Accessibility StatementSkip Navigation VANCOUVER, Sept. 15, 2025 /PRNewswire/ -- City Office REIT, Inc. (NYSE: CIO) ("City Office," "CIO" or the "Company") announced today that its Board of Directors has authorized a quarterly dividend of $0.4140625 per share of the Company's 6.625% Series A Cumulative Redeemable Preferred Stock. The dividends will be payable on October 24, 2025 to preferred stockholders of record as of the close of business on October 10, 2025. As previously disclosed, City Office's Board ...

Core Insights - CleanCore Solutions is demonstrating that true disruption can occur beyond traditional settings like laboratories or factories, highlighting the importance of financial strategy in shaping a company's future [1] Company Overview - CleanCore Solutions is listed on NYSE American under the ticker ZONE, indicating its presence in the public market and potential for investment opportunities [1]

Group 1 - Halper Sadeh LLC is investigating ZimVie Inc. for potential violations of federal securities laws related to its sale to an affiliate of ARCHIMED for $19.00 per share in cash [1] - City Office REIT, Inc. is under investigation for its sale to MCME Carell Holdings for $7.00 per share in cash [2] - The firm may seek increased consideration for shareholders and additional disclosures regarding the proposed transactions [3] Group 2 - Shareholders are encouraged to contact Halper Sadeh LLC to discuss their legal rights and options at no charge [4] - Halper Sadeh LLC represents investors globally who have experienced securities fraud and corporate misconduct, recovering millions for defrauded investors [4]

Core Viewpoint - City Office REIT (CIO) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system emphasizes the importance of earnings estimate revisions, which are strongly correlated with near-term stock price movements [4][6]. - The recent upgrade reflects an improvement in City Office REIT's underlying business, suggesting that investors may respond positively by driving the stock price higher [5][10]. Earnings Estimate Revisions - City Office REIT is projected to earn $1.12 per share for the fiscal year ending December 2025, with no year-over-year change expected [8]. - Over the past three months, the Zacks Consensus Estimate for City Office REIT has increased by 0.5%, indicating a positive trend in analyst estimates [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with only the top 20% of stocks receiving a "Strong Buy" or "Buy" rating [9][10]. - The upgrade to Zacks Rank 2 places City Office REIT in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

REIT Performance Overview - REITs experienced an average decline of -1.17% in July, underperforming compared to broader market indices such as NASDAQ (+3.7%), S&P 500 (+2.2%), and Dow Jones (+0.2%) [1] - The Vanguard Real Estate ETF (VNQ) slightly outperformed the average REIT in July with a return of +0.09% and has outperformed year-to-date at +2.10% compared to the average REIT's -6.42% [1] - The spread between the 2025 FFO multiples of large cap REITs (17.6x) and small cap REITs (13.0x) widened, indicating that investors are paying 35.4% more for each dollar of FFO from large cap REITs [1] Property Type Performance - 66.67% of REIT property types averaged negative total returns in July, with a total return spread of 14.34% between the best (Infrastructure +5.08%) and worst (Land -9.28%) performing property types [5][6] - Over the first seven months of 2025, large cap REITs outperformed small caps by 547 basis points, with micro cap REITs showing a recent trend of outperformance [3][6] - The average P/FFO for the REIT sector remained unchanged at 13.7x in July, with 44.4% of property types experiencing multiple expansion [7] Individual Security Highlights - City Office REIT (CIO) surged by +32.26% in July following an acquisition announcement at $7.00/share, with the transaction expected to close in Q4 2025 [9] - Wheeler REIT (WHLR) faced a significant decline of -43.73% in July, marking a total return of -99.28% over the first seven months of 2025, the worst in the sector [10][12] - 39.35% of REITs had a positive total return in July, while the average year-to-date total return for REITs was -6.42%, significantly lower than the +3.83% return for the same period in 2024 [10] Dividend Yield Insights - High dividend yields are a key attraction for investors in the REIT sector, with many REITs trading below their NAV, resulting in attractive yields [14] - Opportunities exist to capitalize on high dividend yields that may justify the underlying risks associated with certain investments [15]

Company Overview - City Office REIT, Inc. is an internally-managed real estate company focused on acquiring, owning, and operating office properties predominantly in Sun Belt markets, currently owning or having a controlling interest in 4.2 million square feet of office properties [3] Recent Transaction - The company completed the first closing in the sale of its Phoenix portfolio for gross sale proceeds of $266 million, which includes six of the seven properties located in Phoenix [1] - The Pima Center property remains under contract with a gross sales price of $30 million and is expected to close later, pending certain approvals related to the property's ground lease [1] Merger Agreement - The completion of the first closing of the Phoenix portfolio satisfies a closing condition in the merger agreement dated July 23, 2025, between the company and MCME Carell Holdings, LP and MCME Carell Merger Sub, LLC [2]

City Office REIT (CIO) came out with quarterly funds from operations (FFO) of $0.28 per share, in line with the Zacks Consensus Estimate . This compares to FFO of $0.28 per share a year ago. These figures are adjusted for non-recurring items. A quarter ago, it was expected that this real estate investment trust would post FFO of $0.28 per share when it actually produced FFO of $0.3, delivering a surprise of +7.14%. Over the last four quarters, the company has surpassed consensus FFO estimates just once. Emp ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and accompanying notes for City Office REIT, Inc. for the specified interim periods [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section provides the unaudited condensed consolidated financial statements and comprehensive notes for the interim reporting periods [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202025%20and%20December%2031%2C%202024) This section presents the company's financial position, detailing assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 - Total Assets decreased by **$127.5 million** from December 31, 2024, to June 30, 2025, primarily due to a significant reduction in real estate properties, net, partially offset by an increase in assets held for sale[7](index=7&type=chunk) Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | | :-------------------------- | :------------ | :---------------- | :----- | | Total Assets | $1,328,143 | $1,455,670 | $(127,527) | | Real Estate Properties, net | $904,790 | $1,273,146 | $(368,356) | | Assets held for sale | $296,167 | $12,588 | $283,579 | | Total Liabilities | $712,715 | $721,130 | $(8,415) | | Total Equity | $615,428 | $734,540 | $(119,112) | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section outlines the company's revenues, expenses, and net loss for the three and six months ended June 30, 2025 and 2024 - The company reported a substantial increase in net loss attributable to common stockholders for both the three and six months ended June 30, 2025, primarily driven by a **significant impairment of real estate** recognized in 