Net Lease Office Properties 10-K

Item 8. Financial Statements and Supplementary Data. TABLE OF CONTENTS Page No. Report of Independent Registered Public Accounting Firm (PCAOB ID 238 ) 38 Consolidated Balance Sheets as of December 31, 202 5 and 20 24 39 Consolidated Statements of Operations for the Years Ended December 31, 202 5 , 202 4 , and 20 23 40 Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 202 5 , 202 4 , and 20 23 41 Consolidated Statements of Equity for the Years Ended December 31, 202 5 , 202 4 , and 20 23 42 Consolidated Statements of Cash Flows for the Years Ended December 31, 202 5 , 202 4 , and 20 23 43 Notes to Consolidated Financial Statements 44 Schedule II — Valuation and Qualifying Accounts for the Years Ended December 31, 202 5 , 202 4 , and 20 23 74 Schedule III — Real Estate and Accumulated Depreciation as of December 31, 202 5 75 Notes to Schedule III for the Years Ended December 31, 202 5 , 202 4 , and 20 23 76 Financial statement schedules other than those listed above are omitted because the required information is given in the financial statements, including the notes thereto, or because the conditions requiring their filing do not exist. Net Lease Office Properties 2025 10-K – 37 Report of Independent Registered Public Accounting Firm To the Board of Trustees and Shareholders of Net Lease Office Properties 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, 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. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ PricewaterhouseCoopers LLP New York, New York February 25, 2026 We have served as the Company’s auditor since 2022. Net Lease Office Properties 2025 10-K – 38 NET LEASE OFFICE PROPERTIES CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) December 31, 2025 2024 Assets Investments in real estate: Land, buildings and improvements $ 218,799 $ 730,345 Net investments in finance leases 41,878 — In-place lease intangible assets and other 45,160 209,968 Above-market rent intangible assets 10,760 30,512 Investments in real estate 316,597 970,825 Accumulated depreciation and amortization ( 102,926 ) ( 292,679 ) Assets held for sale, net 96,269 29,297 Net investments in real estate 309,940 707,443 Cash and cash equivalents 119,621 25,121 Restricted cash 3,011 43,305 Other assets, net 20,799 29,200 Total assets (a) $ 453,371 $ 805,069 Liabilities and Equity Debt: Non-recourse mortgages, net $ 21,900 $ 111,259 NLOP Mezzanine Loan, net — 57,957 Debt, net 21,900 169,216 Accounts payable, accrued expenses and other liabilities 56,104 44,145 Below-market rent intangible liabilities, net 1,990 6,305 Dividends payable 75,552 — Total liabilities (a) 155,546 219,666 Commitments and contingencies ( Note 1 1 ) Preferred stock, $ 0.001 par value, 5,000,000 shares authorized; none issued — — Common stock, $ 0.001 par value, 45,000,000 shares authorized; 14,814,075 shares issued and outstanding 15 15 Additional paid-in capital 855,813 855,813 Distributions in excess of accumulated earnings ( 561,917 ) ( 234,443 ) Accumulated other comprehensive loss — ( 40,157 ) Total shareholders’ equity 293,911 581,228 Noncontrolling interests 3,914 4,175 Total equity 297,825 585,403 Total liabilities and equity $ 453,371 $ 805,069 __________ (a) See Note 3 for details related to variable interest entities (“VIEs”). See Notes to Consolidated Financial Statements. Net Lease Office Properties 2025 10-K – 39 NET LEASE OFFICE PROPERTIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share amounts) Years Ended December 31, 2025 2024 2023 Revenues Lease revenues $ 99,262 $ 128,857 $ 166,034 Income from finance leases 610 89 1,189 Other lease-related income 19,043 13,301 7,742 118,915 142,247 174,965 Operating Expenses Impairment charges — real estate 140,814 78,237 63,143 Depreciation and amortization 35,878 56,696 74,998 Reimbursable tenant costs 22,451 26,520 27,957 Property expenses, excluding reimbursable tenant costs 8,588 10,901 8,642 General and administrative 7,309 7,502 13,610 Asset management fees 4,577 6,243 1,245 Separation and distribution related costs and other — 16 8,446 Impairment charges — goodwill — — 62,456 219,617 186,115 260,497 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 ) Other gains and (losses) ( 2,557 ) ( 2,154 ) 456 ( 44,302 ) ( 49,900 ) ( 45,765 ) 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 Basic and Diluted 14,814,075 14,789,514 14,631,265 See Notes to Consolidated Financial Statements. Net Lease Office Properties 2025 10-K – 40 NET LEASE OFFICE PROPERTIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in thousands) Years Ended December 31, 2025 2024 2023 Net Loss $ ( 145,162 ) $ ( 91,386 ) $ ( 131,722 ) Other Comprehensive Income (Loss) Foreign currency translation adjustments 40,157 ( 5,748 ) 8,055 Unrealized gain (loss) on derivative instruments — 1,191 ( 1,191 ) 40,157 ( 4,557 ) 6,864 Comprehensive Loss ( 105,005 ) ( 95,943 ) ( 124,858 ) Amounts Attributable to Noncontrolling Interests 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. Net Lease Office Properties 2025 10-K – 41 NET LEASE OFFICE PROPERTIES CONSOLIDATED STATEMENTS OF EQUITY (in thousands, except share and per share amounts) Common Stock Additional Paid-In Capital Distributions in Excess of Accumulated Earnings Accumulated Other Comprehensive Loss Net Parent Investment Total Shareholders’ and Parent Company Equity Noncontrolling Interests Total Equity $0.001 Par Value Shares Amount Balance at January 1, 2023 — $ — $ — $ — $ ( 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 ) Distributions to WPC in connection with the Spin-Off ( 353,133 ) ( 353,133 ) ( 353,133 ) Common shares issued in connection with the Spin-Off 14,620,919 15 855,504 ( 855,519 ) — — Net transfers from parent, including Spin-Off adjustments 52,169 52,169 52,169 Amortization of stock-based compensation expense 50 50 50 Contributions from noncontrolling interest — 2,775 2,775 Distributions to noncontrolling interest — ( 121 ) ( 121 ) Dividends declared ($ 0.34 per share) ( 4,971 ) ( 4,971 ) ( 4,971 ) Other comprehensive income: Foreign currency translation adjustments 8,055 8,055 8,055 Unrealized loss on derivative instruments ( 1,191 ) ( 1,191 ) ( 1,191 ) Balance at December 31, 2023 14,620,919 15 855,554 ( 142,960 ) ( 35,600 ) — 677,009 4,421 681,430 Net (loss) income ( 91,471 ) ( 91,471 ) 85 ( 91,386 ) Shares issued in connection with dividends paid 164,199 12 ( 12 ) — — Shares issued upon delivery of vested restricted share awards 28,957 ( 3 ) ( 3 ) ( 3 ) Amortization of stock-based compensation expense 250 250 250 Distributions to noncontrolling interest — ( 331 ) ( 331 ) Other comprehensive loss: Foreign currency translation adjustments ( 5,748 ) ( 5,748 ) ( 5,748 ) Unrealized gain on derivative instruments 1,191 1,191 1,191 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. Net Lease Office Properties 2025 10-K – 42 NET LEASE OFFICE PROPERTIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Years Ended December 31, 2025 2024 2023 Cash Flows — Operating Activities Net loss $ ( 145,162 ) $ ( 91,386 ) $ ( 131,722 ) Adjustments to net loss: Impairment charges — real estate 140,814 78,237 63,143 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 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 Cash Flows — Investing Activities 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 ) 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 ) 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 ) Proceeds from NLOP Mortgage Loan — — 317,263 Proceeds from NLOP Mezzanine Loan — — 113,646 Net transfers with Parent, including Spin-Off adjustments — — ( 51,708 ) Payment of financing costs — — ( 10,518 ) Contributions from noncontrolling interests — — 2,775 Net Cash Used in Financing Activities ( 218,885 ) ( 367,984 ) ( 36,778 ) Change in Cash and Cash Equivalents and Restricted Cash During the Year Effect of exchange rate changes on cash and cash equivalents and restricted cash 738 ( 1,027 ) ( 50 ) 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 Cash and cash equivalents and restricted cash, end of year $ 122,632 $ 68,426 $ 67,829 See Notes to Consolidated Financial Statements. Net Lease Office Properties 2025 10-K – 43 NET LEASE OFFICE PROPERTIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Business and Organization Pursuant to the terms of a separation and distribution agreement, W. P. Carey Inc. (“WPC”) spun off a portfolio of 59 office assets into a separate publicly-traded company (the “Spin-Off”). 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. On November 1, 2023, WPC completed the Spin-Off, contributing 59 office properties to NLOP. Following the closing of the Spin-Off, NLOP operates as a separate publicly-traded real estate investment trust (“REIT”), and certain wholly-owned affiliates of WPC (our “Advisor”) externally manage NLOP pursuant to certain advisory agreements (the “NLOP Advisory Agreements”). 