EX-99.1 3 d927791dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

Pro Forma Consolidated Financial Statements

(Unaudited)

On June 18, 2025, the Company entered into a purchase and sale agreement to sell Block 23, Pima Center, 5090 N 40th St, SanTan, Papago Tech, The Quad, and Camelback Square (the “Phoenix Portfolio”) for $296.0 million. On August 15, 2025, the Company completed the first closing of the Phoenix Portfolio sale transaction for gross sales proceeds of $266.0 million. The first closing of the sale represents six of the Company’s seven properties located in Phoenix, Arizona. The Company’s Pima Center property continues to be under contract at a $30 million gross sales price. The sale of the Pima Center property is expected to close at a later date, subject to the Company obtaining certain approvals related to the property’s ground lease. The Company does not have a material relationship with the buyer of the Phoenix Portfolio and the disposition is not an affiliated transaction.

Concurrent to the first closing of the Phoenix Portfolio sale transaction, the Company entered into a third amendment to the Amended and Restated Credit Agreement which, among other things, will reduce the available commitment for the revolving credit facility to $150 million. Upon closing of each disposition, net proceeds shall be used to pay down the Company’s term loan and revolving credit facility, less amounts used to repay property-level debt related to the Phoenix Portfolio.

The accompanying unaudited Pro Forma Consolidated Balance Sheet is presented as of June 30, 2025 and the unaudited Pro Forma Consolidated Statements of Operations and unaudited Pro Forma Consolidated Statements of Comprehensive Income are presented for the six-month period ended June 30, 2025 and the year ended December 31, 2024. The unaudited Pro Forma Financial Statements include certain pro forma adjustments to illustrate the estimated effect of the Company’s disposition of the entire Phoenix Portfolio, including Pima Center. The City Office REIT, Inc. Historical columns have been derived from the audited financial statements as of and for the year ended December 31, 2024 and from the unaudited interim financial statements for the six-month period ended June 30, 2025.

On the unaudited Pro Forma Consolidated Balance Sheet, the pro forma adjustments reflect the removal of the disposed properties as if the transaction had occurred on June 30, 2025. On the unaudited Pro Forma Consolidated Statements of Operations and unaudited Pro Forma Consolidated Statements of Comprehensive Income, for the six-month period ended June 30, 2025 and the year ended December 31, 2024, the pro forma adjustments reflect the removal of historical revenue and expenses of the disposed properties for the periods presented as if the transaction had occurred on January 1, 2024.

The unaudited Pro Forma Consolidated Financial Statements set forth below are not fact and there can be no assurance that the Company’s results would not have differed significantly from those set forth below if the disposition had actually occurred on January 1, 2024. Accordingly, the unaudited Pro Forma Consolidated Financial Statements are presented for illustrative purposes only and do not purport to represent, and are not necessarily indicative of, what the Company’s actual financial position and results of operations would have been had the disposition of the properties occurred on the date indicated, nor are they indicative of the Company’s future financial position or results of operations. Readers are cautioned not to place undue reliance on such information and the Company makes no representations regarding the information set forth below or the Company’s ultimate performance compared to it.

Pro forma information is intended to provide investors with information about the impact of transactions by showing how specific transactions might have affected historical financial statements, illustrating the scope of the change in the historical financial position and results of operations. This pro forma consolidated information should not be viewed as indicative of the Company’s financial results in the future and should be read in conjunction with the Company’s financial statements as filed on Form 10-K for the year ended December 31, 2024 and on Form 10-Q for the period ended June 30, 2025. The adjustments made to historical financial information give effect to events that are directly attributable to the disposition of the Phoenix Portfolio and are factually supportable. The unaudited Pro Forma Consolidated Financial Statements are prepared in accordance with Article 11 of Regulation S-X.

City Office REIT, Inc.

