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PHOENIX - Orion Properties Inc. (NYSE:ONL) on Monday rejected a revised acquisition proposal from Kawa Capital Management, determining that the $2.75 per share cash offer "significantly undervalues" the company. According to InvestingPro data, the company trades at just 0.2 times book value, with a strong free cash flow yield of 11%, suggesting potential undervaluation relative to its fundamentals.
The real estate investment trust’s board unanimously concluded the July 17 non-binding proposal was not in the best interests of stockholders after reviewing it with independent financial and legal advisors.
"The Board remains open to evaluating opportunities to enhance stockholder value and, with management, will consider any proposal that appropriately values the Company and its prospects," said Reginald H. Gilyard, Non-Executive Chairman of the Orion Board, in a press release statement.
This marks the second rejection of an acquisition attempt by Kawa Capital, following an earlier proposal that was also deemed inadequate by Orion’s board.
Orion Properties is an internally-managed REIT focused on single-tenant net lease office properties across the United States. The company’s portfolio includes traditional office properties along with governmental, medical office, and flex/laboratory facilities. With a market capitalization of $153.41 million and gross profit margins of 57.3%, the company has shown operational efficiency despite recent market challenges. For deeper insights into Orion’s valuation and financial health, investors can access comprehensive analysis through InvestingPro’s detailed research reports.
The Phoenix-headquartered company was spun off from Realty Income (NYSE:O) in November 2021 and began trading on the New York Stock Exchange that same month.
Wells Fargo is serving as financial advisor to Orion, with Hunton Andrews Kurth LLP providing legal counsel during this process, according to the company’s statement.
In other recent news, Orion Office REIT Inc reported its first-quarter 2025 earnings, showcasing a revenue of $38 million, which surpassed analyst expectations of $36.8 million. Despite this revenue beat, the company reported a net loss of $0.17 per share. In another development, Orion Office REIT received a take-private offer from Kawa Capital Management, its largest shareholder, valuing the company at $2.50 per share. However, Orion’s Board of Directors unanimously rejected this acquisition proposal, stating that it significantly undervalues the company. The decision was made after a thorough review with independent financial and legal advisors. Citizens JMP has maintained a Market Perform rating on Orion Office REIT following these developments. The new acquisition proposal by Kawa Capital was valued 10% higher than their original offer, adding $15 million in equity value. These recent developments highlight ongoing strategic and financial evaluations within Orion Office REIT.
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