Net Lease Office Properties
For the period ended Jun 30, 2025. Filed Aug 6, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 6, 2025
NLOP$9.28+2.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-08.
0001952976-25-000025
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsSupplemental Financial MeasuresCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-06.
0001952976-25-000048
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsSupplemental Financial MeasuresThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 117 previous paragraphs and 129 current paragraphs.
75 unchanged; 32 reworded; 22 added; 10 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 10 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (22)
Current report
•In July 2025, we sold one property for gross proceeds of $25.2 million. This property was classified as held for sale as of June 30, 2025 (Note 13).
Current report
Special Cash Distribution
Current report
•In August 2025, our Board of Trustees declared a special cash distribution of $3.10 per share, totaling approximately $45.9 million. The distribution is payable on September 3, 2025 to shareholders of record as of August 18, 2025 (Note 13). Future special cash distributions will be at the discretion of our Board of Trustees and will depend upon, among other things, our actual and anticipated results of operations and liquidity, which will be affected by various factors, including the timely receipt of rental income from our portfolio; the timing of and proceeds from asset sales; our operating expenses (including management fees); capital expenditures for our portfolio; our current intention to maintain our qualification as a REIT; and other factors which may be outside of our control. There can be no assurance as to the amount or timing of future distributions.
Current report
Net (Loss) Income Attributable to NLOP
Current report
Net loss attributable to NLOP increased for the six months ended June 30, 2025, as compared to the same period in 2024, primarily due to significantly higher impairment charges and lower gain on sale of real estate, partially offset by lower interest expense. See Note 6 for information on impairment charges recorded during the reporting period.
Current report
(b)A property in Tampa, Florida, was sold in July 2025. This property was classified as held for sale as of June 30, 2025 (Note 13).
Current report
Reimbursable Tenant Costs
Current report
For both the three and six months ended June 30, 2025 as compared to the same periods in 2024, reimbursable tenant costs decreased by $0.7 million, primarily due to the impact of disposition activity and lower repair and maintenance costs.
Current report
General and Administrative
Current report
For the three and six months ended June 30, 2025 as compared to the same periods in 2024, general and administrative expenses increased by $0.3 million and $0.2 million, respectively, primarily due to higher investor relations costs related to our inaugural proxy filing.
Current report
Asset management fees paid to our Advisor are calculated based on the ABR of properties in our portfolio and are being proportionately reduced each month following the disposition of each portfolio property (Note 3).
Current report
For the three months ended June 30, 2025, other gains and (losses) of $0.7 million were primarily comprised of (i) interest income on our cash deposits of $0.4 million, (ii) escrow refund related to facility improvements of $0.4 million, (iii) loss on extinguishment of debt of ($0.2) million related to the full repayment of the NLOP Mezzanine Loan in April 2025 (Note 8), and (iv) net realized and unrealized gains on foreign currency exchange rate movements of $0.1 million.
Current report
For the three months ended June 30, 2024, other gains and (losses) of $0.3 million were primarily comprised of (i) interest income on our cash deposits of $0.9 million and (ii) realized losses on our interest rate cap derivative of ($0.6) million (Note 7).
Current report
For the six months ended June 30, 2025, other gains and (losses) of $1.1 million were primarily comprised of (i) interest income on our cash deposits of $0.8 million, (ii) escrow refund related to facility improvements of $0.4 million, (iii) loss on extinguishment of debt of ($0.2) million related to the full repayment of the NLOP Mezzanine Loan in April 2025 (Note 8), and (iv) net realized and unrealized gains on foreign currency exchange rate movements of $0.1 million.
Current report
Net Lease Office Properties 6/30/2025 10-Q –29
Current report
Net Lease Office Properties 6/30/2025 10-Q –30
Current report
New Tax Legislation
Current report
Effective July 4, 2025, certain changes to U.S. tax law were approved that may impact us and our shareholders. Among other changes, this legislation (i) permanently extended the 20% deduction for “qualified REIT dividends” for individuals and other non-corporate taxpayers under Section 199A of the Code, (ii) increased the percentage limit under the REIT asset test applicable to taxable REIT subsidiaries from 20% to 25% for taxable years beginning after December 31, 2025, and (iii) increases the base on which the 30% interest deduction limit under Section 163(j) of the Code applies by excluding depreciation, amortization, and depletion from the definition of “adjusted taxable income” (i.e. based on EBITDA rather than EBIT) for taxable years beginning after December 31, 2024.
