10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2018

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file no: 001-36409

CITY OFFICE REIT, INC.

Maryland		98-1141883
(State or other jurisdiction of incorporation)		(IRS Employer Identification No.)
	1075 West Georgia Street Suite 2010 Vancouver, BC V6E 3C9
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (604) 806-3366

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒     ☐  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  ☒     ☐  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐  (Do not check if a smaller reporting company)	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act  ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ☐    ☒  No

The number of shares of Common Stock, $0.01 par value, of the registrant outstanding at July 30, 2018 was 36,133,271.

City Office REIT, Inc.

Quarterly Report on Form 10-Q

For the Quarter Ended June 30, 2018

Table of Contents

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of June 30, 2018 and December 31, 2017	3
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2018 and 2017	4
	Condensed Consolidated Statements of Changes in Equity for the Six Months Ended June 30, 2018 and Year Ended December 31, 2017	5
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2018 and 2017	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	23
Item 4.	Controls and Procedures	23
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Disclosures	24
Item 5.	Other Information	24
Item 6.	Exhibits	24
Signatures		26

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

City Office REIT, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except par value and share data)

	June 30, 2018			December 31, 2017
Assets
Real estate properties
Land	$	188,110		$	188,110
Building and improvement		581,792			534,473
Tenant improvement		62,796			53,427
Furniture, fixtures and equipment		315			291
		833,013			776,301
Accumulated depreciation		(60,507	)		(48,234	)
		772,506			728,067
Cash and cash equivalents		14,655			12,301
Restricted cash		17,957			22,713
Rents receivable, net		22,349			20,087
Deferred leasing costs, net		9,231			7,793
Acquired lease intangible assets, net		65,103			65,088
Prepaid expenses and other assets		5,538			2,013
Assets held for sale		—			38,427
Total Assets	$	907,339		$	896,489
Liabilities and Equity
Liabilities:
Debt	$	479,610		$	489,509
Accounts payable and accrued liabilities		15,938			17,605
Deferred rent		3,892			4,223
Tenant rent deposits		3,784			3,523
Acquired lease intangible liabilities, net		7,619			8,649
Dividend distributions payable		10,346			10,318
Liabilities related to assets held for sale		—			2,830
Total Liabilities		521,189			536,657
Commitments and Contingencies (Note 9)
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, 36,133,271 and 36,012,086 shares issued and outstanding		361			360
Additional paid-in capital		335,009			334,241
Accumulated deficit		(61,556	)		(86,977	)
Total Stockholders’ Equity		385,814			359,624
Non-controlling interests in properties		336			208
Total Equity		386,150			359,832
Total Liabilities and Equity	$	907,339		$	896,489
Subsequent Events (Note 11)

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

City Office REIT, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share data)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
Revenues:
Rental income	$	25,880		$	21,635		$	52,894		$	43,948
Expense reimbursement		3,545			2,847			7,090			5,141
Other		811			675			1,786			1,466
Total Revenues		30,236			25,157			61,770			50,555
Operating Expenses:
Property operating expenses		11,748			10,674			23,374			20,284
General and administrative		1,966			1,597			3,943			3,790
Depreciation and amortization		11,771			9,148			23,665			19,646
Total Operating Expenses		25,485			21,419			50,982			43,720
Operating income		4,751			3,738			10,788			6,835
Interest Expense:
Contractual interest expense		(5,081	)		(4,356	)		(10,269	)		(8,429	)
Amortization of deferred financing costs		(354	)		(331	)		(986	)		(655	)
		(5,435	)		(4,687	)		(11,255	)		(9,084	)
Change in fair value of contingent consideration		—			2,000			—			2,000
Net gain on sale of real estate property		—			12,116			46,980			12,116
Net (loss)/income		(684	)		13,167			46,513			11,867
Less:
Net income attributable to non-controlling interests in properties		(114	)		(3,104	)		(249	)		(3,272	)
Net (loss)/income attributable to the Company		(798	)		10,063			46,264			8,595
Preferred stock distributions		(1,855	)		(1,855	)		(3,710	)		(3,701	)
Net (loss)/income attributable to common stockholders	$	(2,653	)	$	8,208		$	42,554		$	4,894
Net (loss)/income per common share:
Basic	$	(0.07	)	$	0.27		$	1.18		$	0.16
Diluted	$	(0.07	)	$	0.27		$	1.17		$	0.16
Weighted average common shares outstanding:
Basic		36,132			30,257			36,103			29,886
Diluted		36,132			30,563			36,452			30,186
Dividend distributions declared per common share	$	0.235		$	0.235		$	0.470		$	0.470

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

City Office REIT, Inc.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

(In thousands)

	Number of shares of preferred stock		Preferred stock		Number of shares of common stock		Common stock		Additional paid-in capital		Accumulated deficit			Total stockholders’ equity			Operating Partnership unitholders’ non-controlling interests			Non- controlling interests in properties			Total equity
Balance – December 31, 2016		4,480	$	112,000		24,382	$	244	$	195,566	$	(53,608	)	$	254,202		$	108		$	1,749		$	256,059
Conversion of OP units to shares		—		—		40		—		108		—			108			(108	)		—			—
Restricted stock award grants and vesting		—		—		90		1		1,741		(71	)		1,671			—			—			1,671
Net proceeds from sale of common stock		—		—		11,500		115		136,826		—			136,941			—			—			136,941
Common stock dividend distributions declared		—		—		—		—		—		(31,148	)		(31,148	)		—			—			(31,148	)
Preferred stock dividend distributions declared		—		—		—		—		—		(7,906	)		(7,906	)		—			—			(7,906	)
Distributions		—		—		—		—		—		—			—			—			(4,943	)		(4,943	)
Net income		—		—		—		—		—		5,756			5,756			—			3,402			9,158
Balance – December 31, 2017		4,480		112,000		36,012		360		334,241		(86,977	)		359,624			—			208			359,832
Restricted stock award grants and vesting		—		—		121		1		768		(151	)		618			—			—			618
Common stock dividend distributions declared		—		—		—		—		—		(16,982	)		(16,982	)		—			—			(16,982	)
Preferred stock dividend distributions declared		—		—		—		—		—		(3,710	)		(3,710	)		—			—			(3,710	)
Contributions		—		—		—		—		—		—			—			—			43			43
Distributions		—		—		—		—		—		—			—			—			(164	)		(164	)
Net income		—		—		—		—		—		46,264			46,264			—			249			46,513
Balance – June 30, 2018		4,480	$	112,000		36,133	$	361	$	335,009	$	(61,556	)	$	385,814		$	—		$	336		$	386,150

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

City Office REIT, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Six Months Ended June 30,
	2018			2017
Cash Flows from Operating Activities:
Net income	$	46,513		$	11,867
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		23,665			19,646
Amortization of deferred financing costs		986			655
Amortization of above/below market leases		(140	)		(77	)
Increase in straight-line rent		(1,842	)		(1,960	)
Non-cash stock compensation		705			1,179
Earn-out termination payment		—			(2,400	)
Net gain on sale of real estate property		(46,980	)		(12,116	)
Changes in non-cash working capital:
Rents receivable, net		(93	)		(1,135	)
Prepaid expenses and other assets		(3,034	)		(26	)
Accounts payable and accrued liabilities		(6,467	)		(764	)
Deferred rent		(2,042	)		(2,620	)
Tenant rent deposits		89			(313	)
Net Cash Provided By Operating Activities		11,360			11,936
Cash Flows from/(to) Investing Activities:
Additions to real estate properties		(9,156	)		(4,038	)
Acquisition of real estate		(55,453	)		(46,035	)
Net proceeds from sale of real estate		84,839			16,993
Deferred leasing costs		(2,057	)		(1,810	)
Net Cash Provided By/(Used In) Investing Activities		18,173			(34,890	)
Cash Flows (to)/from Financing Activities:
Proceeds from sale of common stock		—			67,991
Debt issuance and extinguishment costs		(1,942	)		(753	)
Proceeds from mortgage loans payable		—			119,340
Repayment of mortgage loans payable		(34,121	)		(25,836	)
Proceeds from credit facility		82,000			57,000
Repayment of credit facility		(57,000	)		(109,500	)
Shares withheld for payment of taxes on restricted stock unit vesting		(86	)		—
Contributions from non-controlling interests in properties		43			—
Distributions to non-controlling interests in properties		(165	)		(4,418	)
Dividend distributions paid to stockholders and Operating Partnership unitholders		(20,664	)		(18,323	)
Net Cash (Used In)/Provided By Financing Activities		(31,935	)		85,501
Net (Decrease)/Increase in Cash, Cash Equivalents and Restricted Cash		(2,402	)		62,547
Cash, Cash Equivalents and Restricted Cash, Beginning of Period		35,014			29,651
Cash, Cash Equivalents and Restricted Cash, End of Period	$	32,612		$	92,198
Reconciliation of Cash, Cash Equivalents and Restricted Cash:
Cash and Cash Equivalents, End of Period		14,655			68,149
Restricted Cash, End of Period		17,957			24,049
Cash, Cash Equivalents and Restricted Cash, End of Period	$	32,612		$	92,198
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	9,962		$	8,596
Purchases of additions in real estate properties included in accounts payable	$	3,380		$	677
Purchases of deferred leasing costs included in accounts payable	$	158		$	223

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

City Office REIT, Inc.

Notes to the Condensed Consolidated Financial Statements

1. Organization and Description of Business

City Office REIT, Inc. (the “Company”) was organized in the state of Maryland on November 26, 2013. On April 21, 2014, the Company completed its initial public offering (“IPO”) of shares of the Company’s common stock. The Company contributed the net proceeds of the IPO to City Office REIT Operating Partnership, L.P., a Maryland limited partnership (the “Operating Partnership”), in exchange for common units of limited partnership interest in the Operating Partnership (“common units”).

The Company’s interest in the Operating Partnership entitles the Company to share in distributions from, and allocations of profits and losses of, the Operating Partnership in proportion to the Company’s percentage ownership of common units. As the sole general partner of the Operating Partnership, the Company has the exclusive power under the Operating Partnership’s partnership agreement to manage and conduct the Operating Partnership’s business, subject to limited approval and voting rights of the limited partners.

The Company has elected to be taxed and will continue to operate in a manner that will allow it to continue to qualify as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”). Subject to qualification as a REIT, the Company will be permitted to deduct dividend distributions paid to its stockholders, eliminating the U.S. federal taxation of income represented by such distributions at the Company level. REITs are subject to a number of organizational and operational requirements. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to U.S. federal and state income tax on its taxable income at regular corporate tax rates and, for tax years beginning before 2018, any applicable alternative minimum tax.

2. Summary of Significant Accounting Policies

Basis of Preparation and Summary of Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with Securities and Exchange Commission rules and regulations and generally accepted accounting principles in the United States of America (“US GAAP”) and in the opinion of management contain all adjustments (including normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

New Accounting Pronouncements

Adopted in the Current Year

Effective January 1, 2018, the Company adopted FASB ASU 2014-09, Revenue From Contracts with Customers, on a modified retrospective basis. The standard is principle-based and provides a five-step model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. The Company has reviewed its revenue streams to note that the majority are under the guidance of ASU 2016-02, Leases. Net gain on sale of real estate is under the guidance of ASU 2017-05, Other Income. The adoption of this guidance did not have a material impact to the Company’s condensed consolidated financial statements or notes to our condensed consolidated financial statements.

Effective January 1, 2018, the Company adopted FASB ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments in ASU 2016-01 address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The adoption of this guidance did not have a material impact to the Company’s condensed consolidated financial statements.

7

Effective January 1, 2018, the Company adopted FASB ASU 2016-15, Statement of Cash Flow: Classification of Certain Cash Receipts and Cash Payments, on a retrospective basis. The adoption of this guidance did not have a material impact to the Company’s condensed consolidated financial statements.

Effective January 1, 2018, the Company adopted FASB ASU 2016-18, Statement of Cash Flows: Restricted Cash, on a retrospective basis. The update required the statement of cash flows to explain the changes during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents.

To be Adopted in Future Years

In February 2016, the FASB issued ASU 2016-02, Leases. The update amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. ASU 2016-02 will be effective for annual reporting periods beginning after December 15, 2018. Early adoption is permitted. On July 30, 2018, the FASB released ASU 2018-11 which allows lessors to elect, as a practical expedient, to not separate lease and non-lease components and allow these components to be accounted for as a single lease component if both (i) the timing and pattern of transfer to the lessee of the lease component and the related non-lease component are the same and (ii) the lease component, if accounted for separately, would be classified as an operating lease. In addition, a company is permitted to use its effective date as the date of initial application. Therefore, a company electing this option will not restate comparative period financial information, will not make the new required lease disclosures in comparative periods beginning before the effective date and will recognize its cumulative effect transition adjustment as of the effective date. The Company is in the process of evaluating whether it will elect to apply the practical expedient. If the Company elects to apply the practical expedient we expect expense reimbursement that qualify as non-lease components will be presented under a single lease component. If the Company does not elect to apply the practical expedient we expect that certain non-lease components of expense reimbursement may be subject to ASC 606.

3. Real Estate Investments

Acquisitions

During the six months ended June 30, 2018 and 2017 the Company acquired the following properties:

Property	Date Acquired		Percentage Owned
Pima Center		April 2018		100	%
2525 McKinnon		January 2017		100	%

Pima Center and 2525 McKinnon were accounted for as asset acquisitions.

The following table summarizes the Company’s allocations of the purchase price of assets acquired and liabilities assumed during the six months ended June 30, 2018 (in thousands):

	Pima Center
Buildings and improvements	$	42,235
Tenant improvements		2,898
Acquired intangible assets		10,691
Prepaid expenses and other assets		95
Accounts payable and other liabilities		(337	)
Lease intangible liabilities		(129	)
Total consideration	$	55,453

8

The following table summarizes the Company’s allocations of the purchase price of assets acquired and liabilities assumed during the six months ended June 30, 2017 (in thousands):

	2525 McKinnon
Land	$	10,629
Buildings and improvements		33,357
Tenant improvements		1,158
Acquired intangible assets		3,267
Accounts payable and other liabilities		(190	)
Lease intangible liabilities		(2,186	)
Total consideration	$	46,035

Sale of Real Estate Property

On March 8, 2018, the Company sold the Washington Group Plaza property in Boise, Idaho for $86.5 million, resulting in an aggregate net gain of $47.0 million, net of $1.7 million in costs, which has been classified as net gain on sale of real estate property in the condensed consolidated statements of operations. In connection with the sale of the property, certain debt repayments were made.

