EX-99.1 2 nlop2024q2supplementalexh9.htm EX-99.1 Document

Exhibit 99.1



Net Lease Office Properties
Supplemental Financial Information
Second Quarter 2024



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Terms and Definitions

As used in this supplemental package, the terms “Net Lease Office Properties,” “NLOP,” “we,” “us” and “our” include Net Lease Office Properties, its consolidated subsidiaries and its predecessors, unless otherwise indicated. Other terms and definitions are as follows:
REITReal estate investment trust
WPCW. P. Carey Inc., a net-lease REIT (also our “Advisor”)
Spin-OffThe spin-off of 59 office properties owned by WPC into NLOP, a separate publicly-traded REIT, which was completed on November 1, 2023
U.S.United States
ABRContractual minimum annualized base rent
SECSecurities and Exchange Commission
NAREITNational Association of Real Estate Investment Trusts (an industry trade group)
WALTWeighted-average lease term
NLOP Mortgage Loan
Our $335.0 million senior secured mortgage loan
NLOP Mezzanine Loan
Our $120.0 million mezzanine loan facility
NLOP Financing Arrangements
The NLOP Mortgage Loan and NLOP Mezzanine Loan, which are collateralized by the assignment of certain of our previously unencumbered real estate properties
SOFRSecured Overnight Financing Rate

Important Note Regarding Non-GAAP Financial Measures

This supplemental package includes certain “non-GAAP” supplemental measures that are not defined by generally accepted accounting principles (“GAAP”), including funds from operations (“FFO”); adjusted funds from operations (“AFFO”); pro rata cash net operating income (“pro rata cash NOI”); and normalized pro rata cash NOI. FFO is a non-GAAP measure defined by NAREIT. Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP measures are provided within this supplemental package. In addition, refer to the Disclosures Regarding Non-GAAP and Other Metrics section in the Appendix for a description of these non-GAAP financial measures and other metrics.

Amounts may not sum to totals due to rounding.


Net Lease Office Properties
Supplemental Information – Second Quarter 2024
Table of Contents


Net Lease Office Properties
Second Quarter 2024
Summary Metrics
As of or for the three months ended June 30, 2024.
Financial Results
Revenues, including reimbursable costs – consolidated ($000s)$39,029 
Net income attributable to NLOP ($000s)12,451 
Net income attributable to NLOP per diluted share0.84 
Normalized pro rata cash NOI ($000s) (a) (b)
26,025 
AFFO attributable to NLOP ($000s) (a) (b)
17,402 
AFFO attributable to NLOP per diluted share (a) (b)
1.18 
Balance Sheet and Capitalization
Equity market capitalization – based on quarter end share price of $24.62 ($000s)$364,010 
Total consolidated debt ($000s)327,396 
Gross assets ($000s) (c)
1,214,530 
Total consolidated debt to gross assets27.0 %
NLOP Mortgage Loan principal outstanding ($000s) (d)
$131,993 
NLOP Mezzanine Loan principal outstanding ($000s) (d)
89,345 
Advisory Fees and Reimbursements Paid to WPC
Asset management fees (e)
$1,599 
Administrative reimbursements (f)
1,000 
Portfolio (Pro Rata) (b)
ABR (in thousands) (g)
$102,483 
Number of properties47 
Number of tenants50 
Occupancy82.7 %
Weighted-average lease term (in years)5.2 
Leasable square footage (in thousands) (h)
6,905 
ABR from investment grade tenants as a % of total ABR (i)
50.9 %
Dispositions – number of properties sold6 
Dispositions – gross proceeds (in thousands)$192,174 
Subsequent to Quarter End
NLOP Mortgage Loan principal outstanding as of the date of this report ($000s) (j)
73,892 
NLOP Mezzanine Loan principal outstanding as of the date of this report ($000s) (j)
80,916 
Dispositions – number of properties sold1 
Dispositions – gross proceeds (in thousands)$71,500 
________
(a)Normalized pro rata cash NOI and AFFO are non-GAAP measures. See the Disclosures Regarding Non-GAAP and Other Metrics section in the Appendix for a description of our non-GAAP measures and for details on how certain non-GAAP measures are calculated.
(b)Presented on a pro rata basis. See the Disclosures Regarding Non-GAAP and Other Metrics section in the Appendix for a description of pro rata.
(c)Gross assets represent consolidated total assets before accumulated depreciation on buildings and improvements. Gross assets are net of accumulated amortization on in-place lease intangible assets of $148.0 million and above-market rent intangible assets of $24.5 million.
(d)Original principal outstanding for the NLOP Mortgage Loan was $335.0 million. NLOP Mortgage Loan principal outstanding (as a % of original principal) was 39.4% as of June 30, 2024. Original principal outstanding for the NLOP Mezzanine Loan was $120.0 million. NLOP Mezzanine Loan principal outstanding (as a % of original principal) was 74.5% as of June 30, 2024.
(e)Pursuant to certain advisory agreements, our Advisor provides us with strategic management services, including asset management, property disposition support, and various related services. We pay our Advisor an asset management fee that was initially set at an annual amount of $7.5 million and is proportionately reduced each month following the disposition of each portfolio property.
(f)Pursuant to certain advisory agreements, we will reimburse our Advisor a base administrative amount of approximately $4.0 million annually, for certain administrative services, including day-to-day management services, investor relations, accounting, tax, legal, and other administrative matters.
(g)See the Disclosures Regarding Non-GAAP and Other Metrics section in the Appendix for a description of ABR.
(h)Excludes 570,999 of operating square footage for a parking garage at a domestic property.
(i)Percentage of portfolio is based on ABR, as of June 30, 2024. Includes tenants or guarantors with investment grade ratings (31.1%) and subsidiaries of non-guarantor parent companies with investment grade ratings (19.8%). Investment grade refers to an entity with a rating of BBB- or higher from Standard & Poor’s Ratings Services or Baa3 or higher from Moody’s Investors Service. See the Disclosures Regarding Non-GAAP and Other Metrics section in the Appendix for a description of ABR.
(j)NLOP Mortgage Loan principal outstanding (as a % of original principal) was 22.1% as of the date of this report. NLOP Mezzanine Loan principal outstanding (as a % of original principal) was 67.4% as of the date of this report.
 Net Lease Office Properties | 1