Pro Forma Consolidated Balance Sheet

As of June 30, 2025

(Unaudited)

(In thousands, except par value and share data)

 

     City Office
REIT, Inc.
Historical		     Disposition of
Phoenix
Portfolio		            City Office
REIT, Inc. Pro
Forma		  

Assets

          

Real estate properties, net

      904,790       —           904,790  

Cash and cash equivalents

      18,264       —           18,264  

Restricted cash

      16,237       —           16,237  

Rents receivable, net

      40,472       —           40,472  

Deferred leasing costs, net

      21,643       —           21,643  

Acquired lease intangible assets, net

      25,423       —           25,423  

Other assets

      5,147       —           5,147  

Assets held for sale

      296,167       (296,167 )      A        —   
  

 

 

    

 

 

       

 

 

  

Total Assets

    $ 1,328,143     $ (296,167 )       $ 1,031,976  
  

 

 

    

 

 

       

 

 

  

Liabilities and Equity

          

Liabilities:

          

Debt

    $ 647,188     $ (278,082 )      B      $ 369,106  

Accounts payable and accrued liabilities

      22,637       —           22,637  

Deferred rent

      5,265       —           5,265  

Tenant rent deposits

      5,241       —           5,241  

Acquired lease intangible liabilities, net

      4,069       —           4,069  

Other liabilities

      11,499       —           11,499  

Liabilities related to assets held for sale

      16,816       (16,816 )      A        —   
  

 

 

    

 

 

       

 

 

  

Total Liabilities

      712,715       (294,898 )         417,817  

Equity:

          

6.625% Series A Preferred stock, $0.01 par value per share, 5,600,000 shares authorized, 4,480,000 issued and outstanding

      112,000       —           112,000  

Common stock, $0.01 par value, 100,000,000 shares authorized, 40,358,240 shares issued and outstanding

      403       —           403  

Additional paid-in capital

      443,481       —           443,481  

Retained earnings

      60,901       (1,269 )      A        59,632  

Accumulated other comprehensive loss

      (1,847 )      —           (1,847 ) 
  

 

 

    

 

 

       

 

 

  

Total Stockholders’ Equity

      614,938       (1,269 )         613,669  

Non-controlling interests in properties

      490       —           490  
  

 

 

    

 

 

       

 

 

  

Total Equity

      615,428       (1,269 )         614,159  
  

 

 

    

 

 

       

 

 

  

Total Liabilities and Equity

    $ 1,328,143     $ (296,167 )       $ 1,031,976  
  

 

 

    

 

 

       

 

 

  

City Office REIT, Inc.

Pro Forma Consolidated Statement of Operations

For the Six Months Ended June 30, 2025

(Unaudited)

(In thousands, except per share data)

 

     City Office
REIT, Inc.
Historical		     Disposition of
Phoenix Portfolio		            City Office
REIT, Inc. Pro
Forma		  

Rental and other revenues

    $ 84,602     $ (19,464 )      AA      $ 65,138  

Operating expenses:

          

Property operating expenses

      32,585       (7,829 )      AA        24,756  

General and administrative

      8,055       —           8,055  

Depreciation and amortization

      31,189       (8,225 )      AA        22,964  

Impairment of real estate

      102,229       —           102,229  
  

 

 

    

 

 

       

 

 

  

Total operating expenses

      174,058       (16,054 )         158,004  
  

 

 

    

 

 

       

 

 

  

Operating loss

      (89,456 )      (3,410 )         (92,866 ) 

Interest expense:

          

Contractual interest expense

      (16,618 )      1,702       AA        (14,916 ) 

Amortization of deferred financing costs and debt fair value

      (734 )      96       AA        (638 ) 
  

 

 

    

 

 

       

 

 

  
     (17,352 )      1,798          (15,554 ) 
  

 

 

    

 

 

       

 

 

  

Net loss

      (106,808 )      (1,612 )         (108,420 ) 

Less:

          

Net income attributable to non-controlling interests in properties

      (228 )      —           (228 ) 
  

 

 

    

 

 

       

 

 

  

Net loss attributable to the Company

      (107,036 )      (1,612 )         (108,648 ) 

Preferred stock distributions

      (3,710 )      —           (3,710 ) 
  

 

 

    

 

 

       

 

 

  

Net loss attributable to common stockholders

    $ (110,746 )    $ (1,612 )       $ (112,358 ) 
  

 

 

    

 

 

       

 

 

  

Net loss per common share:

          

Basic

    $ (2.75 )         $ (2.79 ) 
  

 

 

         

 

 

  

Diluted

    $ (2.75 )         $ (2.79 ) 
  

 

 

         

 

 

  

Weighted average common shares outstanding:

          

Basic

      40,332            40,332  
  

 

 

         

 

 

  

Diluted

      40,332            40,332  
  

 

 

         

 

 

  

Dividend distributions declared per common share

    $ 0.20          $ 0.20  
  

 

 

         

 

 

  

City Office REIT, Inc.

