Greetings. And welcome to Orion Office REIT's Fourth Quarter and Full Year 2022 Earnings Call. This conference is being recorded. I would now like to turn your call over to your host, Paul Hughes, General Counsel for Orion. Please go ahead, Paul.

Thank you, operator. Good morning, everyone. Yesterday, Orion released its financial results for the quarter and year ended December 31, 2022, filed its Form 10-K 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. Forward-looking statements made during today's call such as the company's guidance for calendar year 2022 are subject to a number of risks and uncertainties that could cause actual results to differ materially from our expectations. These risks and uncertainties are discussed in our earnings release as well as in our Form 10-K and other SEC filings. The company undertakes no duty to update any forward-looking statements that may be made during today's call. Additionally, during the conference 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 measures. As discussed in the company’s earnings release and Form 10-K, we will be revising our definition of core FFO beginning in 2023 to exclude certain non-cash amortization charges which do not reflect the ongoing performance of our business. 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?

Thank you, Paul. Good morning, everyone. And welcome to Orion Office REIT’s earnings call. On behalf of our team, I want to thank you all for joining us. On the call today, I will discuss our performance in the fourth quarter and full year 2022, touch on our first full year of operations and highlight the ongoing progress we're making on Orion's portfolio. I will then turn the call over to Gavin to provide an update on our financial results and guidance. As I mentioned, 2022 was our first full year of operations following our spin-off from Realty Income. During the year, we made significant progress in our core strategy that focuses on owning mission-critical suburban office properties located in high quality suburban markets throughout the United States. These accomplishments came against the backdrop of an evolving and challenging economic environment for real estate in general, and office properties in particular. Our mission as we have communicated since inception, is to own high quality stabilized assets in the right markets. And that will require we've resolved pending lease maturities and vacancies across a large portion of our portfolio in the coming years. To do so, we are intensively managing our assets, including making thoughtful capital allocation decisions in order to effectively address these issues. The ongoing economic environment of rising interest rates, persistent inflation, recession fears, and many tenants inaction on mandating return to the office is impacting the timing around signing new and or extending current leases in our properties. We have faced many of these headwinds since our spin. However, given the quality of our core assets, we have confidence that our approach to unlock long term value from owning a large suburban net lease office portfolio in attractive markets will persevere with time. Many of us in…

Thanks, Paul. I'll begin by discussing Orion’s GAAP results for the fourth quarter of 2022 and highlight some key metrics for the full year. Orion generated total revenues for the quarter of $50.3 million and reported net loss attributable to common stockholders of $19 million, or a loss of $0.33 cents per share. Core Funds from Operations was $23.2 million or $0.41 per share, and adjusted EBITDA was $30.7. For the full year, Orion’s total revenues were $208.1 million and net loss attributable to common stockholders was $97.5 million or a loss of $1.72 per share. Core Funds from Operations was $101.8 million or $1.80 per share, and exceeded the high end of the company's 2022 guidance by $0.02 per share. Adjusted EBITDA for the full year was $132.2 million. G&A in the fourth quarter was $4.4 million while CapEx, tenant and property improvements and leasing costs were $6.1 million. As our leases roll and given the uncertain timing of when leases are signed, and when work is completed on our properties, as we have discussed CapEx timing will vary quarter-to-quarter and year-to-year. We do expect to incur meaningfully more CapEx in 2023 than we did in 2022 as tenants begin to draw on previously agreed on tenant improvement allowances. G&A for the full year was $15.9 million which is slightly below the company's 2022 guidance range for G&A expenses of $16 million to $16.5 million and CapEx and tenant improvements and leasing costs were $14.6 million. Turning to the balance sheet; we ended the year with $557.3 million of outstanding debt, including Orion's proportionate share in the joint venture. During the fourth quarter, we utilized a combination of proceeds from asset dispositions and cash flows from operations to repay $31 million outstanding on a revolving credit facility. As of…

[Operator Instructions] Our first question is coming from Mitch Germain from JMP Securities.

Good morning, how are you? Great. Thanks for taking my question. So how should I think about the trajectory of G&A? Obviously, as you continue to sell assets and the portfolio size shrinks I guess it for at least temporary period of time, how should I think about G&A and a forward basis?

Hey , Mitch, this is Gavin. So G&A, we're essentially normalized in terms of staffing. As we look to sell properties that are vacant, we always will challenge our G&A structure. As far as next year goes, we're going to have another additional year of stock-based compensation. So 2023 will be normalized with the exception of a 2024 one year more tranche of G&A impact by their stock- based compensation.

Right, so the large increase in G&A between last year and this year, Mitch, is a function of the subsidies going away from Realty Income. We don't expect to be increasing G&A materially beyond what Gavin just mentioned in the coming years.

Got you. Okay, that's helpful. I think you mentioned an auction sale, is that something that drove down pricing? Is that, did I hear that correctly?

Yes, So I mean in the, we've sold property through a variety of channels during the course of 2022, both directly to end users or to investors. And we've also sold a number of properties through the auction process, which is very efficient, and gets the properties done quickly. But may have an impact on pricing.

Understood. How much of the 500,000 square feet that is queued up for sale? How much of that is being sold a more traditional way? Or how much of that is now being sold through the auction process?

I think we're looking at that now. Most of it is being sold through the traditional process at the moment. However, if we don't get it done in the traditional process, we may turn to the auction process.

Got you. Okay, that's helpful, thanks. And then finally, is there any, I mean, how should we think about the ability to refi that tranche of debt later this year? I mean, where's the market for that these days? I'm curious in terms of kind of some guidance of how we should consider that transfer of debt.

So, yes, it's a good question, Mitch. We're obviously in pretty continuous discussions with our banks, Wells Fargo is our lead manager. And that's a group of folks we've worked with for a long time. We have full capacity on our revolving credit facility. So we have more than enough, we have the ability to pay off the term loan with utilization of the revolver, if necessary. And indeed, that's one of the reasons why we've been so careful with the balance sheet in the past year by reducing debt. And by lowering our overall leverage, and by having as much capacity as we possibly can so that when we come to either refinancing or paying down the term loan, we have more than enough capacity to do so.

Next question is coming from Gaurav Mehta from EF Hutton.

Thank you. Good morning. I wanted to ask you on your 2023 guidance, I was wondering if you could provide any color on what you are underwriting for occupancy and rental rate spreads during the year.

Sure, Greg, nice to talk to you this morning. I think we expect occupancy to remain relatively stable during the course of the year potentially with some decline as we have some leases that we discussed earlier expiring. For example, in August we have the Walgreen leases expiring, which is 574,000 square feet. So that obviously will have a negative impact on occupancy, positive impacts to occupancy would be our sale of vacant properties. So to the sense that we have to hold Walgreens vacant through the end of the year before it sells in the beginning of next year. We'll have a temporary dip in occupancy towards the end of the year.

Okay. You also talked about marketing additional 500,000 square feet of properties, are you expecting any sales this year? Or your expectation is that majority of the sales would be next year?

No, we expect to have a significant, relatively significant number of sales this year. And then next year, the big sale candidate would be the Walgreens and we've discussed that we hope will sell in the very beginning of 2024. But in 2023, we have a number of properties currently in the market. And we expect to sell a relatively significant number of those during the course of the year.

Thank you. We reached the end of our question-and-answer session. I'd like to turn the floor back over to Paul for any further closing comments.

Thank you all for joining us today. And we look forward to updating everyone with our first quarter call in May. Thank you.

Thank you. That does conclude today's teleconference and webcast. You can disconnect your line at this time. And have a wonderful day. We thank you for your participation today.