Net Lease Office Properties
Second Quarter 2024
Components of Net Asset Value
Dollars in thousands.
Three Months Ended June 30, 2024
Normalized Pro Rata Cash NOI (a) (b)
$26,025 
Balance Sheet – Selected Information
As of June 30, 2024
Assets
Book value of select real estate (c)
$39,974 
Cash and cash equivalents36,078 
Restricted cash, including escrow (d)
44,629 
Other assets, net:
Straight-line rent adjustments$24,258 
Prepaid expenses4,283 
Deferred charges3,385 
Accounts receivable2,656 
Securities and derivatives130 
Taxes receivable76 
Other4,314 
Total other assets, net$39,102 
Liabilities
NLOP Mortgage Loan (e)
$131,993 
NLOP Mezzanine Loan (f)
89,345 
Non-recourse mortgages, net (g)
115,511 
Deferred income taxes3,142 
Dividends payable— 
Accounts payable, accrued expenses and other liabilities:
Accounts payable and accrued expenses$10,857 
Prepaid and deferred rents8,387 
Accrued taxes payable1,329 
Tenant security deposits814 
Operating lease liabilities308 
Other19,113 
Total accounts payable, accrued expenses and other liabilities$40,808 
________
(a)Normalized pro rata cash NOI is a non-GAAP measure. See the Disclosures Regarding Non-GAAP and Other Metrics section in the Appendix for a description of our non-GAAP measures and for details on how they are calculated.
(b)Presented on a pro rata basis. See the Disclosures Regarding Non-GAAP and Other Metrics section in the Appendix for a description of pro rata.
(c)Represents the value of real estate not appropriately captured in normalized pro rata cash NOI, such as vacant assets.
(d)Comprised of approximately $43.4 million related to certain reserve requirements for debt service, capital improvements, and real estate taxes pursuant to the NLOP Mortgage Loan and NLOP Mezzanine Loan. Approximately $1.2 million is related to certain reserve requirements for other loan agreements.
(e)Excludes unamortized discount, net totaling $3.3 million and unamortized deferred financing costs totaling $1.5 million as of June 30, 2024.
(f)Excludes unamortized discount, net totaling $3.2 million and unamortized deferred financing costs totaling $1.4 million as of June 30, 2024.
(g)Excludes unamortized discount, net totaling $0.1 million as of June 30, 2024.
 Net Lease Office Properties | 2

Net Lease Office Properties
Second Quarter 2024
Consolidated Statement of Income
In thousands, except share and per share amounts.
Three Months Ended June 30, 2024
Revenues
Lease revenues$35,149 
Other lease-related income3,880 
39,029 
Operating Expenses
Depreciation and amortization15,122 
Impairment charges — real estate8,222 
Reimbursable tenant costs7,189 
Property expenses, excluding reimbursable tenant costs2,652 
General and administrative (a)
1,880 
Asset management fees (b)
1,599 
36,664 
Other Income and Expenses
Loss on sale of real estate, net37,723 
Interest expense (c)
(27,798)
Other gains and (losses)332 
10,257 
Income before income taxes12,622 
Provision for income taxes(149)
Net Income12,473 
Net income attributable to noncontrolling interests(22)
Net Income Attributable to NLOP$12,451 
Basic Earnings Per Share$0.84 
Diluted Earnings Per Share$0.84 
Weighted-Average Shares Outstanding
Basic14,785,118 
Diluted14,807,960 
________
(a)Includes $1.0 million of administrative reimbursements to our Advisor.
(b)Amount is comprised of fees paid to Advisor for strategic management services, including asset management, property disposition support, and various related services.
(c)Includes $17.0 million of non-cash amortization of deferred financing costs.
 Net Lease Office Properties | 3

Net Lease Office Properties
Second Quarter 2024
FFO and AFFO, Consolidated
In thousands, except share and per share amounts.
Three Months Ended June 30, 2024
Net income attributable to NLOP$12,451 
Adjustments:
Gain on sale of real estate, net(37,723)
Depreciation and amortization of real property15,122 
Impairment charges — real estate8,222 
Proportionate share of adjustments for noncontrolling interests (a)
(51)
Total adjustments(14,430)
FFO (as defined by NAREIT) Attributable to NLOP (b)
(1,979)
Adjustments:
Amortization of deferred financing costs17,028 
Above- and below-market rent intangible lease amortization, net
931 
Other amortization and non-cash items824 
Straight-line and other leasing and financing adjustments733 
Stock-based compensation 75 
Tax benefit — deferred and other(183)
Other (gains) and losses(14)
Proportionate share of adjustments for noncontrolling interests (a)
(13)
Total adjustments19,381 
AFFO Attributable to NLOP (b)
$17,402 
Summary
FFO (as defined by NAREIT) attributable to NLOP (b)
$(1,979)
FFO (as defined by NAREIT) attributable to NLOP per diluted share (b)
$(0.13)
AFFO attributable to NLOP (b)
$17,402 
AFFO attributable to NLOP per diluted share (b)
$1.18 
Diluted weighted-average shares outstanding14,807,960 
________
(a)Adjustments disclosed elsewhere in this reconciliation are on a consolidated basis. This adjustment reflects our FFO or AFFO on a pro rata basis.
(b)FFO and AFFO are non-GAAP measures. See the Disclosures Regarding Non-GAAP and Other Metrics section in the Appendix for a description of our non-GAAP measures.
 Net Lease Office Properties | 4

