Net Lease Office Properties
For the period ended Jun 30, 2026. Filed Aug 5, 2026.
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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, 2026 · Filed Aug 5, 2026
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 2026-03-31; filed 2026-05-07.
0001952976-26-000031
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsSupplemental Financial MeasuresCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-05.
0001952976-26-000057
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 113 previous paragraphs and 120 current paragraphs.
76 unchanged; 31 reworded; 13 added; 6 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 10 previous and 9 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 (13)
Current report
Net (Loss) Income Attributable to NLOP
Current report
Net loss attributable to NLOP decreased for the three months ended June 30, 2026 as compared to the same period in 2025, primarily due to lower impairment charges and lower interest expense, partially offset by the impact of disposition activity. See Note 7 for information on impairment charges recorded during the reporting period.
Current report
(b)In July 2026, we entered into lease amendments with this tenant to (i) extend the leases at four of the five properties it occupies and (ii) terminate the lease early at the fifth property, as described in Note 13.
Current report
For the three months ended June 30, 2026, other gains and (losses) of $0.2 million primarily comprised interest income on our cash deposits of $0.2 million.
Current report
For the three months ended June 30, 2025, other gains and (losses) of $0.7 million primarily comprised (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 six months ended June 30, 2025, other gains and (losses) of $1.1 million primarily comprised (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
Provision for Income Taxes
Current report
For the three and six months ended June 30, 2026 as compared to the same periods in 2025, provision for income taxes decreased by less than $0.1 million and $0.1 million, respectively, primarily due to the disposition of our remaining international properties during 2025.
Current report
Net Lease Office Properties 6/30/2026 10-Q –27
Current report
At both June 30, 2026 and December 31, 2025, our non-recourse mortgage is a mortgage note payable (which is collateralized by the assignment of a real estate property that was leased to Intuit as of June 30, 2026 but is vacant as of the date of this Report), with a fixed interest rate of 7.0% and maturity date of July 2026. This non-recourse mortgage loan was not repaid on its maturity date of July 6, 2026, and the lender has the right to commence foreclosure proceedings. As of the date of this Report, the lender has not exercised such a right. This loan has accrued default interest at an annual rate of 5.0% since the original maturity date, in addition to the base interest rate of 7.0% (Note 8, Note 13).
Current report
Net Lease Office Properties 6/30/2026 10-Q –28
Current report
Net Lease Office Properties 6/30/2026 10-Q –29
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 property in Houston, Texas, which was sold in January 2026 (Note 7).
Removed paragraphs (6)
Previous report
Net Lease Office Properties 3/31/2026 10-Q –19
Previous report
Net Income Attributable to NLOP
Previous report
Net Lease Office Properties 3/31/2026 10-Q –20
Previous report
For the three months ended March 31, 2025, other gains and (losses) of $0.4 million primarily comprised interest
Previous report
income on our cash deposits.
Previous report
The table below summarizes our non-recourse mortgage (dollars in thousands):
Reworded paragraphs (31)
Previous wording
During the three months ended March 31, 2026 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, 2026 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, 2026, we sold six properties for total proceeds, net of selling costs, of $127.5 million (Note 12). These proceeds exclude a $20.0 million deposit received during the fourth of quarter of 2025 related to the disposition of a property in January 2026 located in Houston, Texas, and leased to KBR, our largest tenant by ABR as of December 31, 2025.
Current wording
•During the six months ended June 30, 2026, we sold six properties for total proceeds, net of selling costs, of $128.0 million (Note 12). These proceeds exclude a $20.0 million deposit received during the fourth of quarter of 2025 related to the disposition of a property in January 2026 located in Houston, Texas, and leased to KBR, our largest tenant by ABR as of December 31, 2025.
Previous wording
(a)Amount for the three months ended March 31, 2026 includes $8.0 million of proceeds from the sale of a net investment in sales-type lease (Note 5). 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, 2026 includes $8.0 million of proceeds from the sale of a net investment in sales-type lease (Note 5). Such proceeds are included within Net cash provided by operating activities in accordance with ASC 842, Leases.
Previous wording
Since January 1, 2025, we have disposed of 21 properties for total proceeds, net of selling costs, of $339.8 million, which has resulted in significant declines in our revenues, expenses, net cash provided by operating activities, FFO, and AFFO.
Current wording
Since January 1, 2025 and through June 30, 2026, we have disposed of 21 properties for total proceeds, net of selling costs, of $340.3 million, which has resulted in significant declines in our revenues, expenses, net cash provided by operating activities, FFO, and AFFO.
Previous wording
Total revenues decreased for the three months ended March 31, 2026 as compared to the same period in 2025, primarily due to the impact of disposition activity.
Current wording
Total revenues decreased for the three and six months ended June 30, 2026 as compared to the same periods in 2025, primarily due to the impact of disposition activity.
Previous wording
Net income attributable to NLOP increased for the three months ended March 31, 2026, as compared to the same period in 2025, primarily due to higher gain on sale of real estate and lower interest expense, partially offset by the impact of disposition activity and a non-cash allowance for credit loss recorded on a net investment in a sales-type lease during the current year period (Note 5).
