City Office REIT Completes Two Leasing Transactions Totaling 325,987 Square Feet
Credit leases extend 13% of entire portfolio for 10 years
VANCOUVER, June 18, 2015 /PRNewswire/ -- City Office REIT, Inc. (NYSE: CIO), announced today that it has completed two leasing transactions at its Washington Group Plaza property in Boise, Idaho and its Corporate Parkway property in Allentown, Pennsylvania. The two ten year leases, which account for all of the Corporate Parkway property and for the entire Plaza I building at Washington Group Plaza, total 325,987 square feet of NRA, and renewal rates at the properties represent a weighted average increase of approximately 2.3% over the current rental income. These leases, in addition to improving the long term value of the properties, extend the average remaining lease term of the City Office portfolio from 4.6 years reported on March 31, 2015 to 6.1 years, assuming the leases were in-place at that time.
At its Washington Group Plaza property, City Office completed a ten year, 147,657 square foot lease with St. Luke's Regional Medical Center, Ltd. ("St. Luke's"). St. Luke's is a wholly owned subsidiary of St. Luke's Health System, the largest health care system in Idaho which employs over 12,000 people. The lease is for the Plaza I building, which is currently occupied by another tenant whose lease expires December 31, 2015. Although, the St. Luke's lease has received preliminary lender approval, it remains subject to final lender approval. It is expected to commence by July 1, 2016 upon the completion of tenant improvements. Additional terms of the transaction include a one-time purchase option for the Plaza I building, which may be exercised by St. Luke's in 2021 at a $22.5 million purchase price. If exercised, this sale would imply a 6.4% capitalization rate on Plaza I's projected 2021 net operating income.
The Corporate Parkway lease represents the entire 178,330 square foot property and extends its lease maturity until January 31, 2027. As part of the transaction, The Dun & Bradstreet Corporation, which is the investment grade parent entity, replaced its subsidiary as the tenant on the lease.
"By acquiring well-located office properties at attractive metrics, leveraging strong relationships with our tenants and securing long term leases at improving rental rates, City Office believes it can create value for its shareholders," said James Farrar, Chief Executive Officer. "The completion of these two transactions validates this investment philosophy by demonstrating the growing demand for office space in our markets and delivering long-term leases with credit tenants."
"We are very pleased to expand St. Luke's presence at our Washington Group Plaza property and complete the Dun & Bradstreet Corporation lease extension. Both tenants are leading employers in their states and ideal long-term tenants," said Greg Tylee, President and Chief Operating Officer of City Office REIT.
About City Office REIT, Inc.
City Office REIT is a real estate company focused on owning high-quality office properties in attractive markets primarily in the Southern and Western United States. Including previously announced acquisitions that have not yet closed, City Office REIT will own 2.7 million square feet of office properties. Additional information about City Office REIT is available on the company's website at www.cityofficereit.com. The Company intends to elect to be taxed as a real estate investment trust for U.S. federal income tax purposes.
Forward-looking Statements
This press release contains "forward looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements that are not statements of historical facts are, or may be deemed to be, forward looking statements. Forward looking statements reflect our current expectations concerning future results, objectives, plans and goals, and involve known and unknown risks, uncertainties and other factors that are difficult to predict and which may cause future results, performance or achievements to differ. These risks, uncertainties and other factors include factors described in our news releases and filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2014, which has been filed with the Securities and Exchange Commission. Readers of this press release are cautioned to consider these risks and uncertainties and not to place undue reliance on any forward-looking statements. The Company does not undertake any obligation to publicly update any forward-looking statement, whether written or oral, relating to matters discussed in this press release, except as may be required by applicable securities laws.
Contact
City Office REIT, Inc.
Anthony Maretic, CFO
+1-604-806-3366
[email protected]
SOURCE City Office REIT, Inc.
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