Net Lease Office Properties
Second Quarter 2024
Consolidated Balance Sheets
In thousands, except share and per share amounts.
June 30, 2024December 31, 2023
Assets
Investments in real estate:
Land, buildings and improvements$904,189 $1,203,991 
Net investments in finance leases— 10,522 
In-place lease intangible assets and other253,192 357,788 
Above-market rent intangible assets40,949 57,954 
Investments in real estate1,198,330 1,630,255 
Accumulated depreciation and amortization(342,376)(458,430)
Assets held for sale, net68,884 — 
Net investments in real estate924,838 1,171,825 
Restricted cash44,629 51,560 
Cash and cash equivalents36,078 16,269 
Other assets, net39,102 65,435 
Total assets$1,044,647 $1,305,089 
Liabilities and Equity
Debt:
NLOP Mortgage Loan, net$127,201 $266,844 
NLOP Mezzanine Loan, net84,788 106,299 
Non-recourse mortgages, net115,407 168,836 
Debt, net327,396 541,979 
Accounts payable, accrued expenses and other liabilities40,808 59,527 
Below-market rent intangible liabilities, net8,661 10,643 
Deferred income taxes3,142 10,450 
Dividends payable— 1,060 
Total liabilities380,007 623,659 
Preferred stock, $0.001 par value, 5,000,000 shares authorized; none issued
— — 
Common stock, $0.001 par value, 45,000,000 shares authorized; 14,785,118 and 14,620,919 shares, respectively, issued and outstanding
15 15 
Additional paid-in capital855,716 855,554 
Distributions in excess of accumulated earnings(158,362)(142,960)
Accumulated other comprehensive loss(37,042)(35,600)
Total shareholders' equity660,327 677,009 
Noncontrolling interests4,313 4,421 
Total equity664,640 681,430 
Total liabilities and equity$1,044,647 $1,305,089 

 Net Lease Office Properties | 5

Net Lease Office Properties
Second Quarter 2024
Capitalization
In thousands, except share and per share amounts. As of June 30, 2024.
Total Enterprise ValueSharesShare PriceMarket Value
Equity
Common equity14,785,118 $24.62 $364,010 
Total Equity Market Capitalization364,010 
Outstanding Balance (a)
Debt
NLOP Mortgage Loan131,993 
NLOP Mezzanine Loan89,345 
Non-recourse mortgages115,511 
Total Debt336,849 
Less: Cash and cash equivalents(36,078)
Net Debt300,771 
Total Enterprise Value$664,781 
________
(a)Excludes unamortized discount, net totaling $6.6 million and unamortized deferred financing costs totaling $2.9 million as of June 30, 2024.
 Net Lease Office Properties | 6

Net Lease Office Properties
Second Quarter 2024
Debt Overview
Dollars in thousands. Pro rata. As of June 30, 2024.
Maturity DateFixed / FloatingInterest Rate
Total Outstanding Balance (a)
% of Total
NLOP Financing Arrangements
NLOP Mortgage Loan (b)
11/9/2025Floating10.3 %$131,993 39.2 %
NLOP Mezzanine Loan (c)
11/9/2028Fixed14.5 %89,345 26.5 %
Other Mortgages (Tenant Listed)
Northrup Grumman Systems Corporation (fka Orbital ATK, Inc.)1/6/2025Fixed4.2 %25,489 7.6 %
Midcontinent Independent Stm Op Inc5/6/2025Fixed4.0 %9,029 2.7 %
Intuit Inc.5/6/2025Fixed4.0 %21,900 6.5 %
Acosta, Inc.8/6/2025Fixed4.4 %9,967 3.0 %
Siemens AS12/15/2025Floating4.8 %41,148 12.2 %
Merative L.P.4/1/2026Fixed5.7 %1,844 0.5 %
North American Lighting, Inc.5/6/2026Fixed6.3 %6,134 1.8 %
Total Debt Outstanding9.4 %$336,849 100.0 %
________
(a)Excludes unamortized discount, net totaling $6.6 million and unamortized deferred financing costs totaling $2.9 million as of June 30, 2024.
(b)The NLOP Mortgage Loan bears interest at an annual rate of one-month forward-looking term rate based on SOFR, subject to a floor of 3.85%, plus 5.0%. In addition, we entered into an interest rate cap agreement that limits our SOFR rate exposure at 5.35% under the terms set forth under the NLOP Mortgage Loan. The NLOP Mortgage Loan is subject to two separate one-year extension options. In July and August 2024, we repaid $58.1 million of outstanding principal on the NLOP Mortgage Loan using proceeds from a disposition and lease terminations, as well as excess cash from operations. See the Summary Metrics section for the NLOP Mortgage Loan principal outstanding following these repayments.
(c)The NLOP Mezzanine Loan bears interest at an annual rate of 14.5% (10.0% of which is required to be paid current on a monthly basis, and 4.5% of which is a payment-in-kind accrual, on a quarterly basis). In July and August 2024, we repaid $8.4 million of outstanding principal on the NLOP Mezzanine Loan using proceeds from a disposition and lease terminations, as well as excess cash from operations. See the Summary Metrics section for the NLOP Mezzanine Loan principal outstanding following these repayments.
 Net Lease Office Properties | 7