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 (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 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”). 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. Note 2. Basis of Presentation NLOP For periods after November 1, 2023, the consolidated financial statements include the results of NLOP and all entities in which the Company has a controlling interest. 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 For periods prior to November 1, 2023, the accompanying historical consolidated financial statements and related notes of NLOP do not represent the balance sheet, statement of operations and cash flows of a legal entity, but rather a combination of entities under common control that have been “carved-out” of WPC’s consolidated financial statements and presented herein, in each case, in accordance with U.S. generally accepted accounting principles (“GAAP”). Intercompany transactions and balances have been eliminated in combination. The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. 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. 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. Equity in these consolidated financial statements represents the excess of total assets over total liabilities. Equity is impacted by contributions from and distributions to WPC, which are the result of treasury activities and net funding provided by or distributed to WPC prior to the Spin-Off, as well as the allocated costs and expenses described below. The consolidated financial statements also include an allocation of indirect costs and expenses incurred by WPC related to NLOP, primarily consisting of compensation and other general and administrative costs using the relative percentage of property ABR of NLOP and WPC management’s knowledge of NLOP. In addition, the consolidated financial statements reflect the allocation of interest expense from WPC unsecured debt, excluding debt that is specifically attributable to NLOP ( Note 10 ); interest expense was allocated by calculating the unencumbered net investment in real estate of each property held by NLOP as a percentage of WPC’s total consolidated unencumbered net investment in real estate and multiplying that percentage by the corporate interest expense on WPC unsecured debt ( Note 10 ). The amounts allocated in the accompanying consolidated financial statements are not necessarily indicative of the actual amount of such indirect expenses that would have been recorded had NLOP been a separate independent entity during the applicable periods. WPC believes the assumptions underlying WPC’s allocation of indirect expenses are reasonable. Goodwill attributable to NLOP was determined by first identifying those assets within NLOP that were previously deemed to be a part of a business combination and that WPC paid a premium for. This premium was then allocated to 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. Any goodwill directly attributable to deferred taxes assumed as part of a business combination and related to our European operations is recorded in its functional currency and translated at period end rates where applicable. The amounts allocated in the accompanying consolidated financial statements are not necessarily indicative of the actual amount of such indirect expenses that would have been recorded had NLOP been a separate independent entity. WPC believes the assumptions underlying WPC’s allocation of indirect expenses are reasonable. Note 3. Summary of Significant Accounting Policies Critical Accounting Policies and Estimates Accounting for Acquisitions In accordance with the guidance for business combinations, we determine whether a transaction or other event is a business combination, which requires that the assets acquired and liabilities assumed constitute a business. If the assets acquired are not a business, we account for the transaction or other event as an asset acquisition. Under both methods, we recognize the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity. In addition, for transactions that are business combinations, we evaluate the existence of goodwill or a gain from a bargain purchase. We capitalize acquisition-related costs and fees associated with asset acquisitions. We immediately expense acquisition-related costs and fees associated with business combinations. 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. The tangible assets consist of land, buildings, and site improvements. The intangible assets and liabilities include the above- and below-market value of leases and the in-place leases, which includes the value of tenant relationships. Land is typically valued utilizing the sales comparison (or market) approach. Buildings are valued, as if vacant, using the cost and/or income approach. 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. Assumptions used in the model are property-specific where this information is available; however, when certain necessary information is not available, we use available regional and property-type information. Assumptions and estimates include the following: • a discount rate or internal rate of return; • market rents, growth factors of rents, and market lease term; • capitalization rates to be applied to an estimate of market rent at the beginning and/or the end of the market lease term; • the marketing period necessary to put a lease in place; • carrying costs during the marketing period; and • leasing commissions and tenant improvement allowances. The discount rates and residual capitalization rates used to value the properties are selected based on several factors, including: • the creditworthiness of the lessees; • industry surveys; • property type; • property location and age; • current lease rates relative to market lease rates; and • anticipated lease duration. In the case where a tenant has a purchase option deemed to be favorable to the tenant, or the tenant has long-term renewal options at rental rates below estimated market rental rates, we generally include the value of the exercise of such purchase option or long-term renewal options in the determination of residual value. The remaining economic life of leased assets is estimated by relying in part upon third-party appraisals of the leased assets and industry standards. Different estimates of remaining economic life will affect the depreciation expense that is recorded. Purchase Price Allocation of Intangible Assets and Liabilities — For acquired properties that do not qualify as sale-leaseback transactions, we record above- and below-market lease intangible assets and liabilities for acquired properties based on the present value (using a discount rate reflecting the risks associated with the leases acquired including consideration of the credit of the lessee) of the difference between (i) the contractual rents to be paid pursuant to the leases negotiated or in place at the time of acquisition of the properties and (ii) our estimate of fair market lease rates for the property or equivalent property, both of which are measured over the estimated lease term, which includes renewal options that have rental rates below estimated market rental rates. We discount the difference between the estimated market rent and contractual rent to a present value using an interest rate reflecting our current assessment of the risk associated with the lease acquired, which includes a consideration of the credit of the lessee. When we enter into sale-leaseback transactions with above- or below-market leases, the intangibles will be accounted for as loan receivables or prepaid rent liabilities, respectively. We measure the fair value of below-market purchase option liabilities we acquire as the excess of the present value of the fair value of the real estate over the present value of the tenant’s exercise price at the option date. We determine these values using our estimates or by relying in part upon third-party valuations conducted by independent appraisal firms . We amortize the above-market lease intangible as a reduction of lease revenue over the remaining contractual lease term. We amortize the below-market lease intangible as an increase to lease revenue over the initial term and any renewal periods in the respective leases. 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. The cost avoidance is derived first by determining the in-place lease term on the subject lease. Then, based on our review of the market, the cost to be borne by a property owner to replicate a market lease to the remaining in-place term is estimated. These costs consist of: (i) rent lost during downtime (i.e., assumed periods of vacancy), (ii) estimated expenses that would be incurred by the property owner during periods of vacancy, (iii) rent concessions (i.e., free rent), (iv) leasing commissions, and (v) tenant improvements allowances given to tenants. We determine these values using our estimates or by relying in part upon third-party valuations. We amortize the value of in-place lease intangibles to depreciation and amortization expense over the remaining initial term of each lease. The amortization period for intangibles does not exceed the remaining depreciable life of the building. 