On May 2, 2017, the Company sold the 1400 and 1600 buildings at the AmberGlen property in Portland, Oregon, and its related assets and liabilities, for a sales price of $18.9 million, resulting in an aggregate net gain of $12.1 million, net of $2.0 million in costs, which has been classified as net gain on sale of real estate property in the condensed consolidated statements of operations. In connection with the sale of the property, certain debt repayments were made.

4. Lease Intangibles

Lease intangibles and the value of assumed lease obligations as of June 30, 2018 and December 31, 2017 were comprised as follows (in thousands):

	Lease Intangible Assets															Lease Intangible Liabilities
June 30, 2018	Above Market Leases			Below Market Ground Lease(1)			In Place Leases			Leasing Commissions			Total			Below Market Leases			Below Market Ground Lease(1)			Total
Cost	$	9,862		$	1,855		$	71,309		$	27,770		$	110,796		$	(10,998	)	$	(138	)	$	(11,136	)
Accumulated amortization		(4,039	)		(6	)		(31,000	)		(10,648	)		(45,693	)		3,483			34			3,517
	$	5,823		$	1,849		$	40,309		$	17,122		$	65,103		$	(7,515	)	$	(104	)	$	(7,619	)
	Lease Intangible Assets															Lease Intangible Liabilities
December 31, 2017	Above Market Leases			Below Market Ground Lease			In Place Leases			Leasing Commissions			Total			Below Market Leases			Below Market Ground Lease(1)			Total
Cost	$	9,082		$	—		$	71,426		$	27,706		$	108,214		$	(11,608	)	$	(138	)	$	(11,746	)
Accumulated amortization		(3,215	)		—			(30,613	)		(9,298	)		(43,126	)		3,065			32			3,097
	$	5,867		$	—		$	40,813		$	18,408		$	65,088		$	(8,543	)	$	(106	)	$	(8,649	)

(1) For the below market ground lease asset the Company is the lessee, whereas, for the below market ground lease liabilty the Company is the lessor.

9

The estimated aggregate amortization expense for lease intangibles for the next five years and in the aggregate are as follows (in thousands):

2018	$	8,486
2019		16,140
2020		14,018
2021		10,953
2022		3,434
Thereafter		4,453
	$	57,484

5. Debt

The following table summarizes the indebtedness as of June 30, 2018 and December 31, 2017 (in thousands):

Property	June 30, 2018			December 31, 2017			Interest Rate as of June 30, 2018			Maturity
Unsecured Credit Facility (1)	$	58,500		$	—			LIBOR +1.40	%(2)		March 2022
Midland Life Insurance (3)		87,787			88,582			4.34			May 2021
Mission City		47,000			47,000			3.78			November 2027
190 Office Center (4)		41,250			41,250			4.79			October 2025
SanTan (4)		34,962			35,100			4.56			March 2027
Intellicenter (4)		33,563			33,563			4.65			October 2025
FRP Collection (4)		29,884			30,174			3.85			September 2023
2525 McKinnon		27,000			27,000			4.24			April 2027
5090 N 40th St		22,000			22,000			3.92			January 2027
AmberGlen (4)		20,000			20,000			3.69			May 2027
Lake Vista Pointe (5)		18,203			18,358			4.28			August 2024
FRP Ingenuity Drive (5)(6)		17,000			17,000			4.44			December 2024
Plaza 25 (4)(5)		16,734			16,882			4.10			July 2025
Carillon Point (4)		16,501			16,671			3.50			October 2023
Central Fairwinds (4)		14,972			15,107			4.00			June 2024
Washington Group Plaza		—			32,290			—			—
Secured Credit Facility (1)		—			33,500			—			—
Total Principal		485,356			494,477
Deferred financing costs, net		(5,746	)		(4,968	)
Total	$	479,610		$	489,509

All interest rates are fixed interest rates with the exception of the unsecured credit facility (“Unsecured Credit Facility”) as explained in footnote 1 below.

(1) As of June 30, 2018, the Unsecured Credit Facility had $250 million authorized and $58.5 million was drawn. On March 15, 2018, the Company entered into a $250 million Unsecured Credit Facility which includes an accordion feature that will permit the Company to borrow up to $500 million, subject to customary terms and conditions. The Company’s previous secured credit facility was replaced and repaid in full. The Unsecured Credit Facility matures in March 2022, which may be extended to March 2023 at the Company’s option upon meeting certain conditions. Borrowings under the Unsecured Credit Facility will bear an interest at a rate equal to the LIBOR rate plus a margin of between 140 to 225 basis points depending upon the Company’s consolidated leverage ratio. The Unsecured Credit Facility requires the Company to maintain a fixed charge coverage ratio of no less than 1.50x.

(2) As of June 30, 2018, the one month LIBOR rate was 2.09%.

(3) The mortgage loan is cross-collateralized by DTC Crossroads, Cherry Creek and City Center. Interest on mortgage loan is payable monthly plus principal based on 360 months of amortization. The loan bears a fixed interest rate of 4.34% and matures on May 6, 2021.

(4) The Company is subject to various debt covenants including debt service coverage ratios (“DSCR”) that under certain conditions must be maintained no less than 1.15x, 1.20x, 1.20x, 1.40x, 1.15x, 1.45x, 1.35x and 1.35x respectively for each of 190 Office Center, SanTan, Intellicenter, FRP Collection, AmberGlen, Plaza 25, Carillon Point and Central Fairwinds. The DSCR covenant contained in the loan agreements for Plaza 25, allows for the posting of additional collateral reserves in the event the test is not met. As at June 30, 2018, the covenant was not met and thus the Company has posted all required collateral reserves and is not subject to the test while those reserves are held.

(5) Interest on mortgage loan is payable monthly plus principal based on 360 months of amortization.

(6) The Company is required to maintain a minimum net worth of $17 million, minimum liquidity of $1.7 million and a DSCR of no less than 1.15x.

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The scheduled principal repayments of debt as of June 30, 2018 are as follows (in thousands):

2018	$	60,589
2019		5,049
2020		6,091
2021		88,110
2022		4,772
Thereafter		320,745
	$	485,356

6. Fair Value of Financial Instruments

Fair value measurements are based on assumptions that market participants would use in pricing an asset or a liability. The hierarchy for inputs used in measuring fair value is as follows:

Level 1 Inputs – quoted prices in active markets for identical assets or liabilities

Level 2 Inputs – observable inputs other than quoted prices in active markets for identical assets and liabilities

Level 3 Inputs – unobservable inputs

As of June 30, 2018 and December 31, 2017, the Company did not have any hedges or derivatives.

Cash, Cash Equivalents, Restricted Cash, Rents Receivable, Accounts Payable and Accrued Liabilities

The Company estimates that the fair value approximates carrying value due to the relatively short-term nature of these instruments.

Fair Value of Financial Instruments Not Carried at Fair Value

With the exception of fixed rate mortgage loans payable, the carrying amounts of the Company’s financial instruments approximate their fair value. The Company determines the fair value of its fixed rate mortgage loan payable based on a discounted cash flow analysis using a discount rate that approximates the current borrowing rates for instruments of similar maturities. Based on this, the Company has determined that the fair value of these instruments was $417.4 million and $462.3 million as of June 30, 2018 and December 31, 2017, respectively. Accordingly, the fair value of mortgage loans payable have been classified as Level 3 fair value measurements.

7. Related Party Transactions

Administrative Services Agreement

For the six months ended June 30, 2018 and 2017, the Company earned $0.4 million and $0.6 million, respectively, in administrative services performed for Second City Real Estate II Corporation and its affiliates (“Second City”).

Earn-Out Payment

For the six months ended June 30, 2017, the Company paid $2.4 million to Second City to terminate the Company’s earn-out payment obligation under the Termination and Mutual Release Agreement.

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8. Future Minimum Rent Schedule

Future minimum lease payments to be received as of June 30, 2018 under non-cancellable operating leases for the next five years and thereafter are as follows (in thousands):

2018		49,021
2019		92,328
2020		81,055
2021		70,733
2022		54,263
Thereafter		103,646
	$	451,046

The above minimum lease payments to be received do not include reimbursements from tenants for certain operating expenses and real estate taxes and do not include early termination payments provided for in certain leases.

Ten state government tenants currently have the exercisable right to terminate their leases if the applicable state legislature does not appropriate rent in its annual budget. The Company has determined that the occurrence of any government tenant not being appropriated the rent in the applicable annual budget is a remote contingency and accordingly recognizes lease revenue on a straight-line basis over the respective lease term. These tenants represent approximately 11.4% of the Company’s total future minimum lease payments as of June 30, 2018.

9. Commitments and Contingencies

The Company is obligated under certain tenant leases to fund tenant improvements and the expansion of the underlying leased properties.

Under various federal, state and local laws, ordinances and regulations relating to the protection of the environment, a current or previous owner or operator of real estate may be liable for the cost of removal or remediation of certain hazardous or toxic substances disposed, stored, generated, released, manufactured or discharged from, on, at, under, or in a property. As such, the Company may be potentially liable for costs associated with any potential environmental remediation at any of its formerly or currently owned properties.

The Company believes that it is in compliance in all material respects with all federal, state and local ordinances and regulations regarding hazardous or toxic substances. Management is not aware of any environmental liability that it believes would have a material adverse impact on the Company’s financial position or results of operations. Management is unaware of any instances in which the Company would incur significant environmental costs if any or all properties were sold, disposed of or abandoned. However, there can be no assurance that any such non-compliance, liability, claim or expenditure will not arise in the future.

The Company is involved from time to time in lawsuits and other disputes which arise in the ordinary course of business. As of June 30, 2018 management believes that these matters will not have a material adverse effect, individually or in the aggregate, on the Company’s financial position or results of operations.

10. Stockholders’ Equity

Common Stock and Common Unit Distributions

On June 15, 2018, the Company’s Board of Directors approved and the Company declared a cash dividend distribution of $0.235 per share for the quarterly period ended June 30, 2018. The dividend was paid subsequent to quarter end on July 25, 2018 to common stockholders and common unitholders of record as of July 11, 2018 for an aggregate of $8.5 million.

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Preferred Stock Distributions

On June 15, 2018 the Company’s Board of Directors approved and the Company declared a cash dividend of $0.4140625 per share for an aggregate amount of $1.9 million. The dividend was paid subsequent to quarter end on July 25, 2018.

Restricted Stock Units

The Company has an equity incentive plan (“Equity Incentive Plan”) for executive officers, directors and certain non-executive employees, and with approval of the Board of Directors, for subsidiaries and their respective affiliates. The Equity Incentive Plan provides for grants of restricted common stock, restricted stock units, phantom shares, stock options, dividend equivalent rights and other equity-based awards (including LTIP Units), subject to the total number of shares available for issuance under the plan. The Equity Incentive Plan is administered by the compensation committee of the Board of Directors (the “Plan Administrator”).

The maximum number of shares of common stock that may be issued under the Equity Incentive Plan is 1,263,580 shares. To the extent an award granted under the Equity Incentive Plan expires or terminates, the shares subject to any portion of the award that expires or terminates without having been exercised or paid, as the case may be, will again become available for the issuance of additional awards.

During the six months ended June 30, 2018, 156,375 restricted stock units (“RSUs”) were granted to executive officers, directors and certain non-executive employees with a fair value of $1.9 million. The awards will vest in three equal, annual installments on each of the first three anniversaries of the date of grant. For the six months ended June 30, 2018 the Company recognized net compensation expense of $0.7 million related to the RSUs.

A RSU award represents the right to receive shares of the Company’s common stock in the future, after the applicable vesting criteria, determined by the Plan Administrator, has been satisfied. The holder of an award of RSU has no rights as a stockholder until shares of common stock are issued in settlement of vested RSUs. The Plan Administrator may provide for a grant of dividend equivalent rights in connection with the grant of RSU; provided, however, that if the RSUs do not vest solely upon satisfaction of continued employment or service, any payment in respect to the related dividend equivalent rights will be held by the Company and paid when, and only to the extent that, the related RSU vests.

11. Subsequent Events

On July 9, 2018, the Company, through a wholly-owned subsidiary of the Operating Partnership, acquired a 272,000 square foot property in Denver, Colorado for $59.8 million.

On July 31, 2018, the Company, through a wholly-owned subsidiary of the Operating Partnership, acquired a 163,000 square foot property in Phoenix, Arizona for $51.0 million.

On August 1, 2018, the Company entered into an agreement with Second City Capital Partners II, Limited Partnership whereby Second City agreed to sell its seven percent minority interest in Central Fairwinds Limited Partnership to the Company for $1.1 million.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis is based on, and should be read in conjunction with, the condensed, consolidated financial statements and the related notes thereto of the City Office REIT, Inc. contained in this Quarterly Report on Form 10-Q.

As used in this section, unless the context otherwise requires, references to “we,” “our,” “us,” and “our company” refer to City Office REIT, Inc., a Maryland corporation, together with our consolidated subsidiaries, including City Office REIT Operating Partnership L.P., a Maryland limited partnership, of which we are the sole general partner and which we refer to in this section as our Operating Partnership, except where it is clear from the context that the term only means City Office REIT, Inc.

