Orion Properties Inc.

Current report

We have made equity and Member Loan investments in the Unconsolidated Joint Venture which may not be recoverable.

Current report

We are invested in the Unconsolidated Joint Venture where we own a 20% minority, non-controlling interest and our partner owns the remaining 80% interest. We also made a Member Loan to the Unconsolidated Joint Venture to fund certain capital requirements of the joint venture. The six properties owned by the Unconsolidated Joint Venture are financed with non-recourse mortgage notes which are currently subject to a payment default that occurred at maturity. The ongoing default situation with respect to the mortgage notes has created significant uncertainty with regard to our recovery of our investments in the Unconsolidated Joint Venture. The agent for the mortgage lenders is currently sweeping cash flows from the properties and the lenders have various rights and remedies that are customary in a non-recourse mortgage financing, such as the right to collect default interest, institute a proceeding for foreclosure and apply for the appointment of a receiver. As of December 31, 2025, we recorded a $10.8 million impairment charge on our investment in the Unconsolidated Joint Venture and thereby wrote the carrying value of such investment to zero, and we have recorded a loan loss reserve for the entire $5.5 million gross amount receivable on the Member Loan. We are seeking to work with the lenders and our joint venture partner to sell the joint venture properties in an orderly manner, repay the mortgage notes and recover as much of the Member Loan and equity in the Unconsolidated Joint Venture as possible. We cannot provide any assurance that the Unconsolidated Joint Venture will be able to extend or refinance all or any portion of the mortgage debt obligations, complete the disposition of the six properties on favorable terms or in a timely manner, or at all, or that the lenders will not seek to enforce their remedies due to the ongoing payment default under the mortgage debt, and we may be unable to recover our original investment in the Unconsolidated Joint Venture, which we have written down to zero or, in the case of the Member Loan, fully reserved accordingly.