Current report
Net Lease Office Properties 6/30/2025 10-Q –31
Current report
Net Lease Office Properties 6/30/2025 10-Q –32
Current report
(a)Amounts for the three and six months ended June 30, 2025 include an impairment charge of $81.6 million recognized on the KBR, Inc. property in Houston, Texas (Note 6).
Current report
Net Lease Office Properties 6/30/2025 10-Q –33
Removed paragraphs (10)
Previous report
•During the three months ended March 31, 2025, we repaid $25.5 million of outstanding principal on the NLOP Mezzanine Loan, using proceeds from certain dispositions, as well as cash flow from rent on our properties and other sources (Note 8).
Previous report
•In April 2025, the maturity dates for two non-recourse mortgages with principal outstanding totaling $30.8 million were extended from May 2025 to March 2026 and July 2026 (Note 13).
Previous report
Net Lease Office Properties 3/31/2025 10-Q –20
Previous report
Net Income (Loss) Attributable to NLOP
Previous report
Net Lease Office Properties 3/31/2025 10-Q –21
Previous report
Net Lease Office Properties 3/31/2025 10-Q –22
Previous report
For the three months ended March 31, 2025, other gains and (losses) of $0.4 million were primarily comprised of interest income on our cash deposits.
Previous report
•making principal payments on the NLOP Mezzanine Loan, totaling $35.6 million, which was fully repaid in April 2025 (Note 13);
Previous report
•making scheduled interest payments on the NLOP Mezzanine Loan, which was fully repaid in April 2025 (Note 13) (future interest payments as of March 31, 2025 totaled $19.6 million, with $5.2 million due during the next 12 months); includes 4.5% payment-in-kind interest that we had the option to capitalize into the principal balance;
Previous report
•funding future capital commitments and tenant improvement allowances; and
Reworded paragraphs (32)
Previous wording
During the three months ended March 31, 2025 and through the date of this Report, we completed the following (as further described in the consolidated financial statements):
Current wording
During the six months ended June 30, 2025 and through the date of this Report, we completed the following (as further described in the consolidated financial statements):
Previous wording
•During the three months ended March 31, 2025, we sold two properties for total proceeds, net of selling costs, of $9.2 million (Note 12).
Current wording
•During the six months ended June 30, 2025, we sold three properties for total proceeds, net of selling costs, of $25.4 million (Note 12).
Previous wording
During the three months ended March 31, 2025, we repaid $25.5 million of outstanding principal on the NLOP Mezzanine Loan (Note 8), using proceeds from certain dispositions, as well as cash flow from rent on our properties and other sources. In April 2025, we fully repaid the NLOP Mezzanine Loan, which had $35.6 million of outstanding principal as of March 31, 2025, using excess cash from operations and other sources, including loan reserves (Note 13).
Current wording
•During the six months ended June 30, 2025, we fully repaid the NLOP Mezzanine Loan, which had $61.1 million of outstanding principal as of December 31, 2024, using net proceeds from certain dispositions, as well as excess cash flow from operations and other sources, including the application of loan reserves (Note 8).
Previous wording
(a)Amount for the three months ended March 31, 2024 includes $10.4 million of proceeds from the sale of a net investment in sales-type lease. Such proceeds are included within Net cash provided by operating activities in accordance with ASC 842, Leases.
Current wording
(a)Amount for the six months ended June 30, 2024 includes $10.3 million of proceeds from the sale of a net investment in sales-type lease. Such proceeds are included within Net cash provided by operating activities in accordance with ASC 842, Leases.
Previous wording
Total revenues decreased for the three months ended March 31, 2025 as compared to the same period in 2024, primarily due to the impact of disposition activity, tenant vacancies at certain properties, and lower other lease-related income.
