Shareholders to receive US$7/share as City Office exits public markets following board approval
City Office REIT shareholders are set to receive US$7.00 per share in cash following a definitive agreement for the company to be taken private in an all-cash transaction valued at approximately US$1.1bn, including debt, preferred stock redemption, and asset sales.
As reported by Reuters, on July 25, the deal involves MCME Carell Holdings, LP and MCME Carell Holdings, LLC—affiliates of Elliott Investment Management—acquiring all outstanding shares not already owned.
The offer represents a 26 percent premium to the stock’s last closing price and a 39 percent premium to its 90-day volume-weighted average on the NYSE.
City Office REIT’s board of directors has unanimously approved the transaction.
The company’s press release said that the agreement includes a key condition: the sale of its Phoenix portfolio. The deal is expected to close in the fourth quarter of 2025, subject to customary conditions including shareholder approval. The transaction is not contingent on financing.
Shares of City Office surged more than 24 percent to US$6.92 in morning trading, reaching their highest value since March 2023. Year-to-date, the stock has risen 25 percent.
James Farrar, chief executive officer of City Office, said the company had explored various strategic alternatives before reaching an agreement with MCME Carell.
He described the deal as one that “delivers immediate and significant value to our shareholders,” given the challenging environment for the office sector.
The office sector has experienced sustained pressure as hybrid and remote work models have kept demand well below pre-pandemic levels.
Vacancy rates have reached historic highs, and higher borrowing costs have made it more difficult for developers to finance or refinance properties.
Morning Calm Management, also affiliated with MCME Carell, said the agreement reflects “continued belief in the recovery of the office sector and our interest in acquiring high-quality office assets in strong growth markets.”
Robert Stevenson, analyst at Janney Montgomery Scott, said the deal “provides a shorter timetable (for shareholders) to realizing US$7/share of value, but obviously takes additional upside off the table.”
Based in Vancouver, City Office owns approximately 54 office buildings, primarily located in US Sun Belt cities including Dallas, Denver, Orlando, and Phoenix.
As part of the transaction terms, holders of City Office’s 6.625 percent Series A Cumulative Preferred Stock will receive US$25.00 per share in cash, along with accrued and unpaid distributions, subject to tax deductions. Common shareholders will receive US$7.00 per share in cash at closing.
City Office paid its previously announced second quarter dividend on July 24, but has suspended future common stock dividends through the expected close of the deal. It will continue to pay regular quarterly dividends on its Series A Preferred Stock.
Once the transaction closes, City Office will become a private company.
Both its Common Stock and Series A Preferred Stock will be delisted from the NYSE.
As per the press release, the company will not host a conference call or webcast for its second quarter earnings but expects to release results before markets open on July 31.
Raymond James & Associates, Inc. and Jones Lang LaSalle Securities, LLC served as exclusive financial advisors to City Office. Eastdil Secured advised the buyer.
