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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, 2025


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

For the transition period from to

Commission File Number: 001-36409

CITY OFFICE REIT, INC.

(Exact name of registrant as specified in its charter)


Maryland		98-1141883
(State or other jurisdiction		(IRS Employer
of incorporation or organization)		Identification No.)

666 Burrard Street

Suite 3210

Vancouver, BC

V6C 2X8

(Address of principal executive offices) (Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act:

      Title of Each Class

      Trading Symbol(s)

      Name of each Exchange on Which Registered

      Common Stock, $0.01 par value
6.625% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share

      “CIO”
“CIO.PrA”

      New York Stock Exchange
New York Stock Exchange

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 every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

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

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 28, 2025 was 40,363,640.

Table of Contents

City Office REIT, Inc.

Quarterly Report on Form 10-Q

For the Quarter Ended June 30, 2025

Table of Contents


		Page

PART I.	FINANCIAL INFORMATION	1

Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024	1
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2025 and 2024	2
	Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2025 and 2024	3
	Condensed Consolidated Statements of Changes in Equity for the Three and Six Months Ended June 30, 2025 and 2024	4
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024	5
	Notes to the Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	27

PART II.	OTHER INFORMATION	27

Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.	Defaults Upon Senior Securities	29
Item 4.	Mine Safety Disclosures	29
Item 5.	Other Information	29
Item 6.	Exhibits	30
Signatures		31

Table of Contents

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, 2025			December 31, 2024
Assets
Real estate properties
Land	$	146,309		$	190,372
Building and improvement		838,567			1,169,793
Tenant improvement		118,404			163,569
Furniture, fixtures and equipment		236			1,368
		1,103,516			1,525,102
Accumulated depreciation		(198,726	)		(251,956	)
		904,790			1,273,146
Cash and cash equivalents		18,264			18,886
Restricted cash		16,237			15,073
Rents receivable, net		40,472			52,311
Deferred leasing costs, net		21,643			25,291
Acquired lease intangible assets, net		25,423			34,631
Other assets		5,147			23,744
Assets held for sale		296,167			12,588
Total Assets	$	1,328,143		$	1,455,670
Liabilities and Equity
Liabilities:
Debt	$	647,188		$	646,972
Accounts payable and accrued liabilities		22,637			34,535
Deferred rent		5,265			7,010
Tenant rent deposits		5,241			7,257
Acquired lease intangible liabilities, net		4,069			6,301
Other liabilities		11,499			16,879
Liabilities related to assets held for sale		16,816			2,176
Total Liabilities		712,715			721,130
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 as of June 30, 2025 and December 31, 2024		112,000			112,000
Common stock, $0.01 par value, 100,000,000 shares authorized, 40,358,240 and 40,154,055 shares issued and outstanding as of June 30, 2025 and December 31, 2024		403			401
Additional paid-in capital		443,481			442,329
Retained earnings		60,901			179,838
Accumulated other comprehensive loss		(1,847	)		(713	)
Total Stockholders’ Equity		614,938			733,855
Non-controlling interests in properties		490			685
Total Equity		615,428			734,540
Total Liabilities and Equity	$	1,328,143		$	1,455,670
Subsequent Events (Note 12)

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

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City Office REIT, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share data)


	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
Rental and other revenues	$	42,343		$	42,342		$	84,602		$	86,836
Operating expenses:
Property operating expenses		16,314			17,492			32,585			35,237
General and administrative		4,327			3,820			8,055			7,531
Depreciation and amortization		16,063			14,723			31,189			29,798
Impairment of real estate		102,229			—			102,229			—
Total operating expenses		138,933			36,035			174,058			72,566
Operating (loss)/income		(96,590	)		6,307			(89,456	)		14,270
Interest expense:
Contractual interest expense		(8,339	)		(8,129	)		(16,618	)		(16,228	)
Amortization of deferred financing costs and debt fair value		(380	)		(343	)		(734	)		(661	)
		(8,719	)		(8,472	)		(17,352	)		(16,889	)
Net loss on disposition of real estate property		—			(1,462	)		—			(1,462	)
Net loss		(105,309	)		(3,627	)		(106,808	)		(4,081	)
Less:
Net income attributable to non-controlling interests in properties		(57	)		(125	)		(228	)		(260	)
Net loss attributable to the Company		(105,366	)		(3,752	)		(107,036	)		(4,341	)
Preferred stock distributions		(1,855	)		(1,855	)		(3,710	)		(3,710	)
Net loss attributable to common stockholders	$	(107,221	)	$	(5,607	)	$	(110,746	)	$	(8,051	)
Net loss per common share:
Basic	$	(2.66	)	$	(0.14	)	$	(2.75	)	$	(0.20	)
Diluted	$	(2.66	)	$	(0.14	)	$	(2.75	)	$	(0.20	)
Weighted average common shares outstanding:
Basic		40,358			40,154			40,332			40,126
Diluted		40,358			40,154			40,332			40,126
Dividend distributions declared per common share	$	0.10		$	0.10		$	0.20		$	0.20