Current wording
Total revenues decreased for the three and six months ended June 30, 2025 as compared to the same periods in 2024, primarily due to the impact of disposition activity, tenant vacancies at certain properties, and lower other lease-related income.
Previous wording
We recognized net income attributable to NLOP for the three months ended March 31, 2025, as compared to net loss for the same period in 2024, primarily due to lower interest expense and lower loss on sale of real estate.
Current wording
We recognized net loss attributable to NLOP for the three months ended June 30, 2025, as compared to net income for the same period in 2024, primarily due to significantly higher impairment charges and lower gain on sale of real estate, partially offset by lower interest expense. See Note 6 for information on impairment charges recorded during the reporting period.
Previous wording
FFO increased for the three months ended March 31, 2025 as compared to the same period in 2024, primarily due to lower interest expense (including amortization of deferred financing costs), partially offset by the impact of disposition activity and lower other lease-related income.
Current wording
FFO increased for the three and six months ended June 30, 2025 as compared to the same periods in 2024, primarily due to lower interest expense (including amortization of deferred financing costs), partially offset by the impact of disposition activity and lower other lease-related income.
Previous wording
AFFO decreased for the three months ended March 31, 2025 as compared to the same period in 2024, primarily due to the impact of disposition activity and lower other lease-related income, partially offset by lower interest expense (excluding amortization of deferred financing costs).
Current wording
AFFO decreased for the three and six months ended June 30, 2025 as compared to the same periods in 2024, primarily due to the impact of disposition activity and lower other lease-related income, partially offset by lower interest expense (excluding amortization of deferred financing costs).
Previous wording
(b)ABR amount is subject to fluctuations in foreign currency exchange rates.
Current wording
(c)ABR amount is subject to fluctuations in foreign currency exchange rates.
Previous wording
For the three months ended March 31, 2025 as compared to the same period in 2024, lease revenues decreased by $10.9 million, primarily due to disposition activity and tenant vacancies at certain properties.
Current wording
For the three and six months ended June 30, 2025 as compared to the same periods in 2024, lease revenues decreased by $7.6 million and $18.6 million, respectively, primarily due to disposition activity and tenant vacancies at certain properties.
Previous wording
For the three months ended March 31, 2025 as compared to the same period in 2024, income from direct finance leases decreased by less than $0.1 million, primarily due to the disposition of our remaining property classified as net investments in sales-type lease during the first quarter of 2024 (Note 4).
Current wording
For the six months ended June 30, 2025 as compared to the same period in 2024, income from direct finance leases decreased by less than $0.1 million, primarily due to the disposition of our remaining property classified as net investments in sales-type lease during the first quarter of 2024 (Note 4).
Previous wording
For the three months ended March 31, 2025 as compared to the same period in 2024, depreciation and amortization expense decreased by $8.2 million, primarily due to the impact of disposition activity and accelerated amortization of intangible assets in connection with a lease restructuring during the prior year period.
Current wording
For the three and six months ended June 30, 2025 as compared to the same periods in 2024, depreciation and amortization expense decreased by $5.4 million and $13.7 million, respectively, primarily due to the impact of disposition activity and accelerated amortization of intangible assets in connection with a lease restructuring during the prior year period.
Previous wording
For the three months ended March 31, 2025 as compared to the same period in 2024, property expenses, excluding reimbursable tenant costs, increased by $0.2 million, primarily due to tenant vacancies (which resulted in property expenses no longer being reimbursable), partially offset by the impact of disposition activity.
Current wording
For the three and six months ended June 30, 2025 as compared to the same periods in 2024, property expenses, excluding reimbursable tenant costs, decreased by $0.4 million and $0.2 million, respectively, primarily due to the impact of disposition activity, partially offset by tenant vacancies (which resulted in property expenses no longer being reimbursable).
Previous wording
For the three months ended March 31, 2025 as compared to the same period in 2024, asset management fees decreased by $0.5 million, due to the impact of disposition activity, which reduced the asset base from which our Advisor earns fees (Note 3).