2025[9](index=9&type=chunk) Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Rental and other revenues | $42,343 | $42,342 | $84,602 | $86,836 | | Total operating expenses | $138,933 | $36,035 | $174,058 | $72,566 | | Operating (loss)/income | $(96,590) | $6,307 | $(89,456) | $14,270 | | Net loss attributable to common stockholders | $(107,221) | $(5,607) | $(110,746) | $(8,051) | | Basic Net loss per common share | $(2.66) | $(0.14) | $(2.75) | $(0.20) | | Dividend distributions declared per common share | $0.10 | $0.10 | $0.20 | $0.20 | [Condensed Consolidated Statements of Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section presents the total comprehensive loss, including net loss and other comprehensive income/loss, for the specified interim periods - Comprehensive loss attributable to the company **significantly increased** for both the three and six months ended June 30, 2025, primarily reflecting the higher net loss[12](index=12&type=chunk) Condensed Consolidated Statements of Comprehensive Loss Highlights (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net loss | $(105,309) | $(3,627) | $(106,808) | $(4,081) | | Other comprehensive (loss)/income | $(500) | $(481) | $(1,165) | $1,308 | | Comprehensive loss attributable to the Company | $(105,854) | $(4,230) | $(108,170) | $(3,056) | [Condensed Consolidated Statements of Changes in Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section details changes in stockholders' equity, including net loss and dividend distributions, for the interim periods - Total equity decreased by **$119.1 million** from December 31, 2024, to June 30, 2025, primarily due to a significant reduction in retained earnings resulting from net losses[14](index=14&type=chunk) Condensed Consolidated Statements of Changes in Equity Highlights (in thousands) | Metric | December 31, 2024 | June 30, 2025 | Change | | :------------------------- | :---------------- | :------------ | :----- | | Total Stockholders' Equity | $733,855 | $614,938 | $(118,917) | | Retained Earnings | $179,838 | $60,901 | $(118,937) | | Common Stock (shares) | 40,154 | 40,358 | 204 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section reports cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 - Net cash provided by operating activities decreased by **$6.3 million**, while net cash used in investing activities decreased by **$7.2 million**, primarily due to proceeds from property sales[17](index=17&type=chunk) - Net cash used in financing activities increased by **$0.2 million** to **$13.3 million**, primarily due to lower net proceeds from borrowings[126](index=126&type=chunk) Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :------------------------------------------ | :----------------------------- | :----------------------------- | :----- | | Net Cash Provided By Operating Activities | $25,379 | $31,702 | $(6,323) | | Net Cash Used In Investing Activities | $(11,492) | $(18,694) | $7,202 | | Net Cash Used In Financing Activities | $(13,345) | $(13,058) | $(287) | | Net Increase/(Decrease) in Cash, Cash Equivalents and Restricted Cash | $542 | $(50) | $592 | | Cash, Cash Equivalents and Restricted Cash, End of Period | $34,501 | $43,342 | $(8,841) | [Notes to the Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the condensed consolidated financial statements, covering key accounting policies and financial instrument details [1. Organization and Description of Business](index=8&type=section&id=1.%20Organization%20and%20Description%20of%20Business) This note describes the company's formation, business as a REIT, and its initial public offering - City Office REIT, Inc. was organized in Maryland on November 26, 2013, and completed its initial public offering (IPO) on April 21, 2014[19](index=19&type=chunk) - The company operates as a **Real Estate Investment Trust (REIT)**, allowing it to deduct dividend distributions for U.S. federal tax purposes[21](index=21&type=chunk) [2. Summary of Significant Accounting Policies](index=8&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and estimates used in preparing the financial statements - The unaudited condensed consolidated financial statements are prepared in accordance with **SEC rules** and **US GAAP**, relying on management's estimates and assumptions[22](index=22&type=chunk) [3. Real Estate Investments](index=8&type=section&id=3.%20Real%20Estate%20Investments) This note details real estate transactions, including property sales, deconsolidations, and impairment charges - The Superior Pointe property was sold on January 14, 2025, for **$12.0 million**, with no gain or loss recognized[23](index=23&type=chunk) - The Cascade Station property was deconsolidated on June 27, 2024, due to a loan default, resulting in a **$1.5 million** loss on deconsolidation[24](index=24&type=chunk)[25](index=25&type=chunk) - The Phoenix Portfolio was classified as held for sale as of June 30, 2025, with an estimated sales price of **$296.0 million**, leading to a **$102.2 million** impairment charge[27](index=27&type=chunk)[30](index=30&type=chunk) Assets and Liabilities Held for Sale (in thousands) | Metric | June 30, 2025 (Phoenix Portfolio) | December 31, 2024 (Superior Pointe) | | :---------------------------------------------------- | :-------------------------------- | :---------------------------------- | | Assets held for sale | $296,167 | $12,588 | | Liabilities related to assets held for sale | $16,816 | $2,176 | [4. Lease Intangibles](index=10&type=section&id=4.%20Lease%20Intangibles) This note provides information on lease intangible assets and liabilities, including their net values and amortization schedules - Net lease intangible assets decreased by **$9.2 million**, and net lease intangible liabilities decreased by **$2.2 million** from December 31, 2024, to June 30, 2025[32](index=32&type=chunk) Lease Intangibles (in thousands) | Lease Intangibles | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Lease Intangible Assets, net | $25,423 | $34,631 | | Lease Intangible Liabilities, net | $(4,069) | $(6,301) | Estimated Aggregate Amortization Expense for Lease Intangibles (in thousands) | Year | Amount (in thousands) | | :-------- | :-------------------- | | 2025 | $2,648 | | 2026 | $4,986 | | 2027 | $4,019 | | 2028 | $3,468 | | 2029 | $2,624 | | Thereafter | $3,609 | | **Total** | **$21,354** | [5. Debt](index=11&type=section&id=5.%20Debt) This note details the company's indebtedness, including principal amounts, interest rates, maturities, and covenant compliance - Total principal debt remained relatively stable at **$649.2 million** as of June 30, 2025. The Unsecured Credit Facility has **$257.5 million** drawn and matures in November 2025, with an expected 12-month extension[33](index=33&type=chunk) - Several properties (SanTan, Intellicenter, FRP Ingenuity Drive) are in '**cash-sweep periods**' due to covenant failures, resulting in restricted cash accounts[34](index=34&type=chunk)[44](index=44&type=chunk) Summary of Indebtedness (in thousands) | Property | June 30, 2025 | December 31, 2024 | Interest Rate (June 30, 2025) | Maturity | | :----------------------- | :------------ | :---------------- | :---------------------------- | :------- | | Unsecured Credit Facility | $257,500 | $255,000 | SOFR + 1.50% | Nov 2025 | | Term Loan | $25,000 | $25,000 | 6.00% | Jan 2026 | | Mission City | $44,633 | $45,095 | 3.78% | Nov 2027 | | Circle Point | $37,816 | $38,109 | 4.49% | Sep 2028 | | Canyon Park | $37,760 | $38,159 | 4.30% | Mar 2027 | | The Quad | $30,600 | $30,600 | 4.20% | Sep 2028 | | SanTan | $30,396 | $30,773 | 4.56% | Mar 2027 | | Intellicenter | $29,708 | $30,042 | 4.65% | Oct 2025 | | 2525 McKinnon | $27,000 | $27,000 | 4.24% | Apr 2027 | | FRP Collection | $25,525 | $25,736 | 7.05% | Aug 2028 | | Greenwood Blvd | $20,077 | $20,299 | 6.34% | May 2028 | | AmberGlen | $20,000 | $20,000 | 3.69% | May 2027 | | 5090 N. 40th St | $19,676 | $19,912 | 3.92% | Jan 2027 | | Central Fairwinds | $15,379 | $15,497 | 7.68% | Jun 2029 | | FRP Ingenuity Drive | $14,096 | $14,096 | 4.44% | Dec 2026 | | Carillon Point | $14,079 | $14,196 | 7.05% | Aug 2028 | | **Total Principal** | **$649,245** | **$649,514** | | | Scheduled Principal Repayments of Indebtedness (in thousands) | Year | Amount (in thousands) | | :---------- | :-------------------- | | 2025 | $289,650 | | 2026 | $44,267 | | 2027 | $177,104 | | 2028 | $123,733 | | 2029 | $14,491 | | Thereafter | $0 | | **Total** | **$649,245** | [6. Fair Value of Financial Instruments](index=12&type=section&id=6.