Cautionary Statement Regarding Forward-Looking Statements

This quarterly report on Form 10-Q, including “Item 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition,” contains both historical and forward-looking statements. All statements, other than statements of historical fact are, or may be deemed to be, forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward looking statements are not based on historical facts, but rather reflect our current expectations and projections about our future results, performance, prospects and opportunities. These forward looking statements may be identified by the use of words including “anticipate,” “believe,” “expect,” “intend,” “may,” “might,” “plan,” “estimate,” “project,” “should,” “will,” “result” and similar terms and phrases. These forward looking statements are subject to a number of known and unknown risks, uncertainties and other factors that are difficult to predict and which could cause our actual future results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward looking statements. These risks, uncertainties and other factors include, among others:

• adverse economic or real estate developments in the office sector or the markets in which we operate;

• changes in local, regional, national and international economic conditions;

• our inability to compete effectively;

• our inability to collect rent from tenants or renew tenants’ leases on attractive terms if at all;

• demand for and market acceptance of our properties for rental purposes;

• defaults on or non-renewal of leases by tenants;

• increased interest rates and any resulting increase in financing or operating costs;

• decreased rental rates or increased vacancy rates;

• our failure to obtain necessary financing or access the capital markets on favorable terms or at all;

• changes in the availability of acquisition opportunities;

• availability of qualified personnel;

• our inability to successfully complete real estate acquisitions or dispositions on the terms and timing we expect, or at all;

• our failure to successfully operate acquired properties and operations;

• changes in our business, financing or investment strategy or the markets in which we operate;

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• our failure to generate sufficient cash flows to service our outstanding indebtedness;

• environmental uncertainties and risks related to adverse weather conditions and natural disasters;

• our failure to qualify and maintain our status as a real estate investment trust (“REIT”);

• government approvals, actions and initiatives, including the need for compliance with environmental requirements;

• outcome of claims and litigation involving or affecting us;

• financial market fluctuations; and

• changes in real estate, taxation and zoning laws and other legislation and government activity and changes to real property tax rates and the taxation of REITs in general; and other factors described in our news releases and filings with the Securities and Exchange Commission (the “SEC”), including but not limited to those described in our Annual Report on Form 10-K for the year ended December 31, 2017 under the heading “Risk Factors” and in our subsequent reports filed with the SEC.

The forward looking statements included in this report are made only as of the date of this report, and except as otherwise required by federal securities law, we do not have any obligation to publicly update or revise any forward looking statements to reflect subsequent events or circumstances.

Overview

Company

We were formed as a Maryland corporation on November 26, 2013. On April 21, 2014, we completed our initial public offering (“IPO”) of shares of common stock. We contributed the net proceeds of the IPO to our Operating Partnership in exchange for common units in our Operating Partnership. Both we and our Operating Partnership commenced operations upon completion of the IPO and certain related formation transactions.

Revenue Base

As of June 30, 2018, we owned 22 properties comprised of 46 office buildings with a total of approximately 4.9 million square feet of net rentable area (“NRA”). As of June 30, 2018, our properties were approximately 89.6% occupied.

Office Leases

Historically, most leases for our properties were on a full-service gross or net lease basis, and we expect to continue to use such leases in the future. A full-service gross lease generally has a base year expense “stop”, whereby we pay a stated amount of expenses as part of the rent payment while future increases (above the base year stop) in property operating expenses are billed to the tenant based on such tenant’s proportionate square footage in the property. The property operating expenses are reflected in operating expenses; however, only the increased property operating expenses above the base year stop recovered from tenants are reflected as tenant recoveries in our statements of operations. In a triple net lease, the tenant is typically responsible for all property taxes and operating expenses. As such, the base rent payment does not include any operating expenses, but rather all such expenses are billed to or paid by the tenant. The full amount of the expenses for this lease type is reflected in operating expenses, and the reimbursement is reflected in tenant recoveries. All tenants in the Lake Vista Pointe, FRP Ingenuity Drive, Sorrento Mesa and Superior Pointe properties have triple net leases. Certain tenants of AmberGlen, FRP Collection and 2525 McKinnon have leases on a triple net basis. We are also a lessor for a fee simple ground lease at the AmberGlen property. All of our remaining leases are full-service gross leases.

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Factors That May Influence Our Operating Results and Financial Condition

Business and Strategy

We focus on owning and acquiring office properties in our target markets. Our target markets generally possess what we believe are favorable economic growth trends, growing populations with above-average employment growth forecasts, a large number of government offices, large international, national and regional employers across diversified industries, are generally low-cost centers for business operations, and exhibit favorable occupancy trends. We utilize our management’s market-specific knowledge and relationships as well as the expertise of local real estate operators and our investment partners to identify acquisition opportunities that we believe will offer cash flow stability and long-term value appreciation. Our target markets are attractive, among other reasons, because we believe that ownership is often concentrated among local real estate operators that typically do not benefit from the same access to capital as public REITs and there is a relatively low level of participation of large institutional investors. We believe that these factors result in attractive pricing levels and risk-adjusted returns.

Rental Revenue and Tenant Recoveries

The amount of net rental revenue generated by our properties will depend principally on our ability to maintain the occupancy rates of currently leased space and to lease currently available space and space that becomes available from lease terminations. The amount of rental revenue generated also depends on our ability to maintain or increase rental rates at our properties. We believe that the average rental rates for our portfolio of properties are generally in-line or slightly below the current average quoted market rates. Negative trends in one or more of these factors could adversely affect our rental revenue in future periods. Future economic downturns or regional downturns affecting our markets or submarkets or downturns in our tenants’ industries that impair our ability to renew or re-let space and the ability of our tenants to fulfill their lease commitments, as in the case of tenant bankruptcies, could adversely affect our ability to maintain or increase rental rates at our properties. In addition, growth in rental revenue will also partially depend on our ability to acquire additional properties that meet our investment criteria.

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Our Properties

As of June 30, 2018, we owned 22 office complexes comprised of 46 office buildings with a total of approximately 4.9 million square feet of NRA in the metropolitan areas of Dallas, Denver, Orlando, Phoenix, Portland, San Diego and Tampa. The following table presents an overview of our portfolio as of June 30, 2018 (properties listed by descending NRA by market).

Metropolitan Area	Property	Economic Interest			NRA (000s Square Feet)		In Place Occupancy			Annualized Base Rent per Square Foot		Annualized Gross Rent per Square Foot(1)		Annualized Base Rent(2) ($000s)
Tampa, FL (21.2% of NRA)	Park Tower		94.8	%		470		85.0	%	$	24.03	$	24.03	$	9,599
	City Center		95.0	%		241		98.5	%	$	24.96	$	24.96	$	5,930
	Intellicenter		100.0	%		204		100.0	%	$	23.36	$	23.36	$	4,754
	Carillon Point		100.0	%		124		100.0	%	$	27.36	$	27.36	$	3,398
Denver, CO (19.7%)	Cherry Creek		100.0	%		356		100.0	%	$	18.10	$	18.10	$	6,438
	Plaza 25		100.0	%		196		59.8	%	$	20.14	$	20.14	$	2,359
	DTC Crossroads		100.0	%		189		71.7	%	$	25.12	$	25.12	$	3,407
	Superior Pointe		100.0	%		151		92.1	%	$	16.88	$	28.88	$	2,342
	Logan Tower		100.0	%		71		76.9	%	$	20.33	$	20.33	$	1,105
San Diego, CA (13.7%)	Sorrento Mesa		100.0	%		385		76.2	%	$	24.04	$	29.04	$	7,041
	Mission City		100.0	%		286		88.3	%	$	34.38	$	34.38	$	8,680
Phoenix, AZ (17.9%)	Pima Center		100.0	%		272		99.4	%	$	26.70	$	26.70	$	7,214
	SanTan		100.0	%		267		98.6	%	$	27.13	$	27.13	$	7,131
	5090 N 40th St		100.0	%		175		92.4	%	$	28.62	$	28.62	$	4,622
	Papago Tech		100.0	%		163		98.0	%	$	20.17	$	20.17	$	3,219
Dallas, TX (11.8%)	190 Office Center		100.0	%		303		88.9	%	$	24.64	$	24.64	$	6,645
	Lake Vista Pointe		100.0	%		163		100.0	%	$	15.50	$	23.50	$	2,532
	2525 McKinnon		100.0	%		111		93.0	%	$	27.01	$	42.32	$	2,795
Orlando, FL (11.6%)	FRP Collection		95.0	%		272		75.5	%	$	25.19	$	27.12	$	5,165
	Central Fairwinds		90.0	%		168		95.6	%	$	24.31	$	24.31	$	3,908
	FRP Ingenuity Drive		100.0	%		125		100.0	%	$	21.00	$	29.00	$	2,615
Portland, OR (4.1%)	AmberGlen		76.0	%		201		94.8	%	$	19.99	$	22.64	$	3,813
Total / Weighted Average—June 30, 2018 (3)						4,893		89.6	%	$	23.89	$	25.69	$	104,712

(1) For Superior Pointe, FRP Ingenuity Drive, Lake Vista Pointe, and Sorrento Mesa the annualized base rent per square foot on a triple net basis was increased by $12, $8, $8, and $5 respectively, to estimate a gross equivalent base rent. AmberGlen has a net lease for one tenant which has been grossed-up by $7 on a pro rata basis. FRP Collection has net leases for three tenants which have been grossed up by $8 on a pro-rata basis. 2525 McKinnon has net leases for nine tenants which have been grossed up by $16 on a pro-rata basis.

(2) Annualized base rent is calculated by multiplying (i) rental payments (defined as cash rents before abatements) for the month ended June 30, 2018 by (ii) 12.

(3) Averages weighted based on the property’s NRA, adjusted for occupancy.

Operating Expenses

Our operating expenses generally consist of utilities, property and ad valorem taxes, insurance and site maintenance costs. Increases in these expenses over tenants’ base years (until the base year is reset at expiration) are generally passed along to tenants in our full-service gross leased properties and are generally paid in full by tenants in our net leased properties.

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Conditions in Our Markets

Positive or negative changes in economic or other conditions in the markets we operate in, including state budgetary shortfalls, employment rates, natural hazards and other factors, may impact our overall performance.

Summary of Significant Accounting Policies

The interim condensed consolidated financial statements follow the same policies and procedures as outlined in the audited consolidated financial statements for the year ended December 31, 2017 included in our Annual Report on Form 10-K for the year ended December 31, 2017 except for the adoption of ASU 2014-09 Revenue From Contracts with Customers, ASU 2016-01 Recognition and Measurement of Financial Assets and Financial Liabilities, ASU 2016-15 Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments and ASU 2016-18 Statement of Cash Flows: Restricted Cash as outlined in Note 2 of the condensed consolidated financial statements.

Results of Operations

Comparison of Three Months Ended June 30, 2018 to June 30, 2017

Total Revenue. Revenue includes net rental income, including parking, signage and other income, as well as the recovery of operating costs and property taxes from tenants. Total revenues increased $5.0 million, or 20%, to $30.2 million for the three months ended June 30, 2018 compared to $25.2 million in the corresponding period in 2017. $2.3 million of this increase was attributed to the acquisition of Mission City in September 2017, $2.3 million from the acquisition of Sorrento Mesa in September 2017, $1.0 million from the acquisition of Papago Tech in October 2017 and $1.8 million from the acquisition of Pima Center in April 2018. Offsetting these increases AmberGlen decreased by $0.1 million primarily due to the sale of two of the five buildings in the complex in May 2017 and Washington Group Plaza decreased by $2.3 million due to the sale of the property in March 2018. The remaining properties’ revenues were relatively unchanged in comparison to three months ended June 30, 2017.

Rental Income. Rental income includes net rental income and income from a ground lease. Total rental income increased $4.3 million, or 20%, to $25.9 million for the three months ended June 30, 2018 compared to $21.6 million for the three months ended June 30, 2017. The increase in rental income was primarily due to the acquisitions described above. The acquisitions of Mission City, Sorrento Mesa, Papago Tech and Pima Center contributed an additional $2.0 million, $1.9 million, $0.9 million, and $1.7 million in rental income, respectively, to the 2018 period rental income. AmberGlen decreased by $0.1 million primarily due to the sale of two of the five buildings in the complex in May 2017 and Washington Group Plaza decreased by $2.1 million due to the sale of that property in March 2018.

Expense Reimbursement. Total expense reimbursement increased $0.7 million, or 25%, to $3.5 million for the three month period ended June 30, 2018 compared to $2.8 million for the same period in 2017, primarily due to the acquisition of the Mission City, Sorrento Mesa, Papago Tech and Pima Center properties described above.

Other. Other revenue includes parking, signage and other miscellaneous income. Total other revenues increased $0.1 million, or 20%, to $0.8 million for the three month period ended June 30, 2018 compared to $0.7 million for the same period in 2017. Nominal other income was generated by City Center, Central Fairwinds, Logan Tower, DTC Crossroads, 5090 N 40th St, SanTan, 2525 McKinnon, Park Tower, Mission City and Sorrento Mesa with the largest contribution from City Center and Park Tower parking income.

Operating Expenses

Total Operating Expenses. Total operating expenses consist of property operating expenses, general and administrative expenses and depreciation and amortization. Total operating expenses increased by $4.1 million, or 19%, to $25.5 million for the three months ended June 30, 2018, from $21.4 million for the same period in 2017, primarily due to acquisitions described above. Total operating expenses increased by $2.1 million, $1.8 million, $0.7 million, and $1.7 million, respectively, from the acquisitions of Mission City, Sorrento Mesa, Papago Tech and Pima Center properties. Washington Group Plaza operating expenses decreased by $1.2 million due to its sale in

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March 2018. AmberGlen decreased by $0.1 million primarily due to the sale of two of the five buildings in the complex in May 2017. The remaining operating expenses aggregated to an overall $0.9 million decrease in comparison to the prior year primarily related to a decrease in depreciation at 190 Center and FRP Collection.

Property Operating Expenses. Property operating expenses are comprised mainly of building common area and maintenance expenses, insurance, property taxes, property management fees, as well as certain expenses that are not recoverable from tenants, the majority of which are related to costs necessary to maintain the appearance and marketability of vacant space. In the normal course of business, property expenses fluctuate and are impacted by various factors including, but not limited to, occupancy levels, weather, utility costs, repairs, maintenance and re-leasing costs. Property operating expenses increased $1.0 million, or 10%, to $11.7 million for the three months ended June 30, 2018 from $10.7 million for the same period in 2017. The increase in property operating expenses was primarily due to the acquisitions described above. The acquisition of the Mission City, Sorrento Mesa, Papago Tech and Pima Center contributed an additional $1.0 million, $0.6 million, $0.3 million, and $0.6 million in additional property operating expenses, respectively. AmberGlen decreased by $0.1 million primarily due to the sale of two of the five buildings in the complex in May 2017, and Washington Group Plaza decreased by $1.2 million due to the sale of that property in March 2018. The remaining property operating expenses aggregate to an overall $0.2 million decrease in comparison to the prior year.

General and Administrative. General and administrative expenses comprise of public company reporting costs and the compensation of our management team and board of directors as well as non-cash stock-based compensation expenses. General and administrative expenses increased $0.4 million, or 23%, to $2.0 million for the three month period ended June 30, 2018 compared to $1.6 million for the same period in 2017. The increase was primarily attributable to higher payroll costs.

