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Item 8. Financial Statements and Supplementary Data

2026-02-25 compared with 2025-02-27 · 318 added, 370 removed, 897 unchanged (43% of the section changed)

4 unchanged sentences

Consolidated Statements of Operations for the Years Ended December 31, 202 5 , 202 4 , and 20 23

Consolidated Statements of Comprehensive (Loss) Income for the Years Ended December 31, 2024, 2023, and 2022

Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 202 5 , 202 4 , and 20 23

Consolidated Statements of Equity for the Years Ended December 31, 202 5 , 202 4 , and 20 23

9 unchanged sentences

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Net Lease Office Properties and its subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations, of comprehensive (loss) income, of equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes and financial statement schedules listed in the accompanying index (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheets of Net Lease Office Properties and its subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations, of comprehensive loss, of equity and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes and financial statement schedules listed in the accompanying index (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America.

32 unchanged sentences

Net investments in real estate 309,940 707,443

Restricted cash 43,305 51,560

Cash and cash equivalents

119,621 25,121

Restricted cash 3,011 43,305

Other assets, net 20,799 29,200

4 unchanged sentences

NLOP Mezzanine Loan, net — 57,957

NLOP Mortgage Loan, net — 266,844

Debt, net 21,900 169,216

1 unchanged sentence

Below-market rent intangible liabilities, net 1,990 6,305

Deferred income taxes

Dividends payable 75,552 —

4 unchanged sentences

Common stock, $ 0.001 par value, 45,000,000 shares authorized;

14,814,075 and 14,620,919 shares, respectively, issued and outstanding

14,814,075 shares issued and outstanding

Additional paid-in capital 855,813 855,813

28 unchanged sentences

Other Income and Expenses

(Loss) gain on sale of real estate, net ( 29,006 ) 20,216 ( 3,608 )

Interest expense ( 12,739 ) ( 67,962 ) ( 42,613 )

Gain (loss) on sale of real estate, net 20,216 ( 3,608 ) —

Other gains and (losses) ( 2,557 ) ( 2,154 ) 456

( 44,302 ) ( 49,900 ) ( 45,765 )

(Loss) income before income taxes ( 93,768 ) ( 131,297 ) 16,263

Benefit from (provision for) income taxes 2,382 ( 425 ) ( 486 )

Net (Loss) Income ( 91,386 ) ( 131,722 ) 15,777

Net (income) loss attributable to noncontrolling interests ( 85 ) ( 24 ) 2

Net (Loss) Income Attributable to NLOP $ ( 91,471 ) $ ( 131,746 ) $ 15,779

Basic and Diluted (Loss) Income Per Share $ ( 6.18 ) $ ( 9.00 ) $ 1.08

Loss before income taxes ( 145,004 ) ( 93,768 ) ( 131,297 )

(Provision for) benefit from income taxes ( 158 ) 2,382 ( 425 )

Net Loss ( 145,162 ) ( 91,386 ) ( 131,722 )

Net income attributable to noncontrolling interests ( 100 ) ( 85 ) ( 24 )

Net Loss Attributable to NLOP $ ( 145,262 ) $ ( 91,471 ) $ ( 131,746 )

Basic and Diluted Loss Per Share $ ( 9.81 ) $ ( 6.18 ) $ ( 9.00 )

Weighted-Average Shares Outstanding

3 unchanged sentences

NET LEASE OFFICE PROPERTIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

1 unchanged sentence

2025 2024 2023

Net (Loss) Income $ ( 91,386 ) $ ( 131,722 ) $ 15,777

Other Comprehensive (Loss) Income

Net Loss $ ( 145,162 ) $ ( 91,386 ) $ ( 131,722 )

Other Comprehensive Income (Loss)

Foreign currency translation adjustments 40,157 ( 5,748 ) 8,055

1 unchanged sentence

40,157 ( 4,557 ) 6,864

Comprehensive (Loss) Income ( 95,943 ) ( 124,858 ) 14,544

Comprehensive Loss ( 105,005 ) ( 95,943 ) ( 124,858 )

Amounts Attributable to Noncontrolling Interests

Net (income) loss ( 85 ) ( 24 ) 2

Comprehensive (income) loss attributable to noncontrolling interests ( 85 ) ( 24 ) 2

Comprehensive (Loss) Income Attributable to NLOP $ ( 96,028 ) $ ( 124,882 ) $ 14,546

Net income ( 100 ) ( 85 ) ( 24 )

Comprehensive income attributable to noncontrolling interests ( 100 ) ( 85 ) ( 24 )

Comprehensive Loss Attributable to NLOP $ ( 105,105 ) $ ( 96,028 ) $ ( 124,882 )

See Notes to Consolidated Financial Statements.

8 unchanged sentences

— $ — $ — $ — $ ( 42,464 ) $ 1,150,240 $ 1,107,776 $ 1,743 $ 1,109,519

Net income 15,779 15,779 ( 2 ) 15,777

Net transfers from parent 35,724 35,724 35,724

Acquisition of noncontrolling interests in connection with the CPA:18 Merger — 1,745 1,745

Other comprehensive loss:

Foreign currency translation adjustments ( 1,233 ) ( 1,233 ) ( 1,233 )

Balance at December 31, 2022 — — — — ( 42,464 ) 1,150,240 1,107,776 1,743 1,109,519

Net (loss) income ( 137,989 ) 6,243 ( 131,746 ) 24 ( 131,722 )

20 unchanged sentences

Balance at December 31, 2024 14,814,075 15 855,813 ( 234,443 ) ( 40,157 ) — 581,228 4,175 585,403

Net (loss) income ( 145,262 ) ( 145,262 ) 100 ( 145,162 )

Distributions to noncontrolling interest — ( 361 ) ( 361 )

Distributions declared ($ 12.30 per share)

( 182,212 ) ( 182,212 ) ( 182,212 )

Other comprehensive income:

Foreign currency translation adjustments 40,157 40,157 40,157

Balance at December 31, 2025 14,814,075 $ 15 $ 855,813 $ ( 561,917 ) $ — $ — $ 293,911 $ 3,914 $ 297,825

See Notes to Consolidated Financial Statements.

6 unchanged sentences

Cash Flows — Operating Activities

Net (loss) income $ ( 91,386 ) $ ( 131,722 ) $ 15,777

Adjustments to net (loss) income:

Depreciation and amortization, including intangible assets and deferred financing costs 85,290 81,256 64,275

Net loss $ ( 145,162 ) $ ( 91,386 ) $ ( 131,722 )

Adjustments to net loss:

Impairment charges — real estate 140,814 78,237 63,143

(Gain) loss on sale of real estate, net ( 20,216 ) 3,608 —

Amortization of rent-related intangibles and deferred rental revenue ( 6,352 ) 140 1,959

Net realized and unrealized losses (gains) on extinguishment of debt, foreign currency exchange rate movements, and other 3,496 ( 247 ) 2,121

Deferred income tax benefit ( 3,271 ) ( 1,201 ) ( 1,043 )

Depreciation and amortization, including intangible assets and deferred financing costs 39,757 85,290 81,256

Loss (gain) on sale of real estate, net 29,006 ( 20,216 ) 3,608

Allowance for credit losses 4,815 — —

Straight-line rent adjustments

2,557 2,313 ( 438 )

Net realized and unrealized losses (gains) on extinguishment of debt, foreign currency exchange rate movements, and other 1,274 3,496 ( 247 )

Amortization of rent-related intangibles and deferred rental revenue ( 956 ) ( 6,352 ) 140

Deferred income tax benefit — ( 3,271 ) ( 1,201 )

Stock-based compensation expense — 250 2,904

Impairment charges — goodwill — — 62,456

Proceeds from sales of net investments in sales-type leases 10,341 — —

Net changes in other operating assets and liabilities ( 7,994 ) 13,157 ( 8,933 )

Proceeds from sales of net investments in sales-type leases — 10,341 —

Net Cash Provided by Operating Activities 64,111 71,859 70,966

1 unchanged sentence

Proceeds from sales of real estate 192,277 309,750 38,855

Non-refundable deposit for disposition 20,000 — —

Funding for real estate construction, redevelopments, and other capital expenditures on real estate ( 4,030 ) ( 12,001 ) ( 11,162 )

Cash paid to stockholders of CPA:18 – Global in the CPA:18 Merger — — ( 20,969 )

Cash and restricted cash acquired in connection with the CPA:18 Merger — — 2,768

Net Cash Provided by (Used in) Investing Activities 297,749 27,693 ( 22,918 )

Other investing activities, net ( 5 ) — —

Net Cash Provided by Investing Activities 208,242 297,749 27,693

Cash Flows — Financing Activities

Payments of mortgage principal and other debt instruments ( 111,480 ) ( 366,596 ) ( 63,704 )

Dividends paid ( 1,072 ) — —

Distributions to noncontrolling interest ( 331 ) ( 121 ) —

Distributions paid ( 106,660 ) ( 1,072 ) —

Other financing activities, net ( 384 ) 15 ( 526 )

Distributions to noncontrolling interest ( 361 ) ( 331 ) ( 121 )

Distributions to WPC in connection with the Spin-Off — — ( 343,885 )

7 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents and restricted cash 738 ( 1,027 ) ( 50 )

Net increase (decrease) in cash and cash equivalents and restricted cash 597 61,831 ( 3,300 )

Net increase in cash and cash equivalents and restricted cash 54,206 597 61,831

Cash and cash equivalents and restricted cash, beginning of year 68,426 67,829 5,998

8 unchanged sentences

To accomplish this Spin-Off, WPC formed a Maryland real estate investment trust, Net Lease Office Properties (“NLOP” or the “Company”), on October 21, 2022, to own the 59 office assets.

Information with respect to number of properties and square footage is unaudited.

On November 1, 2023, WPC completed the Spin-Off, contributing 59 office properties to NLOP.

1 unchanged sentence

The Spin-Off was accomplished via a pro rata dividend of 1 NLOP common share for every 15 shares of WPC common stock outstanding.

We elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code effective as of November 1, 2023.

We elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code (the “Code”) effective as of November 1, 2023.

As of December 31, 2025, NLOP’s portfolio comprised full or partial ownership interests in 24 properties, net-leased to 26 corporate tenants, totaling approximately 3.9 million leasable square feet (including 0.6 million of operating square footage for a parking garage at a domestic property), with a weighted-average lease term of 3.9 years.

All references to number of properties, square footage, and occupancy are unaudited.

NLOP operates as one segment, and through its subsidiaries, owns, operates, and finances office buildings.

Our consolidated operating results are regularly reviewed, in the aggregate, by the chief operating decision maker (“CODM”) to evaluate performance and allocate resources.

Our business is characterized as owning a diversified portfolio of office properties that are primarily leased to corporate tenants on a single-tenant, net-lease basis.

These economic characteristics are similar across various geographic locations and industries in which our tenants operate and therefore considered one operating segment.

Our consolidated operating results, including net income, are regularly reviewed, in the aggregate, by our chief operating decision maker (“CODM”) to evaluate performance and allocate resources, which can be found on our consolidated financial statements.

The CODM is our Chief Executive Officer, with oversight provided by our Board of Trustees (our “Board”).

Accordingly, all operations have been considered to represent one reportable segment, which are reported on our consolidated statements of operations and our consolidated balance sheets.

As of December 31, 2024, NLOP’s portfolio was comprised of full or partial ownership interests in 39 properties, net-leased to 43 corporate tenants, totaling approximately 6.2 million leasable square feet (including 0.6 million of operating square footage for a parking garage at a domestic property), with a weighted-average lease term of 4.3 years.

