Net Lease Office Properties (NLOP) reported a total revenue of $142.2 million for the fiscal year ending December 31, 2024, a decrease from $175.0 million in the previous year. The decline in revenue was primarily attributed to the impact of property dispositions and tenant vacancies. The company also recorded a net loss attributable to NLOP of $91.5 million, an improvement from a loss of $131.7 million in 2023, largely due to a significant impairment charge recognized in the prior year and higher gains from property sales. Funds from operations (FFO) decreased to $23.0 million from $72.3 million, while adjusted funds from operations (AFFO) fell to $62.0 million from $93.9 million.
In terms of strategic developments, NLOP completed the spin-off from W. P. Carey Inc. on November 1, 2023, which involved the transfer of 59 office properties. Following the spin-off, NLOP's portfolio consisted of 39 properties leased to 43 corporate tenants, generating an annualized base rent of approximately $88.1 million. The company actively pursued asset dispositions, selling 14 properties during 2024 for total proceeds of $320.1 million, which contributed to a net gain of $22.5 million from these sales.
Operationally, NLOP's portfolio occupancy rate decreased to 85.2% from 97.0% in the previous year, reflecting the challenges in retaining tenants amid changing market conditions. The weighted average lease term for the portfolio was 4.3 years, with 22.6% of annualized base rent (ABR) coming from tenants with leases expiring in the next two years. The company reported a total of 43 tenants, with 25% classified as investment-grade. NLOP's geographic concentration remains significant, with 39.4% of its ABR derived from properties located in Texas.
Looking ahead, NLOP's management expressed cautious optimism regarding future performance, emphasizing the importance of strategic asset management and the potential for further property dispositions to enhance liquidity. The company plans to utilize proceeds from asset sales to pay down debt, including the remaining balance of $61.1 million on its mezzanine loan, and to fund future capital expenditures. However, management acknowledged the ongoing risks posed by market volatility, tenant defaults, and economic conditions that could impact cash flows and operational performance.
About Net Lease Office Properties
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