Depreciation and Amortization. Depreciation and amortization increased $2.7 million, or 29%, to $11.8 million for the three month period ended June 30, 2018 compared to $9.1 million for the same period in 2017, primarily due to the addition of the Mission City, Sorrento Mesa, Papago Tech and Pima Center properties offset by a decrease at Washington Group Plaza and AmberGlen due to the sale of those properties.

Other Expense (Income)

Interest Expense, Net. Interest expense increased $0.7 million, or 16%, to $5.4 million for the three month period ended June 30, 2018, compared to $4.7 million for the corresponding period in 2017. The increase was primarily due to interest expense related to acquisitions. Interest expense for the Mission City property level debt increased by $0.4 million, and the interest on the line of credit increased by $0.6 million as a result of acquisitions funded by that facility. These increases were offset by a $0.3 million decrease in the Washington Group Plaza debt as a result of the sale of that building and the extinguishment of its’ property level debt.

Net Gain on the Sale of Real Estate Property. In the prior year, net gain on the sale of real estate property relates to the sale of 2 buildings in our AmberGlen complex in May 2017.

Comparison of Six Months Ended June 30, 2018 to Six Months Ended June 30, 2017

Total Revenue. Revenue includes net rental income, including parking, signage and other income, as well as the recovery of operating costs and property taxes from tenants. Total revenues increased $11.2 million, or 22%, to $61.8 million for the six months ended June 30, 2018 compared to $50.6 million in the corresponding period in 2017. $0.2 million of this increase was attributed to the acquisition of 2525 McKinnon in January 2017, $4.7 million from the acquisition of Mission City in September 2017, $5.8 million from the acquisition of Sorrento Mesa in September 2017, $1.9 million from the acquisition of Papago Tech in October 2017 and $1.9 million from the acquisition of Pima Center in April 2018. Offsetting these increases AmberGlen decreased by $0.7 million primarily due to the sale of two of the five buildings in the complex in May 2017 and Washington Group Plaza decreased by $2.6 million due to the sale of the property in March 2018. The remaining properties’ revenues were relatively unchanged in comparison to six months ended June 30, 2017.

Rental Income. Rental income includes net rental income and income from a ground lease. Total rental income increased $9.0 million, or 20%, to $52.9 million for the six months ended June 30, 2018 compared to $43.9 million for the six months ended June 30, 2017. The increase in rental income was primarily due to the

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acquisitions described above. The acquisitions of Mission City, Sorrento Mesa, Papago Tech and Pima Center contributed an additional $4.0 million, $5.0 million, $1.7 million and $1.6 million in rental income, respectively, to the 2018 period rental income. AmberGlen decreased by $0.6 million primarily due to the sale of two of the five buildings in the complex in May 2017 and Washington Group Plaza decreased by $2.7 million due to the sale of that property in March 2018.

Expense Reimbursement. Total expense reimbursement increased $2.0 million, or 38%, to $7.1 million for the six month period ended June 30, 2018 compared to $5.1 million for the same period in 2017, primarily due to the acquisition of the 2525 McKinnon, Mission City, Sorrento Mesa, Papago Tech and Pima Center properties described above.

Other. Other revenue includes parking, signage and other miscellaneous income. Total other revenues increased $0.3 million, or 22%, to $1.8 million for the six month period ended June 30, 2018 compared to $1.5 million for the same period in 2017. The increase can be attributed to the net proceeds of an auction of a former tenant’s equipment at FRP Collection which vacated unexpectedly late in 2017. Nominal other income was also generated by City Center, Central Fairwinds, Logan Tower, DTC Crossroads, 5090 N 40th St, SanTan, 2525 McKinnon, Park Tower, Mission City and Sorrento Mesa with the largest contribution from City Center and Park Tower parking income.

Operating Expenses

Total Operating Expenses. Total operating expenses consist of property operating expenses, general and administrative expenses and depreciation and amortization. Total operating expenses increased by $7.3 million, or 17%, to $51.0 million for the six months ended June 30, 2018, from $43.7 million for the same period in 2017, primarily due to acquisitions described above. Total operating expenses increased by $4.3 million, $4.3 million, $1.3 million, and $1.7 million, respectively, from the acquisitions of Mission City, Sorrento Mesa, Papago Tech and Pima Center properties. AmberGlen decreased by $0.5 million primarily due to the sale of two of the five buildings in the complex in May 2017. Washington Group Plaza operating expenses decreased by $2.5 million due to its sale in March 2018. The remaining operating expenses aggregated to an overall $1.3 million decrease in comparison to the prior year primarily related to a decrease in depreciation at 190 Center and FRP Collection.

Property Operating Expenses. Property operating expenses are comprised mainly of building common area and maintenance expenses, insurance, property taxes, property management fees, as well as certain expenses that are not recoverable from tenants, the majority of which are related to costs necessary to maintain the appearance and marketability of vacant space. In the normal course of business, property expenses fluctuate and are impacted by various factors including, but not limited to, occupancy levels, weather, utility costs, repairs, maintenance and re-leasing costs. Property operating expenses increased $3.1 million, or 15%, to $23.4 million for the six months ended June 30, 2018 from $20.3 million for the same period in 2017. The increase in property operating expenses was primarily due to the acquisitions described above. The acquisition of the Mission City, Sorrento Mesa, Papago Tech and Pima Center contributed an additional $1.9 million, $1.1 million, $0.5 million, and $0.6 million in additional property operating expenses, respectively. AmberGlen decreased by $0.3 million primarily due to the sale of two of the five buildings in the complex in May 2017, and Washington Group Plaza decreased by $1.3 million due to the sale of that property in March 2018. The remaining property operating expenses aggregate to an overall $0.6 million increase in comparison to the prior year.

General and Administrative. General and administrative expenses comprise of public company reporting costs and the compensation of our management team and board of directors as well as non-cash stock-based compensation expenses. General and administrative expenses increased $0.1 million, or 4%, to $3.9 million for the six month period ended June 30, 2018 compared to $3.8 million for the same period in 2017. The increase was primarily attributable to higher payroll costs.

Depreciation and Amortization. Depreciation and amortization increased $4.1 million, or 20%, to $23.7 million for the six month period ended June 30, 2018 compared to $19.6 million for the same period in 2017, primarily due to the addition of the 2525 McKinnon, Mission City, Sorrento Mesa, Papago Tech and Pima Center properties offset by a decrease at Washington Group Plaza and AmberGlen due to the sale of those properties. The remaining decrease primarily relates to a decrease in depreciation at 190 Center and FRP Collection.

20

Other Expense (Income)

Interest Expense, Net. Interest expense increased $2.2 million, or 24%, to $11.3 million for the six month period ended June 30, 2018, compared to $9.1 million for the corresponding period in 2017. The increase was primarily due to interest expense related to acquisitions. Interest expense for the 2525 McKinnon and Mission City property level debt increased by $0.2 million and $0.9 million, respectively, as well as interest on the line of credit which increased by $1.3 million as a result of acquisitions funded by that facility. A new mortgage placed on Central Fairwinds in June 2017 also increased interest expense by a further $0.2 million over the prior year. These increases were offset by a $0.4 million decrease in the Washington Group Plaza debt as a result of the sale of that building and the extinguishment of its property level debt.

Net Gain on the Sale of Real Estate Property. Net gain on the sale of real estate property relates to the sale of our Washington Group Plaza property in March 2018. In the prior year, amounts relate to the sale of 2 buildings in our AmberGlen complex in May 2017.

Cash Flows

Comparison of Six Months Ended June 30, 2018 to Six Months Ended June 30, 2017

Cash, cash equivalents and restricted cash were $32.6 million and $92.2 million as of June 30, 2018 and June 30, 2017, respectively.

Cash flow from operating activities. Net cash provided by operating activities decreased by $0.5 million to $11.4 million for the six months ended June 30, 2018 compared to $11.9 million for the same period in 2017. The decrease was attributable to changes in working capital predominantly due to the sale of Washington Group Plaza, offset by the earn-out termination payment which occurred in 2017 but not 2018 and increased operating cash flows from acquisitions.

Cash flow from investing activities. Net cash provided by investing activities increased by $53.1 million to $18.2 million for the six months ended June 30, 2018 compared to $34.9 million used in investing activities for the same period in 2017. The increase was primarily due to proceeds from the disposition of the Washington Group Plaza property offset by the acquisition of Pima Center.

Cash flow to financing activities. Net cash used in financing activities increased by $117.4 million to $31.9 million for the six months ended June 30, 2018 compared to $85.5 million provided by the same period in 2017. Cash flow used in financing activities increased primarily due to proceeds from a public offering of our common stock and a new mortgage which both occurred in 2017 but not 2018. Borrowings on the Unsecured Credit Facility were also higher in 2018.

Liquidity and Capital Resources

Analysis of Liquidity and Capital Resources

We had approximately $14.7 million of cash and cash equivalents and $18.0 million of restricted cash as of June 30, 2018.

On March 15, 2018 the Company entered into a $250 million Unsecured Credit Facility which includes an accordion feature that allows the Company to borrow up to $500 million, subject to customary terms and conditions. The Company’s previous secured credit facility was replaced and repaid in full. The Unsecured Credit Facility matures in March 2022, which may be extended to March 2023 at the Company’s option upon meeting certain conditions. Borrowings under the Unsecured Credit Facility bear an interest at a rate equal to the LIBOR rate plus a margin of between 140 to 225 basis points depending upon the Company’s consolidated leverage ratio. As of June 30, 2018, we had approximately $58.5 million outstanding under our Unsecured Credit Facility.

The Company and the Operating Partnership previously entered into separate equity distribution agreements (the “Sales Agreements”) with each of KeyBanc Capital Markets Inc., Raymond James & Associates, Inc. and BMO Capital Markets Corp. (collectively, the “Sales Agents”), pursuant to which the Company may issue and sell from time to time up to 6,000,000 shares of its common stock, $0.01 par value per share, and up to 1,000,000 shares of its 6.625% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share

21

(collectively, the “Shares”), through the Sales Agents, acting as agents or principals (the “ATM Program”). Pursuant to the Sales Agreements, the Shares may be offered and sold through the Sales Agents in transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act including sales made directly on the New York Stock Exchange or sales made to or through a market maker other than on an exchange or, with the prior consent of the Company, in privately negotiated transactions. The Sales Agents will be entitled to compensation of up to 2.0% of the gross proceeds of shares sold through the Sales Agents from time to time under the sales agreements. The Company has no obligation to sell any of the Shares under the Sales Agreements and may at any time suspend solicitations and offers under, or terminate, the Sales Agreements. During the six month period ended June 30, 2018, we did not sell any Shares under the ATM Program.

Our short-term liquidity requirements primarily consist of operating expenses and other expenditures associated with our properties, distributions to our limited partners and distributions to our stockholders required to qualify for REIT status, capital expenditures and, potentially, acquisitions. We expect to meet our short-term liquidity requirements through net cash provided by operations, reserves established from existing cash, proceeds from our public offerings, including under our ATM Program, and borrowings under our mortgage loans and Unsecured Credit Facility.

Our long-term liquidity needs consist primarily of funds necessary for the repayment of debt at maturity, property acquisitions and non-recurring capital improvements. We expect to meet our long-term liquidity requirements with net cash from operations, long-term secured and unsecured indebtedness and the issuance of equity and debt securities. We also may fund property acquisitions and non-recurring capital improvements using our Unsecured Credit Facility pending longer term financing.

We believe we have access to multiple sources of capital to fund our long-term liquidity requirements, including the incurrence of additional debt and the issuance of additional equity securities. However, we cannot assure you that this is or will continue to be the case. Our ability to incur additional debt is dependent on a number of factors, including our degree of leverage, the value of our unencumbered assets and borrowing restrictions that may be imposed by lenders. Our ability to access the equity capital markets is dependent on a number of factors as well, including general market conditions for REITs and market perceptions about us.

Contractual Obligations and Other Long-Term Liabilities

The following table provides information with respect to our commitments as of June 30, 2018, including any guaranteed or minimum commitments under contractual obligations. The table does not reflect available debt extension options.

	Payments Due by Period (in thousands)
Contractual Obligation	Total		2018		2019-2020		2021-2022		More than 5 years
Principal payments on debt	$	485,356	$	60,589	$	11,140	$	92,882	$	320,745
Interest payments		115,036		9,137		35,586		28,921		41,392
Tenant-related commitments(1)		10,464		8,271		1,582		611		—
Total	$	610,856	$	77,997	$	48,308	$	122,414	$	362,137

(1) Consists principally of commitments for tenant improvements.

Off-Balance Sheet Arrangements

As of June 30, 2018, we did not have any off-balance sheet arrangements.

Inflation

Substantially all of our office leases provide for real estate tax and operating expense escalations. In addition, most of the leases provide for fixed annual rent increases. We believe that inflationary increases may be at least partially offset by these contractual rent increases and expense escalations.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our future income, cash flows and fair values relevant to financial instruments are dependent upon prevailing market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. We have used, and will use, derivative financial instruments to manage or hedge interest rate risks related to borrowings. We do not use derivatives for trading or speculative purposes and only enter into contracts with major financial institutions based upon their credit rating and other factors. We have entered, and we will only enter into, contracts with major financial institutions based on their credit rating and other factors. As of June 30, 2018, our Company did not have any outstanding derivatives.

The primary market risk to which we are exposed is interest rate risk. Our primary interest rate exposure is LIBOR. We primarily use fixed interest rate financing to manage our exposure to fluctuations in interest rates. We consider our interest rate exposure to be minimal because as of June 30, 2018, approximately $426.9 million, or 88.0%, of our debt had fixed interest rates and approximately $58.5 million, or 12.0%, had variable interest rates. A 10% increase in LIBOR would increase our interest costs by approximately $0.1 million on debt outstanding as of June 30, 2018, and would decrease the fair value of our outstanding debt, as well as increase interest costs associated with future debt issuances or borrowings under our Unsecured Credit Facility. A 10% decrease in LIBOR would decrease our interest costs by approximately $0.1 million on debt outstanding as of June 30, 2018, and would increase the fair value of our outstanding debt, as well as decrease interest costs associated with future debt issuances or borrowings under our Unsecured Credit Facility.