Pro Forma Consolidated Statement of Comprehensive Income

For the Six Months Ended June 30, 2025

(Unaudited)

(In thousands)

 

     City Office
REIT, Inc.
Historical		     Disposition of
Phoenix Portfolio		            City Office
REIT, Inc. Pro
Forma		  

Net loss

    $ (106,808 )    $ (1,612 )      AA      $ (108,420 ) 

Other comprehensive loss:

          

Unrealized cash flow hedge loss

      (1,007 )      —           (1,007 ) 

Amounts reclassified to interest expense

      (158 )      —           (158 ) 
  

 

 

    

 

 

       

 

 

  

Other comprehensive loss

      (1,165 )      —           (1,165 ) 
  

 

 

    

 

 

       

 

 

  

Comprehensive loss

      (107,973 )      (1,612 )         (109,585 ) 

Less:

          

Comprehensive income attributable to non-controlling interests in properties

      (197 )      —           (197 ) 
  

 

 

    

 

 

       

 

 

  

Comprehensive loss attributable to the Company

    $ (108,170 )    $ (1,612 )       $ (109,782 ) 
  

 

 

    

 

 

       

 

 

  

City Office REIT, Inc.

Pro Forma Consolidated Statement of Operations

For the Year Ended December 31, 2024

(Unaudited)

(In thousands, except per share data)

 

     City Office
REIT, Inc.
Historical		     Disposition of
Phoenix Portfolio		            City Office
REIT, Inc. Pro
Forma		  

Rental and other revenues

    $ 171,126     $ (39,167 )      AA      $ 131,959  

Operating expenses:

          

Property operating expenses

      69,460       (15,791 )      AA        53,669  

General and administrative

      15,201       —           15,201  

Depreciation and amortization

      59,321       (16,158 )      AA        43,163  

Impairment of real estate

      8,463       —           8,463  
  

 

 

    

 

 

       

 

 

  

Total operating expenses

      152,445       (31,949 )         120,496  
  

 

 

    

 

 

       

 

 

  

Operating income

      18,681       (7,218 )         11,463  

Interest expense:

          

Contractual interest expense

      (32,960 )      3,430       AA        (29,530 ) 

Amortization of deferred financing costs and debt fair value

      (1,384 )      187       AA        (1,197 ) 
  

 

 

    

 

 

       

 

 

  
     (34,344 )      3,617          (30,727 ) 

Net loss on disposition of real estate property

      (1,462 )      (102,229 )      BB        (103,691 ) 
  

 

 

    

 

 

       

 

 

  

Net loss

      (17,125 )      (105,830 )         (122,955 ) 

Less:

          

Net income attributable to non-controlling interests in properties

      (555 )      —           (555 ) 
  

 

 

    

 

 

       

 

 

  

Net loss attributable to the Company

      (17,680 )      (105,830 )         (123,510 ) 

Preferred stock distributions

      (7,420 )      —           (7,420 ) 
  

 

 

    

 

 

       

 

 

  

Net loss attributable to common stockholders

    $ (25,100 )    $ (105,830 )       $ (130,930 ) 
  

 

 

    

 

 

       

 

 

  

Net loss per common share:

          

Basic

    $ (0.63 )         $ (3.26 ) 
  

 

 

         

 

 

  

Diluted

    $ (0.63 )         $ (3.26 ) 
  

 

 

         

 

 

  

Weighted average common shares outstanding:

          

Basic

      40,140            40,140  
  

 

 

         

 

 

  

Diluted

      40,140            40,140  
  

 

 

         

 

 

  

Dividend distributions declared per common share

    $ 0.40          $ 0.40  
  

 

 

         

 

 

  

City Office REIT, Inc.