Net Lease Office Properties
Second Quarter 2024
Dispositions
Dollars in thousands. Pro rata.
Tenant / Lease GuarantorProperty Location(s)Gross Sale PriceABRClosing DateGross Square Footage
4Q23
Raytheon CompanyTucson, AZ$24,575 $1,978 Dec-23143,650 
Carhartt, Inc.Dearborn, MI9,806 748 Dec-2358,722 
BCBSM, Inc.Eagan, MN2,500 298 Dec-2329,916 
AVL Michigan Holding CorporationPlymouth, MI6,200 575 Dec-2370,000 
4Q23 Total43,081 3,599 302,288 
1Q24
Undisclosed – UK insurance company (a)
Newport, United Kingdom10,497 1,761 Jan-2480,664 
Total E&P Norge AS (a)
Stavanger, Norway33,072 5,185 Mar-24275,725 
1Q24 Total43,569 6,946 356,389 
2Q24
Exelon Generation Company, LLC (b)
Warrenville, IL19,830 2,935 Apr-24146,745 
Vacant (formerly AVT Technology Solutions LLC) (b)
Tempe, AZ13,160 — Apr-24132,070 
FedEx CorporationCollierville, TN62,500 5,491 Apr-24390,380 
DMG MORI SEIKI U.S.A., INC. Hoffman Estates, IL35,984 2,458 Apr-24104,598 
BCBSM, Inc. (2 properties)Eagan, MN60,700 4,663 Jun-24347,472 
2Q24 Total192,174 15,547 1,121,265 
Total Dispositions (c)
$278,824 $26,092 1,779,942 
________
(a)Amount reflects the applicable exchange rate on the date of the transaction.
(b)We transferred ownership of these properties and the related non-recourse mortgage loans to the respective mortgage lenders. Gross proceeds from these dispositions represent the mortgage principal outstanding on the respective dates of transfer.
(c)In August 2024, we disposed of one property, as described in the Summary Metrics section.

 Net Lease Office Properties | 8

Net Lease Office Properties
Second Quarter 2024
Capital Expenditures and Leasing Activity
Capital Expenditures
In thousands. For the three months ended June 30, 2024.
Tenant Improvements and Leasing Costs
Tenant Improvements (Tenant Listed)
CVS Health Corporation$140 
140 
Leasing Costs (Tenant Listed)
S&ME, Inc.305 
Tenant Improvements and Leasing Costs445 
Maintenance Capital Expenditures (Tenant Listed)
Pharmaceutical Product Development, LLC942 
KBR, Inc.382 
Xileh Holding Inc.103 
Other31 
1,458 
Total: Tenant Improvements and Leasing Costs, and Maintenance Capital Expenditures$1,903 

Leasing Activity
Dollars in thousands. For the three months ended June 30, 2024, except ABR. Pro rata.
Lease Renewals and Extensions (a)
Expected Tenant Improvements ($000s)Leasing Commissions ($000s)
ABR
TenantLocationSquare FeetPrior Lease ($000s)
New Lease ($000s) (b)
Rent RecaptureIncremental Lease Term
Northrup Grumman Systems Corporation (fka Orbital ATK, Inc.)Plymouth, MN191,336 $3,821 $2,679 70.1 %$— $— 5.0 years
Caremark RX, L.L.C. (c)
Chandler, AZ65,860 1,839 1,645 89.5 %— 415 5.4 years
Charter Communications Operating, LLCBridgeton, MO78,080 820 859 104.8 %— — 5.0 years
S&ME, Inc.Raleigh, NC31,120 430 545 126.7 %1,556 305 12.4 years
Total / Weighted Average (d)
366,396 $6,910 $5,728 82.9 %$1,556 $720 5.8 years
_______
(a)Excludes lease extensions for a period of one year or less.
(b)New lease amounts are based on in-place rents at time of lease commencement and exclude any free rent periods.
(c)Reflects a reduction in square footage leased by the tenant.
(d)Weighted average refers to the incremental lease term.
 Net Lease Office Properties | 9