Interest risk amounts are our management’s estimates based on our Company’s capital structure and were determined by considering the effect of hypothetical interest rates on our financial instruments. These analyses do not consider the effect of any change in overall economic activity that could occur in that environment. We may take actions to further mitigate our exposure to changes in interest rates. However, due to the uncertainty of the specific actions that would be taken and their possible effects, these analyses assume no changes in our Company’s financial structure.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Based on the most recent evaluation, the Company’s Chief Executive Officer and Chief Financial Officer determined that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended) were effective as of June 30, 2018.

Management’s Report on Internal Control Over Financial Reporting

There have been no changes to our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We and our subsidiaries are, from time to time, parties to litigation arising from the ordinary course of their business. Our management does not believe that any such litigation will materially affect our financial position or operations.

Item 1A. Risk Factors

The following risk factor replaces the risk factor disclosed under a similar heading in the section entitled “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2017. Except as presented below, there have been no material changes from the risk factors set forth in such Annual Report.

Covenants in our Credit Agreement may cause us to fail to qualify as a REIT.

In order to maintain our qualification as a REIT, we are generally required under the Code to distribute annually at least 90% of our net taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gain. In addition, we will be subject to income tax at regular corporate rates to the extent that we distribute less than 100% of our net taxable income, including any net capital gains. Under our Credit Agreement, dated as of March 15, 2018, we are subject to various financial covenants that may inhibit our ability to make distributions to our stockholders. If we are unable to make distributions to our stockholders, we will not be able to make sufficient distributions to maintain our REIT status.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit Number	Description
3.1	Articles of Amendment and Restatement of City Office REIT, Inc., as amended and supplemented (incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K filed on March 1, 2018).
3.2	Second Amended and Restated Bylaws of City Office REIT, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on March 14, 2017).
4.1	Certificate of Common Stock of City Office REIT, Inc. (incorporated by reference to Exhibit 4.1 of the Company’s Registration Statement on Form S-11/A filed with the Commission on February 18, 2014).
4.2	Form of certificate representing the 6.625% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form 8-A filed with the Commission on September 30, 2016).

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12.1	Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends †
31.1	Certification by Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002. †
31.2	Certification by Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002. †
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. †
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. †
101.INS	INSTANCE DOCUMENT*
101.SCH	SCHEMA DOCUMENT*
101.CAL	CALCULATION LINKBASE DOCUMENT*
101.LAB	LABELS LINKBASE DOCUMENT*
101.PRE	PRESENTATION LINKBASE DOCUMENT*
101.DEF	DEFINITION LINKBASE DOCUMENT*

† Filed herewith.

* Submitted electronically herewith. Attached as Exhibit 101 to this report are the following documents formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Income; (iii) Consolidated Statements of Equity; (iv) Consolidated Statements of Cash Flows; and (v) Notes to Consolidated Financial Statements.

25

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CITY OFFICE REIT, INC.

Date: August 2, 2018
	By:	/s/ James Farrar
		James Farrar
		Chief Executive Officer and Director (Principal Executive Officer)

Date: August 2, 2018
	By:	/s/ Anthony Maretic
		Anthony Maretic
		Chief Financial Officer, Secretary and Treasurer (Principal Financial Officer and Principal Accounting Officer)

26

EX-12.1

Exhibit 12.1

Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Share Dividends

(In thousands)

	City Office REIT, Inc.												City Office REIT, Inc. Predecessor
	Six months ended June 30, 2018		Year ended December 31, 2017		Year ended December 31, 2016		Year ended December 31, 2015			Period from April 21, 2014 to December 31, 2014			Period from January 1, 2014 to April 20, 2014
Earnings
Add:
Income/(Loss) from continuing operations before adjustment for income or loss from equity investees		46,513		9,158		376		(7,667	)		(6,855	)		(2,530	)
Fixed charges		11,255		20,173		14,761		11,353			7,180			3,772
Distributed income of equity investees		—		—		—		—			—			—
Subtract:
Capitalized interest		—		—		—		—			—			—
Total Earnings		57,768		29,331		15,137		3,686			325			1,242
Fixed Charges
Interest expense		11,255		20,173		14,761		11,353			7,180			3,772
Capitalized interest
Rental expense at computed interest factor(1)		—		—		—		—			—			—
Total Fixed charges		11,255		20,173		14,761		11,353			7,180			3,772
Preferred Stock Dividends		3,710		7,411		1,781		—			—			—
Consolidated Fixed Charges and Preferred Stock Dividends		14,965		27,584		16,542		11,353			7,180			3,772
Consolidated ratio of earnings to fixed charges		3.86		1.06		0.92		0.32			0.05			0.33
Inadequate amount		—		—		1,405		7,667			6,855			2,530

(1) Amounts represent those portions of rent expense that are reasonable approximations of interest costs.

EX-31.1

Exhibit 31.1

Certification

I, James Farrar, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2018 of City Office REIT, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of this report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 2, 2018 Date	/s/ James Farrar
	James Farrar
	Chief Executive Officer and Director (Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification

I, Anthony Maretic, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2018 of City Office REIT, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of this report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 2, 2018 Date	/s/ Anthony Maretic
	Anthony Maretic
	Chief Financial Officer, Secretary and Treasurer (Principal Financial Officer and Principal Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Quarterly Report on Form 10-Q for the period ended June 30, 2018 of City Office REIT, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James Farrar, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 2, 2018 Date	/s/ James Farrar
	James Farrar
	Chief Executive Officer and Director (Principal Executive Officer)

This written report is being furnished to the Securities and Exchange Commission as an exhibit to the Report. A signed original of this written statement required by Section 906 has been provided to City Office REIT, Inc. and will be retained by City Office REIT, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Quarterly Report on Form 10-Q for the period ended June 30, 2018 of City Office REIT, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Anthony Maretic, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 2, 2018 Date	/s/ Anthony Maretic
	Anthony Maretic
	Chief Financial Officer, Secretary and Treasurer (Principal Financial Officer and Principal Accounting Officer)

This written report is being furnished to the Securities and Exchange Commission as an exhibit to the Report. A signed original of this written statement required by Section 906 has been provided to City Office REIT, Inc. and will be retained by City Office REIT, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Jul. 30, 2018
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Trading Symbol	CIO
Entity Registrant Name	City Office REIT, Inc.
Entity Central Index Key	0001593222
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		36,133,271

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Real estate properties
Land	$ 188,110	$ 188,110
Building and improvement	581,792	534,473
Tenant improvement	62,796	53,427
Furniture, fixtures and equipment	315	291
Real estate properties, gross	833,013	776,301
Accumulated depreciation	(60,507)	(48,234)
Real estate properties, net	772,506	728,067
Cash and cash equivalents	14,655	12,301
Restricted cash	17,957	22,713
Rents receivable, net	22,349	20,087
Deferred leasing costs, net	9,231	7,793
Acquired lease intangible assets, net	65,103	65,088
Prepaid expenses and other assets	5,538	2,013
Assets held for sale		38,427
Total Assets	907,339	896,489
Liabilities:
Debt	479,610	489,509
Accounts payable and accrued liabilities	15,938	17,605
Deferred rent	3,892	4,223
Tenant rent deposits	3,784	3,523
Acquired lease intangible liabilities, net	7,619	8,649
Dividend distributions payable	10,346	10,318
Liabilities related to assets held for sale		2,830
Total Liabilities	521,189	536,657
Commitments and Contingencies (Note 9)
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, 36,133,271 and 36,012,086 shares issued and outstanding	361	360
Additional paid-in capital	335,009	334,241
Accumulated deficit	(61,556)	(86,977)
Total Stockholders' Equity	385,814	359,624
Non-controlling interests in properties	336	208
Total Equity	386,150	359,832
Total Liabilities and Equity	$ 907,339	$ 896,489

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Preferred stock, Dividend rate percentage	6.625%	6.625%
Preferred stock, par value per share	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,600,000	5,600,000
Preferred stock, shares issued	4,480,000	4,480,000
Preferred stock, shares outstanding	4,480,000	4,480,000
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	36,133,271	36,012,086
Common stock, shares outstanding	36,133,271	36,012,086

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Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Revenues:
Rental income	$ 25,880	$ 21,635	$ 52,894	$ 43,948
Expense reimbursement	3,545	2,847	7,090	5,141
Other	811	675	1,786	1,466
Total Revenues	30,236	25,157	61,770	50,555
Operating Expenses:
Property operating expenses	11,748	10,674	23,374	20,284
General and administrative	1,966	1,597	3,943	3,790
Depreciation and amortization	11,771	9,148	23,665	19,646
Total Operating Expenses	25,485	21,419	50,982	43,720
Operating income	4,751	3,738	10,788	6,835
Interest Expense:
Contractual interest expense	(5,081)	(4,356)	(10,269)	(8,429)
Amortization of deferred financing costs	(354)	(331)	(986)	(655)
Interest expense, net	(5,435)	(4,687)	(11,255)	(9,084)
Change in fair value of contingent consideration		2,000		2,000
Net gain on sale of real estate property		12,116	46,980	12,116
Net (loss)/income	(684)	13,167	46,513	11,867
Net income attributable to non-controlling interests in properties	(114)	(3,104)	(249)	(3,272)
Net (loss)/income attributable to the Company	(798)	10,063	46,264	8,595
Preferred stock distributions	(1,855)	(1,855)	(3,710)	(3,701)
Net (loss)/income attributable to common stockholders	$ (2,653)	$ 8,208	$ 42,554	$ 4,894
Net (loss)/income per common share:
Basic	$ (0.07)	$ 0.27	$ 1.18	$ 0.16
Diluted	$ (0.07)	$ 0.27	$ 1.17	$ 0.16
Weighted average common shares outstanding:
Basic	36,132	30,257	36,103	29,886
Diluted	36,132	30,563	36,452	30,186
Dividend distributions declared per common share	$ 0.235	$ 0.235	$ 0.470	$ 0.470

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Condensed Consolidated Statements of Changes in Equity - USD ($) $ in Thousands	Total	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Total stockholders' equity [Member]	Operating Partnership Unitholders' Non-controlling Interests [Member]	Non-controlling Interests in Properties [Member]
Beginning balance at Dec. 31, 2016	$ 256,059	$ 112,000	$ 244	$ 195,566	$ (53,608)	$ 254,202	$ 108	$ 1,749
Beginning balance, shares at Dec. 31, 2016		4,480,000	24,382,000
Conversion of OP units to shares, values				108		108	$ (108)
Conversion of OP units to shares, shares			40,000
Restricted stock award grants and vesting, values	1,671		$ 1	1,741	(71)	1,671
Restricted stock award grants and vesting, shares			90,000
Net proceeds from sale of common stock, values	136,941		$ 115	136,826		136,941
Net proceeds from sale of common stock, shares			11,500,000
Common stock dividend distributions declared	(31,148)				(31,148)	(31,148)
Preferred stock dividend distributions declared	(7,906)				(7,906)	(7,906)
Distributions	(4,943)							(4,943)
Net income	9,158				5,756	5,756		3,402
Ending balance at Dec. 31, 2017	$ 359,832	$ 112,000	$ 360	334,241	(86,977)	359,624		208
Ending balance, shares at Dec. 31, 2017	36,012,086	4,480,000	36,012,000
Restricted stock award grants and vesting, values	$ 618		$ 1	768	(151)	618
Restricted stock award grants and vesting, shares			121,000
Common stock dividend distributions declared	(16,982)				(16,982)	(16,982)
Preferred stock dividend distributions declared	(3,710)				(3,710)	(3,710)
Contributions	43							43
Distributions	(164)							(164)
Net income	46,513				46,264	46,264		249
Ending balance at Jun. 30, 2018	$ 386,150	$ 112,000	$ 361	$ 335,009	$ (61,556)	$ 385,814		$ 336
Ending balance, shares at Jun. 30, 2018	36,133,271	4,480,000	36,133,000

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Cash Flows from Operating Activities:
Net income	$ 46,513	$ 11,867
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	23,665	19,646
Amortization of deferred financing costs	986	655
Amortization of above/below market leases	(140)	(77)
Increase in straight-line rent	(1,842)	(1,960)
Non-cash stock compensation	705	1,179
Earn-out termination payment		(2,400)
Net gain on sale of real estate property	(46,980)	(12,116)
Changes in non-cash working capital:
Rents receivable, net	(93)	(1,135)
Prepaid expenses and other assets	(3,034)	(26)
Accounts payable and accrued liabilities	(6,467)	(764)
Deferred rent	(2,042)	(2,620)
Tenant rent deposits	89	(313)
Net Cash Provided By Operating Activities	11,360	11,936
Cash Flows from/(to) Investing Activities:
Additions to real estate properties	(9,156)	(4,038)
Acquisition of real estate	(55,453)	(46,035)
Net proceeds from sale of real estate	84,839	16,993
Deferred leasing costs	(2,057)	(1,810)
Net Cash Provided By/(Used In) Investing Activities	18,173	(34,890)
Cash Flows (to)/from Financing Activities:
Proceeds from sale of common stock		67,991
Debt issuance and extinguishment costs	(1,942)	(753)
Proceeds from mortgage loans payable		119,340
Repayment of mortgage loans payable	(34,121)	(25,836)
Proceeds from credit facility	82,000	57,000
Repayment of credit facility	(57,000)	(109,500)
Shares withheld for payment of taxes on restricted stock unit vesting	(86)
Contributions from non-controlling interests in properties	43
Distributions to non-controlling interests in properties	(165)	(4,418)
Dividend distributions paid to stockholders and Operating Partnership unitholders	(20,664)	(18,323)
Net Cash (Used In)/Provided By Financing Activities	(31,935)	85,501
Net (Decrease)/Increase in Cash, Cash Equivalents and Restricted Cash	(2,402)	62,547
Cash, Cash Equivalents and Restricted Cash, Beginning of Period	35,014	29,651
Cash, Cash Equivalents and Restricted Cash, End of Period	$ 32,612	$ 92,198

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Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Reconciliation of Cash, Cash Equivalents and Restricted Cash:
Cash and Cash Equivalents, End of Period	$ 14,655	$ 68,149
Restricted Cash, End of Period	17,957	24,049
Cash, Cash Equivalents and Restricted Cash, End of Period	32,612	92,198
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	9,962	8,596
Purchases of additions in real estate properties included in accounts payable	3,380	677
Purchases of deferred leasing costs included in accounts payable	$ 158	$ 223

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Organization and Description of Business

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Description of Business

1. Organization and Description of Business

City Office REIT, Inc. (the “Company”) was organized in the state of Maryland on November 26, 2013. On April 21, 2014, the Company completed its initial public offering (“IPO”) of shares of the Company’s common stock. The Company contributed the net proceeds of the IPO to City Office REIT Operating Partnership, L.P., a Maryland limited partnership (the “Operating Partnership”), in exchange for common units of limited partnership interest in the Operating Partnership (“common units”).