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. If a lease is amended, we will determine whether the economics of the amended lease continue to support the existence of the above- or below-market lease intangibles. Purchase Price Allocation of Debt — When we acquire leveraged properties (for example, through the CPA:18 Merger), the fair value of the related debt instruments is determined using a discounted cash flow model with rates that take into account the credit of the tenants, where applicable, and interest rate risk. Such resulting premium or discount is amortized over the remaining term of the obligation. We also consider the value of the underlying collateral, taking into account the quality of the collateral, the credit quality of the tenant, the time until maturity and the current interest rate. Impairments Real Estate — We periodically assess whether there are any indicators that the value of our long-lived real estate and related intangible assets may be impaired or that their carrying value may not be recoverable. These impairment indicators include, but are not limited to, vacancies, an upcoming lease expiration, a tenant with credit difficulty, the termination of a lease by a tenant, or a likely disposition of the property. For real estate assets held for investment and related intangible assets in which an impairment indicator is identified, we follow a two-step process to determine whether an asset is impaired and to determine the amount of the charge. First, we compare the carrying value of the property’s asset group to the estimated future net undiscounted cash flow that we expect the property’s asset group will generate, including any estimated proceeds from the eventual sale of the property’s asset group. The undiscounted cash flow analysis requires us to make our best estimate of market rents, residual values, and holding periods. We estimate market rents and residual values using market information from outside sources such as third-party market research, external appraisals, broker quotes, or recent comparable sales. As our investment objective is to realize value for our shareholders, holding periods used in the undiscounted cash flow analysis are evaluated on an individual property basis based on our strategic hold time of each asset. Depending on the assumptions made and estimates used, the future cash flow projected in the evaluation of long-lived assets and associated intangible assets can vary within a range of outcomes. We consider the likelihood of possible outcomes in determining our estimate of future cash flows and, if warranted, we apply a probability-weighted method to the different possible scenarios. If the future net undiscounted cash flow of the property’s asset group is less than the carrying value, the carrying value of the property’s asset group is considered not recoverable. We then measure the impairment loss as the excess of the carrying value of the property’s asset group over its estimated fair value. 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 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. To identify any impairment, we first assess qualitative factors to determine whether it is more likely than not that the fair value of the Company is less than its carrying value. This assessment is used as a basis to determine whether it is necessary to calculate the fair value of the Company. Impairments, if any, will be the difference between the Company’s fair value and carrying amount, not to exceed the carrying amount of goodwill. 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 Variable Interest Entities When we obtain an economic interest in an entity, we evaluate the entity to determine if it should be deemed a variable interest entity (“VIE”) and, if so, whether we are the primary beneficiary and are therefore required to consolidate the entity. 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 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. Significant judgment is required to determine whether a VIE should be consolidated. We review the contractual arrangements provided for in the partnership agreement or other related contracts to determine whether the entity is considered a VIE, and to establish whether we have any variable interests in the VIE. We then compare our variable interests, if any, to those of the other variable interest holders to determine which party is the primary beneficiary of the VIE based on whether the entity (i) has the power to direct the activities that most significantly impact the economic performance of the VIE and (ii) has the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. The liabilities of these VIEs are non-recourse to us and can only be satisfied from each VIE’s respective assets. At both December 31, 2025 and 2024, we considered one entity to be a VIE (given certain decision-making rights each partner has in accordance with the partnership agreement), which we consolidated, as we are considered the primary beneficiary. The following table presents a summary of selected financial data of the consolidated VIE included in our consolidated balance sheets (in thousands): December 31, 2025 2024 Land, buildings and improvements $ 37,917 $ 37,917 In-place lease intangible assets and other 9,685 9,685 Above-market rent intangible assets 4,338 4,338 Accumulated depreciation and amortization ( 8,863 ) ( 6,271 ) Total assets 44,708 47,197 Total liabilities $ 382 $ 304 Net Lease Office Properties 2025 10-K – 48 Notes to Consolidated Financial Statements Leases As a Lessee : Right-of-use (“ROU”) assets, included within in-place lease intangible assets and other on our consolidated balance sheets, represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments under the lease. We determine if an arrangement contains a lease at contract inception and determine the classification of the lease at commencement. Operating lease ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. We do not include renewal options in the lease term when calculating the lease liability unless we are reasonably certain we will exercise the option. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. Our variable lease payments consist of increases as a result of the Consumer Price Index (“CPI”) or other comparable indices, taxes, and maintenance costs. Lease expense for lease payments is recognized on a straight-line basis over the term of the lease. Below-market land lease intangible assets and above-market land lease intangible liabilities are included as a component of ROU assets. See Note 5 for additional disclosures on the presentation of these amounts in our consolidated balance sheets. The implicit rate within our operating leases is generally not determinable and, as a result, we use our incremental borrowing rate at the lease commencement date to determine the present value of lease payments. The determination of our incremental borrowing rate requires judgment. We determine our incremental borrowing rate for each lease using estimated baseline mortgage rates. These baseline rates are determined based on a review of current mortgage debt market activity for benchmark securities across domestic and international markets, utilizing a yield curve. The rates are then adjusted for various factors, including level of collateralization and lease term. As a Lessor : We combine non-lease components (lease arrangements that include common area maintenance services) with related lease components (lease revenues), since both the timing and pattern of transfer are the same for the non-lease component and related lease component, the lease component is the predominant component, and the lease component would otherwise be classified as an operating lease. For (i) operating lease arrangements involving real estate that include common area maintenance services and (ii) all real estate arrangements that include real estate taxes and insurance costs, we present these amounts within lease revenues in our consolidated statements of operations. We record amounts reimbursed by the lessee in the period in which the applicable expenses are incurred if the reimbursements are deemed collectible. 