of an evolving and challenging economic environment for real estate in general, and office properties in particular. Our mission, as we have communicated since inception, is to own high-quality stabilized assets in the right markets. And that will require we resolve pending lease maturities and vacancies across a large portion of our portfolio in the coming years. To do so, we are intensively managing our assets, including making thoughtful capital allocation decisions in order to effectively address these issues. The ongoing economic environment of rising interest rates, persistent inflation, recession fears, and many tenants' inaction on mandating return to the office is impacting the timing around signing new and or extending current leases in our properties. We have faced many of these headwinds since our spin. However, given the quality of our core assets, we have confidence that our approach to unlock long-term value from owning a large suburban net lease office portfolio in attractive markets will persevere with time. Many of us in Orion's senior management team have effectively navigated these cycles before. We believe that these conditions will inevitably improve the long-term demographic trends and the changing workplace will position our core properties to serve as the base to spur Orion's growth. As of year-end, and including the disposition of six non-core properties in the fourth quarter, we owned 81 properties and six unconsolidated joint venture properties representing 9.7 million square feet that was 89% occupied, up slightly from 88.2% last quarter. This is important to stress the strengths that our core portfolio possesses. Our properties are leased to creditworthy tenants primarily on a net lease basis. As a percentage of annualized base rent, there was 73.3% investment grade tenancy across the portfolio, and approximately 83.4% of our leases are either triple or double net. Our portfolio's weighted average remaining lease term ended 2022 at 4.1 years, steady with one year ago. Our assets are also diversified by tenant, tenant industry, and geography. No tenant industry makes up more than 13.4% of annualized base rent, and no single tenant makes up more than 11.9% of annualized base rent. Our largest markets by state are Texas and New Jersey, which represent 15% and 12% of annualized base rent, respectively. Approximately 33% of our annualized base rent is derived from Sunbelt markets, a proportion we intend to grow over time. From a leasing perspective, we look to begin renewal negotiations proactively with our existing tenants as early as we can, however, the uncertain economy and the continuing hesitancy to return to the office is resulting in the constant recalibration of businesses around the country as companies realign their expectations for space and growth. The consequence we have found is that our tenants continue to push leasing decisions out, are shrinking their space needs, and new tenants are waiting to commit to new space. This dynamic is not unique to Orion nor our assets; it's a symptom of the wider environment facing every office landlord. Importantly, we maintained leasing momentum throughout the year. In the fourth quarter, we had two 10-year lease renewals for a total of 213,000 square feet at two of the company's properties in New York. One five-year lease renewal for 90,000 square feet at one of the company's properties in Lawrence, Kansas, and one 5.4-year lease renewal for 4,000 square feet at one of the company's properties in The Woodlands in Houston, Texas. The company also signed a new 5.4-year lease for 78,000 square feet at one of its properties in Brownsville, Texas. For the year, we leased 805,000 square feet of space at positive cash rent spreads of more than 4% and with a weighted average lease term of more than seven years. As we look back on our progress in only our first 14 months of being public, we have completed approximately 1.5 million square feet of lease renewals, expansions, and new leases. As we look ahead, we continue to have an active pipeline of several hundred thousand square feet of leases in various stages of negotiation and documentation. Given the nature of our lease expirations, tenant retention will continue to be lumpy quarter-to-quarter and year-to-year. Specifically, we had three scheduled lease expirations during the fourth quarter, totaling about 286,000 square feet, and we own five vacant assets at year-end. 2023 will present a variety of challenges for retention, particularly given that we have more than 750,000 square feet of space expiring in suburban Chicago, including the Walgreens campus. That said, we focused intently on addressing vacancy in the portfolio on commercially reasonable terms in regards to timing and expense. At year-end, our vacant space represented about 11%, or 1.1 million square feet, of the overall portfolio, and we incur annual operating expenses of roughly $7.50 per square foot on average, to keep that space. Accordingly, one of our main asset management strategies has been to sell vacant and identified non-core assets that do not fit our long-term investment objectives to both reduce carry costs and avoid the uncertainty and significant capital expenditures associated with returning. In 2022, we deliberately focused our resources on this strategy and closed on 11 sales of approximately 900,000 square feet for approximately $33 million. This equated to a price per square foot of about $36, both reducing existing vacancy and avoiding near-term vacancy as the leases expire. Eight of the 11 properties were vacant as of the date of sale, and the remaining three had near-term lease expirations where we knew the tenants were not renewing. We estimate that the sale of these 11 assets will allow us to save annual vacant property carrying costs of about $7.5 million. If the two properties we sold in Illinois at auction in the fourth quarter are excluded, our average sales price per square foot for the year was about $50 in line with our expectations at the beginning of the year. For the year, we disposed of over 400,000 square feet in Illinois, a decidedly slow-growth, high-tax state with accompanying poor suburban office fundamentals. Additionally, we have entered into a definitive agreement to sell our 574,000 square foot six-property corporate Walgreens campus in Illinois, where the Walgreens leases will expire in August 2023 and the tenant will not be renewing. The sale is scheduled to close in early 2024 and is subject to completion of the buyer's and titling process. We have determined to sell these properties given the upcoming vacancy, high carry costs, and our focus on relocating our portfolio in the right markets. To that point, all of our sales have moved to position the portfolio closer to our long-term targets, including the Walgreens campus, we have seven properties totaling about 584,000 square feet currently under contract for sale at an aggregate sale price of approximately $36.6 million or $63 per square foot. We're also actively marketing a number of other assets for sale totaling over 500,000 square feet that are currently vacant, and/or have short-term leases where we know the tenant will not renew. We believe selling these assets is the right decision for the long-term value we're looking to create. During 2022, we took a very deliberate approach to our balance sheet. Rather than quickly grow the portfolio with debt-funded acquisitions in a market where values were changing rapidly as rates rose, we focused on selling vacant and non-core assets to reduce carry costs and use the proceeds to pay down debt. Our current debt is largely hedged at attractive rates. We have no borrowings on our revolver, and overall, net debt to gross real estate investments is a conservative 31%. In 2022, we made tremendous progress on our business plan; our proactive asset management and disposition activities, along with good leasing momentum, moved our portfolio meaningfully in the right long-term direction. We finished our first full year as a public company with a portfolio producing positive net cash flow, and our available capital to execute our business plan is more than sufficient. Our financial capacity, the underlying strength of many of the properties we own in the portfolio along with our proven ability over the past 30 years to operate this asset class provides us with the confidence that Orion will emerge as a net lease office force in the coming years. With that, I will now turn the call over to Gavin.