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

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City Office REIT, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

(In thousands)


	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
Net loss	$	(105,309	)	$	(3,627	)	$	(106,808	)	$	(4,081	)
Other comprehensive (loss)/income:
Unrealized cash flow hedge (loss)/gain		(421	)		650			(1,007	)		3,557
Amounts reclassified to interest expense		(79	)		(1,131	)		(158	)		(2,249	)
Other comprehensive (loss)/income		(500	)		(481	)		(1,165	)		1,308
Comprehensive loss		(105,809	)		(4,108	)		(107,973	)		(2,773	)
Less:
Comprehensive income attributable to non-controlling interests in properties		(45	)		(122	)		(197	)		(283	)
Comprehensive loss attributable to the Company	$	(105,854	)	$	(4,230	)	$	(108,170	)	$	(3,056	)

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

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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		Retained earnings			Accumulated other comprehensive loss			Total stockholders’ equity			Non- controlling interests in properties			Total equity
Balance —December 31, 2024		4,480	$	112,000		40,154	$	401	$	442,329	$	179,838		$	(713	)	$	733,855		$	685		$	734,540
Restricted stock award grants and vesting		—		—		204		2		249		(59	)		—			192			—			192
Common stock dividend distribution declared		—		—		—		—		—		(4,036	)		—			(4,036	)		—			(4,036	)
Preferred stock dividend distribution declared		—		—		—		—		—		(1,855	)		—			(1,855	)		—			(1,855	)
Contributions		—		—		—		—		—		—			—			—			24			24
Distributions		—		—		—		—		—		—			—			—			(161	)		(161	)
Net (loss)/income		—		—		—		—		—		(1,670	)		—			(1,670	)		171			(1,499	)
Other comprehensive loss		—		—		—		—		—		—			(646	)		(646	)		(19	)		(665	)
Balance —March 31, 2025		4,480	$	112,000		40,358	$	403	$	442,578	$	172,218		$	(1,359	)	$	725,840		$	700		$	726,540
Restricted stock award grants and vesting		—		—		—		—		903		(60	)		—			843			—			843
Common stock dividend distribution declared		—		—		—		—		—		(4,036	)		—			(4,036	)		—			(4,036	)
Preferred stock dividend distribution declared		—		—		—		—		—		(1,855	)		—			(1,855	)		—			(1,855	)
Contributions		—		—		—		—		—		—			—			—			35			35
Distributions		—		—		—		—		—		—			—			—			(290	)		(290	)
Net (loss)/income		—		—		—		—		—		(105,366	)		—			(105,366	)		57			(105,309	)
Other comprehensive loss		—		—		—		—		—		—			(488	)		(488	)		(12	)		(500	)
Balance —June 30, 2025		4,480	$	112,000		40,358	$	403	$	443,481	$	60,901		$	(1,847	)	$	614,938		$	490		$	615,428

	Number of shares of preferred stock		Preferred stock		Number of shares of common stock		Common stock		Additional paid-in capital		Retained earnings			Accumulated other comprehensive (loss)/income			Total stockholders’ equity			Non- controlling interests in properties			Total equity
Balance —December 31, 2023		4,480	$	112,000		39,938	$	399	$	438,867	$	221,213		$	(248	)	$	772,231		$	402		$	772,633
Restricted stock award grants and vesting		—		—		216		2		42		(45	)		—			(1	)		—			(1	)
Common stock dividend distribution declared		—		—		—		—		—		(4,015	)		—			(4,015	)		—			(4,015	)
Preferred stock dividend distribution declared		—		—		—		—		—		(1,855	)		—			(1,855	)		—			(1,855	)
Distributions		—		—		—		—		—		—			—			—			(444	)		(444	)
Net (loss)/income		—		—		—		—		—		(589	)		—			(589	)		135			(454	)
Other comprehensive income		—		—		—		—		—		—			1,763			1,763			26			1,789
Balance —March 31, 2024		4,480	$	112,000		40,154	$	401	$	438,909	$	214,709		$	1,515		$	767,534		$	119		$	767,653
Restricted stock award grants and vesting		—		—		—		—		1,139		(56	)		—			1,083			—			1,083
Common stock dividend distribution declared		—		—		—		—		—		(4,015	)		—			(4,015	)		—			(4,015	)
Preferred stock dividend distribution declared		—		—		—		—		—		(1,855	)		—			(1,855	)		—			(1,855	)
Contributions		—		—		—		—		—		—			—			—			442			442
Distributions		—		—		—		—		—		—			—			—			(104	)		(104	)
Net (loss)/income		—		—		—		—		—		(3,752	)		—			(3,752	)		125			(3,627	)
Other comprehensive loss		—		—		—		—		—		—			(478	)		(478	)		(3	)		(481	)
Balance —June 30, 2024		4,480	$	112,000		40,154	$	401	$	440,048	$	205,031		$	1,037		$	758,517		$	579		$	759,096