%20Fair%20Value%20of%20Financial%20Instruments) This note describes the fair value measurements of financial instruments, including derivative instruments and mortgage loans - The company utilizes **interest rate swaps** to effectively fix the SOFR component of borrowing rates for various loans, classifying these as **Level 2 fair value measurements** and **cash flow hedges**[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[45](index=45&type=chunk) Derivative Financial Instruments Fair Value (in thousands) | Interest Rate Swap | Notional Value June 30, 2025 | Fair Value June 30, 2025 | Fair Value December 31, 2024 | | :----------------- | :--------------------------- | :----------------------- | :--------------------------- | | January 2023 | $25,000 | $29 | $50 | | March 2023 | $140,000 | $18 | $(75) | | August 2023 (FRP Collection) | $25,525 | $(700) | $(275) | | August 2023 (Carillon Point) | $14,079 | $(386) | $(152) | | May 2024 (Central Fairwinds) | $15,379 | $(600) | $(284) | | May 2025 (Greenwood Blvd) | $20,077 | $(261) | — | | **Total** | **$240,060** | **$(1,900)** | **$(736)** | - The fair value of fixed rate mortgage loans payable was **$285.2 million** as of June 30, 2025, compared to a carrying value of **$291.7 million**, classified as **Level 3 fair value measurements**[48](index=48&type=chunk) [7. Related Party Transactions](index=13&type=section&id=7.%20Related%20Party%20Transactions) This note discloses transactions with related parties, specifically administrative services income - The company earned **$0.1 million** in administrative services from related parties for both the six months ended June 30, 2025, and 2024[49](index=49&type=chunk) [8. Leases](index=13&type=section&id=8.%20Leases) This note provides details on lessor and lessee accounting, including rental income and right-of-use assets - Total rental income from fixed and variable lease payments was **$84.3 million** for the six months ended June 30, 2025, a slight decrease from **$86.6 million** in the prior year[52](index=52&type=chunk) Lessor Fixed and Variable Lease Payments (in thousands) | Payment Type | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Fixed payments | $37,079 | $36,042 | $73,525 | $73,634 | | Variable payments | $5,194 | $6,237 | $10,788 | $13,015 | | **Total** | **$42,273** | **$42,279** | **$84,313** | **$86,649** | Future Minimum Lease Payments to be Received (Lessor) (in thousands) | Year | Amount (in thousands) | | :---------- | :-------------------- | | 2025 | $63,602 | | 2026 | $124,214 | | 2027 | $106,555 | | 2028 | $93,759 | | 2029 | $73,689 | | Thereafter | $149,157 | | **Total** | **$610,976** | - Right-of-use assets and lease liabilities for operating leases **significantly decreased** from December 31, 2024, to June 30, 2025, with financing leases eliminated, due to properties classified as held for sale[54](index=54&type=chunk) Lessee Operating Leases (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Right-of-use asset – operating leases | $1,692 | $10,101 | | Lease liability – operating leases | $1,661 | $8,286 | [9. Commitments and Contingencies](index=15&type=section&id=9.%20Commitments%20and%20Contingencies) This note outlines the company's obligations for tenant improvements and assessments of potential litigation impacts - The company is obligated to fund tenant improvements and property expansions[57](index=57&type=chunk) - Management believes there are **no material adverse environmental liabilities or litigation outcomes** that would impact financial position or results of operations[59](index=59&type=chunk)[60](index=60&type=chunk) [10. Stockholders' Equity](index=15&type=section&id=10.%20Stockholders%27%20Equity) This note details changes in equity, including share repurchase plans, dividends, and equity incentive plan activity - The Board approved a **$50 million** share repurchase plan in May 2023, but no shares were repurchased during the six months ended June 30, 2025 or 2024[61](index=61&type=chunk)[63](index=63&type=chunk) - Cash dividends of **$0.10** per common share and **$0.4140625** per Series A Preferred Stock share were declared for Q2 2025, totaling **$4.0 million** and **$1.9 million** respectively[65](index=65&type=chunk)[66](index=66&type=chunk) - Stockholders approved an increase in the maximum number of shares for the Equity Incentive Plan from **3,763,580** to **5,763,580** on May 1, 2025[67](index=67&type=chunk) - Performance RSU Awards granted in January 2022 were earned at **50%** of target, while January 2021 awards were earned at **120%** of target[69](index=69&type=chunk)[70](index=70&type=chunk) Equity Incentive Plan Activity (Number of RSUs) | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | | :---------------------- | :------------ | :------------- | :---------------- | | Outstanding RSUs | 613,070 | 600,995 | 588,089 | | Outstanding Performance RSUs | 815,541 | 815,541 | 629,840 | Compensation Expense for RSU Awards (in thousands) | Period | RSUs | Performance RSUs | Total | | :--------------------------- | :--- | :--------------- | :---- | | 3 Months Ended June 30, 2025 | $417 | $426 | $843 | | 3 Months Ended June 30, 2024 | $642 | $441 | $1,083 | | 6 Months Ended June 30, 2025 | $899 | $858 | $1,757 | | 6 Months Ended June 30, 2024 | $1,284 | $870 | $2,154 | [11. Segment Information](index=18&type=section&id=11.%20Segment%20Information) This note identifies the company's operating segment and the key metrics used by management to evaluate performance - The company operates in one operating segment: **Office Properties**. The Chief Operating Decision Makers (CODM) use consolidated net income and **Net Operating Income (NOI)** to evaluate performance[74](index=74&type=chunk)[75](index=75&type=chunk) Segment Net Operating Income (NOI) (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Rental and other revenues | $42,343 | $42,342 | $84,602 | $86,836 | | Property operating expenses | $16,314 | $17,492 | $32,585 | $35,237 | | **Segment net operating income** | **$26,029** | **$24,850** | **$52,017** | **$51,599** | [12. Subsequent Events](index=18&type=section&id=12.