What Net Lease Office Properties told the SEC could break it.

NLOP's small portfolio is geographically concentrated: at December 31, 2025, 53.5% of ABR was in Texas (including the 37.2% KBR property) and 13.1% in California (including the 5.7% Google property), so adverse economic or regulatory developments in those markets could magnify their effect on operations; this also makes the portfolio highly sensitive to the disposition of a few large assets (the KBR and Google properties were sold in January 2026).

“As of December 31, 2025, 53.5% of our portfolio (as a percentage of ABR) was located in Texas (including 37.2% for our property leased to our tenant, KBR), representing the highest concentration of our assets, and 13.1% was located in California (including 5.7% for our property leased to our tenant, Google).”

NLOP faces significant debt-financing risk: rising interest rates could increase borrowing costs, its cash flow may be insufficient to make required principal and interest payments, and it may be unable to refinance some or all of its debt on favorable terms or at all (it has non-recourse mortgages it has transferred with properties); rapidly rising market interest rates also pressure its dividend-yield-driven share price, and any dividend reduction could further depress the stock.

“associated with debt financing including: that interest rates may rise; that our cash flow will be insufficient to make required payments of principal and interest; that we will be unable to refinance some or all of our debt or increase the availability of overall debt on terms as favorable as those of our existing debt, or at all”

NLOP owns single-tenant office buildings where the majority of properties depend on one tenant for all or most of their rental income, so a tenant's bankruptcy, business downturn or lease termination can sharply cut income; its largest tenant, KBR, was 37.2% of annualized base rent and Google 5.7% at December 31, 2025 — but both of those properties were sold in January 2026 as NLOP winds down, leaving a small (24-property/26-tenant) portfolio in which any remaining significant tenant's default would materially affect results and distributions.

“We depend on significant tenants, and the majority of our properties depend upon a single tenant for all or a majority of their rental income; therefore, our financial condition, including our ability to make distributions to shareholders, may be adversely affected by the bankruptcy or insolvency, a downturn in the business, or a lease termination of such a single te”

NLOP is an externally managed company with no employees: its day-to-day operations are run by its Advisor (a W. P. Carey entity, whose executives are also NLOP's officers), which it pays asset-management fees and reimbursements ($8.6M in 2025), creating conflict-of-interest and dependence risk; it is also effectively in wind-down, having been spun from WPC and actively selling its office portfolio (14 properties sold in 2025 plus the KBR, Google and other properties in early 2026) into a weak office real-estate market.

“As an externally managed company, our day-to-day operations are managed by our Advisor and our executive officers (all of whom are executive officers of our Advisor) under the oversight of our Board.”