Net Lease Office Properties
Second Quarter 2024
Top Ten Tenants
Dollars in thousands. Pro rata. As of June 30, 2024.
Tenant / Lease GuarantorState / CountryABRABR %
Square Footage (a)
Number of PropertiesWeighted-Average Lease Term (Years)
KBR, Inc.Texas$20,156 19.7 %913,713 1 6.0 
JPMorgan Chase Bank, N.A.Florida, Texas9,069 8.8 %666,869 3 4.9 
Siemens AS (b)
Norway4,476 4.4 %165,905 1 1.5 
CVS Health Corporation (c)
Arizona4,300 4.2 %354,888 1 15.1 
Pharmaceutical Product Development, LLCNorth Carolina3,983 3.9 %219,812 1 9.4 
Omnicom Group, Inc.California3,961 3.9 %120,000 1 4.3 
Northrup Grumman Systems Corporation (fka Orbital ATK, Inc.)Minnesota3,821 3.7 %191,336 1 5.4 
E.On UK PLC (b)
United Kingdom3,604 3.5 %217,339 1 1.1 
R.R. Donnelley & Sons CompanyIllinois3,327 3.2 %167,215 1 3.2 
Board of Regents, State of IowaIowa3,254 3.2 %191,700 1 6.3 
Total (d)
$59,951 58.5 %3,208,777 12 5.8 
________
(a)Excludes 570,999 of operating square footage for a garage at a domestic property.
(b)ABR amounts are subject to fluctuations in foreign currency exchange rates.
(c)This property was sold in August 2024.
(d)See the Disclosures Regarding Non-GAAP and Other Metrics section in the Appendix for a description of pro rata.
 Net Lease Office Properties | 10

Net Lease Office Properties
Second Quarter 2024
Lease Expirations
Dollars in thousands. Pro rata. As of June 30, 2024.
Year of Lease Expiration (a)
Number of Leases ExpiringNumber of Tenants with Leases ExpiringABRABR %
Square Footage (b)
Square Footage %
Remaining 20243 2 $543 0.5 %32,120 0.5 %
202512 12 16,467 16.1 %780,951 11.3 %
20267 7 6,486 6.3 %428,038 6.2 %
20277 6 8,713 8.5 %499,571 7.2 %
20287 6 13,903 13.6 %627,627 9.1 %
20296 5 7,756 7.6 %423,873 6.1 %
20306 5 31,977 31.2 %1,747,455 25.3 %
20311 1 615 0.6 %50,600 0.7 %
20322 2 3,648 3.5 %257,008 3.7 %
20331 1 3,983 3.9 %219,812 3.2 %
20352 2 2,951 2.9 %201,229 2.9 %
20372 2 1,141 1.1 %86,610 1.3 %
20391 1 4,300 4.2 %354,888 5.2 %
Vacant— — — — %1,195,376 17.3 %
Total (c)
57 $102,483 100.0 %6,905,158 100.0 %

chart-96942cb589e24478b18a.jpg
________
(a)Assumes tenants do not exercise any renewal options or purchase options.
(b)Excludes 570,999 of operating square footage for a garage at a domestic property.
(c)See the Disclosures Regarding Non-GAAP and Other Metrics section in the Appendix for a description of pro rata.
 Net Lease Office Properties | 11

Net Lease Office Properties
Second Quarter 2024
Property List
Dollars in thousands. Pro rata. As of June 30, 2024.

U.S. Assets:
Encumbered Status
#Primary TenantIndustry
Credit (a)
CityState
Square Footage (b)
ABRRent Increase TypeDate of Next Increase
WALT (c)
NLOP Mortgage LoanOther Mortgages
1
KBR, Inc. (d) (e)
Construction & EngineeringNon-IGHoustonTexas1,064,788$21,294Fixed: One-time 7.78%Jan-275.9
✓
$—
2JPMorgan Chase Bank, N.A.Diversified BanksIGFort WorthTexas386,154$4,755CPI: 0.0% Floor / 2.0% CapMar-255.7
✓
$—
3
CVS Health Corporation (sold on 8/7/24) (f) (g)
Health Care ServicesIGScottsdaleArizona354,888$4,300Fixed: 2.00% annually
Jul-25 (g)
15.1
✓
$—
4Pharmaceutical Product Development, LLCPharmaceuticalsIGMorrisvilleNorth Carolina219,812$3,983Fixed: 2.00% annuallyOct-249.4
✓
$—
5Omnicom Group, Inc.AdvertisingIGPlaya VistaCalifornia120,000$3,961NoneN/A4.3
✓
$—
6Northrup Grumman Systems Corporation (fka Orbital ATK, Inc.)Aerospace & DefenseIGPlymouthMinnesota191,336$3,821Fixed: Rent reset to marketDec-245.4$25,489
7R.R. Donnelley & Sons CompanyCommercial PrintingNon-IGWarrenvilleIllinois167,215$3,327Fixed: 2.00% annuallySep-243.2✓$—
8
Board of Regents, State of Iowa (h)
Government Related ServicesIGCoralvilleIowa191,700$3,254CPI: 0.0% Floor / No CapNov-256.3$—
9
Bankers Financial Corporation (d) (e) (i)
Property & Casualty InsuranceNon-IGSt. PetersburgFlorida167,581$3,150Fixed: 2.50% annuallyAug-244.1✓$—
10JPMorgan Chase Bank, N.A.Diversified BanksIGTampaFlorida176,150$2,993CPI: 0.0% Floor / 2.0% CapMar-255.7✓$—
11Google, LLCInternet Software & ServicesIGVeniceCalifornia67,681$2,930Fixed: 3.00% annuallyJan-251.3$—
12
ICU MEDICAL, INC. (d) (j)
Health Care SuppliesNon-IGPlymouthMinnesota182,250$2,840Fixed: 3.25% annuallyFeb-253.2✓$—
13Intuit Inc.Internet Software & ServicesIGPlanoTexas166,033$2,577Fixed: One-time $2.00/SF in '21N/A2.0$21,900
14Veritas Bermuda, LTDSystems SoftwareNon-IGRosevilleMinnesota136,125$2,211Fixed: 2.00% annuallyDec-248.4✓$—
15Cenlar FSBRegional BanksNon-IGYardleyPennsylvania105,584$2,053Fixed: 2.70% annuallyJan-254.0✓$—
16iHeartCommunications, Inc.BroadcastingNon-IGSan AntonioTexas120,147$2,010Fixed: 2.00% annuallyFeb-2510.6✓$—
17Arbella Service Company, Inc.Property & Casualty InsuranceIGQuincyMassachusetts132,160$1,850Fixed: One-time $1.00/SF in '22N/A2.9✓$—
18
Cofinity, Inc./Aetna Life Insurance Co. (d) (e)
Multi-line InsuranceIGSouthfieldMichigan94,453$1,833Fixed: One-time 6.90% in '23N/A0.6✓$—
19ICF Consulting Group, Inc.IT Consulting & Other ServicesNon-IGMartinsvilleVirginia93,333$1,785CPI: 0.0% Floor / No CapJan-252.6✓$—
20Safelite Group, Inc.Specialized Consumer ServicesNon-IGRio RanchoNew Mexico94,649$1,500Fixed: 2.00% annuallyJan-254.9✓$—
21Acosta, Inc.AdvertisingNon-IGJacksonvilleFlorida88,062$1,497Fixed: $0.50/SF annuallyJul-243.1$9,967
22Master Lock Company, LLCBuilding ProductsNon-IGOak CreekWisconsin120,883$1,437Fixed: 2.00% annuallyJun-257.9✓$—
 Net Lease Office Properties | 12