%20Subsequent%20Events) This note discloses significant events occurring after the reporting period, including a definitive merger agreement - On July 23, 2025, the company entered into a definitive merger agreement to be acquired by MCME Carell Holdings, LP for **$7.00 per common share** in cash, subject to shareholder approval and customary closing conditions[77](index=77&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of the company's financial condition and operating results, discussing key influencing factors and future outlook [Cautionary Statement Regarding Forward-Looking Statements](index=19&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) This section warns that the report contains forward-looking statements subject to various risks and uncertainties - The report contains **forward-looking statements** subject to various risks and uncertainties, including those related to the merger agreement, economic conditions, and market demand for office space[81](index=81&type=chunk)[82](index=82&type=chunk)[87](index=87&type=chunk) [Overview](index=20&type=section&id=Overview) This section provides a brief history of the company and highlights the recently announced merger agreement - City Office REIT, Inc. was formed in November 2013 and completed its IPO in April 2014[84](index=84&type=chunk) - On July 23, 2025, the company entered into a merger agreement to be acquired by MCME Carell for **$7.00 per common share** in cash, pending shareholder approval[85](index=85&type=chunk)[88](index=88&type=chunk) - As of June 30, 2025, the company owned 22 properties (54 office buildings) totaling approximately **5.4 million square feet** of net rentable area (NRA), with an occupancy rate of **82.5%**[89](index=89&type=chunk) [Factors That May Influence Our Operating Results and Financial Condition](index=21&type=section&id=Factors%20That%20May%20Influence%20Our%20Operating%20Results%20and%20Financial%20Condition) This section discusses economic conditions, work-from-home trends, and other factors impacting the company's performance - The economic environment, characterized by **increased inflation**, **higher interest rates**, and **tightened monetary policies**, has led to increased cost of capital and challenges in tenant retention and attraction[91](index=91&type=chunk)[94](index=94&type=chunk) - Work-from-home and hybrid working trends, along with potential impacts from artificial intelligence, have created uncertainty regarding office space demand, with **13.2%** of NRA vacant as of June 30, 2025[92](index=92&type=chunk)[93](index=93&type=chunk) [Business and Strategy](index=22&type=section&id=Business%20and%20Strategy) This section outlines the company's focus on Sun Belt office properties and its strategy for maximizing shareholder value - The company focuses on owning office properties in **Sun Belt growth markets**, characterized by growing populations and employment[96](index=96&type=chunk) - The company is evaluating a joint venture for a **condominium development** in St. Petersburg, Florida, as part of its strategy to maximize shareholder value[97](index=97&type=chunk) [Rental Revenue and Tenant Recoveries](index=22&type=section&id=Rental%20Revenue%20and%20Tenant%20Recoveries) This section explains how occupancy rates, leasing activity, and rental rates drive the company's rental revenue - Rental revenue depends on occupancy rates, ability to lease available space, and rental rates, with **82.5%** of the portfolio leased as of June 30, 2025[98](index=98&type=chunk) - Approximately **16.7%** of NRA is subject to early termination provisions, though no tenants exercised these in 2025. GSA tenants account for **4.0%** of base rental revenue[98](index=98&type=chunk) [Leasing Activity](index=22&type=section&id=Leasing%20Activity) This section presents key metrics related to new and renewal leasing activity for the three months ended June 30, 2025 Three Months Ended June 30, 2025 Leasing Activity | Metric | New Leasing | Renewal Leasing | Total Leasing | | :---------------------------- | :---------- | :-------------- | :------------ | | Square Feet (000's) | 163 | 192 | 355 | | Average Effective Rents per Square Foot | $31.45 | $33.02 | $32.30 | | Tenant Improvements per Square Foot | $49.18 | $7.05 | $26.38 | | Leasing Commissions per Square Foot | $20.10 | $8.79 | $13.98 | | % Change in Renewal Cash Rent vs. Expiring | | 4.9% | | | Retention Rate % | | 49% | | [Our Properties](index=23&type=section&id=Our%20Properties) This section provides an overview of the company's property portfolio, including square footage, occupancy, and rental rates - As of June 30, 2025, the company owned 22 properties across nine metropolitan areas, totaling **5.4 million square feet** of NRA with an overall occupancy of **82.5%**[101](index=101&type=chunk)[102](index=102&type=chunk) Portfolio Overview as of June 30, 2025 | Metropolitan Area | NRA (000's Sq Ft) | Occupancy | Avg Effective Rent per Sq Ft | Annualized Base Rent ($000's) | | :---------------- | :---------------- | :-------- | :--------------------------- | :---------------------------- | | Tampa, FL | 1,049 | 87.0% | $30.40 | $23,827 | | Denver, CO | 653 | 84.7% | $21.99 | $12,549 | | Orlando, FL | 721 | 83.0% | $26.60 | $16,879 | | Raleigh, NC | 493 | 94.6% | $41.25 | $18,750 | | Dallas, TX | 284 | 69.0% | $35.42 | $7,386 | | San Diego, CA | 281 | 95.6% | $39.27 | $11,020 | | Seattle, WA | 207 | 100.0% | $22.31 | $5,235 | | Portland, OR | 203 | 59.4% | $25.44 | $3,350 | | Phoenix, AZ (Assets Held for Sale) | 1,316 | 74.9% | $31.80 | $31,039 | | **Total / Weighted Average** | **5,411** | **82.5%** | **$30.13** | **$139,049** | [Operating Expenses](index=23&type=section&id=Operating%20Expenses) This section describes the nature of operating expenses and how they are recovered from tenants - Operating expenses, including utilities, property taxes, insurance, and maintenance, are generally passed through to tenants in **full-service gross leases** (above base year) and fully paid by tenants in **net leases**[104](index=104&type=chunk) [Conditions in Our Markets](index=23&type=section&id=Conditions%20in%20Our%20Markets) This section discusses the impact of market conditions, economic factors, and evolving work trends on the company's performance - Market conditions, including economic factors, employment rates, and natural hazards, impact overall performance. The long-term effects of work-from-home trends and artificial intelligence on office space demand remain uncertain[105](index=105&type=chunk) [Critical Accounting Policies and Estimates](index=24&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section confirms the consistency of accounting policies with the prior annual report - The interim condensed consolidated financial statements adhere to the same accounting policies and procedures as outlined in the **2024 Annual Report on Form 10-K**[106](index=106&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) This section details the financial performance for the three and six months ended June 30, 2025, compared to the same periods in 2024, focusing on changes in rental revenue, operating expenses (property, general & administrative, depreciation & amortization), impairment charges, and interest expense - Rental and other revenues remained flat for the three months ended June 30, 2025, but decreased by **3%** for the six-month period, primarily due to property dispositions and lower occupancy at certain properties[107](index=107&type=chunk)[115](index=115&type=chunk) - Property operating expenses decreased by **7%** for the three-month period and **8%** for the six-month period, mainly due to property dispositions and lower property taxes[108](index=108&type=chunk)[116](index=116&type=chunk) - General and administrative expenses increased by **13%** for the three-month period and **7%** for the six-month period, primarily due to **$0.7 million** in legal expenses related to transaction costs[109](index=109&type=chunk)[117](index=117&type=chunk) - Depreciation and amortization increased by **9%** for the three-month period and **5%** for the six-month period, driven by higher amortization of tenant-related assets, including accelerated amortization at Greenwood Blvd[110](index=110&type=chunk)[118](index=118&type=chunk) - A significant impairment of real estate of **$102.2 million** was recognized for both the three