On August 1, 2022, WPC completed a merger with Corporate Property Associates CPA:18 – Global Incorporated (“CPA:18 – Global”), in which CPA:18 – Global merged with and into one of WPC’s indirect subsidiaries in exchange for shares of its common stock and cash (the “CPA:18 Merger”).

Nine of the net lease properties that WPC acquired in the CPA:18 Merger were transferred to NLOP in connection with the Spin-Off.

Costs allocated to the nine properties acquired in the CPA:18 Merger have been expensed as incurred and classified within Separation and distribution related costs and other in the consolidated statements of operations, totaling $ 6.0 million for the year ended December 31, 2022.

Our revenues are largely derived from the long-term leases that we execute with tenants.

These revenues are classified as either Lease revenues ( Note 5 ) or Income from finance leases ( Note 6 ) in accordance with Accounting Standards Codification (“ASC”) 842, Leases .

Our operating expenses are regularly reviewed by our CODM.

All expenses are reviewed, but our CODM is regularly provided with the following significant expenses, which are included in our consolidated financial statements and require no additional disaggregation:

Property expenses, excluding reimbursable tenant costs, General and administrative expenses, Asset management fees, Interest expense, and (Provision for) benefit from income taxes.

Basis of Presentation

1 unchanged sentence

Intercompany transactions and balances have been eliminated in consolidation.

Net Lease Office Properties 2025 10-K – 44

Notes to Consolidated Financial Statements

Prior to the Spin-Off

5 unchanged sentences

In the opinion of management, the financial information for the periods presented in this Report reflects all normal and recurring adjustments necessary for a fair presentation of financial position, results of operations, and cash flows.

Net Lease Office Properties 2024 10-K – 46

Notes to Consolidated Financial Statements

These consolidated financial statements reflect the revenues and direct expenses of NLOP and include material assets and liabilities of WPC that are specifically attributable to NLOP.

20 unchanged sentences

We immediately expense acquisition-related costs and fees associated with business combinations.

There were no acquisitions during the reporting period with the exception of properties acquired in the CPA:18 Merger ( Note 4 ).

There were no acquisitions during the reporting period.

Net Lease Office Properties 2025 10-K – 45

Notes to Consolidated Financial Statements

Purchase Price Allocation of Tangible Assets — When we acquire properties with leases classified as operating leases, we allocate the purchase price to the tangible and intangible assets and liabilities acquired based on their estimated fair values.

4 unchanged sentences

The fair value of real estate is determined (i) by applying a discounted cash flow analysis to the estimated net operating income for each property in the portfolio during the remaining anticipated lease term, and (ii) by the estimated residual value, which is based on a hypothetical sale of the property upon expiration of a lease factoring in the re-tenanting of such property at estimated market rental rates and applying a selected capitalization rate.

Net Lease Office Properties 2024 10-K – 47

Notes to Consolidated Financial Statements

Assumptions used in the model are property-specific where this information is available;

25 unchanged sentences

We include the value of below-market leases in Below-market rent and other intangible liabilities in the consolidated financial statements.

Net Lease Office Properties 2025 10-K – 46

Notes to Consolidated Financial Statements

For acquired properties with tenants in place, we record in-place lease intangible assets based on the estimated value ascribed to the avoidance of costs of leasing the properties for remaining primary in-place lease terms.

6 unchanged sentences

The amortization period for intangibles does not exceed the remaining depreciable life of the building.

Net Lease Office Properties 2024 10-K – 48

Notes to Consolidated Financial Statements

If a lease is terminated, we charge the unamortized portion of above- and below-market lease values to rental income and in-place lease values to amortization expense.

15 unchanged sentences

Assets Held for Sale — We generally classify real estate assets that are subject to operating leases as held for sale when we have entered into a contract to sell the property, all material due diligence requirements have been satisfied, we received a non-refundable deposit, and we believe it is probable that the disposition will occur within one year.

When we classify an asset as held for sale, we compare the asset’s fair value less estimated cost to sell to its carrying value, and if the fair value less estimated cost to sell is less than the property’s carrying value, we reduce the carrying value to the fair value less estimated cost to sell.

We will continue to review the property for subsequent changes in the fair value, and may recognize an additional impairment charge, if warranted.

When we classify an asset as held for sale, we compare the asset’s fair value less estimated costs to sell to its carrying value, and if the fair value less estimated costs to sell is less than the property’s carrying value, we reduce the carrying value to the fair value less estimated costs to sell.

We will continue to review the property for subsequent changes in the fair value, and may recognize a loss on sale of real estate, if warranted.

Goodwill — We evaluate goodwill for possible impairment at least annually or upon the occurrence of a triggering event.

3 unchanged sentences

The Company did not have goodwill as of December 31, 2025 or 2024.

Net Lease Office Properties 2025 10-K – 47

Notes to Consolidated Financial Statements

Credit Losses

The allowance for credit losses, which is recorded as a reduction to Net investments in finance leases on our consolidated balance sheets, is measured on an individual basis for our finance leases ( Note 6 ), incorporating information such as the lessee’s credit rating, the expected value of the underlying collateral upon its repossession, and likelihood of closing for an agreed-upon sale (for certain net investments in sales-type leases).

Included in our assessment are factors that incorporate forward-looking information.

Allowance for credit losses is included in our consolidated statements of operations within Other gains and (losses).

Other Accounting Policies

2 unchanged sentences

We apply accounting guidance for consolidation of VIEs to certain entities in which the equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties.

Fixed price purchase and renewal options within a lease, as well as certain

Net Lease Office Properties 2024 10-K – 49

Notes to Consolidated Financial Statements

decision-making rights within a loan or joint-venture agreement, can cause us to consider an entity a VIE.

Fixed price purchase and renewal options within a lease, as well as certain decision-making rights within a loan or joint-venture agreement, can cause us to consider an entity a VIE.

Limited partnerships and other similar entities that operate as a partnership will be considered a VIE unless the limited partners hold substantive kick-out rights or participation rights.

11 unchanged sentences

Total liabilities $ 382 $ 304

Net Lease Office Properties 2025 10-K – 48

Notes to Consolidated Financial Statements

As a Lessee :

17 unchanged sentences

We record amounts reimbursed by the lessee in the period in which the applicable expenses are incurred if the reimbursements are deemed collectible.

Net Lease Office Properties 2024 10-K – 50

Notes to Consolidated Financial Statements

Net investments in sales-type leases are accounted for under Accounting Standards Codification (“ASC”) 842, Leases .

Net investments in sales-type leases are accounted for under ASC 842, Leases .

Upon lease commencement or lease modification, we assess lease classification to determine whether the lease should be classified as an operating, direct financing, or sales-type lease.

15 unchanged sentences

(a) Amounts as of December 31, 2024 and 2023 include approximately $ 41.7 million and $ 48.4 million, respectively, related to certain reserve requirements pursuant to the NLOP Financing Arrangements ( Note 10 ).

In April 2025, we fully repaid the NLOP Mezzanine Loan and are no longer subject to such reserve requirements ( Note 10 ).

Net Lease Office Properties 2025 10-K – 49

Notes to Consolidated Financial Statements

Land, Buildings and Improvements — We carry land, buildings, and improvements at cost less accumulated depreciation.

11 unchanged sentences

We defer and amortize unearned income to income over the lease term so as to produce a constant periodic rate of return on our net investment in the lease.

Net Lease Office Properties 2024 10-K – 51

Notes to Consolidated Financial Statements

Asset Retirement Obligations — Asset retirement obligations relate to the legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development, and/or normal operation of a long-lived asset.

12 unchanged sentences

We include stock-based compensation within Additional paid-in capital in the consolidated statements of equity and General and administrative expenses in the consolidated statements of operations.

Foreign Currency Translation and Transaction Gains and Losses — We have interests in international real estate investments in Europe, and the primary functional currencies for those investments are the euro and the Norwegian krone.

We perform the translation from these currencies to the U.S.

dollar for assets and liabilities using current exchange rates in effect at the balance sheet date and for revenue and expense accounts using the average exchange rate during the month in which the transaction occurs.

We report the gains and losses resulting from such translation as a component of other comprehensive income in equity.

These translation gains and losses are reclassified out of foreign currency translation adjustments (within Accumulated other comprehensive loss in the consolidated balance sheets) and released to net income (within Gain (loss) on sale of real estate, net, in the consolidated statements of operations) when we have substantially exited from all investments in the related currency.

Net Lease Office Properties 2025 10-K – 50

Notes to Consolidated Financial Statements

Foreign Currency Translation and Transaction Gains and Losses — During the year ended December 31, 2025, we exited all investments denominated in euros and Norwegian krone, and as a result, we did not own any international real estate investments as of December 31, 2025.

During the year ended December 31, 2024, we exited all investments in the United Kingdom, which were denominated in the British pound sterling ( Note 12 , Note 15 ).

Prior to our exit from international investments, we performed the translation from foreign currencies to the U.S.

We reported the gains and losses resulting from such translation as a component of other comprehensive income in equity.

These translation gains and losses were fully reclassified out of foreign currency translation adjustments (within Accumulated other comprehensive loss in the consolidated balance sheets) and released to net income (within (Loss) gain on sale of real estate, net, in the consolidated statements of operations) when we exited from all investments in the related currency ( Note 1 2 , Note 1 5 ).

A transaction gain or loss (measured from the transaction date or the most recent intervening balance sheet date, whichever is later), realized upon settlement of a foreign currency transaction generally will be included in net income for the period in which the transaction is settled.

1 unchanged sentence

The translation impact of foreign currency transactions of a long-term nature (that is, settlement is not planned or anticipated in the foreseeable future), in which the entities involved in the transactions are combined, are not included in net income but are reported as a component of other comprehensive income in equity.

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Notes to Consolidated Financial Statements

Derivative Instruments — We measure derivative instruments at fair value and record them as assets or liabilities, depending on our rights or obligations under the applicable derivative contract.

Derivatives that are not designated as hedges must be adjusted to fair value through earnings.

For derivatives designated and that qualify as cash flow hedges, the change in fair value of the derivative is recognized in Other comprehensive (loss) income until the hedged transaction affects earnings.

For derivatives designated and that qualify as cash flow hedges, the change in fair value of the derivative is recognized in Other comprehensive income (loss) until the hedged transaction affects earnings.

Gains and losses on the cash flow hedges representing hedge components excluded from the assessment of effectiveness are recognized in earnings over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with our accounting policy election.

2 unchanged sentences

In accordance with fair value measurement guidance, counterparty credit risk is measured on a net portfolio position basis.

Income Taxes — We conduct business in various states and municipalities within the United States and Europe, and as a result, we or one or more of our subsidiaries file income tax returns in the United States federal jurisdiction and various state and foreign jurisdictions.

Income Taxes — We conduct business in various states and municipalities within the United States (and formerly in Europe ( Note 15 )), and as a result, we or one or more of our subsidiaries file income tax returns in the United States federal jurisdiction and various state and foreign jurisdictions.

As a REIT, our domestic real estate operations are generally not subject to federal tax.

5 unchanged sentences

Our earnings and profits, which determine the taxability of distributions to shareholders, differ from net income reported for financial reporting purposes due primarily to differences in depreciation, and timing differences of rent recognition and certain expense deductions, for federal income tax purposes.

We recognize deferred income taxes in certain of our subsidiaries taxable in the United States or in foreign jurisdictions.