Current wording
For the three and six months ended June 30, 2025 as compared to the same periods in 2024, asset management fees decreased by $0.4 million and $0.9 million, respectively, due to the impact of disposition activity.
Previous wording
Interest expense is comprised of interest on Non-recourse mortgages, our NLOP Mortgage Loan, and our NLOP Mezzanine Loan.
Current wording
Interest expense is comprised of interest on Non-recourse mortgages, our NLOP Mortgage Loan, and our NLOP Mezzanine Loan. Our NLOP Mortgage Loan was fully repaid in December 2024 and our NLOP Mezzanine Loan was fully repaid in April 2025 (Note 8).
Previous wording
For the three months ended March 31, 2025 as compared to the same period in 2024, interest expense decreased by $15.1 million, primarily due to repayments of our debt since January 1, 2024, including the full repayment of the NLOP Mortgage Loan during 2024 (Note 8).
Current wording
For the three and six months ended June 30, 2025 as compared to the same periods in 2024, interest expense decreased by $23.4 million and $38.5 million, respectively, primarily due to repayments of our debt since January 1, 2024 (Note 8).
Previous wording
Loss on Sale of Real Estate, Net
Current wording
(Loss) Gain on Sale of Real Estate, Net
Previous wording
Loss on sale of real estate, net, consists of loss on the sale of properties that were disposed of during the reporting period, as more fully described in Note 4 and Note 12.
Current wording
(Loss) gain on sale of real estate, net, consists of loss or gain on the sale of properties that were disposed of or included in assets held for sale and subject to a revised estimated purchase price, during the reporting period, as more fully described in Note 4 and Note 12.
Previous wording
For the three months ended March 31, 2024, other gains and (losses) of $(0.8) million were primarily comprised of net realized and unrealized losses on foreign currency exchange rate movements of $0.7 million and a loss on extinguishment of debt of $0.3 million (Note 8).
Current wording
For the six months ended June 30, 2024, other gains and (losses) of $(0.5) million were primarily comprised of (i) net realized and unrealized losses on foreign currency exchange rate movements of ($0.7) million, (ii) realized losses on our interest rate cap derivative of ($0.6) million (Note 7), (iii) a loss on extinguishment of debt of ($0.3) million, and (iv) interest income on our cash deposits of $1.0 million.
Previous wording
For the three months ended March 31, 2025 as compared to the same period in 2024, provision for income taxes decreased by $0.1 million, primarily due to the impact of international property dispositions during the reporting period.
Current wording
For the six months ended June 30, 2025 as compared to the same period in 2024, provision for income taxes decreased by $0.2 million, primarily due to the impact of international property dispositions during the reporting period.
Previous wording
Net Cash Provided by Operating Activities— Net cash provided by operating activities decreased by $12.3 million during the three months ended March 31, 2025 as compared to the same period in 2024, primarily due to $10.4 million of proceeds received from the sale of a net investment in sales-type lease during the prior year period (Note 5) and the impact of disposition activity, partially offset by lower interest expense.
Current wording
Net Cash Provided by Operating Activities— Net cash provided by operating activities decreased by $15.3 million during the six months ended June 30, 2025 as compared to the same period in 2024, primarily due to $10.3 million of proceeds received from the sale of a net investment in sales-type lease during the prior year period and the impact of disposition activity, partially offset by lower interest expense.
Previous wording
Net Cash Provided by Investing Activities— Net cash provided by investing activities decreased by $18.1 million during the three months ended March 31, 2025 as compared to the same period in 2024, primarily due to lower proceeds from dispositions during the current year period.
Current wording
Net Cash Provided by Investing Activities— Net cash provided by investing activities decreased by $154.8 million during the six months ended June 30, 2025 as compared to the same period in 2024, primarily due to lower proceeds from dispositions during the current year period.
Previous wording
Net Cash Used in Financing Activities— Net cash used in financing activities decreased by $6.3 million during the three months ended March 31, 2025 as compared to the same period in 2024, primarily due to lower payments of the NLOP Financing Arrangements and mortgage principal (following the full repayment of the NLOP Mortgage Loan during 2024 (Note 8)).