Thanks, Paul. I'll begin by discussing Orion’s GAAP results for the fourth quarter of 2022 and highlight some key metrics for the full year. Orion generated total revenues for the quarter of $50.3 million and reported a net loss attributable to common stockholders of $19 million, or a loss of $0.33 per share. Core Funds from Operations was $23.2 million, or $0.41 per share, and adjusted EBITDA was $30.7 million. For the full year, Orion’s total revenues were $208.1 million and the net loss attributable to common stockholders was $97.5 million, or a loss of $1.72 per share. Core Funds from Operations was $101.8 million or $1.80 per share and exceeded the high end of the company's 2022 guidance by $0.02 per share. Adjusted EBITDA for the full year was $132.2 million. G&A in the fourth quarter was $4.4 million while CapEx, tenant and property improvements, and leasing costs were $6.1 million. As our leases roll and given the uncertain timing of when leases are signed, and when work is completed on our properties, as we have discussed, CapEx timing will vary quarter-to-quarter and year-to-year. We do expect to incur meaningfully more CapEx in 2023 than we did in 2022 as tenants begin to draw on previously agreed on tenant improvement allowances. G&A for the full year was $15.9 million which is slightly below the company's 2022 guidance range for G&A expenses of $16 million to $16.5 million and CapEx and tenant improvements and leasing costs were $14.6 million. Turning to the balance sheet; we ended the year with $557.3 million of outstanding debt, including Orion's proportionate share in the joint venture. During the fourth quarter, we utilized a combination of proceeds from asset dispositions and cash flows from operations to repay $31 million outstanding on a revolving credit facility. As of December 31, 2022, we had no outstanding borrowings on our $425 million revolving credit facility. It is worth noting that in our first 14 months of operations, we have reduced debt by approximately $90 million or 15%. At year-end, we had total liquidity of $446.2 million, consisting of $425 million available capacity on our revolving credit facility, and $21.2 million in cash and cash equivalents, including Orion's proportionate share in Arch Street Joint Venture. One hundred percent of our currently outstanding debt is fixed rate or swapped to fixed rate. Our net debt to adjusted EBITDA was 4.06x for the year ended December 31, 2022, which is 0.64x lower than the company's guidance of 4.7x to 5.0x. Our $175 million credit loan facility is scheduled to mature in November 2023. And the revolving credit facility is scheduled to mature in November 2024. We expect to extend, repay or refinance these facilities on or prior to maturity. Our focus has been running the enterprise this past year on a low leverage basis, while limiting our need to use our revolving credit facility, which gives us good flexibility to execute on our business plan moving forward. Now turning to our dividend, the Orion Board of Directors declared a quarterly cash dividend of $0.10 per share for the first quarter of 2023 to be paid on April 17, 2023, to stockholders of record as of March 31, 2023. With our current liquidity, anticipated proceeds from dispositions, and the cash the business is generating itself, we believe we are in a strong financial position to achieve our near and longer-term objectives. Partially to maintain maximum liquidity in the current environment, the company did not repurchase any shares in the fourth quarter though it was previously announced $50 million open market repurchase program. Turning to the outlook for 2023. We again want to highlight we have added disclosure regarding revisions to our core FFO definition, beginning in 2023. The new definition will exclude certain non-cash amortization charges, which do not reflect the ongoing operating performance of our business. We produced a strong core FFO in 2022 of $1.80 per diluted share. As we have stated in the past, we benefited in 2022 from a number of items that will not carry forward. In the next two years, our financial results will be impacted by a large number of lease expirations. This will result in a reduction in revenue quarter-to-quarter due to the smaller portfolio size and be further impacted by vacancy carry costs and the time to release as well as the required investment to secure longer-term leases. G&A will also rise in 2023 as compared to 2022 as subsidies provided by Realty Income after the spin-off expire. We amortize an additional year of non-cash compensation and our public company costs will increase. Given those assumptions, our Core FFO for 2023 is expected to range from $1.55 to $1.63 per diluted share. Additionally, our G&A for 2023 is anticipated to range from $18.75 million to $19.75 million and net debt to adjusted EBITDA is expected to range from 4.3x to 5.3x. With that, we'll open the line for questions.