Net Lease Office Properties 2025 10-K – 51

Notes to Consolidated Financial Statements

We recognize deferred income taxes in certain of our subsidiaries taxable in the United States or in foreign jurisdictions (prior to the disposition of our last international property ( Note 15 )).

Deferred income taxes are generally the result of temporary differences (items that are treated differently for tax purposes than for GAAP purposes as described in Note 1 4 ).

13 unchanged sentences

Actual results could differ from those estimates.

Net Lease Office Properties 2024 10-K – 53

Notes to Consolidated Financial Statements

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

ASU 2023-07 requires quarterly disclosure of segment expenses if they are (i) significant to the segment, (ii) regularly provided to the CODM, and (iii) included in each reported measure of a segment’s profit or loss.

In addition, ASU 2023-07 requires an annual disclosure of the CODM’s title and a description of how the CODM uses the segment’s profit/loss measure to assess segment performance and to allocate resources.

We adopted this guidance for our interim and annual periods beginning January 1, 2024.

The adoption of this standard did not have a material impact on our consolidated financial statements, but has resulted in incremental disclosures within the footnotes to our consolidated financial statements ( Note 17 ).

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures .

ASU 2024-03 requires all public business entities to provide additional disclosure of the nature of expenses included in the consolidated statements of operations.

ASU 2024-03 is effective for public business entities (including emerging growth companies, since there is not a different transition date for private companies) for annual periods beginning after December 15, 2026 and for interim reporting periods beginning after December 15, 2027, on a prospective basis, with early adoption permitted.

The Company is an emerging growth company and is currently evaluating the impact of this standard on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

2 unchanged sentences

ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state, and local jurisdictions, among other changes.

ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

We are currently evaluating the impact of this guidance on our consolidated financial statements.

Merger with CPA:18 – Global

On February 27, 2022, WPC entered into a merger agreement with CPA:18 – Global, pursuant to which CPA:18 – Global merged with and into one of WPC’s indirect subsidiaries in exchange for shares of its common stock and cash (the “CPA:18 Merger”).

The CPA:18 Merger and related transactions were approved by the stockholders of CPA:18 – Global on July 26, 2022, and completed on August 1, 2022.

At the effective time of the CPA:18 Merger, each share of CPA:18 – Global common stock issued and outstanding immediately prior to the effective time of the CPA:18 Merger was canceled and, in exchange for cancellation of such share, the rights attaching to such share were converted automatically into the right to receive (i) 0.0978 shares of WPC common stock and (ii) $ 3.00 in cash, collectively referred to herein as the Merger Consideration.

Each share of CPA:18 – Global common stock owned by WPC or any of its subsidiaries immediately prior to the effective time of the CPA:18 Merger was automatically canceled and retired, and ceased to exist, for no Merger Consideration.

In exchange for the 141,099,002 shares of CPA:18 – Global common stock that WPC and its subsidiaries did not previously own, WPC paid total Merger Consideration of approximately $ 1.6 billion, consisting of (i) the issuance of 13,786,302 shares of new WPC common stock with a fair value of $ 1.2 billion, based on the closing price of the WPC common stock on August 1, 2022 of $ 87.46 per share, (ii) cash consideration of $ 423.3 million, and (iii) cash of $ 0.1 million paid in lieu of issuing any fractional shares of the new WPC common stock.

Cash consideration paid attributable to NLOP is approximately $ 21.0 million.

Nine of the net lease properties that WPC acquired in the CPA:18 Merger were transferred to NLOP in connection with the Spin-Off, with an aggregate net identifiable asset fair value at acquisition of $ 72.1 million.

Net Lease Office Properties 2024 10-K – 54

Notes to Consolidated Financial Statements

The table below summarizes the nine properties transferred to NLOP, which are included in the historical consolidated financial statements in the year ended December 31, 2022.

(dollars and square footage in thousands)

Tenant/Lease Guarantor (a)

City State Country ABR (a)

Square Footage (unaudited) (a)

Board of Regents, State of Iowa Coralville IA USA $ 3,254 192

Orbital ATK, Inc.

Plymouth MN USA 3,746 191

Plano TX USA 2,577 166

Exelon Generation Company, LLC (b)

Warrenville IL USA 2,862 147

Jacksonville FL USA 1,453 88

North American Lighting, Inc.

Farmington Hills MI USA 1,007 75

Midcontinent Independent System Operator, Inc.

Eagan MN USA 1,103 60

APCO Holdings, Inc.

Norcross GA USA 586 51

Siemens AS (c)

Oslo n/a NO 4,322 166

(a) Information as of December 31, 2022.

(b) We disposed of this property during the year ended December 31, 2024 ( Note 16 ).

Purchase Price Allocation

We accounted for the CPA:18 Merger as a business combination under the acquisition method of accounting.

Costs related to the CPA:18 Merger have been expensed as incurred and classified within Separation and distribution related costs and other in the consolidated statements of operations, totaling $ 6.0 million for the year ended December 31, 2022.

The purchase price was allocated to the assets acquired and liabilities assumed, based upon their preliminary fair values at August 1, 2022.

The following table summarize the estimated fair values of the assets acquired and liabilities assumed in the acquisition, based on the current best estimate of management.

(in thousands) Purchase Price Allocation

Land, buildings and improvements $ 196,867

In-place lease and other intangible assets 55,637

Cash and cash equivalents and restricted cash acquired 2,768

Other assets, net (excluding restricted cash) 1,173

Non-recourse mortgages, net 171,621

Accounts payable, accrued expenses and other liabilities 5,426

Below-market rent intangible liabilities 1,624

Deferred income taxes 5,680

Total liabilities

Total identifiable net assets

Noncontrolling interests 1,804

Goodwill 12,595

ASU 2023-09 is effective for entities other than public business entities (including emerging growth companies) for annual periods beginning after December 15, 2025.

The Company is an emerging growth company and plans to adopt this standard for the annual period beginning January 1, 2026 on a prospective basis, which is not expected to have a material impact on the Company’s consolidated financial statements.

Net Lease Office Properties 2025 10-K – 52

Notes to Consolidated Financial Statements

The $ 12.6 million of goodwill attributed to NLOP was primarily due to the historical premium paid over CPA:18 – Global’s estimated fair value.

This premium was allocated to the NLOP assets based on the fair values of NLOP assets at the time of acquisition relative to the value of all the real estate acquired as part of the business combination.

Goodwill is not deductible for income tax purposes.

Pro Forma Financial Information (Unaudited)

Our consolidated results of operations for the year ended December 31, 2022 include $ 9.8 million of total revenues, and $ 3.8 million of net loss associated with the results of operations for the properties acquired as part of the CPA:18 Merger.

The following consolidated pro forma financial information has been presented as if the CPA:18 Merger had occurred on January 1, 2021 for the year ended December 31, 2022.

The pro forma financial information is not necessarily indicative of what the actual results would have been had the CPA:18 Merger on that date, nor does it purport to represent the results of operations for future periods.

(in thousands) Year Ended December 31, 2022

Pro forma total revenues $ 168,237

Pro forma net income $ 15,828

Agreements and Transactions with Related Parties

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Pursuant to the NLOP Advisory Agreements, which we entered into on November 1, 2023, our Advisor provides us with strategic management services, including asset management, property disposition support, and various related services.

We pay our Advisor an asset management fee that was initially set at an annual amount of $ 7.5 million and is being proportionately reduced each month following the disposition of each portfolio property.

We pay our Advisor an asset management fee that was initially set at an annual amount of $ 7.5 million and is being proportionately reduced following the disposition of each portfolio property.

In addition, we reimburse our Advisor a base administrative amount of approximately $ 4.0 million annually, for certain administrative services, including day-to-day management services, investor relations, accounting, tax, legal, and other administrative matters.

3 unchanged sentences

Years Ended December 31,

2025 2024 2023

Asset management fees (a)

2 unchanged sentences

4,000 4,000 667

$ 8,577 $ 10,243 $ 1,912

(a) Included within Asset management fees in the consolidated statements of operations.

(b) Included within General and administrative expenses in the consolidated statements of operations.

Net Lease Office Properties 2024 10-K – 56

Notes to Consolidated Financial Statements

The following table presents a summary of amounts due to affiliates, which are included within Accounts payable, accrued expenses and other liabilities in the consolidated financial statements (in thousands):

Asset management fees payable $ 469 $ 1,245

Accounts payable $ 376 $ 366

$ 835 $ 1,921

Asset management fees payable 294 469

Other Transactions with WPC

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The remainder of the proceeds from the NLOP Financing Arrangements was used to pay fees and expenses related to the origination of the NLOP Financing Arrangements and other transaction costs, was deposited with the Lenders in satisfaction of the reserve requirements pursuant to the NLOP Financing Arrangements, and was used for other general corporate expenses.

Net Lease Office Properties 2025 10-K – 53

Notes to Consolidated Financial Statements

NLOP Share Costs

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The following table presents amounts of shared costs that were allocated to NLOP (in thousands):

Years Ended December 31,

Year Ended December 31, 2023

General and administrative (a)

$ 13,610 $ 11,843

Interest expense (b)

17,756 18,861

$ 31,366 $ 30,704

(a) General and administrative fees are inclusive of expenses such as employee compensation and benefits, stock-based compensation and professional fees.

2 unchanged sentences

Other Transactions with Related Parties

Captive Insurance Company

Under the NLOP Advisory Agreements, our Advisor manages the insurance for our real property portfolio as part of its property insurance program.

In March 2025, our Advisor formed a wholly owned captive insurance company, which commenced operations in May 2025 and insures a portion of the North American real property portfolios of each of WPC and us.

We pay insurance premiums to all the insurance companies in the property insurance program, including the Advisor’s captive insurance company, which in turn will pay out claims in respect of our properties on a pro rata basis.

During the year ended December 31, 2025, we paid property insurance premiums totaling $ 3.2 million, of which $ 0.7 million was paid to our Advisor, covering the annual period commencing May 1, 2025.

We amortize the insurance premiums over the policy period, which is reflected in Reimbursable tenant costs and Property expenses, excluding reimbursable tenant costs in our consolidated statements of operations.

At December 31, 2025, we owned an interest in one jointly owned investment in real estate, with the remaining interest held by a third party.

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$ 156,141 $ 578,278

During 2024, the U.S.

dollar strengthened against the Norwegian krone and the euro.

As a result of this fluctuation in foreign currency exchange rates, the carrying value of our Land, buildings and improvements decreased by $ 5.9 million from December 31, 2023 to December 31, 2024.

During the year ended December 31, 2025, we recognized impairment charges on nine properties, which reduced the carrying value of Land, buildings and improvements by $ 134.8 million ( Note 8 ).

During the year ended December 31, 2025, we reclassified two properties classified as Land, buildings and improvements to Net investments in finance leases since we entered into agreements to sell the properties to the respective tenants.

As a result, the carrying value of our Land, buildings and improvements decreased by $ 31.8 million from December 31, 2025 to December 31, 2024 ( Note 6 ).

One of these properties was sold in February 2026 ( Note 17 ).

Depreciation expense, including the effect of foreign currency translation, on our buildings and improvements subject to operating leases was $ 14.9 million, $ 23.6 million, and $ 31.2 million for the years ended December 31, 2025, 2024, and 2023, respectively.

During the year ended December 31, 2024, we capitalized accrued costs of $ 2.5 million within Land, buildings and improvements for capital expenditures related to damages at a property.