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. If the lease is determined to be a sales-type lease, we record a net investment in the lease, which is equal to the sum of the lease payments receivable and the unguaranteed residual value, discounted at the rate implicit in the lease. Any difference between the fair value of the asset and the net investment in the lease is considered a gain on sale of real estate and recognized upon execution of the lease. Cash and Cash Equivalents — We consider all short-term, highly liquid investments that are both readily convertible to cash and have a maturity of three months or less at the time of purchase to be cash equivalents. Items classified as cash equivalents include commercial paper and money market funds. Our cash and cash equivalents are held in the custody of several financial institutions, and these balances, at times, exceed federally insurable limits. We seek to mitigate this risk by depositing funds only with major financial institutions. Restricted Cash — Restricted cash primarily consists of security deposits and amounts required to be reserved pursuant to lender agreements for debt service, capital improvements, and real estate taxes and is included within Other assets, net on the balance sheet. The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets to the consolidated statements of cash flows (in thousands): December 31, 2025 2024 2023 Cash and cash equivalents $ 119,621 $ 25,121 $ 16,269 Restricted cash (a) 3,011 43,305 51,560 Total cash and cash equivalents and restricted cash $ 122,632 $ 68,426 $ 67,829 __________ (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. We capitalize costs that extend the useful life of properties or increase their value, while we expense maintenance and repairs that do not improve or extend the lives of the respective assets as incurred. Gain/Loss on Sale — We recognize gains and losses on the sale of properties when the transaction meets the definition of a contract, criteria are met for the sale of one or more distinct assets, and control of the properties is transferred. Other Assets and Liabilities — We include prepaid expenses, straight-line rent receivables, derivative assets, tenant receivables, deferred charges, escrow balances held by lenders, and restricted cash balances in Other assets, net. We include amounts held on behalf of tenants, operating lease liabilities, and deferred revenue in Accounts payable, accrued expenses and other liabilities. Revenue Recognition, Real Estate Leased to Others — We lease real estate to others primarily on a net leased basis, whereby the tenant is generally responsible for operating expenses relating to the property, including property taxes, insurance, maintenance, repairs, and improvements. Our leases generally provide for either scheduled rent increases, periodic rent adjustments based on formulas indexed to changes in the CPI or similar indices. CPI-based adjustments are contingent on future events and are therefore not included as minimum rent in straight-line rent calculations. For our operating leases, we recognize future minimum rental revenue on a straight-line basis over the non-cancelable lease term of the related leases and charge expenses to operations as incurred ( Note 5 ). We record leases accounted for under the direct financing method as a net investment in direct financing leases ( Note 6 ). The net investment is equal to the cost of the leased assets. The difference between the cost and the gross investment, which includes the residual value of the leased asset and the future minimum rents, is unearned income. 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. 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. The fair value of a liability for an asset retirement obligation is recorded in the period in which it is incurred or at the point of acquisition of an asset with an assumed asset retirement obligation, and the cost of such liability is recorded as an increase in the carrying amount of the related long-lived asset by the same amount. The liability is accreted each period and the capitalized cost is depreciated over the estimated remaining life of the related long-lived asset. Revisions to estimated retirement obligations result in adjustments to the related capitalized asset and corresponding liability. In order to determine the fair value of the asset retirement obligations, we make certain estimates and assumptions including, among other things, projected cash flows, the borrowing interest rate, and an assessment of market conditions that could significantly impact the estimated fair value. These estimates and assumptions are subjective. Depreciation — We compute depreciation of building and related improvements using the straight-line method over the estimated remaining useful lives of the properties (not to exceed 40 years) and furniture, fixtures, and equipment. We compute depreciation of tenant improvements using the straight-line method over the lesser of the remaining term of the lease or the estimated useful life. Net Parent Investment — In the consolidated balance sheets, the net parent investment represents WPC’s historical investment in NLOP prior to the Spin-Off, accumulated net earnings after taxes, and the net effect of transactions between NLOP and WPC. Stock-Based Compensation — We have granted restricted share units (“RSUs”) to the independent trustees on our Board. Grants were awarded in the name of the recipient subject to certain restrictions of transferability and a risk of forfeiture. Stock-based compensation expense for all equity-classified stock-based compensation awards is based on the grant date fair value estimated in accordance with current accounting guidance for share-based payments, which includes awards granted to certain nonemployees. We recognize these compensation costs for only those shares expected to vest on a straight-line basis over the requisite service or performance period of the award. 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. 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. 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 occurred. 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. Also, foreign currency intercompany transactions that are scheduled for settlement, consisting primarily of accrued interest and the translation to the reporting currency of intercompany debt that is short-term or has scheduled principal payments, are included in the determination of net income (within Other gains and (losses) in the consolidated statements of operations). 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. 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 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. 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. 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 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. These operations may be subject to certain state and local taxes, as applicable. Significant judgment is required in determining our tax provision and in evaluating our tax positions. We establish tax reserves based on a benefit recognition model, which could result in a greater amount of benefit (and a lower amount of reserve) being initially recognized in certain circumstances. Provided that the tax position is deemed more likely than not of being sustained, we recognize the largest amount of tax benefit that is greater than 50% likely of being ultimately realized upon settlement. We derecognize the tax position when it is no longer more likely than not of being sustained. 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. 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 ). In addition, deferred tax assets arise from unutilized tax net operating losses, generated in prior years. Deferred income taxes are computed under the asset and liability method. The asset and liability method requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between tax bases and financial bases of assets and liabilities. We provide a valuation allowance against our deferred income tax assets when we believe that it is more likely than not that all or some portion of the deferred income tax asset may not be realized. Whenever a change in circumstances causes a change in the estimated realizability of the related deferred income tax asset, the resulting increase or decrease in the valuation allowance is included in deferred income tax expense (benefit). Earnings Per Share — Basic earnings per share is calculated by dividing net income available to common shareholders by the weighted-average number of shares of common shares outstanding during the year. Diluted earnings per share reflects potentially dilutive securities (RSUs) using the treasury stock method, except when the effect would be anti-dilutive. Earnings per share is computed by dividing the net loss for the year by the weighted-average number of common shares outstanding during the period post Spin-Off. For the years ended December 31, 2025, 2024, and 2023, we recognized net loss. Therefore, all potentially dilutive securities were antidilutive and accordingly, basic net loss per share equals diluted net loss per share for the years ended December 31, 2025, 2024, and 2023. The calculation of basic and diluted earnings per share for any of the periods presented prior to the Spin-Off were based on the number of shares outstanding on November 1, 2023. For periods prior to the Spin-Off, it is assumed that there are no dilutive equity instruments as there were no NLOP stock-based awards outstanding prior to the Spin-Off. Use of Estimates — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in our consolidated financial statements and the accompanying notes. Actual results could differ from those estimates. Recent Accounting Pronouncements 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): Improvements to Income Tax Disclosures . ASU 2023-09 requires public companies to annually (i) disclose specific categories in the rate reconciliation disclosure and (ii) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pre-tax income or loss by the applicable statutory income tax rate). 