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

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City Office REIT, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Six Months Ended June 30,
	2025			2024
Cash Flows from Operating Activities:
Net loss	$	(106,808	)	$	(4,081	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		31,189			29,798
Amortization of deferred financing costs and debt fair value		734			661
Amortization of above and below market leases		30			(64	)
Straight-line rent/expense		(351	)		32
Non-cash stock compensation		1,757			2,154
Net loss on disposition of real estate property		—			1,462
Impairment of real estate		102,229			—
Changes in non-cash working capital:
Rents receivable, net		(1,016	)		1,128
Other assets		(538	)		(218	)
Accounts payable and accrued liabilities		(1,286	)		880
Deferred rent		(481	)		(472	)
Tenant rent deposits		(80	)		422
Net Cash Provided By Operating Activities		25,379			31,702
Cash Flows to Investing Activities:
Additions to real estate properties		(20,295	)		(11,570	)
Net proceeds from sale of real estate property		13,574			—
Reduction of cash on disposition of real estate property		—			(2,477	)
Deferred leasing costs		(4,771	)		(4,647	)
Net Cash Used In Investing Activities		(11,492	)		(18,694	)
Cash Flows to Financing Activities:
Debt issuance and extinguishment costs		(200	)		(516	)
Proceeds from borrowings		4,500			9,000
Repayment of borrowings		(4,769	)		(8,645	)
Dividend distributions paid to stockholders		(11,761	)		(11,719	)
Distributions to non-controlling interests in properties		(451	)		(548	)
Shares withheld for payment of taxes on restricted stock unit vesting		(723	)		(1,072	)
Contributions from non-controlling interests in properties		59			442
Net Cash Used In Financing Activities		(13,345	)		(13,058	)
Net Increase/(Decrease) in Cash, Cash Equivalents and Restricted Cash		542			(50	)
Cash, Cash Equivalents and Restricted Cash, Beginning of Period		33,959			43,392
Cash, Cash Equivalents and Restricted Cash, End of Period	$	34,501		$	43,342
Reconciliation of Cash, Cash Equivalents and Restricted Cash:
Cash and Cash Equivalents, End of Period		18,264			28,005
Restricted Cash, End of Period		16,237			15,337
Cash, Cash Equivalents and Restricted Cash, End of Period	$	34,501		$	43,342
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	16,997		$	16,434
Purchase of additions in real estate properties included in accounts payable	$	3,511		$	11,004
Purchase of deferred leasing costs included in accounts payable	$	3,046		$	1,874

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

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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 expects to 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 years prior to 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 (“SEC”) 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, 2024.

3. Real Estate Investments

Disposition of Real Estate Property

Superior Pointe

On January 14, 2025, the Company sold the Superior Pointe property in Denver, Colorado for a gross sales price of $12.0 million. No gain or loss was recognized on the sale as the property was carried at fair value less cost to sell on the date of disposition.

Cascade Station

On June 27, 2024, the Company entered into an assignment in lieu of foreclosure agreement to transfer possession and control of the Cascade Station property to the lender as a result of an event of default as defined in the property’s non-recourse loan agreement. Given the terms of the assignment in lieu of foreclosure agreement, the Company assessed whether the entity holding the property should be reassessed for consolidation as a Variable Interest Entity (“VIE”) in accordance with ASC 810 – Consolidation.

Based on its analysis, the Company concluded that it is not the primary beneficiary of the VIE and therefore deconsolidated the property as of June 27, 2024. The Company deconsolidated the net carrying value of real estate assets of $17.9 million, the mortgage loan of $20.6 million, cash and restricted cash of $2.5 million and net current assets of $1.7 million. For the three months ended June 30, 2024, the Company recognized a loss on deconsolidation of $1.5 million, which has been included within net loss on disposition of real estate property on the Company’s condensed consolidated statement of operations and statement of cash flows.