and six months ended June 30, 2025, related to the Phoenix Portfolio[111](index=111&type=chunk)[119](index=119&type=chunk) - Interest expense increased by **3%** for both the three and six-month periods, mainly due to higher interest rates on the Central Fairwinds property refinance, partially offset by the Cascade Station disposition[112](index=112&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk) [Cash Flows](index=26&type=section&id=Cash%20Flows) This section analyzes the changes in cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 - Net cash provided by operating activities decreased by **$6.3 million** to **$25.4 million** for the six months ended June 30, 2025, primarily due to changes in working capital[124](index=124&type=chunk) - Net cash used in investing activities decreased by **$7.2 million** to **$11.5 million**, mainly due to proceeds from the sale of the Superior Pointe property[125](index=125&type=chunk) - Net cash used in financing activities increased by **$0.2 million** to **$13.3 million**, primarily due to lower net proceeds from borrowings[126](index=126&type=chunk) [Non-GAAP Supplemental Measures: NOI](index=26&type=section&id=Non-GAAP%20Supplemental%20Measures%3A%20NOI) This section defines Net Operating Income (NOI) as a non-GAAP measure and reconciles it to consolidated net loss - **Net Operating Income (NOI)** is a **non-GAAP measure** used to evaluate the performance of office properties, calculated as rental and other revenues less property operating expenses[127](index=127&type=chunk)[128](index=128&type=chunk) Reconciliation of Segment NOI to Consolidated Net Loss (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Segment net operating income | $26,029 | $24,850 | $52,017 | $51,599 | | General and administrative | $(4,327) | $(3,820) | $(8,055) | $(7,531) | | Depreciation and amortization | $(16,063) | $(14,723) | $(31,189) | $(29,798) | | Impairment of real estate | $(102,229) | $0 | $(102,229) | $0 | | Contractual interest expense | $(8,339) | $(8,129) | $(16,618) | $(16,228) | | Amortization of deferred financing costs and debt fair value | $(380) | $(343) | $(734) | $(661) | | Net loss on disposition of real estate property | $0 | $(1,462) | $0 | $(1,462) | | **Consolidated net loss** | **$(105,309)** | **$(3,627)** | **$(106,808)** | **$(4,081)** | [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, debt facilities, and strategies for meeting short-term and long-term liquidity needs - As of June 30, 2025, the company had **$18.3 million** in cash and cash equivalents and **$16.2 million** in restricted cash[131](index=131&type=chunk) - The Unsecured Credit Facility has **$257.5 million** outstanding and is expected to be extended for 12 months beyond its November 2025 maturity[132](index=132&type=chunk) - The Greenwood Blvd loan was amended and restated in May 2025, extending its term and converting to a **floating interest rate**, hedged by a **three-year interest rate swap**[133](index=133&type=chunk) - Short-term liquidity needs are met by cash from operations and reserves, while long-term needs are addressed through operations, debt, equity issuances, and property dispositions[137](index=137&type=chunk)[138](index=138&type=chunk)[140](index=140&type=chunk) [Contractual Obligations and Other Long-Term Liabilities](index=28&type=section&id=Contractual%20Obligations%20and%20Other%20Long-Term%20Liabilities) This section details the company's future payment obligations for debt, interest, tenant commitments, and leases Contractual Obligations as of June 30, 2025 (in thousands) | Contractual Obligations | Total (in thousands) | 2025 (in thousands) | 2026-2027 (in thousands) | 2028-2029 (in thousands) | More than 5 years (in thousands) | | :---------------------- | :------------------- | :------------------ | :----------------------- | :----------------------- | :------------------------------- | | Principal payments on indebtedness | $649,245 | $289,650 | $221,371 | $138,224 | $0 | | Interest payments | $48,226 | $15,002 | $27,031 | $6,193 | $0 | | Tenant-related commitments | $15,055 | $15,055 | $0 | $0 | $0 | | Lease obligations | $2,090 | $163 | $483 | $346 | $1,098 | | **Total** | **$714,616** | **$319,870** | **$248,885** | **$144,763** | **$1,098** | [Inflation](index=28&type=section&id=Inflation) This section discusses how lease provisions are expected to mitigate the impact of inflation on the company's financial performance - The company expects expense reimbursement provisions and fixed rent increases in its leases to partially offset the impact of inflation, though prolonged inflation could affect cash flows or earnings[143](index=143&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risks, primarily interest rate risk, and how it uses derivative financial instruments to manage these risks - The company's interest rate exposure is moderate, with **81.9%** (**$531.7 million**) of its debt having fixed or effectively fixed interest rates as of June 30, 2025[145](index=145&type=chunk) - **Derivative financial instruments**, specifically **interest rate swaps**, are used to manage interest rate risks and are not for trading or speculative purposes[144](index=144&type=chunk) - A **1%** increase or decrease in the Secured Overnight Financing Rate (SOFR) would result in a **$1.2 million** increase or decrease in annual interest costs on outstanding debt[145](index=145&type=chunk) [Item 4. Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of June 30, 2025, and states that there have been no material changes to internal control over financial reporting during the period - The company's Chief Executive Officer and Chief Financial Officer determined that disclosure controls and procedures were **effective** as of June 30, 2025[148](index=148&type=chunk) - There have been **no material changes** to the company's internal control over financial reporting during the period covered by the report[149](index=149&type=chunk) [PART II. OTHER INFORMATION](index=29&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and exhibits [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) The company is occasionally involved in lawsuits arising from ordinary business operations, but management does not believe any current litigation will have a material adverse effect on its financial position or results of operations - The company is involved in lawsuits and disputes in the ordinary course of business[150](index=150&type=chunk) - Management believes that these matters will **not have a material adverse effect** on the company's financial position or results of operations[150](index=150&type=chunk) [Item 1A. Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) This section updates the risk factors from the previous Annual Report on Form 10-K, highlighting new or changed risks related to engaging in development or expansion projects, investing in new asset classes, and the potential adverse effects of the recently announced merger agreement - **No material changes** to risk factors disclosed in the 2024 Annual Report on Form 10-K, except for those detailed in this report[151](index=151&type=chunk) - Engaging in development or expansion projects or investing in new asset classes (e.g., condominium development) subjects the company to **additional risks**, including unforeseen costs, permitting delays, and potential impacts on REIT status[152](index=152&type=chunk)[153](index=153&type=chunk)[160](index=160&type=chunk) - The announcement and pendency of the merger agreement could **adversely affect the business** due to potential disruption of commercial relationships, employee retention issues, and contractual restrictions on business operations[156](index=156&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk) - Completion of the merger is subject to various conditions, including shareholder approval and third-party consents, and failure to satisfy these could **negatively impact** the company's stock price and future financial results[159](index=159&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk) - Any litigation related to the merger agreement, even if without merit, could have a **material adverse impact** due to costs and diversion of management resources[163](index=163&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section states that there were no unregistered sales of equity securities or use of proceeds during the reporting period - **No unregistered sales** of equity securities or use of proceeds occurred during the period[164](index=164&type=chunk) [Item 3. Defaults Upon Senior Securities](index=31&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reporting period - **No defaults** upon senior securities occurred during the period[165](index=165&type=chunk) [Item 4. Mine Safety Disclosures](index=31&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are **not applicable** to the company[166](index=166&type=chunk) [Item 5. Other Information](index=31&type=section&id=Item%205.%20Other%20Information) This section reports that no director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended June 30, 2025 - **No director or officer adopted or terminated** a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[167](index=167&type=chunk) [Item 6. Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including the Merger Agreement, company charter documents, various purchase and sale agreements, and certifications - Key exhibits include the **Agreement and Plan of Merger (Exhibit 2.1)**, **Articles of Amendment and Restatement (Exhibit 3.1)**, and **Purchase and Sale Agreements (Exhibits 10.1, 10.2)**[169](index=169&type=chunk) - **Certifications** by the Chief Executive Officer and Chief Financial Officer under the **Sarbanes-Oxley Act** are also filed as exhibits[169](index=169&type=chunk) [Signatures](index=33&type=section&id=Signatures) This section contains the signatures of the Chief Executive Officer and Chief Financial Officer, certifying the filing of the report on behalf of City Office REIT, Inc. [Signatures](index=33&type=section&id=Signatures) This section formally certifies the report's filing with the signatures of the company's principal officers - The report was signed by James Farrar, Chief Executive Officer and Director, and Anthony Maretic, Chief Financial Officer, Secretary and Treasurer, on July 31, 2025[173](index=173&type=chunk)

[Executive Summary & Key Developments](index=1&type=section&id=Executive%20Summary%20%26%20Key%20Developments) City Office REIT reported a net loss in Q2 2025 but announced a definitive merger agreement and the sale of its Phoenix Portfolio post-quarter end [Second Quarter 2025 Performance Highlights](index=1&type=section&id=Second%20Quarter%202025%20Performance%20Highlights) City Office REIT reported a net loss attributable to common stockholders of $107.2 million, or ($2.66) per fully diluted share, for Q2 2025, while achieving a 1.8% increase in Same Store Cash NOI year-over-year and maintaining an in-place occupancy of 82.5% Q2 2025 Performance Metrics | Metric | Q2 2025 Value | | :-------------------------------- | :------------------- | | Rental and other revenues | $42.3 million | | GAAP net loss attributable to common stockholders | ($107.2) million | | GAAP net loss per fully diluted share | ($2.66) | | Core FFO | $11.8 million | | Core FFO per fully diluted share | $0.28 | | AFFO | $3.0 million | | AFFO per fully diluted share | $0.07 | | In-place occupancy | 82.5% | | Same Store Cash NOI (YoY increase) | 1.8% | | Common Stock Dividend | $0.10 per share | | Series A Preferred Stock Dividend | $0.4140625 per share | - The company executed approximately **355,000 square feet** of new and renewal leases during the quarter[6](index=6&type=chunk) [Strategic Developments Post-Quarter End](index=1&type=section&id=Strategic%20Developments%20Post-Quarter%20End) Subsequent to quarter end, City Office REIT entered into a definitive merger agreement to be acquired by MCME Carell Holdings, LP for $7.00 per common share, representing a significant premium, contingent on the sale of the Phoenix Portfolio for which an agreement has also been signed [Phoenix Portfolio Sale Agreement](index=1&type=section&id=Phoenix%20Portfolio%20Sale%20Agreement) City Office REIT entered into an agreement to sell its Phoenix Portfolio for $296.0 million, a key condition for the pending merger transaction - The Company entered into a purchase and sale agreement to sell all of its properties in Phoenix, Arizona for an aggregate sale price of **$296.0 million**[4](index=4&type=chunk) [Pending Merger Transaction](index=1&type=section&id=Pending%20Merger%20Transaction) On July 23, 2025, City Office REIT entered into a definitive merger agreement with MCME Carell Holdings, LP to be acquired for $7.00 per share in cash, representing a 26% premium to the closing share price and a 39% premium to the 90-day volume weighted average share price, with the total transaction valued at approximately $1.1 billion including debt assumption/repayment and preferred stock redemption Merger Transaction Details | Metric | Value | | :------------------------------------------------ | :------------------- | | Acquisition Price per Common Share | $7.00 | | Premium to prior day closing price | 26% | | Premium to 90-day VWAP | 39% | | Preferred Stock Redemption Price | $25.00 per share + accrued distributions | | Total Transaction Value (incl. debt & preferred) | ~$1.1 billion | - The merger is subject to the satisfaction of conditions, including the sale of the Phoenix Portfolio[5](index=5&type=chunk) [Operational Review](index=2&type=section&id=Operational%20Review) The Company's portfolio maintained an 82.5% in-place occupancy with positive Same Store Cash NOI growth and significant leasing activity in Q2 2025 [Portfolio Operations](index=2&type=section&id=Portfolio%20Operations) As of June 30, 2025, the Company's total portfolio comprised 5.4 million net rentable square feet with an in-place occupancy of 82.5%, increasing to 86.8% when including signed but not yet occupied leases, with Same Store Cash NOI showing positive growth both quarterly and year-to-date Portfolio Operational Metrics | Metric | Value | | :-------------------------------- | :------------------- | | Total Net Rentable Square Feet | 5.4 million | | In-place Occupancy (June 30, 2025) | 82.5% | | Occupancy (incl. signed leases) | 86.8% | | Same Store Cash NOI (Q2 2025 YoY increase) | 1.8% | | Same Store Cash NOI (YTD Q2 2025 YoY increase) | 3.1% | [Leasing Activity](index=2&type=section&id=Leasing%20Activity) During Q2 2025, City Office REIT executed approximately 355,000 square feet of leases, split between new leases and renewals, with new leases having a longer weighted average term and slightly lower effective annual rent compared to renewals Q2 2025 Leasing Activity | Leasing Type | Square Feet | Weighted Average Lease Term | Weighted Average Effective Annual Rent | Weighted Average Cost per Square Foot per Year | | :------------------- | :---------- | :-------------------------- | :----------------------------------- | :--------------------------------------------- | | Total Leasing Activity | 355,000 | N/A | N/A | N/A | | New Leasing | 163,000 | 8.4 years | $31.45 | $8.30 | | Renewal Leasing | 192,000 | 4.0 years | $33.02 | $3.91 | - Approximately **306,000 square feet** of leases signed in Q2 