City Office REIT Acquisition Nears Final Approval

Shareholders of City Office REIT are set to vote on October 16th regarding a proposed acquisition by MCME Carell Holdings. The deal, valued at $1.1 billion including assumed debt, offers $7.00 per share. The company’s stock recently traded at $6.95, hovering just below the acquisition price.

Substantial Premium in Challenging Market

The acquisition proposal delivers significant value appreciation for investors. The $7.00 per share price represents a 26% premium over the stock’s closing price prior to the July 24th announcement and a 39% premium to the 90-day volume-weighted average price. Chief Executive Officer James Farrar emphasized that this transaction provides “immediate and substantial value realization for our shareholders” amidst ongoing market volatility.

Corporate governance milestones are already complete. The company filed its definitive proxy statement with regulators on September 8th, formally setting the stage for the October 16th special meeting where shareholders will cast their votes.

Portfolio Transactions and Quarterly Performance

In August, City Office REIT completed the disposition of its Phoenix portfolio, generating gross proceeds of $266 million. The transaction involved seven properties, with six already closed and one remaining under contract awaiting finalization.

Should investors sell immediately? Or is it worth buying City Office Reit?

Second-quarter 2025 financial results highlighted sector challenges. The company reported a GAAP net loss of $107.2 million, or $2.66 per share, despite generating rental revenue of $42.3 million. Occupancy rates stood at 82.5%, with executed but not yet commenced leases bringing the leased percentage to 86.8%. During the quarter, the company successfully renewed or signed new leases covering 355,000 square feet.

Following the acquisition announcement, the company suspended common share dividend distributions. Preferred shareholders continue to receive their scheduled quarterly payments.

Strategic Shift in Office Real Estate

The acquisition vehicle represents a joint venture between Elliott Investment Management and Morning Calm Management. This transaction signals continued institutional confidence in premium office assets located within growth markets. The stock’s appreciation from its 52-week low of $4.19 to current levels demonstrates market approval of the transaction terms.

Next Steps and Shareholder Considerations

The shareholder vote scheduled for October 16th will determine the company’s future. Should investors approve the transaction, closing is anticipated during the fourth quarter of 2025. This would result in City Office REIT transitioning to private ownership and delisting from public exchanges. With the market price already reflecting the acquisition premium, shareholders must decide whether to accept this exit opportunity or maintain their position through the closing process.