Greetings. Welcome to Orion Office REIT's First Quarter 2023 Earnings Call. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Paul Hughes, General Counsel for Orion. Thank you. You may begin.

Thank you, operator. Good morning, everyone. Yesterday, Orion released its financial results for the quarter ended March 31, 2023, 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 during this call are not strictly historical information and constitute forward-looking statements. These statements, which include the company's guidance estimates for calendar year 2023, 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 our estimates. The risks and uncertainties 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 made during this 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 earnings release and supplement include a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measure. 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. As discussed during our year-end conference call and in our earnings release and Form 10-Q, we revised our definition of core FFO beginning in 2023 to exclude certain noncash amortization charges, which do not reflect the ongoing performance of our business. We will apply this definitional change retrospectively for comparison purposes. 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 First Quarter 2023 Earnings Call. On behalf of our team, I want to thank you all for joining us today. I will highlight the ongoing progress we are making executing on our business strategy and discuss our first quarter performance and operations. I will then turn the call over to Gavin to provide an update on our financial results and on our outlook for the rest of the year. We are continuing our intensive efforts to reposition the portfolio of properties we inherited when we spun off from Realty Income in late 2021. Our focus remains on ensuring that we have the right capital structure in place to support investments in our core portfolio in the form of CapEx and lease incentives in order to retain tenants and lease vacancy so we can deliver sustained cash flow and ultimately position the company to grow. There is no question that our pursuit to execute on Orion's differentiated net lease-focused investment strategy has been impacted by the persistent and deteriorating economic backdrop for real estate and specifically for office. The current conditions notwithstanding, we remain confident that over time, our focus on owning a diversified portfolio of mission-critical and corporate headquarter office buildings located in high-quality suburban markets will allow us to build a strong platform for success. This will require, over the next few years, that we resolve pending lease maturities and vacancies across a large portion of our portfolio that we must continue to intensively manage. We will include making capital allocation decisions that acknowledge that capital is precious and not always available when needed from external sources. We still believe that the best use of our capital is to continue to stabilize and reposition the portfolio and recycle capital as appropriate. We do not plan to over-leverage the business. As of quarter end, we owned 81 properties and six unconsolidated joint venture properties, comprising 9.7 million square feet that were 87.5% occupied. The properties in the portfolio are primarily either triple or double net leased to creditworthy tenants. As a percentage of annualized base rent as of March 31, 2023, 73.6% were investment grade, up from 67% as of March 31, 2022. Our assets are well diversified by tenant, tenant industry, and geography. Our largest tenant by annualized base rent in the United States is the government, and our two largest tenant industries are healthcare and government, representing 13.5% and 12.5% on an annualized base rent, respectively. Over 30% of our annualized base rent is derived from Sunbelt markets. Our largest markets by state are Texas and New Jersey, which represent 15.2% and 12.3% of annualized base rent, respectively. Interestingly, over the last few months, we have seen an increasing number of comments by corporate leaders on the value of in-person work and a new resolve by some large corporations to begin to mandate and enforce a return to the office for many employees. We believe that over time, these changing attitudes will be the incentive for a more sustained return to office. However, even as return to the office gains momentum, hybrid work practices are here to stay, and office space utilization will change as the industry moves forward. As a result, like other office landlords, we are seeing some office tenants seeking less square footage on renewal, and this development will likely continue for the foreseeable future. As we stated last quarter, the pace of signing early renewals has slowed, and the tenant decision-making process has lengthened. Nonetheless, we remain active on the leasing front. In the first quarter, we signed four leases for 83,000 square feet. We remain aggressive in the pursuit of new tenants and lease extensions by staying close to each of our properties and their respective surrounding markets. Specifically in the quarter, we renewed a 64,000 square foot lease with the U.S. government in Parkersburg, West Virginia for 15 years. We also signed or amended three leases at The Woodlands in Houston, Texas for 19,000 square feet. One lease was an expansion with an existing single A rated tenant for 11,000 square feet who now occupies 100% of the leasable square feet in the building on a 10-year remaining lease term. The other two transactions were at the multi-tenant property we own in The Woodlands where we entered into a new 4,000 square foot lease and a 4,000 square foot renewal. Overall, leasing spreads during the first quarter were about 20%, so we caution that there will be significant variability on spreads in any given period given the very granular nature of the portfolio. We also remain in various stages of negotiation and documentation for new leases and renewals at multiple properties. Given the timing of leases and the size of our portfolio, tenant retention will be volatile quarter-to-quarter and year-to-year, depending on the needs of our tenants. Our portfolio's weighted average lease term was four years at quarter-end. We also intend to continue our aggressive stance to dispose of vacant and identified non-core assets that do not fit our long-term investment objectives, as well as assets where we believe the value has been maximized for us. Specifically, as of today's call, we have eight properties under contract for $41 million, and we are actively negotiating and marketing a number of other assets for sale or lease. We ended the quarter with six vacant properties whose operating expenses negatively impact earnings. Selling non-core vacant assets will reduce operating expense drag in the short-term, but pressure our ability to grow earnings in the future, particularly given our smaller size. That said, we know that this is the right approach to maximize the long-term value of the overall portfolio. With respect to our growth, we have begun to see an improvement in asset pricing from a buyer's perspective as high-quality, single-tenant suburban properties have begun to trade at or near long-term attractive levels. However, we remain cognizant of the overall market and financing environments. The long-term prospects for Orion's success remain intact. We have a stable portfolio of assets, good profitability, and low leverage. Looking forward, it will require persistence, vision, and plenty of work to retain tenants, fill vacant space, and dispose of non-core assets, but it is clear that as we accomplish our portfolio goals, there will be a time that we can meaningfully grow the core portfolio and cash flow as we look beyond today's challenges. We will continue to examine all of our options and are energized and committed to providing value for our shareholders over the long-term. With that, I will now turn the call over to Gavin. Gavin?