Dispositions of Properties

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Real Estate Under Construction

During the year ended December 31, 2024, we capitalized $ 0.4 million of real estate under construction related to a maintenance project at a property.

During the year ended December 31, 2025, we capitalized $ 0.8 million of real estate under construction related to a capital project at an existing property, which was placed into service for $ 1.3 million.

Operating Lease Income

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Other Lease-Related Income

For the years ended December 31, 2024 and 2023, other lease-related income on our consolidated statements of operations included lease termination income of $ 9.4 million and $ 4.4 million, respectively, recognized from three tenants.

In September 2025, we entered into a lease termination agreement with a tenant at a property located in Oak Creek, Wisconsin, to terminate the lease on October 31, 2025 (the previous lease expiration date was May 31, 2032).

In connection with the agreement, the tenant paid us a lease termination fee of $ 13.0 million, which was recognized within Other lease-related income in our consolidated statements of operations for the year ended December 31, 2025.

The property was sold in December 2025 ( Note 15 ).

For the years ended December 31, 2025, 2024, and 2023, other lease-related income on our consolidated statements of operations included lease termination income of $ 15.8 million, $ 9.4 million, and $ 4.4 million, respectively (including the amount related to the lease termination described above for the year ended December 31, 2025).

In addition, for the years ended December 31, 2025, 2024, and 2023, other lease-related income on our consolidated statements of operations included income from a parking garage attached to one of our net-leased properties totaling $ 1.8 million, $ 2.0 million, and $ 1.8 million, respectively.

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Total $ 215,445

See Note 6 for scheduled future lease payments to be received under non-cancelable sales-type leases.

Lease costs for operating leases (land leases) are included in (i) property expenses, excluding reimbursable tenant costs, and (ii) reimbursable tenant costs in the consolidated statements of operations.

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Total lease cost $ 126 $ 302 $ 631

Net Lease Office Properties 2025 10-K – 56

Notes to Consolidated Financial Statements

Other Information

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Location on Consolidated Balance Sheets 2025 2024

Operating ROU assets — land leases In-place lease intangible assets and other $ 1,980 $ 4,263

Operating ROU assets — land leases (a)

In-place lease intangible assets and other $ — $ 1,980

Operating lease liabilities Accounts payable, accrued expenses and other liabilities $ 178 $ 259

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Weighted-average discount rate — operating leases 9.4 % 9.2 %

Number of land lease arrangements — operating leases 2 4

Number of land lease arrangements — operating leases (a)

Remaining lease term range (excluding extension options not reasonably certain of being exercised) 81 years

< 1 – 82 years

Cash paid for operating lease liabilities included in Net cash provided by operating activities was $ 0.3 million, $ 0.5 million, and $ 0.5 million for the years ended December 31, 2024, 2023 and 2022, respectively.

(a) Our only land lease arrangement as of December 31, 2025 was at a property classified as held for sale, which was sold in January 2026 ( Note 17 ).

Cash paid for operating lease liabilities included in Net cash provided by operating activities was less than $ 0.1 million, $ 0.3 million, and $ 0.5 million for the years ended December 31, 2025, 2024 and 2023, respectively.

There are no land or office direct financing leases for which we are the lessee, therefore there are no related ROU assets or lease liabilities.

Net Lease Office Properties 2024 10-K – 59

Notes to Consolidated Financial Statements

Undiscounted Cash Flows

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Present value of future lease payments/lease obligations $ 178

Net Lease Office Properties 2025 10-K – 57

Notes to Consolidated Financial Statements

Assets Held for Sale, Net

Below is a summary of our properties held for sale (in thousands):

Land, buildings and improvements — net lease and other

Land, buildings and improvements

$ 101,416 $ 31,066

In-place lease intangible assets and other 80,067 3,891

2 unchanged sentences

Assets held for sale, net $ 96,269 $ 29,297

As of December 31, 2024, we had one property classified as Assets held for sale, net, with a carrying value of $ 29.3 million.

As of December 31, 2025 and 2024, we had four and one properties, respectively, classified as Assets held for sale, net, with a carrying value of $ 96.3 million and $ 29.3 million, respectively.

We sold three of these properties in January and February 2026 ( Note 17 ).

During the year ended December 31, 2025, we reclassified a property from held for sale to held and used, in accordance with ASC 360, Property, Plant, and Equipment .

As a result, we reclassified $ 25.9 million from Assets held for sale, net, to the following line items:

(i) $ 25.9 million to Land, buildings and improvements, (ii) $ 3.9 million to In-place lease intangible assets and other, (iii) $ 1.4 million to Above-market rent intangible assets, and (iv) $ 5.3 million to Accumulated depreciation and amortization.

In addition, the estimated purchase price for this property was lowered during the second quarter of 2025.

As a result, we recognized a loss on sale of real estate of $ 3.4 million during the year ended December 31, 2025, reflecting the updated estimated purchase price, in accordance with ASC 360, Property, Plant, and Equipment .

We sold this property in December 2025.

Finance Receivables

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Net Investments in Sales-Type Leases

One property was classified as a net investment in sales-type leases as of December 31, 2023.

A property located in the United Kingdom was classified as a net investment in sales-type leases as of December 31, 2023.

We had previously entered into an agreement to sell the property to the tenant occupying the property during the fourth quarter of 2023 and recognized a Loss on sale of real estate, net, of $ 8.3 million during the year ended December 31, 2023 related to this transaction.

During the year ended December 31, 2024, we sold this property, which had an aggregate carrying value of $ 10.5 million as of December 31, 2023.

Net investments in sales-type leases is summarized as follows (in thousands):

Lease payments receivable $ — $ 10,614

unearned income — ( 92 )

During the year ended December 31, 2024, we sold this property.

In October 2025, we reclassified a net-lease property located in Dallas, Texas, to net investments in sales-type leases totaling $ 38.0 million on our consolidated balance sheets (based on the estimated purchase price) in accordance with ASC 842, Leases , since the property is expected to be sold to the tenant occupying the property, resulting in a lease modification.

In connection with this transaction, we reclassified the following amounts to Net investments in finance leases:

(i) $ 31.7 million from Land, buildings and improvements, (ii) $ 7.5 million from In-place lease intangible assets and other, (iii) $ 0.3 million from Below-market rent intangible liabilities, net, and (iv) $ 8.4 million from Accumulated depreciation and amortization.

We recognized an aggregate Gain on sale of real estate, net, of $ 5.4 million during the year ended December 31, 2025 related to this transaction, reflecting a balance of $ 2.1 million within Accounts payable, accrued expenses and other liabilities for this investment.

In December 2025, we reclassified a net-lease property located in Raleigh, North Carolina, to net investments in sales-type leases totaling $ 8.7 million on our consolidated balance sheets (based on the estimated purchase price) in accordance with ASC 842, Leases , since the property is expected to be sold to the tenant occupying the property, resulting in a lease modification.

In connection with this transaction, we reclassified the following amounts to Net investments in finance leases:

(i) $ 3.7 million from Land, buildings and improvements, (ii) $ 0.7 million from Other assets, net, and (iii) $ 1.4 million from Accumulated depreciation and amortization.

We recognized an aggregate Gain on sale of real estate, net, of $ 5.5 million during the year ended December 31, 2025 related to this transaction, reflecting a balance of $ 0.2 million within Accounts payable, accrued expenses and other liabilities for this investment.

This property was sold in February 2026 ( Note 17 ).

Net Lease Office Properties 2025 10-K – 58

Notes to Consolidated Financial Statements

At December 31, 2023, there was no reserve or estimate of credit loss on the financing leases.

Earnings from our net investments in sales-type leases were included in Income from finance leases in the consolidated financial statements, and totaled less than $ 0.1 million for both the years ended December 31, 2024 and 2023.

Prior to its reclassification to net investments in sales-type leases, earnings from this investment were recognized in Lease revenues in the consolidated financial statements.

Earnings from our net investments in sales-type leases are included in Income from finance leases in the consolidated financial statements, and totaled $ 0.6 million, less than $ 0.1 million, and less than $ 0.1 million for the years ended December 31, 2025, 2024, and 2023, respectively.

Prior to these reclassifications to net investments in sales-type leases, earnings from these investments were recognized in Lease revenues in the consolidated financial statements.

Net investments in sales-type leases is summarized as follows (in thousands):

Lease payments receivable (a)

unearned income ( 1,033 ) —

allowance for credit losses (b)

(a) Includes estimated purchase price and total rents owed.

(b) During the year ended December 31, 2025, we recorded a net allowance for credit loss of $ 4.8 million on our net investment in sales-type lease, which was included within Other gains and (losses) in our consolidated statements of operations, reflecting the possibility that the sale is not completed due to unresolved maintenance work at the property.

Scheduled Future Lease Payments to be Received

Scheduled future lease payments to be received (exclusive of expenses paid by tenants, percentage of sales rents, and future CPI-based adjustments) under non-cancelable finance leases at December 31, 2025 are as follows (in thousands):

Years Ending December 31, Total

Total $ 47,726

(a) Amount comprises the net investments in sales-type leases described above, representing the estimated purchase prices of the investments plus remaining rents.

One of these properties was sold in February 2026 ( Note 17 ).

See Note 5 for scheduled future lease payments to be received under non-cancelable operating leases.

Net Investments in Direct Financing Leases

During the year ended December 31, 2023, we reclassified an investment classified as a direct financing lease (comprised of four properties) with an aggregate carrying value of $ 14.6 million from Net investments in finance leases to Land, buildings and improvements in connection with a change in lease classification due to an extension of the underlying lease.

Income from direct financing leases, which is included in Income from finance leases in the consolidated financial statements, was $ 1.2 million and $ 1.7 million for the years ended December 31, 2023 and 2022, respectively.

During the year ended December 31, 2023, we reclassified an investment classified as a direct financing lease (comprising four properties) with an aggregate carrying value of $ 14.6 million from Net investments in finance leases to Land, buildings and improvements in connection with a change in lease classification due to an extension of the underlying lease.

Income from direct financing leases, which is included in Income from finance leases in the consolidated financial statements, was $ 1.2 million for the year ended December 31, 2023.

We had no net investments in direct financing leases as of December 31, 2025 and 2024.

Net Lease Office Properties 2025 10-K – 59

Notes to Consolidated Financial Statements

Credit Quality of Finance Receivables

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The credit quality evaluation of our finance receivables is updated quarterly.

Our finance receivable internal credit quality rating was one as of December 31, 2023.

A summary of our finance receivables by internal credit quality rating, excluding our allowance for credit losses, is as follows (dollars in thousands):

Number of Tenants / Obligors at December 31, Carrying Value at December 31,

Internal Credit Quality Indicator 2025 2024 2025 2024

1 1 — $ 37,950 $ —

3 1 — 8,743 —

Goodwill and Other Intangibles

We have recorded lease intangibles that are being amortized over periods ranging from one year to 40 years.

We have recorded lease intangibles that are being amortized over periods ranging from two years to 26 years.

In-place lease intangibles, at cost are included in In-place lease intangible assets and other in the consolidated financial statements.

2 unchanged sentences

Below-market rent intangibles are included in Below-market rent intangible liabilities, net in the consolidated financial statements.

In connection with the CPA:18 Merger ( Note 4 ) and certain other business combinations, we recorded goodwill as a result of consideration exceeding the fair values of the assets acquired and liabilities assumed ( Note 3 ).

In connection with certain business combinations, we recorded goodwill as a result of consideration exceeding the fair values of the assets acquired and liabilities assumed ( Note 3 ).

