ONL - Orion Office REIT: Don't Get Sucked In

2024-06-20 02:18:02 ET

Summary

• Orion Office REIT Inc. has shed nearly 50% of its value in the past year, rearranging its dividend and valuation outlook.
• We argue that Orion is best left alone, as the Office REIT environment faces systematic pressure. Moreover, we dislike Orion's key portfolio metrics.
• Furthermore, we think Orion faces liability-level challenges, which could coalesce with its lease term structuring to wreak havoc.
• We assign an underweight/hold rating to ONL REIT.

This article focuses on Orion Office REIT Inc. ( ONL ) , a U.S.-based real estate investment trust that primarily invests in single-tenant suburban office properties.

It is not a secret that office properties are in doubt as the "work from home" phenomenon has taken shape. Moreover, factors such as industry transformation and supply/demand imbalances have played critical roles recently, attaching systematic risk to office REITs such as Orion....

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