PHOENIX - Orion Office REIT Inc. announced today that it has taken steps to extend the maturity of mortgage notes associated with its joint venture and to provide additional funding for leasing costs. The real estate investment trust, which specializes in office properties, has a joint venture with an affiliate of Arch Street Capital Partners (WA:CPAP), LLC.
The mortgage notes, which were originally set to mature today, have been extended by one year to November 27, 2025. This was made possible by a $3.4 million principal repayment by the joint venture to meet the required loan-to-value conditions. The interest rate on these notes will increase to a 2.60% annual spread over SOFR, with a cap at 5.50% per annum for the extension term.
Orion Office REIT also provided a $1.4 million member loan to the joint venture to assist with the partial repayment of the mortgage notes. This loan carries a 15% annual interest rate and is non-recourse and unsecured. Payment of interest and principal on this member loan will come from excess cash flows of the joint venture.
Furthermore, the company has committed to an additional member loan of up to $13.5 million to support estimated leasing costs associated with a lease extension currently under negotiation for one of the properties in the joint venture's portfolio.
InvestingPro Insights
Recent InvestingPro data provides additional context to Orion Office REIT's financial maneuvers. The company's market capitalization stands at $234.42 million, with a price-to-book ratio of 0.29 as of the last twelve months ending Q3 2024. This low price-to-book ratio aligns with one of the InvestingPro Tips, which notes that the company is "Trading at a low Price / Book multiple."
The REIT's dividend yield is notably high at 9.55%, reflecting the company's commitment to shareholder returns despite challenging market conditions. This is consistent with the InvestingPro Tip that Orion "Pays a significant dividend to shareholders."
However, it's important to note that Orion's revenue growth has been negative, with a -15.59% decline in the last twelve months ending Q3 2024. This trend is reflected in the InvestingPro Tip stating that "Analysts anticipate sales decline in the current year."
These insights, along with 8 additional tips available on InvestingPro, provide a more comprehensive view of Orion Office REIT's financial position as it navigates debt extensions and joint venture investments.
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