Net Lease Office Properties
For the period ended Sep 30, 2025. Filed Nov 7, 2025.
View on SEC.govAbout this filing
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.
Sep 30, 2025 · Filed Nov 7, 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 2025-06-30; filed 2025-08-06.
0001952976-25-000048
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsSupplemental Financial MeasuresCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-11-07.
0001952976-25-000059
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 129 previous paragraphs and 129 current paragraphs.
86 unchanged; 35 reworded; 8 added; 7 removed; 1 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 (8)
Current report
•In September 2025, we disposed of an international property by transferring ownership to a buyer, in satisfaction of the non-recourse mortgage loan encumbering the property for $45.7 million (Note 12).
Current report
Leasing Activity
Current report
•In September 2025, we entered into a lease termination agreement with a tenant at a property located in Oak Creek, Wisconsin, to terminate the lease on October 31, 2025 (the previous lease expiration date was May 31, 2032). In connection with the agreement, the tenant was obligated to pay us a lease termination fee of $13.0 million, of which $4.8 million was recognized within Other lease-related income for the three and nine months ended September 30, 2025 (Note 4). The $13.0 million termination payment was collected in October 2025 (Note 13), and the lease expiration may impact the property’s future cash flows and overall recoverability.
Current report
•During the nine months ended September 30, 2025, we prepaid three non-recourse mortgage loans totaling $24.5 million with a weighted-average interest rate of 5.8% (Note 8).
Current report
Net Loss Attributable to NLOP
Current report
AFFO increased for the three and nine months ended September 30, 2025 as compared to the same periods in 2024, primarily due to lower interest expense, partially offset by the impact of disposition activity. In addition, we recognized higher other lease-related income during the three months ended September 30, 2025 as compared to the same period in 2024.
Current report
For the three months ended September 30, 2025, other gains and (losses) of $1.0 million were primarily comprised of (i) interest income on our cash deposits of $0.6 million and (ii) a gain of $0.4 million related to a forfeited deposit on a potential disposition.
Current report
(b)Amounts for the three and nine months ended September 30, 2025 include loss on sale of real estate of $40.5 million and $41.6 million, respectively, comprising foreign currency translation adjustments reclassified from accumulated other comprehensive income to net loss since we exited all investments denominated in the Norwegian krone during the third quarter of 2025 and the euro during the first quarter of 2025 (Note 2, Note 12).
Removed paragraphs (7)
Previous 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).
Previous report
Net (Loss) Income Attributable to NLOP
Previous report
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 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).
Previous report
(c)ABR amount is subject to fluctuations in foreign currency exchange rates.
Previous 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.
Previous report
Certain amounts disclosed above are based on the applicable foreign currency exchange rate at June 30, 2025.
Reworded paragraphs (35)
Previous 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):
Current wording
During the nine months ended September 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 six months ended June 30, 2025, we sold three properties for total proceeds, net of selling costs, of $25.4 million (Note 12).
Current wording
•During the nine months ended September 30, 2025, we sold six properties for total proceeds, net of selling costs, of $71.3 million (Note 12).
Previous 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).
Current wording
•During the nine months ended September 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
•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 wording
•In August 2025, our Board of Trustees declared a special cash distribution of $3.10 per share, totaling approximately $45.9 million. The distribution was paid on September 3, 2025 to shareholders of record as of August 18, 2025 (Note 10). 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.
Previous 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.
Current wording
(a)Amount for the nine months ended September 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 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.
Current wording
Total revenues decreased for the three and nine months ended September 30, 2025 as compared to the same periods in 2024, primarily due to the impact of disposition activity and tenant vacancies at certain properties. In addition, we recognized higher other lease-related income during the three months ended September 30, 2025 as compared to the same period in 2024.
Previous wording
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 wording
Net loss attributable to NLOP increased for the three and nine months ended September 30, 2025, as compared to the same period in 2024, primarily due to significantly higher impairment charges and higher loss 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 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.
Current wording
FFO increased for the three and nine months ended September 30, 2025 as compared to the same periods in 2024, primarily due to lower interest expense, partially offset by the impact of disposition activity. In addition, we recognized higher other lease-related income during the three months ended September 30, 2025 as compared to the same period in 2024.
Previous wording
ABR— ABR represents contractual minimum annualized base rent for our properties and reflects exchange rates as of June 30, 2025. If there is a rent abatement, we annualize the first monthly contractual base rent following the free rent period.
Current wording
ABR— ABR represents contractual minimum annualized base rent for our properties. If there is a rent abatement, we annualize the first monthly contractual base rent following the free rent period.
Previous 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.
Current wording
For the three and nine months ended September 30, 2025 as compared to the same periods in 2024, lease revenues decreased by $5.9 million and $24.4 million, respectively, primarily due to disposition activity and tenant vacancies at certain properties.
Previous 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).
Current wording
For the nine months ended September 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 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.
Current wording
For the three and nine months ended September 30, 2025 as compared to the same periods in 2024, depreciation and amortization expense decreased by $3.4 million and $17.1 million, respectively, primarily due to the impact of disposition activity and accelerated amortization of intangible assets in connection with a lease restructuring during the nine months ended September 30, 2024.
