City Office REIT(US:CIO)2025-11-07 11:15Property Portfolio - As of September 30, 2025, the company owned 16 properties comprising 33 office buildings with a total of approximately 4.2 million square feet of net rentable area (NRA) and was approximately 84.5% leased[96]. - The company focuses on owning office properties in growth markets predominantly in the Sun Belt, which are characterized by growing populations and above-average employment growth forecasts[98]. - Approximately 20.1% of the NRA in the portfolio had early termination provisions as of September 30, 2025, but no tenants exercised these provisions in 2025[99]. - As of September 30, 2025, 0.7% of the leases were scheduled to expire over the remainder of the calendar year, without regard to renewal options[99]. - General Services Administration (GSA) tenants represented approximately 5.1% of the base rental revenue, with all federal or state governmental agencies accounting for 7.7%[99]. Leasing Activity - For the three months ended September 30, 2025, total leasing activity included 105,000 square feet, with new leasing at 38,000 square feet and renewal leasing at 67,000 square feet[102]. - The average effective rent per square foot for new leases was $45.50, while for renewals it was $40.25, resulting in an overall average of $42.13 per square foot[102]. - The retention rate for leases was 68%, indicating a strong ability to retain existing tenants[102]. Financial Performance - Rental and other revenues decreased by $5.1 million, or 12%, to $37.3 million for the three months ended September 30, 2025, compared to $42.4 million for the same period in 2024[111]. - Property operating expenses decreased by $2.2 million, or 12%, to $15.6 million for the three months ended September 30, 2025, from $17.8 million for the same period in 2024[112]. - General and administrative expenses remained unchanged at $3.8 million for the three months ended September 30, 2025, and 2024[113]. - Depreciation and amortization decreased by $4.0 million, or 28%, to $10.6 million for the three months ended September 30, 2025, from $14.6 million in the prior year[114]. - Rental and other revenues decreased by $7.3 million, or 6%, to $121.9 million for the nine months ended September 30, 2025, compared to $129.2 million for the same period in 2024[119]. - Property operating expenses decreased by $4.8 million, or 9%, to $48.2 million for the nine months ended September 30, 2025, from $53.0 million for the same period in 2024[120]. - General and administrative expenses increased by $0.5 million, or 5%, to $11.8 million for the nine months ended September 30, 2025, from $11.3 million in the prior year[121]. - Depreciation and amortization decreased by $2.6 million, or 6%, to $41.8 million for the nine months ended September 30, 2025, from $44.4 million in the prior year[122]. - Impairment of real estate was $102.2 million for the nine months ended September 30, 2025, compared to nil in the prior year[123]. - Interest expense decreased by $0.5 million, or 2%, to $25.0 million for the nine months ended September 30, 2025, from $25.5 million for the same period in 2024[124]. Cash Flow and Debt - Cash, cash equivalents, and restricted cash decreased from $43.0 million as of September 30, 2024, to $39.3 million as of September 30, 2025[127]. - Net cash provided by operating activities decreased by $11.3 million to $38.7 million for the nine months ended September 30, 2025, compared to $50.0 million for the same period in 2024[128]. - Net cash provided by investing activities increased by $265.6 million to $235.8 million for the nine months ended September 30, 2025, primarily due to the sale of Superior Pointe and the First Phoenix Closing[129]. - Net cash used in financing activities increased by $248.5 million to $269.1 million for the nine months ended September 30, 2025, primarily due to increased repayment of borrowings[130]. - Segment net operating income (NOI) for the nine months ended September 30, 2025, was $73.675 million, a decrease from $76.187 million in 2024[134]. - As of September 30, 2025, approximately $285.0 million, or 71.2%, of the company's debt had fixed interest rates, while $115.0 million, or 28.8%, had variable interest rates[150]. - A 1% increase in SOFR would result in a $1.2 million increase in annual interest costs on debt outstanding as of September 30, 2025[150]. - The company had approximately $21.3 million of cash and cash equivalents and $17.9 million of restricted cash as of September 30, 2025[135]. - The total contractual obligations as of September 30, 2025, amounted to $450.878 million, with principal payments on indebtedness totaling $399.970 million[146]. Merger and Acquisition - The company entered into a Merger Agreement with MCME Carell to acquire all outstanding shares for $7.00 per share in cash, subject to customary closing conditions[93]. Economic Outlook - The company anticipates that future economic downturns could adversely affect its ability to maintain or increase rental rates and fulfill lease commitments[99].