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 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 Note 4. Agreements and Transactions with Related Parties Advisory Agreements 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 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. On October 31, 2023, we entered into a Separation and Distribution Agreement, which set forth the various individual transactions to be consummated that comprised the Separation and the Distribution, including the assets transferred to and liabilities assumed by us, as well as the responsibility and obligation of us and our Advisor with respect to Spin-Off related costs. On October 31, 2023, we also entered into a Tax Matters Agreement, which governs the respective rights, responsibilities, and obligations of us and our Advisor after the Spin-Off, with respect to tax liabilities and benefits, the preparation and filing of tax returns, the control of audits and other tax proceedings, tax covenants, tax indemnification, cooperation, and information sharing. The following tables present a summary of fees we paid and expenses we reimbursed to our Advisor in accordance with the terms of the NLOP Advisory Agreements (in thousands): Years Ended December 31, 2025 2024 2023 Asset management fees (a) $ 4,577 $ 6,243 $ 1,245 Administrative reimbursements (b) 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. 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): December 31, 2025 2024 Accounts payable $ 376 $ 366 Asset management fees payable 294 469 $ 670 $ 835 Other Transactions with WPC Spin-Off In September 2023, we entered into the $ 455 million NLOP Financing Arrangements (as defined and described in Note 10 ), which were funded upon the closing of the Spin-Off on November 1, 2023. Approximately $ 343.9 million of the proceeds from the NLOP Financing Arrangements was transferred to WPC in accordance with the Separation and Distribution Agreement. 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 Historically, prior to the Spin-Off, NLOP was managed and operated in the normal course of business consistent with other affiliates of WPC. Accordingly, certain shared costs were allocated to NLOP and reflected as expenses in the consolidated statements of operations. Management considers the allocation methodologies used to be reasonable and appropriate reflections of the historical WPC expenses attributable to NLOP for purposes of the consolidated financial statements of NLOP. However, the expenses reflected in the consolidated statements of operations may not be indicative of the actual expenses that would have been incurred during the periods presented if NLOP historically operated as a separate, stand-alone entity. In addition, the expenses reflected in the consolidated statements of operations may not be indicative of related expenses that will be incurred in the future by NLOP. The following table presents amounts of shared costs that were allocated to NLOP (in thousands): Year Ended December 31, 2023 General and administrative (a) $ 13,610 Interest expense (b) 17,756 Total $ 31,366 __________ (a) General and administrative fees are inclusive of expenses such as employee compensation and benefits, stock-based compensation and professional fees. (b) NLOP’s income statement prior to the Spin-Off includes an allocation of interest expense associated with WPC unsecured debt utilized partially to fund property assets of NLOP. Net parent investment shown in the consolidated statements of equity include contributions from WPC, which are the result of treasury activities and net funding provided by WPC prior to the Spin-Off, and also includes the indirect costs and expenses allocated to NLOP by WPC as described in Note 2 . 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. Other 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. We consolidate this investment. Net Lease Office Properties 2025 10-K – 54 Notes to Consolidated Financial Statements Note 5. Land, Buildings and Improvements, and Assets Held for Sale Land, Buildings and Improvements Land and buildings leased to others, which are subject to operating leases, and real estate under construction, are summarized as follows (in thousands): December 31, 2025 2024 Land $ 26,946 $ 94,123 Buildings and improvements 191,853 635,775 Real estate under construction — 447 Less: Accumulated depreciation ( 62,658 ) ( 152,067 ) $ 156,141 $ 578,278 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. Dispositions of Properties During 2025, we disposed of 15 properties, which were classified as Land, buildings and improvements. As a result, the carrying value of our Land, buildings and improvements decreased by $ 214.8 million from December 31, 2024 to December 31, 2025 ( Note 1 5 ). Real Estate Under Construction 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. Leases Operating Lease Income Lease income related to operating leases recognized and included in the consolidated statements of operations is as follows (in thousands): Years Ended December 31, 2025 2024 2023 Lease income — fixed $ 73,752 $ 99,263 $ 135,341 Lease income — variable (a) 25,510 29,594 30,693 Total operating lease income $ 99,262 $ 128,857 $ 166,034 __________ (a) Includes (i) rent increases based on changes in the CPI and other comparable indices and (ii) reimbursements for property taxes, insurance, and common area maintenance services. Net Lease Office Properties 2025 10-K – 55 Notes to Consolidated Financial Statements Other Lease-Related Income 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. 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 operating leases at December 31, 2025 are as follows (in thousands): Years Ending December 31, Total 2026 $ 47,851 2027 47,548 2028 41,408 2029 34,618 2030 21,523 Thereafter 22,497 Total $ 215,445 See Note 6 for scheduled future lease payments to be received under non-cancelable sales-type leases. Lease Cost 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. Certain information related to the total lease cost for operating leases is as follows (in thousands): Years Ended December 31, 2025 2024 2023 Fixed lease cost $ 126 $ 278 $ 541 Variable lease cost — 24 90 Total lease cost $ 126 $ 302 $ 631 Net Lease Office Properties 2025 10-K – 56 Notes to Consolidated Financial Statements Other Information Supplemental balance sheet information related to ROU assets and lease liabilities is as follows (dollars in thousands): December 31, Location on Consolidated Balance Sheets 2025 2024 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 Weighted-average remaining lease term — operating leases 81.3 years 55.9 years Weighted-average discount rate — operating leases 9.4 % 9.2 % Number of land lease arrangements — operating leases (a) 1 2 Remaining lease term range (excluding extension options not reasonably certain of being exercised) 81 years < 1 – 82 years __________ (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. Undiscounted Cash Flows A reconciliation of the undiscounted cash flows for operating leases recorded on the consolidated balance sheet within Accounts payable, accrued expenses and other liabilities as of December 31, 2025 is as follows (in thousands): Years Ending December 31, Total 2026 $ 13 2027 13 2028 14 2029 14 2030 14 Thereafter 2,571 Total lease payments 2,639 Less: amount of lease payments representing interest ( 2,461 ) 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): December 31, 2025 2024 Land, buildings and improvements $ 101,416 $ 31,066 In-place lease intangible assets and other 80,067 3,891 Above-market rent intangible assets 13,323 1,382 Accumulated depreciation and amortization ( 98,537 ) ( 7,042 ) Assets held for sale, net $ 96,269 $ 29,297 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. Note 6. Finance Receivables Assets representing rights to receive money on demand or at fixed or determinable dates are referred to as finance receivables. Our finance receivables portfolio consists of our Net investments in finance leases. Operating leases are not included in finance receivables. See Note 3 and Note 5 for information on ROU operating lease assets recognized in our consolidated balance sheets. Net Investments in Sales-Type Leases 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. 