VANCOUVER, June 15, 2016 /PRNewswire/ -- City Office REIT, Inc. (NYSE: CIO) ("City Office" or the "Company") announced today that it has completed the previously announced sale of its Corporate Parkway property in Allentown, Pennsylvania for a gross sale price of $44.9 million before customary closing and transaction costs. The transaction was completed at an expected 6.6% net operating income yield. The Company previously announced that it had extended the lease for the entire 178,330 square foot property until January 2027, and as part of the transaction, replaced the tenant with its investment grade parent as the lessee. The property was contributed to City Office as part of the initial public offering in April 2014. With the sale of this non-strategic asset, the Company has been able to align its portfolio entirely within its target markets.
Proceeds from the sale were used to repay approximately $4 million of mortgage debt. The Company intends to acquire assets as part of a like-kind exchange under Section 1031 of the Internal Revenue Code, as amended (the "Code").
"The closing of the Corporate Parkway sale highlights the success of our value enhancing strategy. By completing an early 10 year lease extension and enhancing the lease credit, we positioned the property for sale at a premium valuation. These efforts allowed us to realize an exceptional 51.0% IRR and a 2.2x equity multiple on our investment," said James Farrar, Chief Executive Officer of City Office.
About City Office REIT, Inc.
City Office REIT is an internally-managed real estate company focused on acquiring, owning and operating high-quality office properties located in leading markets in the Southern and Western United States. City Office currently owns or has an interest in 3.1 million square feet of office properties. Additional information about City Office is available on the Company's website at www.cityofficereit.com. The Company has elected to be taxed as a real estate investment trust for U.S. federal income tax purposes.
This press release contains "forward looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements that are not statements of historical facts are, or may be deemed to be, forward looking statements. These factors include, but are not limited to, the Company's ability to source and acquire properties, including properties appropriate for like-kind exchange under the Code, on attractive terms, or at all; the Company's expectations and forecasts of future leasing activity at its current and future properties, and the Company's ability to accurately model the income yield, net operating income, IRR, equity multiple, capitalization rate, and other financial metrics used to evaluate its properties. These and other material risks are described in the Company's Annual Report on Form 10-K for the year ended December 31, 2015 and any other documents filed by the Company from time to time, which are available from the Company and from the SEC, and you should read and understand these risks when evaluating any forward-looking statement. The Company does not have any obligation to publicly update any forward looking statements to reflect subsequent events or circumstances.
City Office REIT, Inc.
Anthony Maretic, CFO
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SOURCE City Office REIT, Inc.