Orion Properties Inc. (ONL) stock intrinsic value fair value estimate & owner earnings analysis

Orion Properties (ONL) owns about 6.7 million square feet of mostly single-tenant suburban office buildings, spun off from Realty Income in November 2021. The largest tenant is the US Government (about 18% of base rent). Occupancy was 78.7% at year-end 2025 with a 5.7-year average remaining lease term. We value it on the cash the business produces after keeping its buildings leased, then subtract what it owes. What has happened to the earning power. Revenue fell from $208 million (2022) to $195 million (2023), $165 million (2024) and $148 million (2025), and the first half of 2026 ran about 6% lower again, as tenants left and large blocks of space went vacant. Cash from operations fell from $114 million (2022) to $89 million, $54 million and $24 million (2025). At the same time the cost of keeping buildings leased rose: tenant improvements and leasing commissions were $18 million in 2023, $23 million in 2024 and $52 million in 2025, and the company had $51 million of further leasing commitments outstanding at the end of 2025. We treat all of that spending as a cost of staying in business, because revenue is shrinking and none of it can be called growth spending. Our cash-flow measure (after stock compensation and leasing spending) was about $1.62 a share in 2022, $1.16 in 2023, $0.51 in 2024 and negative $0.56 in 2025. Before paying lenders, the business generated roughly $2.06, $1.61, $1.03 and about zero per share in those years. Whichever way it is measured, the buildings are now generating almost no surplus cash after they are kept leased, and interest of about $28 million a year exceeds what is left. The company has also written down its properties by $33 million (2023), $48 million (2024) and $99 million (2025). Why the valuation rests on the buildings, not on a cash-flow multiple. We did not set the starting level from the strong 2022 and 2023 years, because those reflect a rent roll roughly 25% larger than today's. Base rent expiring is 10% of the total in 2026, 13% in 2027 and 23% in 2028, so more shrinkage is contracted. We credit no leasing recovery, no market rebound and no growth. What demonstrably persists is the real estate itself: the company sold 10 properties for $80.7 million in 2025 and another roughly $94 million in the first half of 2026 (including a $28.8 million gain), at or above the values it had on its books after write-downs. Each case therefore values (1) a modest cash flow while properties are held and (2) sale of the portfolio at the demonstrated pace of roughly $100 million a year, at a stated percentage of the June 2026 book value of $928 million, less 2% selling costs, all discounted at 6%. What it owes. Debt was about $437 million at June 30, 2026: a $355 million fixed-rate mortgage loan (about 5%) on 19 properties that matures in February 2029 (extendable to August 2030), an $18 million San Ramon mortgage, and a revolver of about $100 million (about 7%) that matures in February 2028 (extendable to February 2029). This is about $7.51 per share. The rate on the mortgage is a little below and the revolver a little above what we assume, and the two roughly offset, so we subtract the face amount. Cash of $17 million is treated as needed to run the business; a further $47 million of restricted cash is earmarked for tenant improvements already committed and is not counted. We also do not count the Arch Street joint venture: its debt is in payment default and the company has written its investment down to zero, and we place no value on it. Base case: the business is worth about $11.31 a share, it owes $7.51, leaving about $3.79 a share. It assumes properties are sold over about ten years at 88% of today's book value (the 2023-2025 write-downs averaged about 5% of book a year, so more price erosion is credited before sales complete, offset by recent sales at or above book), with cash flow of about $10 million a year that shrinks as properties are sold. Year one assumes no improvement: owner-cash-flow growth was sharply negative in 2025 (from $0.51 to negative $0.56 per share) and we assume none in year one. Bear case: the business is worth about $8.48 a share, it owes $7.51, leaving about $0.97 a share. The lenders' 2028 and 2029 maturities and the continuing write-downs (2025 alone was about 9% of book value) force faster sales, about $150 million a year, at only 70% of book, while the properties consume about $15 million a year of cash after leasing costs. Shareholders would keep only a thin slice; if prices were lower still, the debt could absorb nearly everything. Bull case: the business is worth about $13.76 a share, it owes $7.51, leaving about $6.25 a share. Sales continue at about $100 million a year at 100% of book value (recent sales cleared at gains, including the $28.8 million gain in early 2026), and the properties produce about $25 million a year, close to the 2024-2025 average, as leasing spending returns to the 2024 level. We give no credit for lease-up of vacant buildings or for the company's plan to shift to specialized-use assets, because it has only just begun: one small $15 million Illinois purchase, leased to a single tenant through 2036, is the only evidence so far. What would make this wrong. The main assumption is that the buildings can be sold near book value. The 2025 record is mixed: $7.1 million of gains on sold properties, but $99 million of write-downs, most of it on properties held for sale. Lenders might also decline to extend the 2028-2029 maturities. On the other hand, the results are highly sensitive: each 10 points of sale price is worth about $1.40 a share. The company's shares are exposed roughly 1.5 times to that swing because debt sits ahead of them. Filings do not let us reconcile a $1.0 million cash-flow line in 2025, which is not material. The second-quarter 2026 report was available only as summary data, so the balance sheet and cash flows for that quarter come from those figures and not from the full document.