Current wording
We recognized net income attributable to NLOP for the six months ended June 30, 2026 as compared to net loss attributable to NLOP for the six months ended June 30, 2025, primarily due to lower impairment charges, higher gain on sale of real estate, and lower interest expense, partially offset by the impact of disposition activity and a non-cash allowance for credit loss recorded on a net investment in a sales-type lease during the six months ended June 30, 2026 (Note 5).
Previous wording
FFO decreased for the three months ended March 31, 2026 as compared to the same period in 2025, primarily due to the impact of disposition activity and a non-cash allowance for credit loss recorded on a net investment in a sales-type lease during the current year period (Note 5), partially offset by lower interest expense.
Current wording
FFO decreased for the three and six months ended June 30, 2026 as compared to the same periods in 2025, primarily due to the impact of disposition activity and a non-cash allowance for credit loss recorded on a net investment in a sales-type lease during the six months ended June 30, 2026 (Note 5), partially offset by lower interest expense.
Previous wording
AFFO decreased for the three months ended March 31, 2026 as compared to the same period in 2025, primarily due to the impact of disposition activity, partially offset by lower interest expense.
Current wording
AFFO decreased for the three and six months ended June 30, 2026 as compared to the same periods in 2025, primarily due to the impact of disposition activity, partially offset by lower interest expense.
Previous wording
For the three months ended March 31, 2026 as compared to the same period in 2025, lease revenues decreased by $20.1 million, primarily due to disposition activity.
Current wording
For the three and six months ended June 30, 2026 as compared to the same periods in 2025, lease revenues decreased by $21.2 million and $41.2 million, respectively, primarily due to disposition activity.
Previous wording
For the three months ended March 31, 2026 as compared to the same period in 2025, income from direct finance leases increased by $0.6 million, primarily due to the reclassification of two net-lease assets to net investments in sales-type leases during the fourth quarter of 2025. During the first quarter of 2026, one of these assets was sold and one was reclassified as a net-lease property (Note 5).
Current wording
For the six months ended June 30, 2026 as compared to the same period in 2025, income from direct finance leases increased by $0.6 million, primarily due to the reclassification of two net-lease assets to net investments in sales-type leases during the fourth quarter of 2025. During the first quarter of 2026, one of these assets was sold and one was reclassified as a net-lease property (Note 5).
Previous wording
For the three months ended March 31, 2026 as compared to the same period in 2025, depreciation and amortization expense decreased by $7.4 million, primarily due to the impact of disposition activity.
Current wording
For the three and six months ended June 30, 2026 as compared to the same periods in 2025, depreciation and amortization expense decreased by $6.9 million and $14.4 million, respectively, primarily due to the impact of disposition activity.
Previous wording
In May 2026, our Board of Trustees approved a reduction in the base administrative reimbursement to our Advisor from $4.0 million annually to $2.0 million annually, effective July 1, 2026 (Note 13). Such reimbursements are included in general and administrative expenses.
Current wording
In May 2026, a reduction in the base administrative reimbursement to our Advisor was agreed upon and approved by our Board of Trustees; effective July 1, 2026, the reimbursement is $2.0 million annually instead of $4.0 million annually (Note 3). Such reimbursements are included in general and administrative expenses.
Previous wording
For the three months ended March 31, 2026 as compared to the same period in 2025, general and administrative expenses increased by $0.1 million, primarily due to the timing of certain investor relations expenses.
Current wording
For the three and six months ended June 30, 2026 as compared to the same periods in 2025, general and administrative expenses decreased by $0.3 million and $0.1 million, respectively, primarily due to lower professional fees.
Previous wording
For the three months ended March 31, 2026 as compared to the same period in 2025, property expenses, excluding reimbursable tenant costs, decreased by $1.8 million, primarily due to the impact of disposition activity.
Current wording
For the three and six months ended June 30, 2026 as compared to the same periods in 2025, property expenses, excluding reimbursable tenant costs, decreased by $1.8 million and $3.5 million, respectively, primarily due to the impact of disposition activity.
Previous wording
For the three months ended March 31, 2026 as compared to the same period in 2025, asset management fees decreased by $0.8 million, due to the impact of disposition activity.
Current wording
For the three and six months ended June 30, 2026 as compared to the same periods in 2025, asset management fees decreased by $0.8 million and $1.6 million, respectively, due to the impact of disposition activity.
Previous wording
For the three months ended March 31, 2026 as compared to the same period in 2025, reimbursable tenant costs decreased by $5.5 million, primarily due to the impact of disposition activity.
Current wording
For the three and six months ended June 30, 2026 as compared to the same periods in 2025, reimbursable tenant costs decreased by $6.3 million and $11.9 million, respectively, primarily due to the impact of disposition activity.
Previous wording
Gain (loss) gain on sale of real estate, net, consists of gain or loss on the sale of properties that were disposed of during the reporting period, as more fully described in Note 4, Note 5, and Note 12.