Previous wording
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 wording
For three and nine months ended September 30, 2025 as compared to the same periods in 2024, reimbursable tenant costs decreased by $1.5 million and $2.2 million, respectively, primarily due to the impact of dispositions, as well as lower real estate taxes and maintenance costs at certain properties.
Previous 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).
Current wording
For the three and nine months ended September 30, 2025 as compared to the same periods in 2024, property expenses, excluding reimbursable tenant costs, decreased by $1.1 million and $1.3 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 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 wording
For the three months ended September 30, 2025 as compared to the same period in 2024, general and administrative expenses decreased by $0.2 million, primarily due to lower professional fees.
Previous 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.
Current wording
For the three and nine months ended September 30, 2025 as compared to the same periods in 2024, asset management fees decreased by $0.3 million and $1.3 million, respectively, due to the impact of disposition activity.
Previous 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.
Current wording
(Loss) gain on sale of real estate, net, consists of loss or gain on (i) the sale of properties that were disposed of, (ii) properties included in assets held for sale and subject to a revised estimated purchase price, or (iii) the reclassification of foreign currency translation adjustments from accumulated other comprehensive income to net loss since we exited all investments denominated in a currency (which totaled losses of $40.5 million and $41.6 million for the three and nine months ended September 30, 2025, respectively), as more fully described in Note 2, Note 4, and Note 12.
Previous 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).
Current wording
For the three and nine months ended September 30, 2025 as compared to the same periods in 2024, interest expense decreased by $10.1 million and $48.5 million, respectively, primarily due to repayments of our debt since January 1, 2024 (Note 8).
Previous wording
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 wording
For the three months ended September 30, 2024, other gains and (losses) of $0.4 million were primarily comprised of (i) interest income on our cash deposits of $0.7 million, (ii) net realized and unrealized gains on foreign currency exchange rate movements of $0.1 million, and (iii) net realized and unrealized losses on our interest rate cap derivative of $(0.4) million.
Previous wording
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 wording
For the nine months ended September 30, 2025, other gains and (losses) of $2.1 million were primarily comprised of (i) interest income on our cash deposits of $1.4 million, (ii) a gain of $0.4 million related to a forfeited deposit on a potential disposition,(iii) escrow refund related to facility improvements of $0.4 million, and (iv) loss on extinguishment of debt of $(0.2) million primarily related to the full repayment of the NLOP Mezzanine Loan in April 2025 (Note 8).
Previous 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.
Current wording
For the nine months ended September 30, 2024, other gains and (losses) of $(0.1) million were primarily comprised of (i) net realized and unrealized losses on our interest rate cap derivative of $(1.0) million (Note 7), (ii) net realized and unrealized losses on foreign currency exchange rate movements of $(0.5) million, (iii) a loss on extinguishment of debt of $(0.3) million, and (iv) interest income on our cash deposits of $1.7 million.
Previous 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.
Current wording
For the three and nine months ended September 30, 2025 as compared to the same periods in 2024, provision for income taxes decreased by $0.5 million and $0.6 million, respectively, primarily due to net income recognized on a taxable entity during the prior year periods and the impact of international property dispositions.
Previous 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.
Current wording
Net Cash Provided by Operating Activities— Net cash provided by operating activities decreased by $19.2 million during the nine months ended September 30, 2025 as compared to the same period in 2024, primarily due to the impact of disposition activity and $10.3 million of proceeds received from the sale of a net investment in sales-type lease during the prior year period, partially offset by lower interest expense.
Previous 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.
Current wording
Net Cash Provided by Investing Activities— Net cash provided by investing activities decreased by $192.5 million during the nine months ended September 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 $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)).
Current wording
Net Cash Used in Financing Activities— Net cash used in financing activities decreased by $165.7 million during the nine months ended September 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)), partially offset by $45.9 million of distributions paid during the current year period.
Previous 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.
Current wording
(a)Aggregate debt balance includes unamortized discount, net, totaling $1.8 million and unamortized deferred financing costs totaling $1.0 million as of December 31, 2024.
Previous 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).
Current wording
During the nine months ended September 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 $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
Current wording
•cash and cash equivalents totaling $38.7 million; and
Previous 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.
Current wording
•unleveraged properties that had an aggregate asset carrying value of approximately $393.8 million at September 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 June 30, 2025, scheduled debt principal payments total $80.5 million during the remainder of 2025 and $36.6 million during 2026 (Note 8).
Current wording
As of September 30, 2025, scheduled debt principal payments total $25.2 million during the remainder of 2025 and $21.9 million during 2026 (Note 8).
Previous 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;
Current wording
•making scheduled principal and balloon payments on our non-recourse mortgage debt obligations totaling $47.1 million, which are due during the next 12 months;
Previous 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
Current wording
•making scheduled interest payments on our non-recourse mortgage obligations totaling $1.5 million, which are due during the next 12 months; and
Previous wording
(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 wording
(a)Amount for the nine months ended September 30, 2025 includes an impairment charge of $81.6 million recognized on the KBR, Inc. property in Houston, Texas (Note 6).
Previous 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.
Current wording
(c)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
(c)Primarily comprised of gains and losses on extinguishment of debt and foreign currency transactions.
Current wording
(d)Primarily comprised of gains and losses on extinguishment of debt and foreign currency transactions.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
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.