The Company’s interest in the Operating Partnership entitles the Company to share in distributions from, and allocations of profits and losses of, the Operating Partnership in proportion to the Company’s percentage ownership of common units. As the sole general partner of the Operating Partnership, the Company has the exclusive power under the Operating Partnership’s partnership agreement to manage and conduct the Operating Partnership’s business, subject to limited approval and voting rights of the limited partners.

The Company has elected to be taxed and will continue to operate in a manner that will allow it to continue to qualify as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”). Subject to qualification as a REIT, the Company will be permitted to deduct dividend distributions paid to its stockholders, eliminating the U.S. federal taxation of income represented by such distributions at the Company level. REITs are subject to a number of organizational and operational requirements. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to U.S. federal and state income tax on its taxable income at regular corporate tax rates and, for tax years beginning before 2018, any applicable alternative minimum tax.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Preparation and Summary of Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with Securities and Exchange Commission rules and regulations and generally accepted accounting principles in the United States of America (“US GAAP”) and in the opinion of management contain all adjustments (including normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

New Accounting Pronouncements

Adopted in the Current Year

Effective January 1, 2018, the Company adopted FASB ASU 2014-09, Revenue From Contracts with Customers, on a modified retrospective basis. The standard is principle-based and provides a five-step model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. The Company has reviewed its revenue streams to note that the majority are under the guidance of ASU 2016-02, Leases. Net gain on sale of real estate is under the guidance of ASU 2017-05, Other Income. The adoption of this guidance did not have a material impact to the Company’s condensed consolidated financial statements or notes to our condensed consolidated financial statements.

Effective January 1, 2018, the Company adopted FASB ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments in ASU 2016-01 address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The adoption of this guidance did not have a material impact to the Company’s condensed consolidated financial statements.

Effective January 1, 2018, the Company adopted FASB ASU 2016-15, Statement of Cash Flow: Classification of Certain Cash Receipts and Cash Payments, on a retrospective basis. The adoption of this guidance did not have a material impact to the Company’s condensed consolidated financial statements.

Effective January 1, 2018, the Company adopted FASB ASU 2016-18, Statement of Cash Flows: Restricted Cash, on a retrospective basis. The update required the statement of cash flows to explain the changes during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents.

To be Adopted in Future Years

In February 2016, the FASB issued ASU 2016-02, Leases. The update amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. ASU 2016-02 will be effective for annual reporting periods beginning after December 15, 2018. Early adoption is permitted. On July 30, 2018, the FASB released ASU 2018-11 which allows lessors to elect, as a practical expedient, to not separate lease and non-lease components and allow these components to be accounted for as a single lease component if both (i) the timing and pattern of transfer to the lessee of the lease component and the related non-lease component are the same and (ii) the lease component, if accounted for separately, would be classified as an operating lease. In addition, a company is permitted to use its effective date as the date of initial application. Therefore, a company electing this option will not restate comparative period financial information, will not make the new required lease disclosures in comparative periods beginning before the effective date and will recognize its cumulative effect transition adjustment as of the effective date. The Company is in the process of evaluating whether it will elect to apply the practical expedient. If the Company elects to apply the practical expedient we expect expense reimbursement that qualify as non-lease components will be presented under a single lease component. If the Company does not elect to apply the practical expedient we expect that certain non-lease components of expense reimbursement may be subject to ASC 606.

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Real Estate Investments

6 Months Ended

Jun. 30, 2018

Real Estate [Abstract]

Real Estate Investments

3. Real Estate Investments

Acquisitions

During the six months ended June 30, 2018 and 2017 the Company acquired the following properties:

Property	Date Acquired		Percentage Owned
Pima Center		April 2018		100	%
2525 McKinnon		January 2017		100	%

Pima Center and 2525 McKinnon were accounted for as asset acquisitions.

The following table summarizes the Company’s allocations of the purchase price of assets acquired and liabilities assumed during the six months ended June 30, 2018 (in thousands):

	Pima Center
Buildings and improvements	$	42,235
Tenant improvements		2,898
Acquired intangible assets		10,691
Prepaid expenses and other assets		95
Accounts payable and other liabilities		(337	)
Lease intangible liabilities		(129	)
Total consideration	$	55,453

The following table summarizes the Company’s allocations of the purchase price of assets acquired and liabilities assumed during the six months ended June 30, 2017 (in thousands):

	2525 McKinnon
Land	$	10,629
Buildings and improvements		33,357
Tenant improvements		1,158
Acquired intangible assets		3,267
Accounts payable and other liabilities		(190	)
Lease intangible liabilities		(2,186	)
Total consideration	$	46,035

Sale of Real Estate Property

On March 8, 2018, the Company sold the Washington Group Plaza property in Boise, Idaho for $86.5 million, resulting in an aggregate net gain of $47.0 million, net of $1.7 million in costs, which has been classified as net gain on sale of real estate property in the condensed consolidated statements of operations. In connection with the sale of the property, certain debt repayments were made.

On May 2, 2017, the Company sold the 1400 and 1600 buildings at the AmberGlen property in Portland, Oregon, and its related assets and liabilities, for a sales price of $18.9 million, resulting in an aggregate net gain of $12.1 million, net of $2.0 million in costs, which has been classified as net gain on sale of real estate property in the condensed consolidated statements of operations. In connection with the sale of the property, certain debt repayments were made.

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Lease Intangibles

6 Months Ended

Jun. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Lease Intangibles

4. Lease Intangibles

Lease intangibles and the value of assumed lease obligations as of June 30, 2018 and December 31, 2017 were comprised as follows (in thousands):

	Lease Intangible Assets															Lease Intangible Liabilities
June 30, 2018	Above Market Leases			Below Market Ground Lease(1)			In Place Leases			Leasing Commissions			Total			Below Market Leases			Below Market Ground Lease(1)			Total
Cost	$	9,862		$	1,855		$	71,309		$	27,770		$	110,796		$	(10,998	)	$	(138	)	$	(11,136	)
Accumulated amortization		(4,039	)		(6	)		(31,000	)		(10,648	)		(45,693	)		3,483			34			3,517
	$	5,823		$	1,849		$	40,309		$	17,122		$	65,103		$	(7,515	)	$	(104	)	$	(7,619	)
	Lease Intangible Assets															Lease Intangible Liabilities
December 31, 2017	Above Market Leases			Below Market Ground Lease			In Place Leases			Leasing Commissions			Total			Below Market Leases			Below Market Ground Lease(1)			Total
Cost	$	9,082		$	—		$	71,426		$	27,706		$	108,214		$	(11,608	)	$	(138	)	$	(11,746	)
Accumulated amortization		(3,215	)		—			(30,613	)		(9,298	)		(43,126	)		3,065			32			3,097
	$	5,867		$	—		$	40,813		$	18,408		$	65,088		$	(8,543	)	$	(106	)	$	(8,649	)

(1) For the below market ground lease asset the Company is the lessee, whereas, for the below market ground lease liabilty the Company is the lessor.

The estimated aggregate amortization expense for lease intangibles for the next five years and in the aggregate are as follows (in thousands):

2018	$	8,486
2019		16,140
2020		14,018
2021		10,953
2022		3,434
Thereafter		4,453
	$	57,484

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Debt

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Debt

5. Debt

The following table summarizes the indebtedness as of June 30, 2018 and December 31, 2017 (in thousands):

Property	June 30, 2018			December 31, 2017			Interest Rate as of June 30, 2018			Maturity
Unsecured Credit Facility (1)	$	58,500		$	—			LIBOR +1.40	%(2)		March 2022
Midland Life Insurance (3)		87,787			88,582			4.34			May 2021
Mission City		47,000			47,000			3.78			November 2027
190 Office Center (4)		41,250			41,250			4.79			October 2025
SanTan (4)		34,962			35,100			4.56			March 2027
Intellicenter (4)		33,563			33,563			4.65			October 2025
FRP Collection (4)		29,884			30,174			3.85			September 2023
2525 McKinnon		27,000			27,000			4.24			April 2027
5090 N 40th St		22,000			22,000			3.92			January 2027
AmberGlen (4)		20,000			20,000			3.69			May 2027
Lake Vista Pointe (5)		18,203			18,358			4.28			August 2024
FRP Ingenuity Drive (5)(6)		17,000			17,000			4.44			December 2024
Plaza 25 (4)(5)		16,734			16,882			4.10			July 2025
Carillon Point (4)		16,501			16,671			3.50			October 2023
Central Fairwinds (4)		14,972			15,107			4.00			June 2024
Washington Group Plaza		—			32,290			—			—
Secured Credit Facility (1)		—			33,500			—			—
Total Principal		485,356			494,477
Deferred financing costs, net		(5,746	)		(4,968	)
Total	$	479,610		$	489,509

All interest rates are fixed interest rates with the exception of the unsecured credit facility (“Unsecured Credit Facility”) as explained in footnote 1 below.

(1) As of June 30, 2018, the Unsecured Credit Facility had $250 million authorized and $58.5 million was drawn. On March 15, 2018, the Company entered into a $250 million Unsecured Credit Facility which includes an accordion feature that will permit the Company to borrow up to $500 million, subject to customary terms and conditions. The Company’s previous secured credit facility was replaced and repaid in full. The Unsecured Credit Facility matures in March 2022, which may be extended to March 2023 at the Company’s option upon meeting certain conditions. Borrowings under the Unsecured Credit Facility will bear an interest at a rate equal to the LIBOR rate plus a margin of between 140 to 225 basis points depending upon the Company’s consolidated leverage ratio. The Unsecured Credit Facility requires the Company to maintain a fixed charge coverage ratio of no less than 1.50x.

(2) As of June 30, 2018, the one month LIBOR rate was 2.09%.

(3) The mortgage loan is cross-collateralized by DTC Crossroads, Cherry Creek and City Center. Interest on mortgage loan is payable monthly plus principal based on 360 months of amortization. The loan bears a fixed interest rate of 4.34% and matures on May 6, 2021.

(4) The Company is subject to various debt covenants including debt service coverage ratios (“DSCR”) that under certain conditions must be maintained no less than 1.15x, 1.20x, 1.20x, 1.40x, 1.15x, 1.45x, 1.35x and 1.35x respectively for each of 190 Office Center, SanTan, Intellicenter, FRP Collection, AmberGlen, Plaza 25, Carillon Point and Central Fairwinds. The DSCR covenant contained in the loan agreements for Plaza 25, allows for the posting of additional collateral reserves in the event the test is not met. As at June 30, 2018, the covenant was not met and thus the Company has posted all required collateral reserves and is not subject to the test while those reserves are held.

(5) Interest on mortgage loan is payable monthly plus principal based on 360 months of amortization.

(6) The Company is required to maintain a minimum net worth of $17 million, minimum liquidity of $1.7 million and a DSCR of no less than 1.15x.

The scheduled principal repayments of debt as of June 30, 2018 are as follows (in thousands):

2018	$	60,589
2019		5,049
2020		6,091
2021		88,110
2022		4,772
Thereafter		320,745
	$	485,356

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Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

6. Fair Value of Financial Instruments

Fair value measurements are based on assumptions that market participants would use in pricing an asset or a liability. The hierarchy for inputs used in measuring fair value is as follows:

Level 1 Inputs – quoted prices in active markets for identical assets or liabilities

Level 2 Inputs – observable inputs other than quoted prices in active markets for identical assets and liabilities

Level 3 Inputs – unobservable inputs

As of June 30, 2018 and December 31, 2017, the Company did not have any hedges or derivatives.

Cash, Cash Equivalents, Restricted Cash, Rents Receivable, Accounts Payable and Accrued Liabilities

The Company estimates that the fair value approximates carrying value due to the relatively short-term nature of these instruments.

Fair Value of Financial Instruments Not Carried at Fair Value

With the exception of fixed rate mortgage loans payable, the carrying amounts of the Company’s financial instruments approximate their fair value. The Company determines the fair value of its fixed rate mortgage loan payable based on a discounted cash flow analysis using a discount rate that approximates the current borrowing rates for instruments of similar maturities. Based on this, the Company has determined that the fair value of these instruments was $417.4 million and $462.3 million as of June 30, 2018 and December 31, 2017, respectively. Accordingly, the fair value of mortgage loans payable have been classified as Level 3 fair value measurements.

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Related Party Transactions

6 Months Ended

Jun. 30, 2018

Related Party Transactions [Abstract]

Related Party Transactions

7. Related Party Transactions

Administrative Services Agreement

For the six months ended June 30, 2018 and 2017, the Company earned $0.4 million and $0.6 million, respectively, in administrative services performed for Second City Real Estate II Corporation and its affiliates (“Second City”).

Earn-Out Payment

For the six months ended June 30, 2017, the Company paid $2.4 million to Second City to terminate the Company’s earn-out payment obligation under the Termination and Mutual Release Agreement.

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Future Minimum Rent Schedule

6 Months Ended

Jun. 30, 2018

Leases [Abstract]

Future Minimum Rent Schedule

8. Future Minimum Rent Schedule

Future minimum lease payments to be received as of June 30, 2018 under non-cancellable operating leases for the next five years and thereafter are as follows (in thousands):

2018		49,021
2019		92,328
2020		81,055
2021		70,733
2022		54,263
Thereafter		103,646
	$	451,046

The above minimum lease payments to be received do not include reimbursements from tenants for certain operating expenses and real estate taxes and do not include early termination payments provided for in certain leases.

Ten state government tenants currently have the exercisable right to terminate their leases if the applicable state legislature does not appropriate rent in its annual budget. The Company has determined that the occurrence of any government tenant not being appropriated the rent in the applicable annual budget is a remote contingency and accordingly recognizes lease revenue on a straight-line basis over the respective lease term. These tenants represent approximately 11.4% of the Company’s total future minimum lease payments as of June 30, 2018.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

9. Commitments and Contingencies

The Company is obligated under certain tenant leases to fund tenant improvements and the expansion of the underlying leased properties.