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 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): December 31, 2025 2024 Lease payments receivable (a) $ 47,726 $ — 47,726 — Less: unearned income ( 1,033 ) — Less: allowance for credit losses (b) ( 4,815 ) — $ 41,878 $ — __________ (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 2026 (a) $ 47,726 2027 — 2028 — 2029 — 2030 — Thereafter — 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 (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 We evaluate the credit quality of our finance receivables utilizing an internal five-point credit rating scale, with one representing the highest credit quality and five representing the lowest. A credit quality of one through three indicates a range of investment grade to stable. A credit quality of four through five indicates a range of inclusion on the watch list to risk of default. The credit quality evaluation of our finance receivables is updated quarterly. 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 $ — 2 — — — — 3 1 — 8,743 — 4 — — — — 5 — — — — $ 46,693 $ — Note 7. Goodwill and Other Intangibles 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. Above-market rent intangibles, at cost are included in Above-market rent intangible assets in the consolidated financial statements. Accumulated amortization of in-place lease and above-market rent intangibles is included in Accumulated depreciation and amortization in the consolidated financial statements. Below-market rent intangibles are included in Below-market rent intangible liabilities, net in the consolidated financial statements. 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 ). The following table presents a reconciliation of our goodwill (in thousands): Goodwill Balance at January 1, 2023 $ 63,583 Impairment charges ( Note 8 ) ( 62,456 ) Foreign currency translation adjustments ( 1,127 ) Balance at December 31, 2023 $ — Intangible assets and liabilities are summarized as follows (in thousands): December 31, 2025 2024 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Finite-Lived Intangible Assets In-place lease $ 45,160 $ ( 33,060 ) $ 12,100 $ 207,988 $ ( 123,040 ) $ 84,948 Above-market rent 10,760 ( 7,208 ) 3,552 30,512 ( 17,572 ) 12,940 $ 55,920 $ ( 40,268 ) $ 15,652 $ 238,500 $ ( 140,612 ) $ 97,888 Finite-Lived Intangible Liabilities Below-market rent $ ( 4,495 ) $ 2,505 $ ( 1,990 ) $ ( 18,856 ) $ 12,551 $ ( 6,305 ) Total intangible liabilities $ ( 4,495 ) $ 2,505 $ ( 1,990 ) $ ( 18,856 ) $ 12,551 $ ( 6,305 ) 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. Amortization of below-market rent and above-market rent intangibles is recorded as an adjustment to Lease revenues and amortization of in-place lease intangibles is included in Depreciation and amortization. Based on the intangible assets and liabilities recorded at December 31, 2025, scheduled annual net amortization of intangibles for each of the next five calendar years and thereafter is as follows (in thousands): Years Ending December 31, Net Decrease (Increase) in Lease Revenues Increase to Amortization Total 2026 $ 676 $ 2,726 $ 3,402 2027 439 2,291 2,730 2028 377 1,850 2,227 2029 377 1,850 2,227 2030 288 1,651 1,939 Thereafter ( 595 ) 1,732 1,137 Total $ 1,562 $ 12,100 $ 13,662 Note 8. Fair Value Measurements The fair value of an asset is defined as the exit price, which is the amount that would either be received when an asset is sold or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance establishes a three-tier fair value hierarchy based on the inputs used in measuring fair value. These tiers are: 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; 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. Items Measured at Fair Value on a Recurring Basis The methods and assumptions described below were used to estimate the fair value of each class of financial instrument. For significant Level 3 items, we have also provided the unobservable inputs. 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. This analysis reflects the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves, spot and forward rates, and implied volatilities. We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative instruments for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. These derivative instruments were classified as Level 2 as these instruments are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market. Our material financial instruments had the following carrying values and fair values as of the dates shown (dollars in thousands): December 31, 2025 December 31, 2024 Level Carrying Value Fair Value Carrying Value Fair Value Non-recourse mortgages, net (a) (b) (c) 3 $ 21,900 $ 21,900 $ 111,259 $ 91,642 NLOP Mezzanine Loan, net (a) (b) (c) (d) 3 — — 57,957 61,753 __________ 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. Items Measured at Fair Value on a Non-Recurring Basis (Including Impairment Charges) We periodically assess whether there are any indicators that the value of our real estate investments may be impaired or that their carrying value may not be recoverable. 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 (classified as Level 3) (in thousands): Years Ended December 31, 2025 2024 2023 Fair Value Measurements Impairment Charges Fair Value Measurements Impairment Charges Fair Value Measurements Impairment Charges Impairment Charges Real estate $ 180,307 $ 140,814 $ 200,316 $ 78,237 $ 58,088 $ 63,143 Goodwill — — — — — 62,456 $ 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: Real Estate 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; and • 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 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 %; and • 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 %; and • 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 ). 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, less costs to sell. 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. The fair value measurement for these properties were determined by using the following unobservable inputs: First property (impairment charge of $ 17.1 million; this property was sold in 2025): • Market rents of 200 Norwegian krone per square foot; • Terminal capitalization rate of 10.0 %; • Residual discount rate of 10.0 %; and • Cash flow discount rate of 8.0 %. 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; • Terminal capitalization rate of 9.0 %; and • Cash flow discount rate of 14.0 %. Third property (impairment charge of $ 1.2 million): • Estimated base rent collection of $ 0.6 million through the end of the lease term; • Comparable vacant sale prices ranging from $ 0.3 million per acre to $ 0.7 million per acre; and • Cash flow discount rate of 9.0 %. Net Lease Office Properties 2025 10-K – 63 Notes to Consolidated Financial Statements 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, less costs to sell. 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 (this property was sold in 2025): • Market rents ranging from $ 23 per square foot to $ 31 per square foot; • Terminal capitalization rate of 8.3 %; and • 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, less costs to sell. This property was disposed of in 2024. Goodwill The impairment charges described below are reflected within Impairment charges — goodwill in our consolidated statements of operations. During the year ended December 31, 2023, we recognized an impairment charge of $ 62.5 million on goodwill in order to reduce its carrying value to zero , since the Company’s trading value as a public company subsequent to the completion of the Spin-Off resulted in a market capitalization that was significantly below the carrying value of our net assets ( Note 7 ). Note 9. Risk Management and Use of Derivative Financial Instruments Risk Management In the normal course of our ongoing business operations, we encounter economic risk. There are four main components of economic risk that impact us: interest rate risk, credit risk, market risk, and foreign currency risk. We are primarily subject to interest rate risk on our interest-bearing liabilities, including our unhedged variable-rate non-recourse mortgage loans. Credit risk is the risk of default on our operations and our tenants’ inability or unwillingness to make contractually required payments. 