During the year ended December 31, 2023, we recorded an impairment for the total amount of goodwill of $ 62.5 million ( Note 8 ).

1 unchanged sentence

Balance at January 1, 2023

Acquisition of CPA:18 – Global ( Note 4 )

Foreign currency translation adjustments ( 971 )

Balance at December 31, 2022

Impairment charges ( Note 8 )

1 unchanged sentence

Balance at December 31, 2023

Net Lease Office Properties 2024 10-K – 61

Notes to Consolidated Financial Statements

Intangible assets and liabilities are summarized as follows (in thousands):

7 unchanged sentences

Total intangible liabilities $ ( 4,495 ) $ 2,505 $ ( 1,990 ) $ ( 18,856 ) $ 12,551 $ ( 6,305 )

During the year ended December 31, 2024, the U.S.

dollar strengthened against the Norwegian krone and the euro, resulting in a decrease of $ 0.5 million in the carrying value of our net intangible assets from December 31, 2023 to December 31, 2024.

Net Lease Office Properties 2025 10-K – 60

Notes to Consolidated Financial Statements

See Note 6 for a description of intangible assets and liabilities reclassified to net investments in sales-type leases during the year ended December 31, 2025.

Net amortization of intangibles, including the effect of foreign currency translation, was $ 21.5 million, $ 35.4 million, and $ 47.7 million for the years ended December 31, 2025, 2024, and 2023, respectively.

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These tiers are:

Level 1, for which quoted market prices for identical instruments are available in active markets, such as money market funds, equity securities, and U.S.

Level 1, for which quoted market prices for identical instruments are available in active markets, such as money market funds and U.S.

Treasury securities;

Level 2, for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument, such as certain derivative instruments including interest rate caps, interest rate swaps, and foreign currency collars;

Level 2, for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument, such as certain derivative instruments including interest rate caps;

and Level 3, for securities that do not fall into Level 1 or Level 2 and for which little or no market data exists, therefore requiring us to develop our own assumptions.

2 unchanged sentences

For significant Level 3 items, we have also provided the unobservable inputs.

Net Lease Office Properties 2024 10-K – 62

Notes to Consolidated Financial Statements

Derivative Assets — Our derivative assets, which are included in Other assets, net in the consolidated financial statements, are comprised of interest rate caps ( Note 10 ).

Derivative Assets — Our derivative assets, which were included in Other assets, net in the consolidated financial statements, comprised interest rate caps ( Note 9 ).

The valuation of our derivative instruments is determined using a discounted cash flow analysis on the expected cash flows of each derivative.

8 unchanged sentences

3 $ 21,900 $ 21,900 $ 111,259 $ 91,642

NLOP Mezzanine Loan, net (a) (b) (c)

3 57,957 61,753 106,299 113,797

NLOP Mortgage Loan, net (a) (b) (c)

NLOP Mezzanine Loan, net (a) (b) (c) (d)

3 — — 57,957 61,753

(a) The carrying value of Non-recourse mortgages, net includes unamortized deferred financing costs of less than $ 0.1 million at December 31, 2023.

The carrying value of the NLOP Mezzanine Loan, net ( Note 11 ) includes unamortized deferred financing costs of $ 1.0 million and $ 2.4 million at December 31, 2024 and 2023, respectively.

The carrying value of the NLOP Mortgage Loan, net ( Note 11 ) includes unamortized deferred financing costs of $ 6.7 million at December 31, 2023.

(b) The carrying value of Non-recourse mortgages, net includes unamortized premium of $ 0.4 million and unamortized discount of $ 0.7 million at December 31, 2024 and 2023, respectively.

The carrying value of the NLOP Mezzanine Loan, net ( Note 11 ) includes unamortized discount of $ 2.2 million and $ 5.6 million at December 31, 2024 and 2023, respectively.

The carrying value of the NLOP Mortgage Loan, net ( Note 11 ) includes unamortized discount of $ 15.3 million at December 31, 2023.

Net Lease Office Properties 2025 10-K – 61

Notes to Consolidated Financial Statements

(a) The carrying value of the NLOP Mezzanine Loan, net ( Note 10 ) includes unamortized deferred financing costs of $ 1.0 million at December 31, 2024.

(b) The carrying value of Non-recourse mortgages, net includes unamortized premium of $ 0.4 million at December 31, 2024.

The carrying value of the NLOP Mezzanine Loan, net ( Note 10 ) includes unamortized discount of $ 2.2 million at December 31, 2024.

(c) We determined the estimated fair value of our non-recourse mortgage loans, NLOP Mezzanine Loan, and NLOP Mortgage Loan using a discounted cash flow model that estimates the present value of the future loan payments by discounting such payments at current estimated market interest rates.

The estimated market interest rates consider interest rate risk and the value of the underlying collateral, which includes quality of the collateral, the credit quality of the tenant/obligor, and the time until maturity.

(d) In April 2025, we fully repaid the NLOP Mezzanine Loan ( Note 10 ).

We estimated that our other financial assets and liabilities, excluding finance receivables ( Note 6 ), had fair values that approximated their carrying values at both December 31, 2025 and 2024.

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Our impairment policies are described in Note 3 .

The following table presents information about assets for which we recorded an impairment charge and that were measured at fair value on a non-recurring basis (in thousands):

The following table presents information about assets for which we recorded an impairment charge and that were measured at fair value on a non-recurring basis (classified as Level 3) (in thousands):

Years Ended December 31,

2025 2024 2023

Measurements Impairment

1 unchanged sentence

Measurements Impairment

Charges Fair Value

Measurements Impairment

Impairment Charges

2 unchanged sentences

$ 140,814 $ 78,237 $ 125,599

Impairment charges, and their related triggering events and fair value measurements, recognized during the years ended December 31, 2025, 2024, and 2023 were as follows:

The impairment charges described below are reflected within Impairment charges — real estate in our consolidated statements of operations.

2025 — During the year ended December 31, 2025, we recognized an impairment charge of $ 81.6 million on a property in Houston, Texas, leased to KBR.

After performing a strategic review of the asset at the direction of our Board of Trustees during the second quarter of 2025, we commenced sale efforts for the property.

As a result, this met our likely disposition impairment trigger event in accordance with ASC 360, Property, Plant, and Equipment , at which time we determined that the carrying value of the asset was not fully recoverable.

The impairment charge reflects the excess of the asset’s carrying amount over its estimated fair value.

The fair value was determined based on valuation techniques consistent with ASC 820, Fair Value Measurement , which factored in current market conditions, existing lease terms, and assumptions about the highest and best use of the asset, using the following unobservable inputs:

• Cash flow discount rate of 10.0 % commencing on June 30, 2025 and ending on an assumed future sale date;

• Future sale value discount rate of 10.0 % commencing on June 30, 2025 and ending on an assumed future sale date;

• Future buyer required return of 15.0 % commencing on an assumed future sale date and ending after an assumed buyer hold period.

Net Lease Office Properties 2025 10-K – 62

Notes to Consolidated Financial Statements

Impairment charges, and their related triggering events and fair value measurements, recognized during the years ended December 31, 2024 and 2023, were as follows (during the year ended December 31, 2022, no impairment was deemed necessary):

The impairment charges described below are reflected within Impairment charges — real estate in our consolidated statements of operations.

2024 — During the year ended December 31, 2024, we recognized impairment charges totaling $ 47.7 million on nine properties in order to reduce their carrying values to their estimated fair values, which approximated their estimated selling prices.

Five of these properties were sold during 2024.

During the fourth quarter of 2025, we recognized another impairment charge of $ 3.2 million on this property, in order to reduce its carrying value to its estimated fair value, which approximated its estimated selling price, less costs to sell.

This property was classified as held for sale as of December 31, 2025 ( Note 5 ) and sold in January 2026 ( Note 1 7 ).

Additionally, during the year ended December 31, 2025, we recognized an impairment charge of $ 14.6 million on a property in Warrenville, Illinois, due to changes in expected cash flows related to the existing tenant’s lease expiration in 2027, in order to reduce its carrying value to its estimated fair value.

The fair value measurement for this property was determined by using the following unobservable inputs:

• Market rents of $ 14 per square foot;

• Cash flow discount rate of 7.0 %;

• Property residual value of $ 35.90 per square foot, based on comparable dispositions;

• Future sale value discount rate of 8.0 %;

• Terminal capitalization rate of 8.5 %.

In addition, during the year ended December 31, 2025, we recognized an impairment charge of $ 10.6 million on a property in Quincy, Massachusetts, due to changes in expected cash flows related to the existing tenant’s lease expiration in 2027, in order to reduce its carrying value to its estimated fair value.

The fair value measurement for this property was determined by using the following unobservable inputs:

• Market rents of $ 20 per square foot;

• Cash flow discount rate of 8.0 %;

• Future sale value discount rate of 11.0 %;

• Terminal capitalization rate of 8.5 %.

Furthermore, during the year ended December 31, 2025, we recognized impairment charges totaling $ 30.8 million on six properties, in order to reduce their carrying values to their estimated fair values, which approximated their estimated selling prices, less costs to sell.

Five of these properties were sold in 2025 and one was sold in February 2026 ( Note 17 ).

Five of these properties were sold during 2024 and four were sold during 2025.

Additionally, during the year ended December 31, 2024, we recognized impairment charges totaling $ 30.6 million on three properties due to changes in expected cash flows related to the existing tenants’ lease expirations in 2025, in order to reduce their carrying values to their estimated fair values.

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First property (impairment charge of $ 17.1 million;

this property was sold in 2025):

• Market rents of 200 Norwegian krone per square foot;

3 unchanged sentences

Second property (impairment charge of $ 12.2 million;

this property was sold in 2025):

• Market rents ranging from $ 7 per square foot to $ 15 per square foot;

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• Cash flow discount rate of 9.0 %.

2023 — During the year ended December 31, 2023, we recognized impairment charges totaling $ 32.7 million on three properties leased to the same tenant due to the tenant’s lease expiration in 2024, in order to reduce their carrying values to their estimated fair values, which approximated their estimated selling prices.

One of the properties was sold in November 2024.

Net Lease Office Properties 2025 10-K – 63

Notes to Consolidated Financial Statements

One of the properties was sold in 2024.

Additionally, we recognized an impairment charge of $ 29.3 million on a property due to the tenant’s lease expiration in 2024, in order to reduce its carrying value to its estimated fair value.

The fair value measurement for this property was determined by using the following unobservable inputs:

The fair value measurement for this property was determined by using the following unobservable inputs (this property was sold in 2025):

• Market rents ranging from $ 23 per square foot to $ 31 per square foot;

1 unchanged sentence

• Cash flow discount rate of 9.3 %.

We also recognized an impairment charge of $ 1.1 million on a property due to the tenant’s lease expiration in 2024, in order to reduce its carrying value to its estimated fair value, which approximated its estimated selling price.

This property was disposed of in April 2024.

Net Lease Office Properties 2024 10-K – 64

Notes to Consolidated Financial Statements

This property was disposed of in 2024.

The impairment charges described below are reflected within Impairment charges — goodwill in our consolidated statements of operations.

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Market risk includes changes in the value of our properties and related loans, due to changes in interest rates or other market factors.

We own investments in the United States and Europe and are subject to risks associated with fluctuating foreign currency exchange rates.

We own investments in the United States and previously owned investments in Europe, and have been subject to risks associated with fluctuating foreign currency exchange rates.