Our first question is coming from Mitch Germain from JMP Securities.

Good morning, how are you? Great. Thanks for taking my question. So how should I think about the trajectory of G&A? Obviously, as you continue to sell assets and the portfolio size shrinks, I guess it for at least a temporary period of time, how should I think about G&A on a forward basis?

Hey, Mitch, this is Gavin. So G&A, we're essentially normalized in terms of staffing. As we look to sell properties that are vacant, we will always challenge our G&A structure. As far as next year goes, we're going to have another additional year of stock-based compensation, so 2023 will be normalized with the exception of a 2024 one-year more tranche of G&A impact by their stock-based compensation.

Right, so the large increase in G&A between last year and this year, Mitch, is a function of the subsidies going away from Realty Income. We don't expect to be increasing G&A materially beyond what Gavin just mentioned in the coming years.

Got you. Okay, that's helpful. I think you mentioned an auction sale; is that something that drove down pricing? Did I hear that correctly?

Yes, so I mean in the, we've sold property through a variety of channels during the course of 2022, both directly to end users or to investors. And we've also sold a number of properties through the auction process, which is very efficient, and gets the properties done quickly, but may have an impact on pricing.

Understood. How much of the 500,000 square feet that is queued up for sale? How much of that is being sold a more traditional way? Or how much of that is now being sold through the auction process?

I think we're looking at that now. Most of it is being sold through the traditional process at the moment. However, if we don't get it done in the traditional process, we may turn to the auction process.

Got you. Okay, that's helpful, thanks. And then finally, is there any, I mean, how should we think about the ability to refi that tranche of debt later this year? I mean, where's the market for that these days? I'm curious in terms of kind of some guidance of how we should consider that transfer of debt?

So, yes, it's a good question, Mitch. We're obviously in pretty continuous discussions with our banks; Wells Fargo is our lead manager, and that's a group of folks we've worked with for a long time. We have full capacity on our revolving credit facility. So we have more than enough; we have the ability to pay off the term loan with utilization of the revolver, if necessary. And indeed, that's one of the reasons why we've been so careful with the balance sheet in the past year by reducing debt. And by lowering our overall leverage, and by having as much capacity as we possibly can, so that when we come to either refinancing or paying down the term loan, we have more than enough capacity to do so.

Next question is coming from Gaurav Mehta from EF Hutton.

Thank you. Good morning. I wanted to ask you on your 2023 guidance; I was wondering if you could provide any color on what you are underwriting for occupancy and rental rate spreads during the year.

Sure, Greg, nice to talk to you this morning. I think we expect occupancy to remain relatively stable during the course of the year potentially with some decline as we have some leases that we discussed earlier expiring. For example, in August, we have the Walgreens leases expiring, which is 574,000 square feet. So that obviously will have a negative impact on occupancy, positive impacts to occupancy would be our sale of vacant properties. So to the sense that we have to hold Walgreens vacant through the end of the year before it sells in the beginning of next year. We'll have a temporary dip in occupancy towards the end of the year.

Okay. You also talked about marketing additional 500,000 square feet of properties; are you expecting any sales this year? Or your expectation is that the majority of the sales would be next year?

No, we expect to have a relatively significant number of sales this year. And then next year, the big sale candidate would be the Walgreens, and we've discussed that we hope will sell in the very beginning of 2024. But in 2023, we have a number of properties currently in the market. And we expect to sell a relatively significant number of those during the course of the year.

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

Thank you all for joining us today. And we look forward to updating everyone with our first quarter call in May. Thank you.

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