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 previously owned investments in Europe, and have been subject to risks associated with fluctuating foreign currency exchange rates. Derivative Financial Instruments When we use derivative instruments, it is generally to reduce our exposure to fluctuations in interest rates. We have not entered into, and do not plan to enter into, financial instruments for trading or speculative purposes. The primary risks related to our use of derivative instruments include a counterparty to a hedging arrangement defaulting on its obligation and a downgrade in the credit quality of a counterparty to such an extent that our ability to sell or assign our side of the hedging transaction is impaired. While we seek to mitigate these risks by entering into hedging arrangements with large financial institutions that we deem to be creditworthy, it is possible that our hedging transactions, which are intended to limit losses, could adversely affect our earnings. Furthermore, if we terminate a hedging arrangement, we may be obligated to pay certain costs, such as transaction or breakage fees. We have established policies and procedures for risk assessment and the approval, reporting, and monitoring of derivative financial instrument activities. 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 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. 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 Not Designated as Hedging Instruments Balance Sheet Location December 31, 2025 December 31, 2024 Interest rate cap Other assets, net $ — $ 10 Total derivatives $ — $ 10 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 Income (Loss) Years Ended December 31, Derivatives in Cash Flow Hedging Relationships 2025 2024 2023 Interest rate cap $ — $ 1,191 $ ( 1,191 ) Total $ — $ 1,191 $ ( 1,191 ) Amount of Gain (Loss) on Derivatives Reclassified from 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 ) $ — Interest rate cap Interest expense — ( 477 ) ( 144 ) Total $ — $ ( 1,428 ) $ ( 144 ) 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 ) Derivatives Not in Cash Flow Hedging Relationships Interest rate cap Other gains and (losses) ( 10 ) ( 431 ) — Total $ ( 10 ) $ ( 448 ) $ ( 2 ) See below for information on our purposes for entering into derivative instruments. Interest Rate Caps We are exposed to the impact of interest rate changes primarily through our borrowing activities. We have obtained, and may in the future obtain, variable-rate debt (our NLOP Financing Arrangements ( Note 10 )), and, as a result, we have entered into, and may continue to enter into, interest rate cap agreements with counterparties. Interest rate caps limit the effective borrowing rate of variable-rate debt obligations. 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 and is defined in Note 10 ). This interest rate cap matured in November 2025. Net Lease Office Properties 2025 10-K – 65 Notes to Consolidated Financial Statements Note 10. Debt Debt Facility On September 20, 2023, in connection with the Spin-Off ( Note 1 ), we and certain of our wholly-owned subsidiaries entered into financing arrangements for which funding was subject to certain conditions (including the closing of the Spin-Off), including (i) a $ 335.0 million senior secured mortgage loan with an original maturity on November 9, 2025, with two separate one-year extension options subject to certain conditions (the “NLOP Mortgage Loan”) and (ii) a $ 120.0 million mezzanine loan facility maturing on November 9, 2028 (the “NLOP Mezzanine Loan” and, together with the NLOP Mortgage Loan, the “NLOP Financing Arrangements”). 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. Non-Recourse Mortgages Non-recourse mortgages consist of mortgage notes payable, which are collateralized by the assignment of real estate properties. 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 ). Parent Debt 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. 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. We recognized a net loss on extinguishment of debt of $ 0.3 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 5.2 %. As a result of one of the repayments, WPC no longer serves as guarantor for any of our non-recourse mortgage loans. Repayments During 2023 During the year ended December 31, 2023, we (i) repaid a non-recourse mortgage loan at maturity with an aggregate principal balance of approximately $ 0.3 million, and (ii) prepaid a non-recourse mortgage loan of $ 2.9 million. We recognized an aggregate net gain on extinguishment of debt of less than $ 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 on their respective dates of repayment was 5.2 %. 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 Scheduled debt principal payments as of December 31, 2025 are as follows (in thousands): Years Ending December 31, Total 2026 $ 21,900 2027 — 2028 — 2029 — 2030 — Total $ 21,900 Note 11. Commitments and Contingencies At December 31, 2025, we were not involved in any material litigation. Various claims and lawsuits arising in the normal course of business are pending against us. The results of these proceedings are not expected to have a material adverse effect on our consolidated financial position or results of operations. Note 12. Equity Common Shares 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: Dividends Paid During the Years Ended December 31, 2025 2024 2023 Return of capital $ 7.20 $ 0.34 $ — Total dividends paid $ 7.20 $ 0.34 $ — During the fourth quarter of 2023, our Board declared a dividend of $ 0.34 per share, which was paid on January 29, 2024 to shareholders of record as of December 18, 2023. Shareholders had the option to elect to receive their dividend in the form of cash or additional NLOP shares, with the aggregate amount of cash distributed by NLOP limited to a maximum of 20% of the total dividend. The total number of shares issued in the share dividend was 164,199 shares. 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 Notes to Consolidated Financial Statements Earnings Per Share The following table summarizes basic and diluted earnings (dollars in thousands): Years Ended December 31, 2025 2024 2023 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 For the years ended December 31, 2025, 2024, and 2023, we recognized net loss. Therefore, all potentially dilutive securities are antidilutive and accordingly, basic net loss per share equals diluted net loss per share. Reclassifications Out of Accumulated Other Comprehensive Loss The following tables present a reconciliation of changes in Accumulated other comprehensive loss by component for the periods presented (in thousands): Gains and (Losses) on Derivative Instruments Foreign Currency Translation Adjustments Total Balance at January 1, 2023 $ — $ ( 42,464 ) $ ( 42,464 ) Other comprehensive income before reclassifications ( 1,335 ) 8,055 6,720 Amounts reclassified from accumulated other comprehensive loss to: Interest expense 144 — 144 Total 144 — 144 Net current period other comprehensive income ( 1,191 ) 8,055 6,864 Balance at December 31, 2023 ( 1,191 ) ( 34,409 ) ( 35,600 ) Other comprehensive loss before reclassifications ( 237 ) ( 1,433 ) ( 1,670 ) Amounts reclassified from accumulated other comprehensive loss to: Other gains and (losses) 951 — 951 Interest expense 477 — 477 Gain on sale of real estate, net ( Note 1 5 ) — ( 4,315 ) ( 4,315 ) Total 1,428 ( 4,315 ) ( 2,887 ) Net current period other comprehensive loss 1,191 ( 5,748 ) ( 4,557 ) Balance at December 31, 2024 — ( 40,157 ) ( 40,157 ) 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 Note 13. Stock-Based and Other Compensation Stock-Based Compensation At December 31, 2025, we maintained the stock-based compensation plan described below. 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 The 2023 Incentive Award Plan provides that the maximum aggregate number of our common shares that may be issued under the Incentive Award Plan will be 750,000 common shares. The maximum number of common shares that may be issued in connection with awards of incentive stock options (“ISOs”) under the 2023 Incentive Award Plan is 1,500,000 common shares. The 2023 Incentive Award Plan provides for the grant of various stock- and cash-based awards, including RSUs, stock options (including ISOs and nonqualified stock options), restricted stock, dividend equivalents, stock payments, other incentive awards, long-term incentive plan units, and stock appreciation rights. At December 31, 2025, 720,939 shares remained available for issuance under the 2023 Incentive Award Plan. 