Derivative Financial Instruments

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Derivatives that are not designated as hedges must be adjusted to fair value through earnings.

For derivatives designated and that qualify as cash flow hedges, the change in fair value of the derivative is recognized in Other comprehensive (loss) income until the hedged item is recognized in earnings.

For derivatives designated and that qualify as cash flow hedges, the change in fair value of the derivative is recognized in Other comprehensive income (loss) until the hedged item is recognized in earnings.

Such gains and losses are recorded within Interest expense in our consolidated statements of operations.

The earnings recognition of excluded components is presented in the same line item as the hedged transactions.

Net Lease Office Properties 2025 10-K – 64

Notes to Consolidated Financial Statements

All derivative transactions with an individual counterparty are governed by a master International Swap and Derivatives Association agreement, which can be considered as a master netting arrangement;

however, we report all our derivative instruments on a gross basis on our consolidated financial statements.

At both December 31, 2024 and 2023, no cash collateral had been posted nor received for any of our derivative positions.

Our interest rate cap matured in November 2025.

As of December 31, 2025, we do not have any derivative financial instruments.

At December 31, 2024, no cash collateral had been posted nor received for any of our derivative positions.

The following table sets forth certain information regarding our derivative instruments (in thousands):

Asset Derivatives Fair Value at

Derivatives Designated as Hedging Instruments Balance Sheet Location December 31, 2024 December 31, 2023

Interest rate cap Other assets, net $ — $ 433

Derivatives Not Designated as Hedging Instruments

Derivatives Not Designated as Hedging Instruments Balance Sheet Location December 31, 2025 December 31, 2024

Interest rate cap Other assets, net $ — $ 10

Total derivatives $ — $ 10

Net Lease Office Properties 2024 10-K – 65

Notes to Consolidated Financial Statements

The following tables present the impact of our derivative instruments in the consolidated financial statements (in thousands):

Amount of Gain (Loss) Recognized on Derivatives in

Other Comprehensive (Loss) Income

Other Comprehensive Income (Loss)

Years Ended December 31,

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Amount of Gain (Loss) on Derivatives Reclassified from

Other Comprehensive (Loss) Income

Other Comprehensive Income (Loss)

Derivatives in Cash Flow Hedging Relationships Location of Gain (Loss) Recognized in Income Years Ended December 31,

2025 2024 2023

Interest rate cap Other gains and (losses) $ — $ ( 951 ) $ —

1 unchanged sentence

Total $ — $ ( 1,428 ) $ ( 144 )

Amounts reported in Other comprehensive (loss) income related to interest rate derivative contracts will be reclassified to Interest expense as interest is incurred on our variable-rate debt.

Amounts reported in Other comprehensive income (loss) related to interest rate derivative contracts will be reclassified to Interest expense as interest is incurred on our variable-rate debt.

Amount of Gain (Loss) on Derivatives Recognized in Income

Derivatives in Cash Flow Hedging Relationships Location of Gain (Loss) Recognized in Income Years Ended December 31,

2025 2024 2023

Interest rate cap Interest expense $ — $ ( 17 ) $ ( 2 )

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Our objective in using these derivatives is to limit our exposure to interest rate movements.

During the third quarter of 2024, we de-designated our interest rate cap as a hedging instrument, since we determined that the derivative is no longer highly effective, given mismatches between the hedged notional of the interest rate cap versus the outstanding principal on the NLOP Mortgage Loan (which was fully repaid during 2024 ( Note 11 )).

The interest rate caps that our consolidated subsidiaries had outstanding at December 31, 2024 are summarized as follows (currency in thousands):

Interest Rate Derivatives Number of Instruments Notional

Amount Fair Value at

December 31, 2024

Not Designated as Cash Flow Hedging Instruments

Interest rate cap 1 150,904 USD $ 10

This interest rate cap matured in November 2025.

Net Lease Office Properties 2025 10-K – 65

Notes to Consolidated Financial Statements

Credit Risk-Related Contingent Features

We measure our credit exposure on a counterparty basis as the net positive aggregate estimated fair value of our derivatives, net of any collateral received.

No collateral was received as of December 31, 2024.

At December 31, 2024, both our total credit exposure and the maximum exposure to any single counterparty was less than $ 0.1 million.

Debt Facility

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Upon closing of the Spin-Off on November 1, 2023 ( Note 1 ), the NLOP Financing Arrangements were drawn in full, and approximately $ 343.9 million of the proceeds from the financing (net of transaction expenses) was transferred to WPC in connection with the Spin-Off.

During the year ended December 31, 2025, we fully repaid the NLOP Mezzanine Loan, which had $ 61.1 million of outstanding principal as of December 31, 2024, using net proceeds from certain dispositions, as well as excess cash flow from operations and other sources, including the application of loan reserves.

During the year ended December 31, 2024, we fully repaid the NLOP Mortgage Loan, which had $ 288.9 million of outstanding principal as of December 31, 2023, using proceeds from certain dispositions, as well as cash flow from rent on our properties and other sources.

The NLOP Financing Arrangements were initially collateralized by the assignment of 40 of our previously unencumbered real estate properties.

As of December 31, 2024, the NLOP Mortgage Loan was repaid and the remaining outstanding principal balance on the NLOP Mezzanine Loan was secured by pledges of equity in 26 of our properties, following the dispositions of 14 properties during 2023 and 2024.

For a list of our encumbered properties, please see Schedule III — Real Estate and Accumulated Depreciation .

The NLOP Mezzanine Loan bears interest at an annual rate of 14.5 % ( 10.0 % of which is required to be paid current on a monthly basis, and 4.5 % of which is a payment-in-kind accrual, on a quarterly basis).

We expect to use the net proceeds from property sales, as well as cash flow from rent on our properties and other sources, to repay the NLOP Mezzanine Loan.

During the year ended December 31, 2024, we repaid $ 53.2 million of outstanding principal on the NLOP Mezzanine Loan, using proceeds from certain dispositions, as well as cash flow from rent on our properties and other sources.

In February 2025, we repaid $ 3.3 million of outstanding principal on the NLOP Mezzanine Loan using excess cash ( Note 18 ).

The following table presents a summary of our NLOP Financing Arrangements (dollars in thousands):

NLOP Financing Arrangements Original Principal Balance Interest Rate at December 31, 2024

Maturity Date at December 31, 2024

Principal Outstanding Balance at December 31,

NLOP Mezzanine Loan (a)

$ 120,000 14.5 %

11/9/2028 $ 61,141 $ 114,336

NLOP Mortgage Loan (b)

335,000 N/A N/A — 288,895

$ 61,141 $ 403,231

(a) Balance excludes unamortized discount of $ 2.2 million and $ 5.6 million at December 31, 2024 and 2023, respectively, and unamortized deferred financing costs of $ 1.0 million and $ 2.4 million at December 31, 2024 and 2023, respectively.

(b) Balance excludes unamortized discount of $ 15.3 million at December 31, 2023 and unamortized deferred financing costs of $ 6.7 million at December 31, 2023.

Net Lease Office Properties 2024 10-K – 67

Notes to Consolidated Financial Statements

Non-Recourse Mortgages

Non-recourse mortgages consist of mortgage notes payable, which are collateralized by the assignment of real estate properties.

For a list of our encumbered properties, please see Schedule III — Real Estate and Accumulated Depreciation .

At December 31, 2024, our non-recourse mortgage notes payable encumbered six properties, with an aggregate weighted-average interest rate of 4.5 % (fixed-rate and variable-rate non-recourse mortgage notes payable were 4.3 % and 4.9 %, respectively), with maturity dates ranging from January 2025 to May 2026.

A non-recourse mortgage loan with an outstanding principal balance of $ 25.2 million as of December 31, 2024 and a maturity date of January 6, 2025 has not been repaid as of the date of this Report ( Note 18 ).

This non-recourse mortgage loan encumbers a property classified as Assets held for sale, net, as of December 31, 2024 ( Note 6 ).

Non-recourse mortgages for properties acquired in the CPA:18 Merger were $ 138.4 million for the year ended December 31, 2022.

Refer to Note 4 for further information on CPA:18 Merger.

At December 31, 2025, our only non-recourse mortgage note payable encumbered one property, with a fixed interest rate of 7.0 %, and a maturity date of July 2026.

This mortgage encumbered a property classified as net investments in sales-type lease as of December 31, 2025 ( Note 6 ).

Prior to the Spin-Off, certain wholly-owned affiliates of WPC entered into debt agreements with the international NLOP entities to provide the funding necessary to acquire certain international assets.

In connection with the Spin-Off, WPC assigned to us the receivable related to these debt amounts (“Parent Debt”), which eliminates in consolidation.

During the year ended December 31, 2022, we prepaid Parent Debt totaling $ 3.1 million.

Parent Debt for a property acquired in the CPA:18 Merger was $ 3.9 million for the year ended December 31, 2022.

Repayments During 2025

During the year ended December 31, 2025, we repaid four non-recourse mortgage loans totaling $ 49.8 million.

We recognized a net loss on extinguishment of debt of $ 0.1 million on these repayments, which is included within Other gains and (losses) on our consolidated statements of operations.

The weighted-average interest rate for these non-recourse mortgage loans was 7.5 %.

Repayments During 2024

During the year ended December 31, 2024, we prepaid two non-recourse mortgage loans totaling $ 20.8 million.

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The weighted-average interest rate for these non-recourse mortgage loans on their respective dates of repayment was 5.2 %.

Repayments During 2022

During the year ended December 31, 2022, we repaid at or close to maturity non-recourse mortgage loans totaling $ 36.8 million.

We recognized an aggregate net loss on extinguishment of debt of less than $ 0.1 million on these repayments, which is included within Losses on extinguishment of debt and other on our consolidated statements of operations.

The weighted-average interest rate for these non-recourse mortgage loans on their respective dates of repayment was 4.3 %.

Interest Paid

For the years ended December 31, 2024, 2023, and 2022, interest paid was $ 41.3 million, $ 39.3 million, and $ 26.8 million, respectively.

Foreign Currency Exchange Rate Impact

During the year ended December 31, 2024, the U.S.

dollar strengthened against the Norwegian krone, resulting in a decrease of $ 4.5 million in the carrying value of our Non-recourse mortgages, net from December 31, 2023 to December 31, 2024.

Net Lease Office Properties 2025 10-K – 66

Notes to Consolidated Financial Statements

Interest Paid

For the years ended December 31, 2025, 2024, and 2023, interest paid was $ 9.2 million, $ 41.3 million, and $ 39.3 million, respectively.

Scheduled Debt Principal Payments

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2026 $ 21,900

Total principal payments 171,982

Unamortized discount, net ( 1,798 )

Unamortized deferred financing costs ( 968 )

Total $ 21,900

Certain amounts are based on the applicable foreign currency exchange rate at December 31, 2024.

The credit agreements for certain of our non-recourse mortgage loan agreements and NLOP Financing Arrangements include customary financial maintenance covenants that require us to maintain certain ratios and benchmarks at the end of each quarter.

We were in compliance with all of these covenants at December 31, 2024.

Commitments and Contingencies

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Common Shares

Dividends paid to shareholders consist of ordinary income, capital gains, return of capital or a combination thereof for income tax purposes.

Dividends paid to shareholders may consist of ordinary income, capital gains, return of capital or a combination thereof for income tax purposes.

Our dividends per share are summarized as follows:

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Cash paid in connection with the share dividend totaled $ 1.1 million, which includes cash paid in lieu of fractional shares.

