Net Lease Office Properties (NLOP) stock intrinsic value fair value estimate & owner earnings analysis

Net Lease Office Properties (NLOP) was spun out of W. P. Carey in November 2023 with a large portfolio of net-leased office buildings. Since then it has been selling nearly everything. Total assets fell from $805 million at the end of 2024 to $201 million at June 30, 2026, and the proceeds have gone out to shareholders as special distributions ($3.10 in September 2025, $4.10 in December 2025, $5.10 paid January 2026, $6.75 paid February 2026, and roughly $3.30 per share in April 2026). The company's filings say it may sell all or substantially all remaining properties, possibly under a plan of liquidation, without a shareholder vote. We therefore value it as a business that is being wound down: what the remaining buildings will fetch, plus the modest rent they earn until sold, less debt. Why past earnings do not describe the business today. Our owner-earnings measure (operating cash flow, less working-capital swings, stock compensation and maintenance capital spending) was about $4.60 per share in 2025 and $4.56 per share in 2023. But that was the old portfolio. The Houston KBR building alone was 37% of annualized rent and was sold in January 2026 for $66.0 million, together with the Venice, California property ($39.6 million) and two smaller sales. Second-quarter 2026 revenue was $6.4 million, or about $25 million a year, against $119 million in 2025. After building operating costs (about $2.7 million a quarter) and corporate overhead (about $1.9 million a quarter, roughly $7.6 million a year), the remaining portfolio produces something like $6 to 7 million a year of cash before interest, about $0.45 per share. We did not use the historical series as the earnings level, since doing so would count income from buildings that have been sold. Other accounting points: 2024 operating cash flow included a one-time $10.3 million of lease-sale proceeds, which we removed; large non-cash impairments ($141 million in 2025, $78 million in 2024, $63 million plus a $62 million goodwill write-off in 2023) are correctly excluded from cash earnings but are the evidence for the downside case, since they show that office values have repeatedly been marked down. What the remaining assets are worth. At June 30, 2026, the remaining real estate was carried at about $167 million (cost $268 million less $100 million of depreciation). Cash was $23.7 million. Debt was a single $21.9 million non-recourse mortgage at about 5.2%, scheduled to mature in 2026; that is close to our 6% assumption, so we made no adjustment, and it can be repaid from cash on hand. Outside owners hold about $3.9 million of equity in subsidiaries, which we deduct. Book value attributable to shareholders was $163.8 million, or about $11.06 per share on 14.81 million shares. The remaining portfolio's operating profit of roughly $14 million a year against $167 million of carrying value is about an 8.6% yield, in line with what secondary office is generally priced at, so book value is a reasonable but not conservative starting point. Base case, about $9.65 per share. The remaining buildings are sold over roughly two to three years at about 90% of carrying value (net of sales costs), discounted at 6%. Evidence: the company sold about $310 million of property in 2024, $192 million in 2025 and $118 million in January and February 2026, so it has a demonstrated ability to sell; but in the second quarter of 2026 it still took another $7.1 million of impairments on the remaining assets, and the remaining leases are short (weighted average about four years, with the Intuit lease in Texas, about 2.6 million of annual rent, expiring within about six months of year-end 2025). Rent collected in the meantime, less overhead, adds about $7 million. Business worth about $145 million, plus $23.7 million cash, less $21.9 million debt and $3.9 million minority interest, leaves about $143 million, or $9.65 a share. We did not credit any growth: the company is shrinking and nothing named supports expanding earnings. Bear case, about $6.40 per share. Further markdowns take sale prices to about 70% of carrying value, sales stretch to about three years, and vacancies leave the portfolio roughly break-even after $7.6 million a year of overhead, with about $3 million of wind-down costs. The evidence is the impairment history above, the short lease terms, and the second-quarter 2026 write-down. Business worth about $96 million, plus $23.7 million cash, less $21.9 million debt and $3.9 million minority interest, leaves about $94 million, or $6.40 a share. The mortgage is non-recourse and can be paid from cash, so debt does not threaten the shares directly. Bull case, about $10.75 per share. The remaining properties are sold at full carrying value within about 18 months, as the company has already done with several large assets, and the rent stream continues. That gives about $161 million of business value, and about $159 million, or $10.75 a share, after cash, debt and minority interest. We do not credit prices above carrying value because no named driver supports it. What would make this wrong. Sale prices are the whole story: each 10% change in the sale price of the remaining $167 million moves value by about $1.05 per share. Note that we could only see financial data through June 30, 2026; any distribution declared after that date would reduce these values dollar for dollar. We also could not reconcile the exact remaining rent roll to the 10-K property table after the January and February sales, so run-rate rent is estimated from second-quarter revenue.