Item 1.01. Entry into a Material Definitive Agreement.
On September 26, 2016, City Office REIT, Inc. (the Company) and City Office REIT Operating Partnership, L.P., a Maryland limited
partnership (the Operating Partnership), entered into an underwriting agreement (the Underwriting Agreement) with the several underwriters named on Schedule I therein (the Underwriters), for whom Raymond James
& Associates, Inc. and Wunderlich Securities, Inc. acted as representatives, pursuant to which the Company agreed to offer and sell 4,000,000 preferred shares of preferred stock, $0.01 par value per share, as 6.625% Series A Cumulative
Redeemable Preferred Stock, $0.01 par value per share (Series A Preferred Stock) at a public offering price of $25.00 per share (the Preferred Stock Offering). The Underwriters were granted an option to purchase up to an
additional 600,000 shares of Series A Preferred Stock, bringing the total number of shares of Series A Preferred Stock that may be issued in this offering to 4,600,000 shares of Series A Preferred Stock. In the Underwriting Agreement, the Company
and the Operating Partnership made certain customary representations, warranties and covenants and agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the
Securities Act). The closing of the Preferred Stock Offering is expected to occur on October 4, 2016, subject to customary closing conditions pursuant to the terms of the Underwriting Agreement.
The Company estimates that the net proceeds from the Preferred Stock Offering, after deducting underwriting discounts and commissions and
estimated offering expenses payable by the Company, will be approximately $96.6 million ($111.1 million if the Underwriters exercise their option to purchase additional shares in full).
The shares of Series A Preferred Stock have been registered on the Companys shelf registration statement on Form S-3 (File No.
333-203882), which was declared effective by the Securities and Exchange Commission (the SEC) on May 18, 2015.
This
description of the material terms of the Underwriting Agreement is qualified in its entirety by reference to the Underwriting Agreement, which is filed as Exhibit 1.1 to this Current Report on Form 8-K and is hereby incorporated by reference into
this Item 1.01. For a more detailed description of the Underwriting Agreement, see the disclosure under the caption Underwriting contained in the Companys prospectus supplement, dated September 26, 2016 and filed with the SEC
on September, 27, 2016 (the Prospectus Supplement), which disclosure is hereby incorporated by reference into this Item 1.01.
A copy of the opinion of Ballard Spahr LLP relating to the legality of the issuance and sale of the Series A Preferred Stock is attached to
this Current Report on Form 8-K as Exhibit 5.1. A copy of the opinion of Hunton & Williams LLP with respect to certain tax matters is attached to this Current Report on Form 8-K as Exhibit 8.1.
In connection with the anticipated closing of the offering of the Series A Preferred Stock, the Company, as the sole general partner of the
Operating Partnership, on its own behalf as general partner of the Operating Partnership and on behalf of the limited partners of the Operating Partnership, has amended the Amended and Restated Agreement of Limited Partnership of the Operating
Partnership (the Partnership Agreement) to provide for the issuance of up to 4,600,000 6.625% Series A Cumulative Redeemable Preferred Units (liquidation preference $25.00 per unit) (the Series A Preferred Units). Such
amendment is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated by reference herein. The Company expects to contribute the net proceeds from the sale of the Series A Preferred Stock in the Preferred Stock Offering to the
Operating Partnership in exchange for the same number of Series A Preferred Units. The Series A Preferred Units have economic terms that mirror the terms of the Series A Preferred Stock. The issuance of the Series A Preferred Units will be exempt
from registration pursuant to Section 4(a)(2) of the Securities Act.
The Series A Preferred Units will rank, as to distributions and upon
liquidation, senior to the common units of limited partnership interest in the Operating Partnership.
This description of the material
terms of the amendment to the Partnership Agreement is qualified in its entirety by reference to the amendment to the Partnership Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is hereby incorporated by reference
into this Item 1.01.
In addition, on September 29, 2016, SCCP Boise, Limited Partnership (SCCP), a
subsidiary of the Company, entered into a lease agreement (the Lease).with an unaffiliated third party with respect to 111,381 square feet of net rentable area at the Companys Washington Group Plaza property in Boise, ID
(WGP). The Lease has a term of 120 months and has a tentative commencement date of the later of July 1, 2017 or the date on which the premises is delivered to the counter party after surrender by the existing tenant. In connection with
execution of the Lease, on September 28, 2016, SCCP entered into an agreement (the PSA) to sell WGP to an unaffiliated third party for $86.5 million. On or before December 16, 2016 (the Contingency Date), the counter party
has the right to terminate the PSA, subject to certain conditions, and receive a return of all deposits made pursuant to the PSA through the Contingency Date. Closing on the transactions contemplated by the PSA is expected to occur prior to April 5,
2018. However, as numerous closing requirements and conditions remain outstanding, there can be no assurance that the transactions contemplated by the Lease and the PSA will be consummated on the timing or terms the Company expects, if at all.