City Office REIT Reports Second Quarter 2025 Financial Performance and Merger Updates

City Office REIT Reports Second Quarter 2025 Financial Performance

City Office REIT, Inc. (NYSE: CIO) has published its results for the second quarter ending June 30, 2025, showcasing both operational insights and significant corporate developments. The company reported rental and other revenues at approximately $42.3 million. However, it also faced a GAAP net loss attributable to common stockholders amounting to around $107.2 million, translating to a loss of $2.66 per fully diluted share.

Financial Highlights

During the quarter, City Office REIT achieved a Core Funds from Operations (FFO) totaling about $11.8 million or $0.28 per diluted share. Additionally, Adjusted Funds from Operations (AFFO) were recorded at approximately $3.0 million or $0.07 per diluted share. The company’s in-place occupancy rate was reported at 82.5%, which improved to 86.8% when accounting for signed leases that were not yet occupied.

A noteworthy operational highlight was the execution of approximately 355,000 square feet of new and renewal leases throughout the quarter. In comparison to the same period in 2024, Same Store Cash Net Operating Income (NOI) experienced a modest increase of 1.8%.

The board has declared dividends for the second quarter, marking a common stock dividend of $0.10 per share, payable on July 24, 2025. Additionally, holders of the Series A Preferred Stock received $0.4140625 per share on the same date.

Leasing Activity

The leasing activity revealed a significant engagement with new and renewal agreements, comprising 163,000 square feet of new leases at an average effective annual rent of $31.45 per square foot over an average lease term of 8.4 years. Renewal leases averaged $33.02 per square foot for a term of four years.

Debt and Capital Structure

As of June 30, 2025, City Office REIT had approximately $649.2 million in outstanding principal debt, of which about 81.9% was fixed or effectively fixed due to interest rate swaps. During the quarter, the company amended a loan for the Greenwood Blvd property, extending its maturity by three years, while also engaging in an interest rate swap agreement to facilitate an effective fixed rate of 6.34%.

Sales Agreement and Potential Merger

Significantly, City Office REIT has entered into a sales agreement to divest all of its properties located in Phoenix, Arizona, for a total of $296 million. This strategic move is accompanied by a pending merger agreement, which was finalized on July 23, 2025. Under this agreement, MCME Carell Holdings and its affiliates will acquire all issued and outstanding shares of City Office for $7.00 per share in cash. This acquisition represents a 26% premium over the last closing price before the announcement.

The overall transaction valuation is estimated at about $1.1 billion, considering existing debt repayment and preferred stock redemption. The merger will require shareholder approval and is contingent on the sale of the Phoenix Portfolio.

Conclusion

As City Office REIT moves forward with these strategic maneuvers, including an anticipated merger and property sales, it emphasizes operational performance and shareholder value amidst challenging financial results this quarter. Looking ahead, the company will not provide further guidance due to this pending merger, shifting focus towards finalizing arrangements with the buyer.

For more comprehensive details regarding the second quarter results and the implications of the upcoming merger, stakeholders are encouraged to access the complete financial disclosures on the company's official site.