Table of Contents

Assets Held for Sale

On June 18, 2025, the Company entered into a purchase and sale agreement (the “Phoenix Sale Agreement”) to sell Block 23, Pima Center, 5090 N 40th St, SanTan, Papago Tech, The Quad, and Camelback Square (the “Phoenix Portfolio”) for $296.0 million, which excludes closing costs and credits. The Company determined that the Phoenix Portfolio met the criteria for classification as held for sale as of June 30, 2025. Upon classification as held for sale, the Company recognized an impairment of $102.2 million to lower the carrying amount of the Phoenix Portfolio to its estimated fair value less cost to sell. Refer to “Impairment of Real Estate” below. As of June 30, 2025, the Company had received an initial deposit of $2.0 million, which was recorded in restricted cash along with a corresponding liability in other liabilities on the Company’s condensed consolidated balance sheets. Subsequent to June 30, 2025, the Company received an additional deposit of $18.0 million and upon receipt, the total of the two deposits became non-refundable. The sale is subject to customary closing conditions and the sale of Block 23 and Pima Center are separately subject to the successful reassignment of their respective ground leases.

The properties were classified as held for sale as of June 30, 2025 (in thousands):


Phoenix Portfolio	June 30, 2025
Real estate properties, net	$	261,507
Deferred leasing costs, net		5,801
Acquired lease intangibles assets, net		3,277
Rents receivable, prepaid expenses and other assets		25,582
Assets held for sale	$	296,167
Acquired lease intangibles liability, net		1,081
Accounts payable, accrued liabilities, deferred rent, tenant rent deposits, and other liabilities		15,735
Liabilities related to assets held for sale	$	16,816

On November 1, 2024, the Company entered into a purchase and sale agreement to sell the Superior Pointe property for
$12.0 million, which excludes closing costs and credits. The Company determined that the property met the criteria for classification
as held for sale as of December 31, 2024. Upon classification as held for sale, the Company recognized an impairment of $8.5 million
to lower the carrying amount of the property to its estimated fair value less cost to sell. Refer to “Impairment of Real Estate” below.
As of December 31, 2024, the Company had received a deposit of $0.3 million, which was recorded in restricted cash along with a
corresponding liability in other liabilities on the Company’s condensed consolidated balance sheets. On January 14, 2025, the Company completed the sale of the Superior Pointe property.

The property was classified as held for sale as of December 31, 2024 (in thousands):


Superior Pointe	December 31, 2024
Real estate properties, net	$	10,637
Deferred leasing costs, net		382
Rents receivable, prepaid expenses and other assets		1,569
Assets held for sale	$	12,588
Accounts payable, accrued liabilities, deferred rent, tenant rent deposits, and other liabilities		2,176
Liabilities related to assets held for sale	$	2,176

Impairment of Real Estate

During the three and six months ended June 30, 2025, the Company recognized an impairment of real estate of $102.2 million to lower the carrying amount of the Phoenix Portfolio to its estimated fair value less cost to sell.

There was no impairment of real estate during the six months ended June 30, 2024.

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4. Lease Intangibles

Lease intangibles and the value of assumed lease obligations as of June 30, 2025 and December 31, 2024 were comprised of the following (in thousands):


	Lease Intangible Assets												Lease Intangible Liabilities
June 30, 2025	Above Market Leases			In Place Leases			Leasing Commissions			Total			Below Market Leases			Below Market Ground Lease			Total
Cost	$	14,507		$	51,716		$	23,017		$	89,240		$	(9,924	)	$	(138	)	$	(10,062	)
Accumulated amortization		(9,657	)		(38,970	)		(15,190	)		(63,817	)		5,931			62			5,993
	$	4,850		$	12,746		$	7,827		$	25,423		$	(3,993	)	$	(76	)	$	(4,069	)

	Lease Intangible Assets												Lease Intangible Liabilities
December 31, 2024	Above Market Leases			In Place Leases			Leasing Commissions			Total			Below Market Leases			Below Market Ground Lease			Total
Cost	$	16,596		$	69,760		$	30,987		$	117,343		$	(14,294	)	$	(138	)	$	(14,432	)
Accumulated amortization		(10,584	)		(51,893	)		(20,235	)		(82,712	)		8,071			60			8,131
	$	6,012		$	17,867		$	10,752		$	34,631		$	(6,223	)	$	(78	)	$	(6,301	)

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


2025	$	2,648
2026		4,986
2027		4,019
2028		3,468
2029		2,624
Thereafter		3,609
	$	21,354