2025 are expected to take occupancy after quarter end[9](index=9&type=chunk) [Financial Position & Capital Management](index=2&type=section&id=Financial%20Position%20%26%20Capital%20Management) The Company's capital structure includes $649.2 million in debt, with a significant impairment charge related to the Phoenix Portfolio sale and a suspension of common stock dividends due to the pending merger [Capital Structure](index=2&type=section&id=Capital%20Structure) As of June 30, 2025, the Company had approximately $649.2 million in outstanding debt, with 81.9% being fixed rate, a weighted average maturity of 1.4 years, and an average interest rate of 5.2%, further extending a loan for the Greenwood Blvd property with its interest rate effectively fixed at 6.34% through an interest rate swap Capital Structure Overview | Metric | Value | | :-------------------------------- | :------------------- | | Total Principal Outstanding Debt | ~$649.2 million | | % Fixed Rate Debt | 81.9% | | Weighted Average Maturity | 1.4 years | | Weighted Average Interest Rate | 5.2% | | Greenwood Blvd Loan Amendment Amount | $20.1 million | | Greenwood Blvd Loan Extended Maturity | May 2028 | | Greenwood Blvd Loan Fixed Interest Rate (via swap) | 6.34% | [Real Estate Transactions](index=2&type=section&id=Real%20Estate%20Transactions) The Company entered into an agreement to sell its Phoenix Portfolio for $296.0 million, classifying it as held for sale as of June 30, 2025, which resulted in an impairment charge of $102.2 million, with the sale expected to close in Q3 after receiving $20.0 million in non-refundable deposits Phoenix Portfolio Sale Details | Metric | Value | | :------------------------------------------------ | :------------------- | | Phoenix Portfolio Sale Price | $296.0 million | | Impairment Recognized (as of June 30, 2025) | $102.2 million | | Initial Deposit Received (as of June 30, 2025) | $2.0 million | | Additional Deposit Received (subsequent to June 30, 2025) | $18.0 million | | Total Non-refundable Deposits | $20.0 million | - The Phoenix Portfolio met the criteria for classification as held for sale as of June 30, 2025[13](index=13&type=chunk) - The sale is scheduled to close in the third quarter, subject to customary closing conditions, with some properties potentially closing later[15](index=15&type=chunk) [Dividends](index=3&type=section&id=Dividends) The Board of Directors declared Q2 2025 dividends of $0.10 per common share and $0.4140625 per Series A Preferred Share, both paid on July 24, 2025, but future common stock dividend payments have been suspended due to the pending merger, while preferred stock dividends will continue until redemption at $25.00 per share plus accrued distributions immediately prior to the merger closing Q2 2025 Dividend Declarations | Dividend Type | Q2 2025 Amount per Share | | :-------------------------------- | :----------------------- | | Common Stock Dividend | $0.10 | | 6.625% Series A Preferred Stock Dividend | $0.4140625 | | Preferred Stock Redemption Price (pre-Merger) | $25.00 + accrued distributions | - Future quarterly common stock dividend payments have been suspended through the expected close of the Merger[18](index=18&type=chunk) - Regular quarterly dividends on Preferred Stock will continue as long as such Preferred Stock remains outstanding[18](index=18&type=chunk) [Corporate Communications & Non-GAAP Measures](index=3&type=section&id=Corporate%20Communications%20%26%20Non-GAAP%20Measures) City Office REIT suspended its 2025 guidance and conference call due to the pending merger, providing detailed definitions for non-GAAP financial measures [2025 Outlook](index=3&type=section&id=2025%20Outlook) Due to the pending merger, City Office REIT has suspended its 2025 guidance and will not be affirming past guidance - The Company will no longer provide guidance nor is it affirming past guidance in light of the pending Merger[20](index=20&type=chunk) [Webcast and Conference Call Details](index=3&type=section&id=Webcast%20and%20Conference%20Call%20Details) The Company will not host a conference call to discuss its second quarter 2025 results due to the pending merger, but a supplemental financial information package is available on its investor relations website - The Company will not host a conference call with analysts and investors to discuss its second quarter 2025 results due to the pending Merger[21](index=21&type=chunk) [Non-GAAP Financial Measures Definitions](index=3&type=section&id=Non-GAAP%20Financial%20Measures%20Definitions) This section provides definitions and explanations for various non-GAAP financial measures used by City Office REIT, including FFO, Core FFO, AFFO, NOI, Same Store NOI, and Same Store Cash NOI, highlighting their utility as supplemental performance indicators for REITs while noting their limitations and potential incomparability with other REITs' calculations - **FFO (Funds from Operations)** is defined by NAREIT as net income plus real estate related depreciation and amortization, adjusted for gains/losses on property sales and impairments[22](index=22&type=chunk) - **Core FFO** adjusts NAREIT FFO for certain non-core items like acquisition costs, loss on early extinguishment of debt, and changes in fair value of earn-outs/contingent consideration[26](index=26&type=chunk) - **AFFO (Adjusted Funds from Operations)** is computed by adding non-cash amortization to Core FFO and subtracting cash paid for recurring tenant improvements, leasing commissions, and capital expenditures, while eliminating the net effect of straight-line rent/expense, deferred market rent, and debt fair value amortization[28](index=28&type=chunk) - **NOI (Net Operating Income)** is defined as rental and other revenues less property operating expenses, providing insight into core operations[30](index=30&type=chunk) - **Same Store NOI** and **Same Store Cash NOI** measure the operating results of properties continuously owned and operated for the entirety of presented reporting periods, excluding variations from acquisitions, dispositions, or repositionings[31](index=31&type=chunk)[33](index=33&type=chunk) [Consolidated Financial Statements](index=7&type=section&id=Consolidated%20Financial%20Statements) The Company's Q2 2025 financial statements reflect a net loss driven by a real estate impairment, alongside reconciliations for FFO, Core FFO, AFFO, and NOI [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a decrease in total assets from $1,455.7 million at December 31, 2024, to $1,328.1 million at June 30, 2025, primarily driven by a reclassification of assets to 'held for sale' and a reduction in real estate properties, while total liabilities remained relatively stable and total equity decreased from $734.5 million to $615.4 million Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Total Assets | $1,328,143 | $1,455,670 | | Real estate properties, net | $904,790 | $1,273,146 | | Assets held for sale | $296,167 | $12,588 | | Total Liabilities | $712,715 | $721,130 | | Debt | $647,188 | $646,972 | | Total Equity | $615,428 | $734,540 | | Retained earnings | $60,901 | $179,838 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2025, the Company reported rental and other revenues of $42.3 million, consistent with the prior year, but a significant impairment of real estate of $102.2 million led to an operating loss of $96.6 million and a net loss attributable to common stockholders of $107.2 million, a substantial increase from the $5.6 million loss in Q2 2024 Condensed Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Rental and other revenues | $42,343 | $42,342 | $84,602 | $86,836 | | Property operating expenses | $16,314 | $17,492 | $32,585 | $35,237 | | Impairment of real estate | $102,229 | — | $102,229 | — | | Operating (loss)/income | ($96,590) | $6,307 | ($89,456) | $14,270 | | Net loss attributable to common stockholders | ($107,221) | ($5,607) | ($110,746) | ($8,051) | | Net loss per common share (Diluted) | ($2.66) | ($0.14) | ($2.75) | ($0.20) | [Reconciliation of Net Income to FFO, Core FFO and AFFO](index=9&type=section&id=Reconciliation%20of%20Net%20Income%20to%20FFO%2C%20Core%20FFO%20and%20AFFO) Despite a GAAP net loss, the Company reported positive FFO, Core FFO, and AFFO for Q2 2025, after adjusting for non-cash items like depreciation and the significant real estate impairment, with Core FFO per share at $0.28 and AFFO per share at $0.07, resulting in an AFFO payout ratio of 141% Reconciliation of Net Income to FFO, Core FFO and AFFO (in thousands, except per share) | Metric | Three Months Ended June 30, 2025 (in thousands, except per share) | | :------------------------------------ | :----------------------------------------------------------------- | | Net loss attributable to common stockholders | ($107,221) | | FFO attributable to common stockholders | $10,921 | | Core FFO attributable to common stockholders | $11,765 | | AFFO attributable to common stockholders | $2,970 | | FFO per common share | $0.26 | | Core FFO per common share | $0.28 | | AFFO per common share | $0.07 | | Dividends distributions declared per common share | $0.10 | | FFO Payout Ratio | 38% | | Core FFO Payout Ratio | 36% | | AFFO Payout Ratio | 141% | [Reconciliation of Net Income to NOI, Same Store NOI and Same Store Cash NOI](index=10&type=section&id=Reconciliation%20of%20Net%20Income%20to%20NOI%2C%20Same%20Store%20NOI%20and%20Same%20Store%20Cash%20NOI) For Q2 2025, Net Operating Income (NOI) was $26.0 million, an increase from $24.9 million in Q2 2024, with Same Store Cash NOI also increasing to $24.8 million from $24.3 million year-over-year, reflecting improved operational performance from stabilized properties Reconciliation of Net Income to NOI, Same Store NOI and Same Store Cash NOI (in thousands) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net loss | ($105,309) | ($3,627) | ($106,808) | ($4,081) | | Net operating income ("NOI") | $26,029 | $24,850 | $52,017 | $51,599 | | Same store NOI | $26,029 | $24,393 | $51,975 | $50,466 | | Same store cash NOI | $24,772 | $24,327 | $50,259 | $48,735 | [Legal & Forward-Looking Statements](index=5&type=section&id=Legal%20%26%20Forward-Looking%20Statements) This section outlines important information for shareholders regarding the proposed merger, identifies solicitation participants, and provides a disclaimer on forward-looking statements [Additional Information and Where to Find It](index=5&type=section&id=Additional%20Information%20and%20Where%20to%20Find%20It) This section advises shareholders to read the Company's preliminary and definitive proxy statements, to be filed with the SEC, for a full description of the proposed merger and Phoenix Portfolio sale, as these documents will contain important information for voting on the merger and can be obtained from the Company's investor relations or the SEC's website - Shareholders are advised to read the Company's preliminary and definitive proxy statements for important information regarding the proposed merger[34](index=34&type=chunk) - Proxy statements will be available on the Company's website (www.cioreit.com) and the SEC's internet site (http://www.sec.gov)[34](index=34&type=chunk) [Participants in Solicitation](index=5&type=section&id=Participants%20in%20Solicitation) The Company's directors, executive officers, and certain management/employees may be considered participants in the solicitation of proxies for the proposed merger, with information regarding these participants detailed in the proxy statement and other relevant SEC filings, including the Annual Report on Form 10-K - Directors, executive officers, and certain other members of management and employees may be deemed 'participants' in the solicitation of proxies for the proposed Merger[35](index=35&type=chunk) - Information about participants will be set forth in the proxy statement and the Company's Annual Report on Form 10-K[35](index=35&type=chunk) [Forward-looking Statements](index=5&type=section&id=Forward-looking%20Statements) This section contains a standard disclaimer regarding forward-looking statements, emphasizing that actual results may differ materially from expectations due to various risks and uncertainties, including factors related to the pending merger, economic conditions, market changes, and operational challenges, many of which are beyond the Company's control, and the Company disclaims any obligation to update these statements - The press release contains forward-looking statements subject to risks and uncertainties, and actual results may vary materially from those anticipated[36](index=36&type=chunk)[38](index=38&type=chunk) - Examples of forward-looking statements include expectations regarding financial performance, market rental rates, economic growth, occupancy, and financing[37](index=37&type=chunk) - Key factors that could cause actual results to differ include the termination of the Merger Agreement or Phoenix Sale Agreement, inability to complete the merger, and disruptions to operations[38](index=38&type=chunk)

Core Insights - City Office REIT, Inc. reported its financial results for the second quarter ended June 30, 2025, highlighting significant developments including a pending merger and property sales [1][4][18]. Financial Performance - Rental and other revenues for the quarter were $42.3 million, with a GAAP net loss attributable to common stockholders of approximately $107.2 million, or ($2.66) per fully diluted share [9][39]. - Core Funds from Operations (Core FFO) were approximately $11.8 million, or $0.28 per fully diluted share, while Adjusted Funds from Operations (AFFO) were approximately $3.0 million, or $0.07 per fully diluted share [9][40]. - Same Store Cash NOI increased by 1.8% for the three months ended June 30, 2025, compared to the same period in the prior year [5][41]. Portfolio Operations - The total portfolio as of June 30, 2025, contained 5.4 million net rentable square feet, with an occupancy rate of 82.5%, or 86.8% including signed leases not yet occupied [5][9]. - The company executed approximately 355,000 square feet of new and renewal leases during the quarter, with new leases having a weighted average lease term of 8.4 years at an effective annual rent of $31.45 per square foot [6][7]. Merger and Sale Transactions - The company entered into a definitive merger agreement with MCME Carell Holdings, LP, under which MCME Carell will acquire all issued and outstanding shares of City Office for $7.00 per share, representing a 26% premium to the closing share price prior to the announcement [4][18]. - The company also entered into a purchase and sale agreement to sell its properties in Phoenix, Arizona, for an aggregate sale price of $296.0 million, which is part of the conditions for the merger [3][12]. Capital Structure - As of June 30, 2025, the company had total principal outstanding debt of approximately $649.2 million, with 81.9% of the debt being fixed rate or effectively fixed due to interest rate swaps [10][11]. - The company declared a second quarter dividend of $0.10 per share of common stock, which was paid on July 24, 2025, but has resolved to suspend future common stock dividend payments through the expected close of the merger [9][16][14]. Outlook - In light of the pending merger, the company will no longer provide guidance nor affirm past guidance [18].