Current wording
Gain (loss) gain on sale of real estate, net, consists of gain or loss on (i) the sale of properties that were disposed of, net of taxes, (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 $1.1 million for the six months ended June 30, 2025), as more fully described in Note 4 and Note 12.
Previous wording
For the three months ended March 31, 2026 as compared to the same period in 2025, interest expense decreased by $5.4 million, primarily due to repayments of our debt since January 1, 2025 (Note 8).
Current wording
For the three and six months ended June 30, 2026 as compared to the same periods in 2025, interest expense decreased by $4.0 million and $9.4 million, respectively, primarily due to repayments of our debt since January 1, 2025 (Note 8).
Previous wording
For the three months ended March 31, 2026, other gains and (losses) of $10.2 million primarily comprised (i) a non-cash allowance for credit loss on a sales-type lease of $(11.0) million (Note 5) and (ii) interest income on our cash deposits of $0.8 million.
Current wording
For the six months ended June 30, 2026, other gains and (losses) of $10.0 million primarily comprised (i) a non-cash allowance for credit loss on a sales-type lease of $(11.0) million (Note 5) and (ii) interest income on our cash deposits of $1.0 million.
Previous wording
Net Cash Provided by Operating Activities— Net cash provided by operating activities decreased by $6.0 million during the three months ended March 31, 2026 as compared to the same period in 2025, primarily due to the impact of disposition activity, partially offset by $8.0 million of proceeds received from the sale of a net investment in sales-type lease during the current year period.
Current wording
Net Cash Provided by Operating Activities— Net cash provided by operating activities decreased by $15.9 million during the six months ended June 30, 2026 as compared to the same period in 2025, primarily due to the impact of disposition activity, partially offset by $8.0 million of proceeds received from the sale of a net investment in sales-type lease during the current year period.
Previous wording
Net Cash Provided by Investing Activities— Net cash provided by investing activities increased by $110.2 million during the three months ended March 31, 2026 as compared to the same period in 2025, primarily due to higher proceeds from dispositions during the current year period.
Current wording
Net Cash Provided by Investing Activities— Net cash provided by investing activities increased by $96.6 million during the six months ended June 30, 2026 as compared to the same period in 2025, primarily due to higher proceeds from dispositions during the current year period.
Previous wording
Net Cash Used in Financing Activities— Net cash used in financing activities increased by $149.8 million during the three months ended March 31, 2026 as compared to the same period in 2025, primarily due to $175.5 million of distributions paid during the current year period, partially offset by lower debt payments (following the 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 increased by $163.0 million during the six months ended June 30, 2026 as compared to the same period in 2025, primarily due to $224.4 million of distributions paid during the current year period, partially offset by lower debt payments (following the full repayment of the NLOP Mezzanine Loan during 2025 (Note 8)).
Previous wording
•cash and cash equivalents totaling $70.6 million; and
Current wording
•cash and cash equivalents totaling $23.7 million; and
Previous wording
•unleveraged properties that had an aggregate asset carrying value of approximately $161.2 million at March 31, 2026, 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 $151.4 million at June 30, 2026, 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, 2026, scheduled debt principal payments total $21.9 million during the remainder of 2026 (Note 8).
Current wording
As of June 30, 2026, scheduled debt principal payments total $21.9 million during the remainder of 2026 (Note 8, Note 13).
Previous wording
•making scheduled principal and balloon payments on our non-recourse mortgage debt obligation totaling $21.9 million, which are due during the next 12 months;
Current wording
•making scheduled principal and balloon payments on our remaining non-recourse mortgage debt obligation totaling $21.9 million, which are due during the next 12 months (this non-recourse mortgage loan, which has a maturity date of July 6, 2026, has not been repaid as of the date of this Report (Note 8, Note 13));
Previous wording
•making scheduled interest payments on our non-recourse mortgage obligation totaling $0.5 million, which are due during the next 12 months; and
Current wording
•making scheduled interest payments on our non-recourse mortgage obligation totaling $0.1 million, which are due during the next 12 months; and
Previous wording
We expect to fund these cash requirements through cash generated from operations and cash received from dispositions of properties.
Current wording
We expect to fund these cash requirements through cash received from dispositions of properties and cash generated from operations.
Previous wording
Our liquidity could be adversely affected by refinancing debt at higher interest rates or an unanticipated disruption to our operating cash flow, which could include interrupted rent collections or greater-than-anticipated operating expenses.
Current wording
Our liquidity could be adversely affected by real estate market conditions (which could impact our ability to dispose of properties) and an unanticipated disruption to our operating cash flow, which could include interrupted rent collections or greater-than-anticipated operating expenses.
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)Amount for the three months ended March 31, 2026 includes a non-cash allowance for credit loss recorded on a net investment in a sales-type lease of $11.0 million (Note 5). These amounts also include gains and losses on extinguishment of debt and foreign currency transactions.
Current wording
(c)Amount for the six months ended June 30, 2026 includes a non-cash allowance for credit loss recorded on a net investment in a sales-type lease of $11.0 million (Note 5). These amounts also include gains and losses on extinguishment of debt and foreign currency transactions.