Pro Forma Consolidated Statement of Comprehensive Income

For the Year Ended December 31, 2024

(Unaudited)

(In thousands)

 

     City Office
REIT, Inc.
Historical		     Disposition of
Phoenix
Portfolio		            City Office
REIT, Inc. Pro
Forma		  

Net loss

    $ (17,125 )    $ (105,830 )      AA      $ (122,955 ) 

Other comprehensive loss:

          

Unrealized cash flow hedge gain

      3,092       —           3,092  

Amounts reclassified to interest expense

      (3,537 )      —           (3,537 ) 
  

 

 

    

 

 

       

 

 

  

Other comprehensive loss

      (445 )      —           (445 ) 
  

 

 

    

 

 

       

 

 

  

Comprehensive loss

      (17,570 )      (105,830 )         (123,400 ) 

Less:

          

Comprehensive income attributable to non-controlling interests in properties

      (575 )      —           (575 ) 
  

 

 

    

 

 

       

 

 

  

Comprehensive loss attributable to the Company

    $ (18,145 )    $ (105,830 )       $ (123,975 ) 
  

 

 

    

 

 

       

 

 

  

City Office REIT, Inc.

Notes to Unaudited Pro Forma Consolidated Financial Statements

1. Adjustments to Unaudited Pro Forma Consolidated Balance Sheet

(A) On August 15, 2025, the Company completed the first closing of the Phoenix Portfolio sale transaction for gross sales proceeds of $266.0 million. The first closing of the sale represents six of the Company’s seven properties located in Phoenix, Arizona. The Company’s Pima Center property continues to be under contract at a $30 million gross sales price. The sale of the Pima Center property is expected to close at a later date, subject to the Company obtaining certain approvals related to the property’s ground lease. The Company will receive total gross sales proceeds of $296.0 million and remove the full carrying value of the Phoenix Portfolio properties as shown below, with such amounts having been presented as assets held for sale of $296.2 million and liabilities related to assets held for sale of $16.8 million as at June 30, 2025.

Net sales proceeds from the Phoenix Portfolio sale transaction will be approximately $278.1 million.

 

(In thousands)       

Gross sales price

    $ 296,000  

Estimated closing and transaction costs

      (12,400 ) 

Estimated working capital adjustments

      (5,518 ) 
  

 

 

  

Net sales proceeds

      278,082  

Less: Carrying value of real estate assets

      (261,507 ) 

Less: Carrying value of unamortized lease intangible assets

      (3,276 ) 

Less: Carrying value of unamortized deferred leasing costs

      (5,801 ) 

Less: Carrying value of other assets

      (25,583 ) 

Less: Carrying value of unamortized lease intangible liabilities

      1,081  

Less: Carrying value of other liabilities

      15,735  
  

 

 

  

Pro forma loss

    $ (1,269 ) 
  

 

 

  

(B) The net sales proceeds will first be used to settle $80.5 million of property-level debt related to the Phoenix Portfolio disposition and the remaining proceeds of $197.6 million will be used to pay down the Company’s term loan and revolving credit facility. As such, there is a $278.1 million pro forma adjustment to debt.

2. Adjustments to Unaudited Pro Forma Consolidated Statement of Operations and Unaudited Pro Forma Consolidated Statement of Comprehensive Income

(AA) These pro forma adjustments remove the actual historical revenue and expenses for the six-month period ended June 30, 2025 and year ended December 31, 2024 related to the operations of the Phoenix Portfolio under the Company’s ownership. The impairment of real estate recognized in the City Office REIT Historical Statement of Operations for the six-month period ended June 30, 2025 was recorded to reduce the carrying amount of the Phoenix Portfolio to its estimated fair value less cost to sell upon classification of the Phoenix Portfolio as held for sale. No pro forma adjustment has been included to remove the effect of this nonrecurring item.

(BB) This pro forma adjustment reflects a loss on disposition of $102.2 million (which is equal to the impairment of real estate recorded in the City Office REIT Historical Statement of Operations for the six-month period ended June 30, 2025) as if the Phoenix Portfolio disposition occurred on January 1, 2024.