23
JPMorgan Chase Bank, N.A. (d) (e)
Diversified BanksIGTampaFlorida135,733$1,387CPI: 0.0% Floor / 2.0% CapN/A0.7✓$—
24Midcontinent Independent Stm Op Inc.Electric UtilitiesIGEaganMinnesota60,463$1,133Fixed: $0.25/SF annuallyMar-251.7$9,029
25Emerson Electric Co.Industrial MachineryIGHoustonTexas52,144$1,082Fixed: $0.50/SF annuallyNov-241.3✓$—
26North American Lighting, Inc.Auto Parts & EquipmentNon-IGFarmington HillsMichigan75,286$1,058Fixed: 2.50% annuallyApr-251.7$6,134
27Radiate Holdings, L.P.Cable & SatelliteNon-IGSan MarcosTexas47,000$1,043CPI: 0.0% Floor / 3.0% CapAug-244.2$—
28Arcfield Acquisition CorporationAerospace & DefenseNon-IGKing of PrussiaPennsylvania88,578$1,000Fixed: One-time 17.50% in '23N/A2.1✓$—
29
Caremark RX, L.L.C. (d) (e)
Health Care ServicesIGChandlerArizona183,000$982Fixed: 2.00% annuallyJun-255.3✓$—
30Merative L.P.IT Consulting & Other ServicesNon-IGHartlandWisconsin81,082$940CPI: 0.0% Floor / No CapDec-2411.4$1,844
31
Pioneer Credit Recovery, Inc. (d) (k)
Diversified Support ServicesNon-IGMoorestownNew Jersey65,567$924Fixed: 2.50% annuallyN/A0.6✓$—
32Charter Communications Operating, LLCCable & SatelliteNon-IGBridgetonMissouri78,080$820Fixed: $0.50/SF annuallyApr-255.7✓$—
33Xileh Holding Inc.Multi-Sector HoldingsIGAuburn HillsMichigan55,490$711Fixed: 2.50% annuallyJan-2513.5✓$—
34Undisclosed – multi-national provider of industrial gasesIndustrial GasesIGHoustonTexas49,821$617Fixed: 2.00% annuallyJan-251.5✓$—
35APCO Holdings, Inc.Property & Casualty InsuranceNon-IGNorcrossGeorgia50,600$615Fixed: 2.50% annuallyMar-256.7✓$—
36Radiate Holdings, L.P.Cable & SatelliteNon-IGWacoTexas30,699$459CPI: 0.0% Floor / 3.0% CapAug-244.2$—
37
S&ME, Inc. (l)
Environmental & Facilities ServicesNon-IGRaleighNorth Carolina31,120$430Fixed: 2.75% annuallyMar-2512.7✓$—
38Radiate Holdings, L.P.Cable & SatelliteNon-IGCorpus ChristiTexas20,717$344CPI: 0.0% Floor / 3.0% CapAug-244.2$—
39Radiate Holdings, L.P.Cable & SatelliteNon-IGOdessaTexas21,193$230CPI: 0.0% Floor / 3.0% CapAug-244.2$—
40Radiate Holdings, L.P.Cable & SatelliteNon-IGSan MarcosTexas14,400$205CPI: 0.0% Floor / 3.0% CapAug-244.2✓$—
41
Vacant (formerly BCBSM, Inc.) (m)
N/AN/AEaganMinnesota442,542$0N/AN/A0.0✓$—
42
Vacant (formerly BCBSM, Inc.) (m)
N/AN/AEaganMinnesota227,666$0N/AN/A0.0
✓
$—
43
Vacant (formerly McKesson Corporation) (m)
N/AN/AThe WoodlandsTexas204,063$0N/AN/A0.0
✓
$—
44
Vacant (formerly BCBSM, Inc.) (m)
N/AN/AEaganMinnesota12,286$0N/AN/A0.0✓$—
U.S. Total (n)
6,468,514$93,3415.5$74,363
 Net Lease Office Properties | 13