Under various federal, state and local laws, ordinances and regulations relating to the protection of the environment, a current or previous owner or operator of real estate may be liable for the cost of removal or remediation of certain hazardous or toxic substances disposed, stored, generated, released, manufactured or discharged from, on, at, under, or in a property. As such, the Company may be potentially liable for costs associated with any potential environmental remediation at any of its formerly or currently owned properties.

The Company believes that it is in compliance in all material respects with all federal, state and local ordinances and regulations regarding hazardous or toxic substances. Management is not aware of any environmental liability that it believes would have a material adverse impact on the Company’s financial position or results of operations. Management is unaware of any instances in which the Company would incur significant environmental costs if any or all properties were sold, disposed of or abandoned. However, there can be no assurance that any such non-compliance, liability, claim or expenditure will not arise in the future.

The Company is involved from time to time in lawsuits and other disputes which arise in the ordinary course of business. As of June 30, 2018 management believes that these matters will not have a material adverse effect, individually or in the aggregate, on the Company’s financial position or results of operations.

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Stockholders' Equity

6 Months Ended

Jun. 30, 2018

Federal Home Loan Banks [Abstract]

Stockholders' Equity

10. Stockholders’ Equity

Common Stock and Common Unit Distributions

On June 15, 2018, the Company’s Board of Directors approved and the Company declared a cash dividend distribution of $0.235 per share for the quarterly period ended June 30, 2018. The dividend was paid subsequent to quarter end on July 25, 2018 to common stockholders and common unitholders of record as of July 11, 2018 for an aggregate of $8.5 million.

Preferred Stock Distributions

On June 15, 2018 the Company’s Board of Directors approved and the Company declared a cash dividend of $0.4140625 per share for an aggregate amount of $1.9 million. The dividend was paid subsequent to quarter end on July 25, 2018.

Restricted Stock Units

The Company has an equity incentive plan (“Equity Incentive Plan”) for executive officers, directors and certain non-executive employees, and with approval of the Board of Directors, for subsidiaries and their respective affiliates. The Equity Incentive Plan provides for grants of restricted common stock, restricted stock units, phantom shares, stock options, dividend equivalent rights and other equity-based awards (including LTIP Units), subject to the total number of shares available for issuance under the plan. The Equity Incentive Plan is administered by the compensation committee of the Board of Directors (the “Plan Administrator”).

The maximum number of shares of common stock that may be issued under the Equity Incentive Plan is 1,263,580 shares. To the extent an award granted under the Equity Incentive Plan expires or terminates, the shares subject to any portion of the award that expires or terminates without having been exercised or paid, as the case may be, will again become available for the issuance of additional awards.

During the six months ended June 30, 2018, 156,375 restricted stock units (“RSUs”) were granted to executive officers, directors and certain non-executive employees with a fair value of $1.9 million. The awards will vest in three equal, annual installments on each of the first three anniversaries of the date of grant. For the six months ended June 30, 2018 the Company recognized net compensation expense of $0.7 million related to the RSUs.

A RSU award represents the right to receive shares of the Company’s common stock in the future, after the applicable vesting criteria, determined by the Plan Administrator, has been satisfied. The holder of an award of RSU has no rights as a stockholder until shares of common stock are issued in settlement of vested RSUs. The Plan Administrator may provide for a grant of dividend equivalent rights in connection with the grant of RSU; provided, however, that if the RSUs do not vest solely upon satisfaction of continued employment or service, any payment in respect to the related dividend equivalent rights will be held by the Company and paid when, and only to the extent that, the related RSU vests.

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Subsequent Events

6 Months Ended

Jun. 30, 2018

Subsequent Events [Abstract]

Subsequent Events

11. Subsequent Events

On July 9, 2018, the Company, through a wholly-owned subsidiary of the Operating Partnership, acquired a 272,000 square foot property in Denver, Colorado for $59.8 million.

On July 31, 2018, the Company, through a wholly-owned subsidiary of the Operating Partnership, acquired a 163,000 square foot property in Phoenix, Arizona for $51.0 million.

On August 1, 2018, the Company entered into an agreement with Second City Capital Partners II, Limited Partnership whereby Second City agreed to sell its seven percent minority interest in Central Fairwinds Limited Partnership to the Company for $1.1 million.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Basis of Preparation and Summary of Significant Accounting Policies

Basis of Preparation and Summary of Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with Securities and Exchange Commission rules and regulations and generally accepted accounting principles in the United States of America (“US GAAP”) and in the opinion of management contain all adjustments (including normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

New Accounting Pronouncements

New Accounting Pronouncements

Adopted in the Current Year

Effective January 1, 2018, the Company adopted FASB ASU 2014-09, Revenue From Contracts with Customers, on a modified retrospective basis. The standard is principle-based and provides a five-step model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. The Company has reviewed its revenue streams to note that the majority are under the guidance of ASU 2016-02, Leases. Net gain on sale of real estate is under the guidance of ASU 2017-05, Other Income. The adoption of this guidance did not have a material impact to the Company’s condensed consolidated financial statements or notes to our condensed consolidated financial statements.

Effective January 1, 2018, the Company adopted FASB ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments in ASU 2016-01 address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The adoption of this guidance did not have a material impact to the Company’s condensed consolidated financial statements.

Effective January 1, 2018, the Company adopted FASB ASU 2016-15, Statement of Cash Flow: Classification of Certain Cash Receipts and Cash Payments, on a retrospective basis. The adoption of this guidance did not have a material impact to the Company’s condensed consolidated financial statements.

Effective January 1, 2018, the Company adopted FASB ASU 2016-18, Statement of Cash Flows: Restricted Cash, on a retrospective basis. The update required the statement of cash flows to explain the changes during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents.

To be Adopted in Future Years

In February 2016, the FASB issued ASU 2016-02, Leases. The update amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. ASU 2016-02 will be effective for annual reporting periods beginning after December 15, 2018. Early adoption is permitted. On July 30, 2018, the FASB released ASU 2018-11 which allows lessors to elect, as a practical expedient, to not separate lease and non-lease components and allow these components to be accounted for as a single lease component if both (i) the timing and pattern of transfer to the lessee of the lease component and the related non-lease component are the same and (ii) the lease component, if accounted for separately, would be classified as an operating lease. In addition, a company is permitted to use its effective date as the date of initial application. Therefore, a company electing this option will not restate comparative period financial information, will not make the new required lease disclosures in comparative periods beginning before the effective date and will recognize its cumulative effect transition adjustment as of the effective date. The Company is in the process of evaluating whether it will elect to apply the practical expedient. If the Company elects to apply the practical expedient we expect expense reimbursement that qualify as non-lease components will be presented under a single lease component. If the Company does not elect to apply the practical expedient we expect that certain non-lease components of expense reimbursement may be subject to ASC 606.

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Real Estate Investments (Tables)

6 Months Ended

Jun. 30, 2018

Real Estate [Abstract]

Schedule of Acquired Properties

During the six months ended June 30, 2018 and 2017 the Company acquired the following properties:

Property	Date Acquired		Percentage Owned
Pima Center		April 2018		100	%
2525 McKinnon		January 2017		100	%

Schedule of Allocation of Purchase Price of Assets Acquired and Liabilities Assumed

The following table summarizes the Company’s allocations of the purchase price of assets acquired and liabilities assumed during the six months ended June 30, 2018 (in thousands):

	Pima Center
Buildings and improvements	$	42,235
Tenant improvements		2,898
Acquired intangible assets		10,691
Prepaid expenses and other assets		95
Accounts payable and other liabilities		(337	)
Lease intangible liabilities		(129	)
Total consideration	$	55,453

The following table summarizes the Company’s allocations of the purchase price of assets acquired and liabilities assumed during the six months ended June 30, 2017 (in thousands):

	2525 McKinnon
Land	$	10,629
Buildings and improvements		33,357
Tenant improvements		1,158
Acquired intangible assets		3,267
Accounts payable and other liabilities		(190	)
Lease intangible liabilities		(2,186	)
Total consideration	$	46,035

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Lease Intangibles (Tables)

6 Months Ended

Jun. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Lease Intangibles and Value of Assumed Lease Obligations

Lease intangibles and the value of assumed lease obligations as of June 30, 2018 and December 31, 2017 were comprised as follows (in thousands):

	Lease Intangible Assets															Lease Intangible Liabilities
June 30, 2018	Above Market Leases			Below Market Ground Lease(1)			In Place Leases			Leasing Commissions			Total			Below Market Leases			Below Market Ground Lease(1)			Total
Cost	$	9,862		$	1,855		$	71,309		$	27,770		$	110,796		$	(10,998	)	$	(138	)	$	(11,136	)
Accumulated amortization		(4,039	)		(6	)		(31,000	)		(10,648	)		(45,693	)		3,483			34			3,517
	$	5,823		$	1,849		$	40,309		$	17,122		$	65,103		$	(7,515	)	$	(104	)	$	(7,619	)
	Lease Intangible Assets															Lease Intangible Liabilities
December 31, 2017	Above Market Leases			Below Market Ground Lease			In Place Leases			Leasing Commissions			Total			Below Market Leases			Below Market Ground Lease(1)			Total
Cost	$	9,082		$	—		$	71,426		$	27,706		$	108,214		$	(11,608	)	$	(138	)	$	(11,746	)
Accumulated amortization		(3,215	)		—			(30,613	)		(9,298	)		(43,126	)		3,065			32			3,097
	$	5,867		$	—		$	40,813		$	18,408		$	65,088		$	(8,543	)	$	(106	)	$	(8,649	)

(1) For the below market ground lease asset the Company is the lessee, whereas, for the below market ground lease liabilty the Company is the lessor.

Estimated Aggregate Amortization Expense for Lease Intangibles

The estimated aggregate amortization expense for lease intangibles for the next five years and in the aggregate are as follows (in thousands):

2018	$	8,486
2019		16,140
2020		14,018
2021		10,953
2022		3,434
Thereafter		4,453
	$	57,484

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Debt (Tables)

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Summary of Indebtedness

The following table summarizes the indebtedness as of June 30, 2018 and December 31, 2017 (in thousands):

Property	June 30, 2018			December 31, 2017			Interest Rate as of June 30, 2018			Maturity
Unsecured Credit Facility (1)	$	58,500		$	—			LIBOR +1.40	%(2)		March 2022
Midland Life Insurance (3)		87,787			88,582			4.34			May 2021
Mission City		47,000			47,000			3.78			November 2027
190 Office Center (4)		41,250			41,250			4.79			October 2025
SanTan (4)		34,962			35,100			4.56			March 2027
Intellicenter (4)		33,563			33,563			4.65			October 2025
FRP Collection (4)		29,884			30,174			3.85			September 2023
2525 McKinnon		27,000			27,000			4.24			April 2027
5090 N 40th St		22,000			22,000			3.92			January 2027
AmberGlen (4)		20,000			20,000			3.69			May 2027
Lake Vista Pointe (5)		18,203			18,358			4.28			August 2024
FRP Ingenuity Drive (5)(6)		17,000			17,000			4.44			December 2024
Plaza 25 (4)(5)		16,734			16,882			4.10			July 2025
Carillon Point (4)		16,501			16,671			3.50			October 2023
Central Fairwinds (4)		14,972			15,107			4.00			June 2024
Washington Group Plaza		—			32,290			—			—
Secured Credit Facility (1)		—			33,500			—			—
Total Principal		485,356			494,477
Deferred financing costs, net		(5,746	)		(4,968	)
Total	$	479,610		$	489,509

All interest rates are fixed interest rates with the exception of the unsecured credit facility (“Unsecured Credit Facility”) as explained in footnote 1 below.

(1) As of June 30, 2018, the Unsecured Credit Facility had $250 million authorized and $58.5 million was drawn. On March 15, 2018, the Company entered into a $250 million Unsecured Credit Facility which includes an accordion feature that will permit the Company to borrow up to $500 million, subject to customary terms and conditions. The Company’s previous secured credit facility was replaced and repaid in full. The Unsecured Credit Facility matures in March 2022, which may be extended to March 2023 at the Company’s option upon meeting certain conditions. Borrowings under the Unsecured Credit Facility will bear an interest at a rate equal to the LIBOR rate plus a margin of between 140 to 225 basis points depending upon the Company’s consolidated leverage ratio. The Unsecured Credit Facility requires the Company to maintain a fixed charge coverage ratio of no less than 1.50x.

(2) As of June 30, 2018, the one month LIBOR rate was 2.09%.

(3) The mortgage loan is cross-collateralized by DTC Crossroads, Cherry Creek and City Center. Interest on mortgage loan is payable monthly plus principal based on 360 months of amortization. The loan bears a fixed interest rate of 4.34% and matures on May 6, 2021.

(4) The Company is subject to various debt covenants including debt service coverage ratios (“DSCR”) that under certain conditions must be maintained no less than 1.15x, 1.20x, 1.20x, 1.40x, 1.15x, 1.45x, 1.35x and 1.35x respectively for each of 190 Office Center, SanTan, Intellicenter, FRP Collection, AmberGlen, Plaza 25, Carillon Point and Central Fairwinds. The DSCR covenant contained in the loan agreements for Plaza 25, allows for the posting of additional collateral reserves in the event the test is not met. As at June 30, 2018, the covenant was not met and thus the Company has posted all required collateral reserves and is not subject to the test while those reserves are held.

(5) Interest on mortgage loan is payable monthly plus principal based on 360 months of amortization.

(6) The Company is required to maintain a minimum net worth of $17 million, minimum liquidity of $1.7 million and a DSCR of no less than 1.15x.