Thanks, Paul. I'll begin by discussing Orion's GAAP results for the first quarter. Orion generated total revenue of $50.2 million as compared to $53.2 million in the same quarter of the prior year. We reported a net loss attributable to common stockholders of $8.9 million or $0.16 per share as compared to a net loss of $9.9 million or $0.17 per share reported in 2022. Core funds from operations for the quarter was $25.3 million or $0.45 per share as compared to $29.3 million or $0.52 per share in the first quarter of 2022. Adjusted EBITDA was $31.2 million versus $34.7 million in the same quarter of 2022. The changes year-over-year are primarily related to current vacancies and the disposition of properties. G&A was $4.3 million compared to $3.5 million in the first quarter of 2022. As we discussed on prior calls, the expiration of spin-related expense subsidies from Realty Income, the achievement of optimal headcount during 2022 and an additional year of stock-based compensation will impact year-over-year 2023 comparisons. CapEx this quarter was $3.3 million compared to $2.4 million in 2022, including tenant improvements of $1.6 million and other property improvements of $800,000, leasing commissions associated with the property's leasing activity were an additional $900,000. As a reminder, CapEx timing will be dependent on when leases are signed and what is completed on the properties. CapEx will likely increase over time as leases roll over and new and existing tenants draw upon tenant improvement allowances. Turning to the balance sheet. We ended the quarter with $557.3 million of outstanding debt, and there were no outstanding borrowings on the $425 million revolving credit facility. It is important to note that in less than two years as a public company, we have reduced debt by approximately $90 million or 15%. At quarter end, Orion had total liquidity of $449.5 million consisting of $425 million available capacity on the revolving credit facility and $24.5 million in cash and cash equivalents. 100% of the outstanding debt is fixed rate or swapped to fixed rate. Net debt to annualized adjusted EBITDA was 4.27x for the quarter end, which is below our year-end 2023 guidance range of 4.3x to 5.3x. We continue to progress on efforts to extend, repay, or refinance the $175 million term loan facility that is scheduled to mature on November 12, 2023, and the revolving credit facility that is scheduled to mature on November 12, 2024. We have more than enough capacity on the revolving facility to retain the flexibility to refinance the term loan facility onto the revolver at maturity while still running the business if we choose to do so. We recognize that the market for financing office real estate assets is currently dislocated. And over the past year, we have deliberately maintained significant liquidity on the balance sheet as a result. We remain committed to operating the business on a low leverage basis, which gives us good financial flexibility to execute on our business plan. In light of the financing conditions and as we continue to work with our lending group to advance our refinancing, we did not make any acquisitions for the portfolio or repurchase any shares in the first quarter. Turning to our dividend, Orion's Board of Directors declared a quarterly cash dividend of $0.10 per share for the second quarter of 2023 to be paid on July 17, 2023, to stockholders of record as of June 30, 2023. We are reaffirming our 2023 core FFO range of $1.55 to $1.63 per diluted share, our 2023 G&A range of $18.75 million to $19.75 million and our 2023 year-end net debt-to-adjusted EBITDA range of 4.3x to 5.3x. One additional note. While we do not provide quarterly guidance, given scheduled lease vacancies during the year, we expect to have sequential reductions in the quarterly amount of earnings and core FFO on a per share basis as we move through the year. We believe that the strong operating cash flow the business is generating and low leverage puts the company in a strong financial position to achieve our near and longer-term objectives, and we are excited to execute on our business strategy for years to come. With that said, we will open the line up for questions.