European Assets:
Encumbered Status
#Primary TenantIndustry
Credit (a)
CityCountrySquare FootageABRRent Increase TypeDate of Next Increase
WALT (c)
NLOP Mortgage LoanOther Mortgages
1Siemens ASIndustrial ConglomeratesIGOsloNorway165,905$4,476CPI: 0.0% Floor / No CapJan-251.5$41,148
2E.On UK PLCInternet RetailIGHoughton le SpringUnited Kingdom217,339$3,604CPI: 2.0% Floor / 4.0% CapN/A1.1$—
3Nokia CorporationCommunications EquipmentIGKrakowPoland53,400$1,062CPI: 0.0% Floor / No CapSep-245.2$—
European Total (n)
436,644$9,1421.7$41,148
________
✓ Indicates an asset that is in the NLOP Financing Arrangements collateral pool.
_    Indicates an asset that was disposed of in August 2024, as described in the Summary Metrics section.
(a)“IG” refers to investment grade rated tenants.
(b)Excludes 570,999 of operating square footage for a parking garage associated with the KBR, Inc. property in Houston, Texas.
(c)Assumes parties do not exercise any renewal or purchase options pursuant to their applicable leases.
(d)Denotes multi-tenant property. Primary tenant generating largest percentage of ABR shown. Industry, credit, rent increase type and next rent increase are for primary tenant.
(e)Denotes leased property that is not 100% occupied.
(f)This property was sold in August 2024, as described in the Summary Metrics section. ABR was reset to $4.25 million prior to the sale.
(g)Fixed rent increase structure with 2.00% annual bumps commenced upon completion of a renovation in July 2024 (prior to the sale in August 2024).
(h)We own a 90% controlling interest in this consolidated property.
(i)In July 2024, the tenant exercised its early lease termination option, and the lease will expire on July 31, 2025 (previous lease expiration date was July 31, 2028).
(j)In July 2024, the tenant exercised its early lease termination option, and the lease will expire on July 31, 2025 (previous lease expiration date was January 31, 2028).
(k)In July 2024, we entered into a lease amendment with the primary tenant and the lease expiration was extended from December 31, 2024 to June 30, 2026. The date of the next 2.50% annual rent increase is January 1, 2025.
(l)In connection with a lease amendment in April 2024, there is a one-time rent bump to $544,600 commencing October 1, 2024, followed by fixed annual rent escalations of 2.75%.
(m)Denotes property that is vacant as of the date of this report.
(n)See the Disclosures Regarding Non-GAAP and Other Metrics section in the Appendix for a description of pro rata.
 Net Lease Office Properties | 14





Net Lease Office Properties
Appendix
Second Quarter 2024



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 Net Lease Office Properties | 15

Net Lease Office Properties
Second Quarter 2024
Normalized Pro Rata Cash NOI
In thousands.
Three Months Ended June 30, 2024
Consolidated Lease Revenues and Other
Total lease revenues – as reported$35,149 
Parking garage revenues (a)
477 
Less: Consolidated Reimbursable and Non-Reimbursable Property Expenses
Reimbursable property expenses – as reported7,189 
Non-reimbursable property expenses – as reported2,652 
25,785 
Adjustments for Pro Rata Ownership of Real Estate Joint Ventures:
Less: Pro rata share of NOI attributable to noncontrolling interests(90)
(90)
25,695 
Adjustments for Pro Rata Non-Cash Items:
Add: Above- and below-market rent intangible lease amortization931 
Less: Straight-line and other leasing and financing adjustments733 
Add: Other non-cash items103 
1,767 
Pro Rata Cash NOI (b)
27,462 
Adjustment to normalize for intra-period dispositions (c)
(1,437)
Normalized Pro Rata Cash NOI (b)
$26,025 
 Net Lease Office Properties | 16

Net Lease Office Properties
Second Quarter 2024

The following table presents a reconciliation from Net loss attributable to NLOP to Normalized pro rata cash NOI:
Three Months Ended June 30, 2024
Net Income Attributable to NLOP
Net income attributable to NLOP – as reported$12,451 
Adjustments for Consolidated Operating Expenses
Add: Operating expenses – as reported36,664 
Less: Property expenses, excluding reimbursable tenant costs – as reported(2,652)
34,012 
Adjustments for Other Consolidated Revenues and Expenses:
Less: Other lease-related income (excluding parking garage revenues)(3,403)
Less: Reimbursable property expenses – as reported(7,189)
Add: Other income and (expenses) – as reported(10,257)
Add: Provision for income taxes – as reported149 
(20,700)
Other Adjustments:
Adjustment to normalize for intra-period dispositions (c)
(1,437)
Add: Above- and below-market rent intangible lease amortization931 
Less: Straight-line and other leasing and financing adjustments733 
Add: Property expenses, excluding reimbursable tenant costs, non-cash104 
Add: Adjustments for pro rata ownership(69)
262 
Normalized Pro Rata Cash NOI (b)
$26,025 
________
(a)Amount is comprised of revenues from a parking garage at a domestic property and is included in Other lease-related income on our consolidated income statements.
(b)Pro rata cash NOI and normalized pro rata cash NOI are non-GAAP measures. See the Disclosures Regarding Non-GAAP and Other Metrics section that follows for a description of our non-GAAP measures and for details on how pro rata cash NOI and normalized pro rata cash NOI are calculated.
(c)For properties disposed of during the period, the adjustment eliminates our pro rata share of cash NOI for the period.
 Net Lease Office Properties | 17