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, 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): RSU Awards Shares Weighted-Average Grant Date Fair Value Balance at November 1, 2023 — $ — Granted (a) 28,653 10.47 Nonvested at December 31, 2023 28,653 10.47 Vested (b) ( 28,653 ) 10.47 Nonvested at December 31, 2024 — $ — __________ (a) The grant date fair value of RSUs reflect our share price on the date of grant on a one -for-one basis. (b) The grant date fair value of shares vested during the year ended December 31, 2024 was $ 0.3 million. Note 14. Income Taxes Income Tax Provision The components of our provision for (benefit from) income taxes for the periods presented are as follows (in thousands): Years Ended December 31, 2025 2024 2023 Federal Current $ 3 $ 11 $ 58 3 11 58 State and Local Current 26 242 357 26 242 357 Foreign Current 129 636 1,211 Deferred — ( 3,271 ) ( 1,201 ) 129 ( 2,635 ) 10 Total Provision for (Benefit from) Income Taxes $ 158 $ ( 2,382 ) $ 425 Net Lease Office Properties 2025 10-K – 69 Notes to Consolidated Financial Statements A reconciliation of effective income tax for the periods presented is as follows (in thousands): Years Ended December 31, 2025 2024 2023 Pre-tax loss attributable to taxable subsidiaries $ ( 13,581 ) $ ( 58,474 ) $ ( 32,176 ) Federal provision at statutory tax rate (21%) $ ( 2,852 ) $ ( 12,280 ) $ ( 6,757 ) 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 ) Election of TRS Status (a) — — 4,615 Other 32 ( 169 ) ( 520 ) 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. Deferred Income Taxes Deferred income taxes at December 31, 2025 and 2024 consist of the following (in thousands): December 31, 2025 2024 Deferred Tax Assets Net operating loss and other tax credit carryforwards $ 7,706 $ 872 Basis differences — foreign investments — 1,432 Other 771 5,262 Total deferred tax assets 8,477 7,566 Valuation allowance ( 8,477 ) ( 7,566 ) Net Deferred Tax Assets $ — $ — 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: • Basis differences between tax and GAAP for certain real estate investments. For income tax purposes, in certain acquisitions, we assume the seller’s basis, or the carry-over basis, in the acquired assets. The carry-over basis is typically lower than the purchase price, or the GAAP basis, resulting in a deferred tax liability with an offsetting increase to goodwill or the acquired tangible or intangible assets; • 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; and • 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. federal net operating loss carryforwards were $ 35.0 million, which will not expire as they can be carried forward indefinitely. There are also state net operating loss carryforwards of $ 5.3 million, which will begin to expire in 2044. 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. A position that meets this standard is measured at the largest amount of benefit that will more likely than not be realized on settlement. 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. These unrecognized tax benefits are recorded as liabilities within Accounts payable, accrued expenses and other liabilities on our consolidated balance sheets. We recognize interest and penalties related to uncertain tax positions in income tax expense. At both December 31, 2025 and 2024, we had less than $ 0.1 million of accrued interest related to uncertain tax positions. Income Taxes Paid 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. In order to maintain our qualification as a REIT, we are required, among other things, to distribute at least 90% of our REIT net taxable income to our stockholders and meet certain tests regarding the nature of our income and assets. As a REIT, we are not subject to federal income taxes on our income and gains that we distribute to our stockholders as long as we satisfy certain requirements, principally relating to the nature of our income and the level of our distributions, as well as other factors. 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 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. Note 15. Property Dispositions 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 ( Note 3 , Note 12 ). 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). Net Lease Office Properties 2025 10-K – 71 Notes to Consolidated Financial Statements 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. Note 16. Segment Information Reportable Segment Information The Company operates as one reportable segment. 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 CODM to evaluate performance and allocate resources, which can be found on our consolidated financial statements ( Note 1 , Note 3 ). 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 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. Geographic Information 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. 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): Years Ended December 31, 2025 2024 2023 Revenues Domestic $ 115,808 $ 133,663 $ 159,808 International 3,107 8,584 15,157 Total $ 118,915 $ 142,247 $ 174,965 December 31, 2025 2024 Long-lived Assets (a) Domestic $ 309,940 $ 677,933 International (b) — 29,510 Total $ 309,940 $ 707,443 __________ (a) Consists of Net investments in real estate. (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 Note 17. Subsequent Events Dispositions 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 NET LEASE OFFICE PROPERTIES SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS Years Ended December 31, 2025, 2024, and 2023 (in thousands) Description Balance at Beginning of Year Other Additions Deductions Balance at End of Year Year Ended December 31, 2025 Valuation reserve for deferred tax assets $ 7,566 $ 3,580 $ ( 2,669 ) $ 8,477 Year Ended December 31, 2024 Valuation reserve for deferred tax assets $ 9,809 $ 4,942 $ ( 7,185 ) $ 7,566 Year Ended December 31, 2023 Valuation reserve for deferred tax assets $ 7,129 $ 3,431 $ ( 751 ) $ 9,809 Net Lease Office Properties 2025 10-K – 74 NET LEASE OFFICE PROPERTIES SCHEDULE III — REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 2025 (in thousands) Initial Cost to Company Cost Capitalized Subsequent to Acquisition (a) Increase (Decrease) in Net 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 Statement of Income is Computed Description Encumbrances Land Buildings Land Buildings Total Land, Buildings and Improvements (Office Property Locations) King of Prussia, PA $ — $ 1,219 $ 6,283 $ 1,295 $ — $ 1,219 $ 7,578 $ 8,797 $ 5,218 1968 Jan. 1998 40 yrs. Rio Rancho, NM — 1,190 9,353 5,866 ( 238 ) 2,287 13,884 16,171 9,146 1999 Jul. 1998 40 yrs. Yardley, PA — 1,726 12,781 4,378 — 1,726 17,159 18,885 7,680 2002 Sep. 2012 30 yrs. San Marcos, TX — 440 688 — — 440 688 1,128 288 2000 Sep. 2012 31 yrs. Playa Vista, CA — 3,857 35,800 — — 3,857 35,800 39,657 14,898 1999 Sep. 2012 40 yrs. Odessa, TX — 196 1,864 — — 196 1,864 2,060 150 2000 Sep. 2012 29 yrs. San Marcos, TX — 656 6,723 — — 656 6,723 7,379 540 1996 Sep. 2012 29 yrs. Corpus Christi, TX — 764 1,823 — — 764 1,823 2,587 146 2000 Sep. 2012 29 yrs. Waco, TX — 473 2,058 — — 473 2,058 2,531 165 1969 Sep. 2012 29 yrs. Quincy, MA — 2,316 21,537 127 ( 11,064 ) 814 12,102 12,916 7,132 1989 Jun. 2013 40 yrs. Houston, TX — 2,136 2,344 — ( 1,143 ) 1,544 1,793 3,337 501 1982 Oct. 2018 40 yrs. Eagan, MN — 1,470 — — ( 951 ) 519 — 519 — 2005 Oct. 2018 N/A Eagan, MN — 4,312 32,878 — ( 19,216 ) 1,524 16,450 17,974 5,451 1969 Oct. 2018 40 yrs. Warrenville, IL — 3,662 23,711 — ( 13,091 ) 1,621 12,661 14,282 4,406 2002 Oct. 2018 40 yrs. San Antonio, TX — 3,094 16,624 — — 3,094 16,624 19,718 3,211 2002 Oct. 2018 40 yrs. Norcross, GA — 1,795 2,676 — — 1,795 2,676 4,471 229 1999 Aug. 2022 40 yrs. Farmington Hills, MI — 2,195 5,213 1,062 — 2,195 6,275 8,470 446 2001 Aug. 2022 40 yrs. Coralville, IA — 2,222 35,695 — — 2,222 35,695 37,917 3,051 2015 Aug. 2022 40 yrs. $ — $ 33,723 $ 218,051 $ 12,728 $ ( 45,703 ) $ 26,946 $ 191,853 $ 218,799 $ 62,658 __________ (a) Consists of the cost of improvements subsequent to acquisition and acquisition costs, including construction costs on build-to-suit transactions, legal fees, appraisal fees, title costs, and other related professional fees. For business combinations, transaction costs are excluded. (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: Net Lease Office Properties 2025 10-K – 75 NET LEASE OFFICE PROPERTIES NOTES TO SCHEDULE III — REAL ESTATE AND ACCUMULATED DEPRECIATION (in thousands) Reconciliation of Real Estate Subject to Operating Leases Years Ended December 31, 2025 2024 2023 Beginning balance $ 729,898 $ 1,203,991 $ 1,287,547 Dispositions ( 276,655 ) ( 371,638 ) ( 35,287 ) Impairment charges ( 134,783 ) ( 73,301 ) ( 57,607 ) 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 from real estate under construction 1,253 — — Reclassification from direct financing leases — — 14,558 Ending balance $ 218,799 $ 729,898 $ 1,203,991 Reconciliation of Accumulated Depreciation for Real Estate Subject to Operating Leases Years Ended December 31, 2025 2024 2023 Beginning balance $ 152,067 $ 213,034 $ 190,516 Dispositions ( 62,087 ) ( 82,339 ) ( 4,782 ) Reclassification to assets held for sale ( 38,971 ) ( 1,769 ) — 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, 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 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. None.