Special Cash Distributions

In August 2025, our Board of Trustees declared a special cash distribution of $ 3.10 per share, totaling approximately $ 45.9 million.

The distribution was paid on September 3, 2025 to shareholders of record as of August 18, 2025.

In November 2025, our Board of Trustees declared a special cash distribution of $ 4.10 per share, totaling approximately $ 60.7 million.

The distribution was paid on December 19, 2025 to shareholders of record as of December 4, 2025.

In December 2025, our Board of Trustees declared a special cash distribution of $ 5.10 per share, totaling approximately $ 75.6 million.

The distribution was paid on January 20, 2026 to shareholders of record as of January 2, 2026.

Net Lease Office Properties 2025 10-K – 67

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2025 2024 2023

Net (loss) income – basic and diluted $ ( 91,471 ) $ ( 131,746 ) $ 15,779

Net loss – basic and diluted $ ( 145,262 ) $ ( 91,471 ) $ ( 131,746 )

Weighted-average shares outstanding – basic and diluted 14,814,075 14,789,514 14,631,265

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Therefore, all potentially dilutive securities are antidilutive and accordingly, basic net loss per share equals diluted net loss per share.

For the year ended December 31, 2022, there were no potentially dilutive securities excluded from the computation of diluted earnings per share.

Reclassifications Out of Accumulated Other Comprehensive Loss

3 unchanged sentences

$ — $ ( 42,464 ) $ ( 42,464 )

Other comprehensive loss before reclassifications — ( 1,233 ) ( 1,233 )

Balance at December 31, 2022 — ( 42,464 ) ( 42,464 )

Other comprehensive income before reclassifications ( 1,335 ) 8,055 6,720

8 unchanged sentences

Interest expense 477 — 477

Gain (loss) on sale of real estate, net ( Note 16 )

Gain on sale of real estate, net ( Note 1 5 )

— ( 4,315 ) ( 4,315 )

2 unchanged sentences

Balance at December 31, 2024 — ( 40,157 ) ( 40,157 )

See Note 10 for additional information on our derivatives activity recognized within Other comprehensive (loss) income for the periods presented.

Other comprehensive loss before reclassifications — ( 1,473 ) ( 1,473 )

Amounts reclassified from accumulated other comprehensive loss to:

Loss on sale of real estate, net ( Note 1 5 )

— 41,630 41,630

Total — 41,630 41,630

Net current period other comprehensive income — 40,157 40,157

Balance at December 31, 2025 $ — $ — $ —

See Note 9 for additional information on our derivatives activity recognized within Other comprehensive income (loss) for the periods presented.

Net Lease Office Properties 2025 10-K – 68

Notes to Consolidated Financial Statements

Stock-Based and Other Compensation

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At December 31, 2025, we maintained the stock-based compensation plan described below.

The total compensation expense for awards issued under this plan was $ 0.3 million for the year ended December 31, 2024 and less than $ 0.1 million for the period from November 1, 2023 to December 31, 2023, which was included in General and administrative expenses in the consolidated financial statements.

Net Lease Office Properties 2024 10-K – 70

Notes to Consolidated Financial Statements

There were no unvested shares outstanding at December 31, 2025 and 2024.

The total compensation expense for awards issued under this plan was $ 0.3 million for the year ended December 31, 2024.

2023 Incentive Award Plan

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Through the date of this Report, we have only issued RSUs under the 2023 Incentive Award Plan to members of our Board (we have no employees).

Nonvested RSUs at December 31, 2024 and changes during the period from November 1, 2023 to December 31, 2023 and the year ended December 31, 2024 were as follows:

Nonvested RSUs at December 31, 2025 and changes during the period from November 1, 2023 to December 31, 2023 and the year ended December 31, 2024 were as follows (there was no activity during the year ended December 31, 2025):

Shares Weighted-Average Grant Date Fair Value

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Income Tax Provision

The components of our (benefit from) provision for income taxes for the periods presented are as follows (in thousands):

The components of our provision for (benefit from) income taxes for the periods presented are as follows (in thousands):

Years Ended December 31,

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Current $ 3 $ 11 $ 58

Deferred — — —

State and Local

Current 26 242 357

Deferred — — —

Current 129 636 1,211

1 unchanged sentence

129 ( 2,635 ) 10

Total (Benefit from) Provision for Income Taxes $ ( 2,382 ) $ 425 $ 486

Total Provision for (Benefit from) Income Taxes $ 158 $ ( 2,382 ) $ 425

Net Lease Office Properties 2025 10-K – 69

7 unchanged sentences

Change in valuation allowance 2,931 10,592 3,179

Non-deductible expense 63 5 1

Rate differential ( 45 ) ( 494 ) ( 63 )

State and local taxes, net of federal benefit 29 ( 36 ) ( 30 )

Non-deductible expense 5 1 ( 45 )

Election of TRS Status (a)

Other 32 ( 169 ) ( 520 )

Total (benefit from) provision for income taxes $ ( 2,382 ) $ 425 $ 486

Total Provision for (Benefit from) Income Taxes $ 158 $ ( 2,382 ) $ 425

(a) Represents deferred taxes recorded as a result of our taxable REIT subsidiary (“TRS”) status election for certain of our domestic real estate properties.

8 unchanged sentences

Net Deferred Tax Assets $ — $ —

Deferred Tax Liabilities

Basis differences — foreign investments — ( 10,450 )

Total deferred tax liabilities — ( 10,450 )

Net Deferred Tax Liability $ — $ ( 10,372 )

There were no deferred tax liabilities as of December 31, 2025 or 2024.

Our deferred tax assets and liabilities are primarily the result of temporary differences related to the following:

3 unchanged sentences

• Timing differences generated by differences in the GAAP basis and the tax basis of assets such as those related to capitalized acquisition costs, straight-line rent, prepaid rents, and intangible assets;

• Tax net operating losses in certain subsidiaries, including those domiciled in foreign jurisdictions, that may be realized in future periods if the respective subsidiary generates sufficient taxable income.

• Tax net operating losses in certain subsidiaries that may be realized in future periods if the respective subsidiary generates sufficient taxable income.

As of December 31, 2025, U.S.

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There are also state net operating loss carryforwards of $ 5.3 million, which will begin to expire in 2044.

As of December 31, 2024, net operating loss carryforwards in foreign jurisdictions were $ 0.1 million, which will not expire as they can be carried forward indefinitely.

Net Lease Office Properties 2024 10-K – 72

Notes to Consolidated Financial Statements

The net deferred tax liability in the table above is comprised of deferred tax asset balance, net of certain deferred tax liabilities and valuation allowances, of $ 0.1 million at December 31, 2023, which is included in Other assets, net in the consolidated balance sheets, and other deferred tax liability balance of $ 10.5 million at December 31, 2023, which is included in Deferred income taxes in the consolidated balance sheets.

There were no such balances as of December 31, 2024.

Our taxable subsidiaries recognize tax positions in the financial statements only when it is more likely than not that the position will be sustained on examination by the relevant taxing authority based on the technical merits of the position.

1 unchanged sentence

A liability is established for differences between positions taken in a tax return and amounts recognized in the financial statements.

Net Lease Office Properties 2025 10-K – 70

Notes to Consolidated Financial Statements

At both December 31, 2025 and 2024, we had unrecognized tax benefits totaling $ 0.1 million that, if recognized, would have a favorable impact on our effective income tax rate in future periods.

3 unchanged sentences

Income Taxes Paid

Income taxes paid were $ 0.7 million, $ 2.7 million, and $ 1.8 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Income taxes paid were $ 0.7 million, $ 0.7 million, and $ 2.7 million during the years ended December 31, 2025, 2024, and 2023, respectively.

We elected to be taxed as a REIT under Section 856 through 860 of the Internal Revenue Code effective as of November 1, 2023.

2 unchanged sentences

We believe that we have operated, and we intend to continue to operate, in a manner that allows us to continue to qualify as a REIT.

We conduct business primarily in the United States and Europe, and as a result, we or one or more of our subsidiaries file income tax returns in the United States federal jurisdiction and various state, local, and foreign jurisdictions.

We conduct business in the United States, and as a result, we or one or more of our subsidiaries file income tax returns in the United States federal jurisdiction and various state, local, and foreign jurisdictions.

Property Dispositions

Our property dispositions are also discussed in Note 6 and Note 7 .

Our property dispositions are also discussed in Note 5 .

2025 — During the year ended December 31, 2025, we sold 14 properties, for total proceeds, net of selling costs, of $ 198.6 million, and recognized net gains on these sales totaling $ 10.5 million.

In September 2025, we transferred ownership of a property in Oslo, Norway, and the related non-recourse mortgage loan, which had an aggregate net asset carrying value of approximately $ 27.0 million and mortgage principal outstanding of $ 45.7 million, respectively, on the date of transfer, to a buyer, resulting in a net gain of $ 14.5 million (we also transferred cash on hand of $ 6.3 million to the lender and wrote off $ 2.1 million of working capital).

Additionally, in accordance with ASC 830-30-40, Foreign Currency Matters , we reclassified an aggregate of $ 40.5 million of net foreign currency translation losses from Accumulated other comprehensive loss to Loss on sale of real estate, net (as an increase to Loss on sale of real estate, net), since the sale represented a disposal of all of our investments denominated in Norwegian krone ( Note 3 , Note 12 ).

In connection with the sale of a property in Poland in March 2025, and in accordance with ASC 830-30-40, Foreign Currency Matters , we reclassified an aggregate of $ 1.1 million of net foreign currency translation losses from Accumulated other comprehensive loss to Loss on sale of real estate, net (as an increase to Loss on sale of real estate, net), since the sale represented a disposal of all of our investments denominated in euros ( Note 3 , Note 12 ).

2024 — During the year ended December 31, 2024, we sold 14 properties for total proceeds, net of selling costs, of $ 320.1 million, and recognized a net gain on these sales totaling $ 22.5 million, which is included in Gain (loss) on sale of real estate, net, on the consolidated statements of operations (inclusive of income taxes totaling $ 0.1 million recognized upon sale).

In connection with the sale of a property in the United Kingdom in October 2024, and in accordance with ASC 830-30-40, Foreign Currency Matters , we reclassified an aggregate of $ 4.3 million of net foreign currency translation gains from Accumulated other comprehensive loss to Gain on sale of real estate, net (as an increase to Gain on sale of real estate, net), since the sale represented a disposal of all of our United Kingdom investments.

In April 2024, we transferred ownership of a property in Warrenville, Illinois, and the related non-recourse mortgage loan, which had an aggregate net asset carrying value of approximately $ 19.3 million and mortgage principal outstanding of $ 19.8 million, respectively, on the date of transfer, to the mortgage lender, resulting in a net loss of $ 1.0 million (we also wrote off $ 1.4 million of working capital).

In April 2024, we transferred ownership of a property in Tempe, Arizona, and the related non-recourse mortgage loan, which had an aggregate net asset carrying value of approximately $ 13.3 million and mortgage principal outstanding of $ 13.2 million, respectively, on the date of transfer, to the mortgage lender, resulting in a net loss of $ 1.3 million (we also wrote off $ 1.2 million of working capital).

2023 — During the year ended December 31, 2023, we sold four properties for total proceeds, net of selling costs, of $ 38.9 million, and recognized a net gain on these sales totaling $ 4.7 million, which is included in Gain (loss) on sale of real estate, net, on the consolidated statements of operations.

Net Lease Office Properties 2025 10-K – 71

Notes to Consolidated Financial Statements

Segment Information

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Our revenues are largely derived from the long-term leases that we execute with tenants.

