VANCOUVER, Dec. 20, 2016 /PRNewswire/ -- City Office REIT,
Inc. (NYSE: CIO) ("City Office" or the "Company") announced the
closing of two acquisitions in Phoenix,
Arizona for an aggregate purchase price of approximately
$101 million. The Company also
announced that, in relation to the previously announced potential
sale of the Washington Group Plaza property in Boise, Idaho, St. Luke's Health System Ltd.
("St. Luke's") waived certain conditions for closing and made a
$5 million non-refundable
deposit.
On December 15, 2016, City Office
closed the acquisition of SanTan Corporate Center ("SanTan") in
Phoenix, Arizona for a purchase
price of $58.5 million, exclusive of
closing costs. The acquisition is anticipated to generate an
initial full-year net operating income yield of approximately 7.7%
based on the purchase price and the estimated cost of planned
capital improvements. SanTan is a 266,531 square foot, Class
A office complex located in Phoenix's technology-driven Chandler
submarket. The property features a highly visible location,
excellent access to the surrounding amenity base, high-end tenant
finishes and an onsite café. SanTan is 100% leased, with 55% of the
property's net rentable area leased to investment grade tenants,
including Toyota Motor Credit Corporation.
On November 30, 2016, City Office
closed the previously announced acquisition of 5090 N 40th St
("5090") in Phoenix, Arizona for a
purchase price of $42.6 million,
exclusive of closing costs. The acquisition is anticipated to
generate an initial full-year net operating income yield of
approximately 7.1% based on the purchase price and the estimated
cost of planned capital improvements. 5090 is a 175,835
square foot, Class A office property strategically located within
the Camelback Corridor, one of the leading submarkets in
metropolitan Phoenix. The property has undergone extensive
renovations and has been institutionally maintained. The
building is well leased to a strong, diversified roster of
nationally recognizable tenants.
"The strong attributes and attractive acquisition metrics for
both of these transactions represent an excellent entry point into
the Phoenix market for us," said
James Farrar, Chief Executive
Officer of City Office. "We believe that geographic
diversification within our high growth markets strengthens our
portfolio. With the closings of SanTan and 5090, we have now
acquired more assets in 2016 than in any other year since our IPO,
representing our commitment to scaling our portfolio with
high-quality properties."
On December 16, 2016, in relation
to the potential sale of Washington Group Plaza, St. Luke's
completed its due diligence review, waived certain conditions
precedent for closing and made a $5
million non-refundable deposit. The sale price of
$86.5 million represents an expected
capitalization rate of approximately 5.8% based on 2017 budgeted
net operating income. Closing is scheduled to occur in
April 2018 in conjunction with the
maturity of the property's secured mortgage. However, both
City Office and St. Luke's have the right to accelerate closing by
providing at least 120 days' advance notice, with the party
triggering the acceleration responsible for paying the defeasance
costs associated with the existing mortgage loan.
"The agreement to sell the Washington Group Plaza property
represents our ability to create value for our shareholders at the
property level," said James
Farrar. "The four office buildings that comprise
Washington Group Plaza were contributed to City Office as part of
our IPO in April 2014. Since that time, we have completed
numerous leasing transactions and implemented substantial
operational improvements and cost savings. These efforts
enhanced the property, which laid the foundation for a mutually
beneficial transaction with St. Luke's."
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 markets in the Southern and
Western United States. City Office
currently owns or has a controlling interest in 4.4 million square
feet of office properties. Additional information about City Office
is available on the Company's website at
www.cityofficereit.com. The Company has elected to be taxed
as a real estate investment trust for U.S. federal income tax
purposes.
Forward-looking Statements
This press release contains "forward-looking statements" within
the meaning of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995 and other federal
securities laws. All statements that are not statements of
historical facts are, or may be deemed to be, forward-looking
statements. These factors include, but are not limited to,
the Company's ability to source, acquire and close on properties on
the terms it expects, or at all; the Company's expectations and
forecasts of its cash flows and future leasing activity at its
current and future properties, and the Company's ability to
accurately model the income yield, capitalization rate, and other
financial metrics used to evaluate its properties. These and other
material risks are described in the Company's Annual Report on Form
10-K for the year ended December 31,
2015 and any other documents filed by the Company from time
to time, which are available from the Company and from the SEC, and
you should read and understand these risks when evaluating any
forward-looking statement. The Company does not have any obligation
to publicly update any forward-looking statements to reflect
subsequent events or circumstances.
Contact
City Office REIT, Inc.
Anthony Maretic, CFO
+1-604-806-3366
investorrelations@cityofficereit.com
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SOURCE City Office REIT, Inc.