Net Lease Office Properties
Second Quarter 2024
Disclosures Regarding Non-GAAP and Other Metrics

Non-GAAP Financial Disclosures
FFO and AFFO
Due to certain unique operating characteristics of real estate companies, as discussed below, NAREIT, an industry trade group, has promulgated a non-GAAP measure known as FFO, which we believe to be an appropriate supplemental measure, when used in addition to and in conjunction with results presented in accordance with GAAP, to reflect the operating performance of a REIT. The use of FFO is recommended by the REIT industry as a supplemental non-GAAP measure. FFO is not equivalent to, nor a substitute for, net income or loss as determined under GAAP.
We define FFO, a non-GAAP measure, consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT, as restated in December 2018. The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding gains or losses from the sale of certain real estate, impairment charges on real estate or other assets incidental to the company’s main business, gains or losses on changes in control of interests in real estate and depreciation and amortization from real estate assets; and after adjustments for unconsolidated partnerships and jointly owned investments. Adjustments for unconsolidated partnerships and jointly owned investments are calculated to reflect FFO on the same basis.
We also modify the NAREIT computation of FFO to adjust GAAP net income for certain non-cash charges, such as amortization of real estate-related intangibles, deferred income tax benefits and expenses, straight-line rent and related reserves, other non-cash rent adjustments, non-cash allowance for credit losses on finance leases, stock-based compensation, non-cash environmental accretion expense, amortization of discounts and premiums on debt and amortization of deferred financing costs. Our assessment of our operations is focused on long-term sustainability and not on such non-cash items, which may cause short-term fluctuations in net income but have no impact on cash flows. Additionally, we exclude non-core income and expenses, such as gains or losses from extinguishment of debt, merger and acquisition expenses, and spin-off expenses. We also exclude realized and unrealized gains/losses on foreign currency exchange rate movements (other than those realized on the settlement of foreign currency derivatives), which are not considered fundamental attributes of our business plan and do not affect our overall long-term operating performance. We refer to our modified definition of FFO as AFFO. We exclude these items from GAAP net income to arrive at AFFO as they are not the primary drivers in our decision-making process and excluding these items provides investors a view of our portfolio performance over time and makes it more comparable to other REITs that are currently not engaged in acquisitions, mergers and restructuring, which are not part of our normal business operations. AFFO also reflects adjustments for jointly owned investments. We use AFFO as one measure of our operating performance when we formulate corporate goals, evaluate the effectiveness of our strategies and determine executive compensation.
We believe that AFFO is a useful supplemental measure for investors to consider as we believe it will help them to better assess the sustainability of our operating performance without the potentially distorting impact of these short-term fluctuations. However, there are limits on the usefulness of AFFO to investors. For example, impairment charges and unrealized foreign currency exchange rate losses that we exclude may become actual realized losses upon the ultimate disposition of the properties in the form of lower cash proceeds or other considerations. We use our FFO and AFFO measures as supplemental financial measures of operating performance. We do not use our FFO and AFFO measures as, nor should they be considered to be, alternatives to net income computed under GAAP, or as alternatives to net cash provided by operating activities computed under GAAP, or as indicators of our ability to fund our cash needs.
Pro Rata Cash NOI
Cash net operating income (“cash NOI”) is a non-GAAP financial measure that is intended to reflect the performance of our properties. We define cash NOI as cash rents from our properties less non-reimbursable property expenses. Cash NOI excludes amortization of intangibles and straight-line rent adjustments that are included in GAAP lease revenues. We present cash NOI on a pro rata basis (“pro rata cash NOI”) to account for our share of income related to noncontrolling interests. We believe that pro rata cash NOI is a helpful measure that both investors and management can use to evaluate the financial performance of our properties and it allows for comparison of our operating performance between periods and to other REITs. Pro rata cash NOI should not be considered as an alternative to net income as an indication of our financial performance or to cash flows as a measure of liquidity or our ability to fund all needs. The method by which we calculate and present cash NOI and/or pro rata cash NOI may not be directly comparable to the way other REITs present such metrics.
Normalized Pro Rata Cash NOI
Normalized pro rata cash NOI is pro rata cash NOI as defined above adjusted primarily to exclude our pro rata share of cash NOI from properties disposed of during the most recent quarter. We believe this measure provides a helpful representation of our net operating income from our in-place leased properties.
 Net Lease Office Properties | 18

Net Lease Office Properties
Second Quarter 2024

Other Metrics
Pro Rata Metrics
This supplemental package contains certain metrics prepared on a pro rata basis. We refer to these metrics as pro rata metrics. We have one investment in which our economic ownership is less than 100%. On a full consolidation basis, we report 100% of the assets, liabilities, revenues and expenses of this investment that is deemed to be under our control, even though our ownership is less than 100%. On a pro rata basis, we generally present our proportionate share, based on our economic ownership of this jointly owned investment, of the assets, liabilities, revenues and expenses of this investment. Multiplying our jointly owned investment’s financial statement line items by our percentage ownership and adding or subtracting those amounts from our totals, as applicable, may not accurately depict the legal and economic implications of holding an ownership interest of less than 100% in our jointly owned investment.
ABR
ABR represents contractual minimum annualized base rent for our properties and reflects exchange rates as of June 30, 2024. If there is a rent abatement, we annualize the first monthly contractual base rent following the free rent period. ABR is presented on a pro rata basis.
 Net Lease Office Properties | 19