Thank you. We will now be conducting a question-and-answer session. Our first question comes from Mitch Germain with JMP Securities. Please go ahead.

Thank you. Paul, I'm just curious, six or so quarters since you've been public. And in assessing the portfolio when you inherited it to today, how has some of the leasing that's transpired? Is that somewhat in line with expectations? Has it been somewhat under? Has it been ahead? I'm curious about your thoughts there.

Thanks, Mitch. Good morning. I'd say from when we started to where we are today, the leasing that we've been able to accomplish has been largely in line with what we originally expected, but we have had a couple of leases that we had properties that we had hoped to backfill more quickly than we've been able to do so. So I would say from a renewal perspective, it's pretty much been as we've expected. But what has been very slow to develop is the ability to attract new tenants to vacant properties. We have several vacant properties now where we have very active opportunities for potentially backfilling that space. But I would say, overall, that's what's been slow is backfilling vacant space.

Got you. I mean probably consistent with your comments on decision-making slowdown. You mentioned an improvement in asset pricing. So it's a little bit inconsistent with what we've been hearing. I guess our discussions suggest that there could be further downside. So I'd love for your commentary on that topic, please.

Yes, I believe we are on the same page, Mitch. When I refer to improvement in asset pricing, I am looking at it from a buyer's perspective versus a seller's. For a while now, cap rates have been quite stubborn, with sellers holding out for the prices seen six, eight, or twelve months ago, while buyers have begun to look ahead. Recently, as we review our potential transactions, we have observed that cap rates are starting to widen significantly for well-leased, long-duration properties in good locations, reaching levels we have historically found attractive. My career began in the mid-1990s, and over long periods, these levels have been appealing. However, as you pointed out, we have been very cautious; we did not make any acquisitions in the first quarter and have not made any since our spinoff. Although we see some improvement in asset pricing, we remain quite careful in deciding whether to expand our portfolio.

I guess my last question is, would you consider an acquisition before you can determine the status of the term loan? Or is that really the motivating factor with regards to potentially using some capital or capacity on the revolver going forward?

I think we view it from a comprehensive angle. We have the ability to access our line of credit and cash available on our balance sheet. This gives us the flexibility to acquire an asset if we decide to, although we haven't done so yet. We are also aware that the financing markets are challenging, and we are collaborating with our lenders to achieve the best possible outcome for the term loan. While I can't provide a clear answer, I can say that we are mindful of the broader market conditions.

Thank you.

Thank you, Mitch.

There are no further questions at this time. I would like to turn the floor back over to Mr. McDowell for closing remarks.

Thank you all for joining us on this first quarter conference call, and we look forward to hosting you again on our second quarter conference call later this summer. Thank you. Goodbye.

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