Schedule of Principal Repayments of Debt Payable

The scheduled principal repayments of debt as of June 30, 2018 are as follows (in thousands):

2018	$	60,589
2019		5,049
2020		6,091
2021		88,110
2022		4,772
Thereafter		320,745
	$	485,356

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Future Minimum Rent Schedule (Tables)

6 Months Ended

Jun. 30, 2018

Leases [Abstract]

Schedule of Future Minimum Lease Payments under Non-cancellable Operating Leases

Future minimum lease payments to be received as of June 30, 2018 under non-cancellable operating leases for the next five years and thereafter are as follows (in thousands):

2018		49,021
2019		92,328
2020		81,055
2021		70,733
2022		54,263
Thereafter		103,646
	$	451,046

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Organization and Description of Business - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Company formation date	Nov. 26, 2013
Operation commencement date	Apr. 21, 2014

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Real Estate Investments - Schedule of Acquired Properties through Operating Partnership (Detail)	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Pima Center [Member]
Acquisitions [Line Items]
Real estate property, date acquired, asset acquisitions	2018-04
Real estate property, percentage owned, asset acquisitions	100.00%
2525 McKinnon [Member]
Acquisitions [Line Items]
Real estate property, date acquired, asset acquisitions		2017-01
Real estate property, percentage owned, asset acquisitions		100.00%

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Real Estate Investments - Schedule of Allocation of Purchase Price of Assets Acquired and Liabilities Assumed (Detail) - USD ($) $ in Thousands	Jun. 30, 2018	Jun. 30, 2017
2525 McKinnon [Member]
Acquisitions [Line Items]
Land, asset acquisitions		$ 10,629
Buildings and improvements, asset acquisitions		33,357
Tenant improvements, asset acquisitions		1,158
Acquired intangible assets, asset acquisitions		3,267
Accounts payable and other liabilities, asset acquisitions		(190)
Lease intangible liabilities, asset acquisitions		(2,186)
Total Consideration, asset acquisitions		$ 46,035
Pima Center [Member]
Acquisitions [Line Items]
Buildings and improvements, asset acquisitions	$ 42,235
Tenant improvements, asset acquisitions	2,898
Acquired intangible assets, asset acquisitions	10,691
Prepaid expenses and other assets, asset acquisitions	95
Accounts payable and other liabilities, asset acquisitions	(337)
Lease intangible liabilities, asset acquisitions	(129)
Total Consideration, asset acquisitions	$ 55,453

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Real Estate Investments - Additional Information (Detail) - USD ($) $ in Thousands			3 Months Ended	6 Months Ended
	Mar. 08, 2018	May 02, 2017	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Real Estate [Line Items]
Net gain on sale of real estate property			$ 12,116	$ 46,980	$ 12,116
AmberGlen Property [Member]
Real Estate [Line Items]
Proceeds of sale of property		$ 18,900
Net gain on sale of real estate property		12,100
Cost incurred on property sold		$ 2,000
Washington Group Plaza [Member]
Real Estate [Line Items]
Proceeds of sale of property	$ 86,500
Net gain on sale of real estate property	47,000
Cost incurred on property sold	$ 1,700

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Lease Intangibles - Schedule of Lease Intangibles and Value of Assumed Lease Obligations (Detail) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Finite-Lived Intangible Assets [Line Items]
Cost, Lease Intangible Assets	$ 110,796	$ 108,214
Accumulated amortization, Lease Intangible Assets	(45,693)	(43,126)
Total, Lease Intangible Assets	65,103	65,088
Cost, Lease Intangible Liabilities	(11,136)	(11,746)
Accumulated amortization, Lease Intangible Liabilities	3,517	3,097
Total, Lease Intangible Liabilities	(7,619)	(8,649)
Above Market Leases [Member]
Finite-Lived Intangible Assets [Line Items]
Cost, Lease Intangible Assets	9,862	9,082
Accumulated amortization, Lease Intangible Assets	(4,039)	(3,215)
Total, Lease Intangible Assets	5,823	5,867
Below Market Ground Lease [Member]
Finite-Lived Intangible Assets [Line Items]
Cost, Lease Intangible Assets	1,855
Accumulated amortization, Lease Intangible Assets	(6)
Total, Lease Intangible Assets	1,849
In Place Leases [Member]
Finite-Lived Intangible Assets [Line Items]
Cost, Lease Intangible Assets	71,309	71,426
Accumulated amortization, Lease Intangible Assets	(31,000)	(30,613)
Total, Lease Intangible Assets	40,309	40,813
Leasing Commissions [Member]
Finite-Lived Intangible Assets [Line Items]
Cost, Lease Intangible Assets	27,770	27,706
Accumulated amortization, Lease Intangible Assets	(10,648)	(9,298)
Total, Lease Intangible Assets	17,122	18,408
Below Market Tenant Lease [Member]
Finite-Lived Intangible Assets [Line Items]
Cost, Lease Intangible Liabilities	(10,998)	(11,608)
Accumulated amortization, Lease Intangible Liabilities	3,483	3,065
Total, Lease Intangible Liabilities	(7,515)	(8,543)
Below Market Ground Lease [Member]
Finite-Lived Intangible Assets [Line Items]
Cost, Lease Intangible Liabilities	(138)	(138)
Accumulated amortization, Lease Intangible Liabilities	34	32
Total, Lease Intangible Liabilities	$ (104)	$ (106)

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Lease Intangibles - Estimated Aggregate Amortization Expense for Lease Intangibles (Detail) $ in Thousands	Jun. 30, 2018 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2018	$ 8,486
2019	16,140
2020	14,018
2021	10,953
2022	3,434
Thereafter	4,453
Total	$ 57,484

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Debt - Summary of Indebtedness (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Indebtedness	$ 485,356	$ 494,477
Deferred financing costs, net	(5,746)	(4,968)
Total	479,610	489,509
Credit Facility [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Indebtedness		33,500
Credit Facility [Member] | Unsecured Debt [Member]
Debt Instrument [Line Items]
Indebtedness	$ 58,500
Maturity	2022-03
London Interbank Offered Rate (LIBOR) [Member] | Credit Facility [Member] | Unsecured Debt [Member]
Debt Instrument [Line Items]
Interest Rate, spread	1.40%
Washington Group Plaza [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Indebtedness		32,290
Lake Vista Pointe [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Indebtedness	$ 18,203	18,358
Interest Rate	4.28%
Maturity	2024-08
FRP Ingenuity Drive [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Indebtedness	$ 17,000	17,000
Interest Rate	4.44%
Maturity	2024-12
Plaza 25 [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Indebtedness	$ 16,734	16,882
Interest Rate	4.10%
Maturity	2025-07
Midland Life Insurance [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Indebtedness	$ 87,787	88,582
Interest Rate	4.34%
Maturity	2021-05
Mission City [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Indebtedness	$ 47,000	47,000
Interest Rate	3.78%
Maturity	2027-11
190 Office Center [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Indebtedness	$ 41,250	41,250
Interest Rate	4.79%
Maturity	2025-10
SanTan [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Indebtedness	$ 34,962	35,100
Interest Rate	4.56%
Maturity	2027-03
Intellicenter [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Indebtedness	$ 33,563	33,563
Interest Rate	4.65%
Maturity	2025-10
FRP Collection [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Indebtedness	$ 29,884	30,174
Interest Rate	3.85%
Maturity	2023-09
2525 McKinnon [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Indebtedness	$ 27,000	27,000
Interest Rate	4.24%
Maturity	2027-04
5090 N 40th St [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Indebtedness	$ 22,000	22,000
Interest Rate	3.92%
Maturity	2027-01
AmberGlen Property [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Indebtedness	$ 20,000	20,000
Interest Rate	3.69%
Maturity	2027-05
Carillon Point [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Indebtedness	$ 16,501	16,671
Interest Rate	3.50%
Maturity	2023-10
Central Fairwinds [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Indebtedness	$ 14,972	$ 15,107
Interest Rate	4.00%
Maturity	2024-06

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Debt - Summary of Indebtedness (Parenthetical) (Detail) - USD ($)	6 Months Ended
	Jun. 30, 2018	Mar. 15, 2018
Washington Group Plaza [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Amortization period	360 months
Lake Vista Pointe [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Amortization period	360 months
Effective interest rate of loan	4.28%
FRP Ingenuity Drive [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Amortization period	360 months
Effective interest rate of loan	4.44%
Minimum net worth required	$ 17,000,000
Minimum liquidity requirements	$ 1,700,000
FRP Ingenuity Drive [Member] | Secured Debt [Member] | Minimum [Member]
Debt Instrument [Line Items]
DSCR	115.00%
Plaza 25 [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Amortization period	360 months
Effective interest rate of loan	4.10%
Plaza 25 [Member] | Secured Debt [Member] | Minimum [Member]
Debt Instrument [Line Items]
DSCR	145.00%
Midland Life Insurance [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Loan maturity date	May 06, 2021
Amortization period	360 months
Effective interest rate of loan	4.34%
190 Office Center [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Effective interest rate of loan	4.79%
190 Office Center [Member] | Secured Debt [Member] | Minimum [Member]
Debt Instrument [Line Items]
DSCR	115.00%
SanTan [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Effective interest rate of loan	4.56%
SanTan [Member] | Secured Debt [Member] | Minimum [Member]
Debt Instrument [Line Items]
DSCR	120.00%
Intellicenter [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Effective interest rate of loan	4.65%
Intellicenter [Member] | Secured Debt [Member] | Minimum [Member]
Debt Instrument [Line Items]
DSCR	120.00%
FRP Collection [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Effective interest rate of loan	3.85%
FRP Collection [Member] | Secured Debt [Member] | Minimum [Member]
Debt Instrument [Line Items]
DSCR	140.00%
AmberGlen Property [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Effective interest rate of loan	3.69%
AmberGlen Property [Member] | Secured Debt [Member] | Minimum [Member]
Debt Instrument [Line Items]
DSCR	115.00%
Carillon Point [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Effective interest rate of loan	3.50%
Carillon Point [Member] | Secured Debt [Member] | Minimum [Member]
Debt Instrument [Line Items]
DSCR	135.00%
Central Fairwinds [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Effective interest rate of loan	4.00%
Central Fairwinds [Member] | Secured Debt [Member] | Minimum [Member]
Debt Instrument [Line Items]
DSCR	135.00%
Credit Facility [Member] | Unsecured Debt [Member]
Debt Instrument [Line Items]
Revolving Credit Facility, authorized amount	$ 250,000,000	$ 250,000,000
Revolving Credit Facility, outstanding amount	$ 58,500,000
Loan maturity date	Mar. 31, 2022
Loan expected extended maturity date	Mar. 31, 2023
Revolving Credit Facility, maximum borrowing capacity		$ 500,000,000
Credit Facility [Member] | Unsecured Debt [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Interest Rate, Description	1.40%
One month LIBOR rate	2.09%
Credit Facility [Member] | Unsecured Debt [Member] | Minimum [Member]
Debt Instrument [Line Items]
Fixed charge coverage ratio	150.00%
Credit Facility [Member] | Unsecured Debt [Member] | Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Interest Rate, Description	1.40%
Credit Facility [Member] | Unsecured Debt [Member] | Maximum [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Interest Rate, Description	2.25%

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Debt - Schedule of Principal Repayments of Debt Payable (Detail) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Debt Disclosure [Abstract]
2018	$ 60,589
2019	5,049
2020	6,091
2021	88,110
2022	4,772
Thereafter	320,745
Total	$ 485,356	$ 494,477

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Fair Value of Financial Instruments - Additional Information (Detail) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Hedges or derivatives	$ 0	$ 0
Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage loans payable, fair value	$ 417,400,000	$ 462,300,000

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Related Party Transactions - Additional Information (Detail) - Second City Funds [Member] - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Administrative Services Agreement [Member]
Related Party Transaction [Line Items]
Revenue for services	$ 0.4	$ 0.6
Termination and Mutual Release Agreement - Earn-Out [Member]
Related Party Transaction [Line Items]
Related party transaction		$ 2.4

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Future Minimum Rent Schedule - Schedule of Future Minimum Lease Payments under Non-cancellable Operating Leases (Detail) $ in Thousands	Jun. 30, 2018 USD ($)
Leases [Abstract]
2018	$ 49,021
2019	92,328
2020	81,055
2021	70,733
2022	54,263
Thereafter	103,646
Total future minimum lease payments to be received	$ 451,046

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Future Minimum Rent Schedule - Additional Information (Detail)	Jun. 30, 2018
Sales Revenue, Services, Net [Member] | Government Contracts Concentration Risk [Member]
Concentration Risk [Line Items]
Percentage of total future minimum lease payments	11.40%

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Stockholder's Equity - Additional Information (Detail) $ / shares in Units, $ in Millions		3 Months Ended	6 Months Ended
	Jul. 25, 2018 USD ($)	Jun. 30, 2018 $ / shares	Jun. 30, 2018 USD ($) Installment $ / shares shares
Class of Stock [Line Items]
Maximum number of shares issued under Equity Incentive Plan | shares			1,263,580
Common Stock [Member]
Class of Stock [Line Items]
Declared cash dividend distribution per share | $ / shares		$ 0.235	$ 0.235
Dividends paid, declared date		Jun. 15, 2018
Dividends paid date		Jul. 25, 2018
Dividends paid, date of record		Jul. 11, 2018
Preferred Stock [Member]
Class of Stock [Line Items]
Declared cash dividend distribution per share | $ / shares		$ 0.4140625	$ 0.4140625
Dividends paid, declared date		Jun. 15, 2018
Dividends paid date		Jul. 25, 2018
Subsequent Event [Member] | Common Stock [Member]
Class of Stock [Line Items]
Dividend paid	$ 8.5
Subsequent Event [Member] | Preferred Stock [Member]
Class of Stock [Line Items]
Dividend paid	$ 1.9
Restricted Stock Units (RSUs) [Member]
Class of Stock [Line Items]
Net compensation expense			$ 0.7
Number of annual installments for award vesting | Installment			3
Restricted Stock Units (RSUs) [Member] | Directors and Non-Executive Employees [Member]
Class of Stock [Line Items]
Restricted stock units granted to executive officers, directors and non-executive employees | shares			156,375
Restricted stock units grant date fair value			$ 1.9

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Subsequent Events - Additional Information (Detail) $ in Thousands				6 Months Ended
	Aug. 01, 2018 USD ($)	Jul. 31, 2018 USD ($) ft²	Jul. 09, 2018 USD ($) ft²	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($)
Subsequent Event [Line Items]
Acquisition of real estate				$ 55,453	$ 46,035
Denver, Colorado [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Area of property | ft²			272,000
Acquisition of real estate			$ 59,800
Phoenix, Arizona [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Area of property | ft²		163,000
Acquisition of real estate		$ 51,000
Central Fairwinds Limited Partnership Minority Interest Purchase Agreements [Member] | Second City Funds [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Related party transaction	$ 1,100
Central Fairwinds Limited Partnership [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Percentage minority interest owned	7.00%