City Office REIT, Inc. (NYSE: CIO) (“City Office” or the “Company”) announced today that it has entered into definitive agreements to sell all of its holdings in the Sorrento Mesa submarket of San Diego for $576 million. The transactions are expected to generate net proceeds, after estimated closing and transaction costs, of approximately $546 million, which equates to $12.38 per common share. The properties to be sold are unencumbered by debt.
The sales will be completed pursuant to two separate agreements. The northern portion of the portfolio is scheduled to close in December 2021 for $395 million. The southern portion of the portfolio is scheduled to close in February 2023 for $181 million. City Office has the ability to accelerate either closing date to align with redeployment opportunities. Both sales are subject to customary closing conditions.
“We are pleased to announce the agreements to sell our Sorrento Mesa life science portfolio,” commented James Farrar, the Company’s Chief Executive Officer. “Since our initial acquisition of properties in Sorrento Mesa in 2017, we have re-positioned, re-tenanted, renovated and strategically enhanced our portfolio. The resulting aggregation of life science assets and over one million square feet of zoned life science development potential created an extremely valuable portfolio.”
“This is an exciting, transformational transaction for the Company. The sale and redeployment positions us to complement and elevate the quality of our office portfolio through acquisitions across some of the highest employment and population growth cities in the south and west. Executing this strategy will create a pathway to enhance our earnings per share, expand our net asset value and strengthen our balance sheet.”
A detailed presentation regarding the transaction can be found on the Investor Relations section of the Company’s website at www.cioreit.com.
About City Office REIT, Inc.
City Office REIT is an internally-managed real estate company focused on acquiring, owning and operating high-quality office properties located in leading 18-hour cities in the Southern and Western United States. City Office currently owns or has a controlling interest in 5.6 million square feet of office properties. The Company has elected to be taxed as a real estate investment trust for U.S. federal income tax purposes.
This press release contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Certain statements contained in this press release, including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, are forward-looking statements within the meaning of the federal securities laws and as such are based upon the Company’s current beliefs as to the outcome and timing of future events. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “approximately,” “anticipate,” “assume,” “believe,” “budget,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “future,” “hypothetical,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will” or other similar words or expressions. There can be no assurance that actual forward-looking statements will be those anticipated by the Company. They are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statement, including with respect to future acquisition or disposition activity, if any, the terms on which we may acquire or dispose of property in the future, if at all, and future or expected cap rates. Factors that could cause actual results to differ materially include, among other things, changes to the Company’s expected liquidity position, uncertainty regarding acquisitions, dispositions or our operations, and the risk factors set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and subsequent filings with the United States Securities and Exchange Commission (the “SEC”). Forward-looking statements presented in this press release are based on management’s beliefs and assumptions made by, and information currently available to, management. The forward-looking statements contained in this press release are based on historical performance and management’s current plans, estimates and expectations in light of information currently available to us and are subject to uncertainty and changes in circumstances. There can be no assurance that future developments affecting us will be those that we have anticipated. Actual results may differ materially from these expectations due to the factors, risks and uncertainties described above, changes in global, regional or local political, economic, business, competitive, market, regulatory and other factors described in our news releases and filings with the SEC, including but not limited to those described in our Annual Report on Form 10-K for the year ended December 31, 2020 under the heading “Risk Factors” and in our subsequent reports filed with the SEC, many of which are beyond our control. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove to be incorrect, our actual results may vary in material respects from what we may have expressed or implied by these forward-looking statements. We caution that you should not place undue reliance on any of our forward-looking statements. Any forward-looking statement made by us in this press release speaks only as of the date of this press release. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. The Company does not guarantee that the assumptions underlying such forward-looking statements contained in this press release are free from errors. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by applicable securities laws.
City Office REIT, Inc.
Anthony Maretic, CFO
SOURCE City Office REIT, Inc.