Current wording
Net Cash Used in Financing Activities— Net cash used in financing activities decreased by $143.7 million during the six months ended June 30, 2025 as compared to the same period in 2024, primarily due to lower payments of the NLOP Financing Arrangements and mortgage principal (following the full repayment of the NLOP Mortgage Loan during 2024 and full repayment of the NLOP Mezzanine Loan during 2025 (Note 8)).
Previous wording
(a)Aggregate debt balance includes unamortized discount, net, totaling $1.0 million and $1.8 million as of March 31, 2025 and December 31, 2024, respectively, and unamortized deferred financing costs totaling $0.7 million and $1.0 million as of March 31, 2025 and December 31, 2024, respectively.
Current wording
(a)Aggregate debt balance includes unamortized premium, net, totaling $0.1 million as of June 30, 2025 and unamortized discount, net, totaling $1.8 million as of December 31, 2024, and unamortized deferred financing costs totaling $1.0 million as of December 31, 2024.
Previous wording
•In April 2025, we fully repaid the NLOP Mezzanine Loan, which had $35.6 million of outstanding principal as of March 31, 2025, using excess cash from operations and other sources, including loan reserves (Note 13).
Current wording
During the six months ended June 30, 2025, we fully repaid the NLOP Mezzanine Loan, which had $61.1 million of outstanding principal as of December 31, 2024, using net proceeds from certain dispositions, as well as excess cash flow from operations and other sources, including the application of loan reserves (Note 8).
Previous wording
•cash and cash equivalents totaling $28.2 million. Of this amount, $8.8 million, at then-current exchange rates, was held in foreign subsidiaries, and we could be subject to restrictions or significant costs should we decide to repatriate these amounts; and
Current wording
•cash and cash equivalents totaling $54.1 million. Of this amount, $8.6 million, at then-current exchange rates, was held in foreign subsidiaries, and we could be subject to restrictions or significant costs should we decide to repatriate these amounts; and
Previous wording
•unleveraged properties that had an aggregate asset carrying value of approximately $73.7 million at March 31, 2025, although there can be no assurance that we would be able to sell or obtain financing for these properties.
Current wording
•unleveraged properties that had an aggregate asset carrying value of approximately $471.8 million at June 30, 2025, although there can be no assurance that we would be able to sell or obtain financing for these properties.
Previous wording
As of March 31, 2025, scheduled debt principal payments total $108.8 million during the remainder of 2025 and $5.9 million during 2026 (Note 8). In April 2025, the maturity dates for two non-recourse mortgages with principal outstanding totaling $30.8 million were extended from May 2025 to March 2026 and July 2026 (Note 13).
Current wording
As of June 30, 2025, scheduled debt principal payments total $80.5 million during the remainder of 2025 and $36.6 million during 2026 (Note 8).
Previous wording
•making scheduled principal and balloon payments on our non-recourse mortgage debt obligations, totaling $114.7 million, with $108.8 million due during the next 12 months;
Current wording
•making scheduled principal and balloon payments on our non-recourse mortgage debt obligations, totaling $117.1 million, with $95.2 million due during the next 12 months;
Previous wording
•making scheduled interest payments on our non-recourse mortgage obligations (future interest payments total $3.8 million, with $3.2 million due during the next 12 months);
Current wording
•making scheduled interest payments on our non-recourse mortgage obligations, totaling $3.7 million, with $3.6 million due during the next 12 months; and
Previous wording
(a)Adjustments disclosed elsewhere in this reconciliation are on a consolidated basis. This adjustment reflects our FFO or AFFO on a pro rata basis.
Current wording
(b)Adjustments disclosed elsewhere in this reconciliation are on a consolidated basis. This adjustment reflects our FFO or AFFO on a pro rata basis.
Previous wording
(b)Primarily comprised of gains and losses on extinguishment of debt and foreign currency transactions.
Current wording
(c)Primarily comprised of gains and losses on extinguishment of debt and foreign currency transactions.