These revenues are classified as either Lease revenues ( Note 6 ) or Income from finance leases and loans receivable ( Note 7 ) in accordance with ASC 842, Leases .

These revenues are classified as either Lease revenues ( Note 5 ) or Income from finance leases ( Note 6 ) in accordance with ASC 842, Leases .

Our operating expenses are regularly reviewed by our CODM.

Property expenses, excluding reimbursable tenant costs, General and administrative expenses, Asset management fees, Interest expense, and Benefit from (provision for) income taxes.

Property expenses, excluding reimbursable tenant costs, General and administrative expenses, Asset management fees, Interest expense, and (Provision for) benefit from income taxes.

Geographic Information

Our portfolio is comprised of domestic and international investments.

At December 31, 2024, our international investments were comprised of investments in Poland and Norway.

At December 31, 2025, our portfolio comprises domestic investments.

We sold all of our investments in Norway and Poland during 2025.

We sold all of our investments in the United Kingdom during 2024.

No international tenant or country individually comprised at least 10% of our total lease revenues for the years ended December 31, 2025, 2024, or 2023, or at least 10% of our total long-lived assets at December 31, 2025 or 2024.

One domestic tenant comprised (i) 23.4 %, 17.9 %, and 20.2 % of our total lease revenues for the years ended December 31, 2024, 2023, and 2022, respectively, and (ii) 22.5 % and 14.4 % of our total long-lived assets at December 31, 2024 and 2023, respectively.

Another domestic tenant comprised 12.7 % of our total lease revenues for the year ended December 31, 2024.

Our tenant KBR comprised (i) 29.5 %, 23.4 %, and 17.9 % of our total lease revenues for the years ended December 31, 2025, 2024, and 2023, respectively, and (ii) 21.1 % and 22.5 % of our total long-lived assets at December 31, 2025 and 2024, respectively.

We sold the KBR property in January 2026 ( Note 17 ).

Our tenants Iowa Board of Regents and Intuit comprised 13.9 % and 10.7 %, respectively, of our total long-lived assets at December 31, 2025.

Our tenant JPMorgan Chase comprised 13.7 % and 12.7 % of our total lease revenues for the years ended December 31, 2025 and 2024, respectively.

We sold all properties leased to JPMorgan Chase during the year ended December 31, 2025.

The following tables present geographic information (in thousands):

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International (b)

29,510 146,747

Total $ 309,940 $ 707,443

(a) Consists of Net investments in real estate.

(b) We sold three international properties during the year ended December 31, 2024 and only have two international properties remaining ( Note 6 , Note 7 , Note 16 ).

Subsequent Events

Non-Recourse Mortgage Non-Payment

This non-recourse mortgage loan encumbers a property classified as Assets held for sale, net, as of December 31, 2024 ( Note 6 ).

(b) We sold two international properties during the year ended December 31, 2025 and have no international properties remaining ( Note 5 , Note 1 5 ).

Net Lease Office Properties 2025 10-K – 72

Notes to Consolidated Financial Statements

Repayments of NLOP Mezzanine Loan

In February 2025, we repaid $ 3.3 million of outstanding principal on the NLOP Mezzanine Loan using excess cash ( Note 11 ).

Rent Reimbursement

In February 2025, we entered into an agreement to reimburse a tenant $ 3.3 million of rent (as a rent credit) since the tenant had to vacate a property during a period of maintenance, which was included in our consolidated statements of operations for the year ended December 31, 2024 as a reduction to Lease revenues since it was treated as a contingency.

Subsequent Events

In January 2026, we sold the KBR property located in Houston, Texas, for gross proceeds of $ 66.0 million.

This property was classified as held for sale as of December 31, 2025 ( Note 5 ).

In January 2026, we sold a property located in Venice, California, for gross proceeds of $ 39.6 million.

This property was classified as held for sale as of December 31, 2025 ( Note 5 ).

In February 2026, we sold a property located in Martinsville, Virginia, for gross proceeds of $ 3.9 million.

This property was classified as held for sale as of December 31, 2025 ( Note 5 ).

In February 2026, we sold a property located in Raleigh, North Carolina, for gross proceeds of $ 8.7 million ( Note 6 ).

Special Cash Distribution

In January 2026, our Board of Trustees declared a special cash distribution of $ 6.75 per share, totaling approximately $ 100.0 million.

The distribution was paid on February 17, 2026 to shareholders of record as of January 30, 2026.

Net Lease Office Properties 2025 10-K – 73

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Land, Buildings and Improvements (Office Property Locations)

Raleigh, NC $ — $ 1,638 $ 1,255 $ 2 $ ( 780 ) $ 828 $ 1,287 $ 2,115 $ 1,200 1983 Jan.

King of Prussia, PA $ — $ 1,219 $ 6,283 $ 1,295 $ — $ 1,219 $ 7,578 $ 8,797 $ 5,218 1968 Jan.

Rio Rancho, NM — 1,190 9,353 5,866 ( 238 ) 2,287 13,884 16,171 9,146 1999 Jul.

Moorestown, NJ — 351 5,981 1,779 1 351 7,761 8,112 5,304 1964 Feb.

Venice, CA — 2,032 10,152 13,214 1 2,032 23,367 25,399 10,433 1991 Sep.

Fort Worth, TX — 4,600 37,580 327 — 4,600 37,907 42,507 14,118 2003 Feb.

Petersburg, FL — 1,466 15,207 3,877 — 1,466 19,084 20,550 7,348 1999 Sep.

Yardley, PA — 1,726 12,781 4,378 — 1,726 17,159 18,885 7,680 2002 Sep.

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Quincy, MA — 2,316 21,537 127 ( 11,064 ) 814 12,102 12,916 7,132 1989 Jun.

Houston, TX — 522 7,448 228 ( 1,166 ) 404 6,628 7,032 3,201 1999 Jan.

Roseville, MN — 2,560 16,025 435 — 2,560 16,460 19,020 3,223 2001 Nov.

The Woodlands, TX — 1,697 52,289 — ( 29,342 ) 645 23,999 24,644 7,427 2009 Oct.

Tampa, FL — 2,025 31,821 1,557 ( 8,124 ) 1,476 25,803 27,279 5,419 1985 Oct.

Tampa, FL — 1,864 18,022 410 — 1,864 18,432 20,296 2,946 1985 Oct.

Houston, TX — 2,136 2,344 — ( 1,143 ) 1,544 1,793 3,337 501 1982 Oct.

Martinsville, VA — 1,082 8,108 — — 1,082 8,108 9,190 1,406 2011 Oct.

Eagan, MN — 1,470 — — ( 951 ) 519 — 519 — 2005 Oct.

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Warrenville, IL — 3,662 23,711 — ( 13,091 ) 1,621 12,661 14,282 4,406 2002 Oct.

Houston, TX — 23,161 104,266 3,345 — 23,161 107,611 130,772 16,606 1973 Oct.

Krakow, Poland — 2,381 6,212 245 ( 3,659 ) 1,279 3,900 5,179 912 2003 Oct.

Plymouth, MN — 2,871 26,353 1,000 ( 11,515 ) 1,605 17,104 18,709 4,429 1999 Oct.

San Antonio, TX — 3,094 16,624 — — 3,094 16,624 19,718 3,211 2002 Oct.

Oak Creek, WI — 2,858 11,055 — — 2,858 11,055 13,913 1,938 2000 Oct.

Morrisville, NC — 2,374 30,140 7,071 — 2,374 37,211 39,585 5,172 1998 Mar.

Norcross, GA — 1,795 2,676 — — 1,795 2,676 4,471 229 1999 Aug.

Farmington Hills, MI — 2,195 5,213 1,062 — 2,195 6,275 8,470 446 2001 Aug.

Eagan, MN 8,828 1,298 7,445 — — 1,298 7,445 8,743 450 2013 Aug.

Net Lease Office Properties 2024 10-K – 77

SCHEDULE III — REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)

December 31, 2024

(in thousands)

Initial Cost to Company Cost Capitalized

Subsequent to

Acquisition (a)

Investments (b)

Gross Amount at which

Carried at Close of Period (c) (d)

Accumulated Depreciation (d)

Date of Construction Date Acquired Life on which

Depreciation in Latest

Description Encumbrances Land Buildings Land Buildings Total

Plano, TX 21,803 3,667 28,073 — ( 1,111 ) 3,667 26,962 30,629 1,698 2001 Aug.

Jacksonville, FL 9,657 2,084 6,673 — — 2,084 6,673 8,757 404 2001 Aug.

Coralville, IA — 2,222 35,695 — — 2,222 35,695 37,917 3,051 2015 Aug.

Oslo, Norway 39,771 15,763 33,250 27 ( 23,465 ) 8,000 17,575 25,575 1,711 2013 Aug.

$ — $ 33,723 $ 218,051 $ 12,728 $ ( 45,703 ) $ 26,946 $ 191,853 $ 218,799 $ 62,658

1 unchanged sentence

For business combinations, transaction costs are excluded.

(b) The increase (decrease) in net investment was primarily due to (i) impairment charges and (ii) changes in foreign currency exchange rates.

(c) Excludes (i) gross lease intangible assets of $ 238.5 million and the related accumulated amortization of $ 140.6 million, (ii) gross lease intangible liabilities of $ 18.9 million and the related accumulated amortization of $ 12.6 million, (iii) assets held for sale of $ 29.3 million, and (iv) real estate under construction of $ 0.4 million.

(b) The increase (decrease) in net investment was primarily due to impairment charges.

(c) Excludes (i) gross lease intangible assets of $ 55.9 million and the related accumulated amortization of $ 40.3 million, (ii) gross lease intangible liabilities of $ 4.5 million and the related accumulated amortization of $ 2.5 million, (iii) net investments in sales-type leases of $ 41.9 million, and (iv) assets held for sale of $ 96.3 million.

(d) A reconciliation of real estate and accumulated depreciation follows:

10 unchanged sentences

Reclassification to assets held for sale ( 99,312 ) ( 31,066 ) —

Reclassification to sales-type lease ( 35,411 ) — ( 17,861 )

Reclassification from assets held for sale 25,914 — —

Capital improvements 4,279 8,372 13,398

Foreign currency translation adjustment 3,616 ( 6,460 ) ( 757 )

Reclassification to sales-type lease — ( 17,861 ) —

Reclassification from real estate under construction 1,253 — —

Reclassification from direct financing leases — — 14,558

Acquisitions through CPA:18 Merger — — 196,867

Ending balance $ 218,799 $ 729,898 $ 1,203,991

5 unchanged sentences

Dispositions ( 62,087 ) ( 82,339 ) ( 4,782 )

Depreciation expense 23,687 31,237 28,923

Reclassification to assets held for sale ( 38,971 ) ( 1,769 ) —

Foreign currency translation adjustment ( 546 ) 226 ( 2,243 )

Depreciation expense 14,991 23,687 31,237

Reclassification to sales-type lease ( 3,626 ) — ( 4,163 )

Foreign currency translation adjustment 284 ( 546 ) 226

Ending balance $ 62,658 $ 152,067 $ 213,034

At December 31, 2024, the aggregate cost of real estate that we and our consolidated subsidiaries own for federal income tax purposes was approximately $ 1.1 billion.

At December 31, 2025, the aggregate cost of real estate that we and our consolidated subsidiaries own for federal income tax purposes was approximately $ 641.9 million.

Net Lease Office Properties 2025 10-K – 76

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data