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5. Debt

The following table summarizes the indebtedness as of June 30, 2025 and December 31, 2024 (dollars in thousands), including the impact of the effective interest rate swaps described in Note 6:


Property		June 30, 2025		December 31, 2024	Interest Rate as of June 30, 2025 (1)		Maturity
Unsecured Credit Facility (2)(3)	$	257,500	$	255,000	SOFR + 1.50%	(1)(2)	November 2025	(2)
Term Loan (3)		25,000		25,000	6.00%	(3)	January 2026
Mission City		44,633		45,095	3.78%		November 2027
Circle Point		37,816		38,109	4.49%		September 2028
Canyon Park (4)		37,760		38,159	4.30%		March 2027
The Quad (11)		30,600		30,600	4.20%		September 2028
SanTan (5)(11)		30,396		30,773	4.56%		March 2027
Intellicenter (6)		29,708		30,042	4.65%		October 2025
2525 McKinnon		27,000		27,000	4.24%		April 2027
FRP Collection		25,525		25,736	7.05%	(7)	August 2028
Greenwood Blvd (8)		20,077		20,299	6.34%	(8)	May 2028
AmberGlen		20,000		20,000	3.69%		May 2027
5090 N. 40th St (11)		19,676		19,912	3.92%		January 2027
Central Fairwinds		15,379		15,497	7.68%	(9)	June 2029
FRP Ingenuity Drive (10)		14,096		14,096	4.44%		December 2026
Carillon Point		14,079		14,196	7.05%	(7)	August 2028
Total Principal		649,245		649,514
Deferred financing costs, net		(2,057)		(2,542)
Total	$	647,188	$	646,972

(1)

As of June 30, 2025, the daily-simple Secured Overnight Financing Rate (“SOFR”) was 4.45%.

(2)

Borrowings under our unsecured credit facility (the “Unsecured Credit Facility”) bear interest at a rate equal to the daily-simple SOFR rate plus a margin of between 135 to 235 basis points depending upon the Company’s consolidated leverage ratio. On February 9, 2023, the Company entered into a three-year interest rate swap for a notional amount of $140 million, effective March 8, 2023, effectively fixing the SOFR component of the borrowing rate for $140 million of the Unsecured Credit Facility at 4.19%. As of June 30, 2025, the Unsecured Credit Facility had $257.5 million drawn and a $2.5 million letter of credit to satisfy escrow requirements for a mortgage lender. The Unsecured Credit Facility matures in November 2025 and may be extended by 12 months at the Company’s option 90 days prior to maturity, provided there is no event of default, the Company affirms the representations and warranties set forth in the Amended and Restated Credit Agreement, dated November 16, 2021 for the Unsecured Credit Facility (the Amended and Restated Credit Agreement”), and the Company pays the extension fee. The Unsecured Credit Facility requires the Company to maintain a fixed charge coverage ratio of no less than 1.50x.

(3)

On January 5, 2023, the Company entered into a second amendment to the Amended and Restated Credit Agreement and entered into a three-year $25 million term loan, increasing its total authorized borrowings from $350 million to $375 million. Borrowings under the $25 million term loan bear interest at a rate equal to the daily-simple SOFR rate plus a margin of 210 basis points. In conjunction with the term loan, the Company also entered into a three-year interest rate swap for a notional amount of $25 million, effectively fixing the SOFR component of the borrowing rate of the term loan at 3.90%.

(4)

The mortgage loan anticipated repayment date (“ARD”) is March 1, 2027. The final scheduled maturity date can be extended up to 5 years beyond the ARD. If the loan is not paid off at ARD, the loan’s interest rate shall be adjusted to the greater of (i) the initial interest rate plus 200 basis points or (ii) the yield on the five year “on the run” treasury reported by Bloomberg market data service plus 450 basis points.

(5)

In the second quarter of 2023, the Debt Service Coverage Ratio (“DSCR”) and debt yield covenants for SanTan were not met, which triggered a ‘cash-sweep period’ that began in the second quarter of 2023. As of June 30, 2025, the DSCR and debt yield covenants were still not met. As of June 30, 2025 and December 31, 2024, total restricted cash for the property was $0.7 million and $1.6 million, respectively.

(6)

In April 2025, a 'cash-sweep period' began at the Intellicenter property following the DSCR covenant not being met. As of June 30, 2025, total restricted cash for the property was $1.4 million.

(7)

The FRP Collection and Carillon Point loans bear interest at a rate equal to the daily-simple SOFR rate plus a margin of 275 basis points. The SOFR component of the borrowing rate is effectively fixed for the remainder of the five-year term via interest rate swaps at 4.30%.

(8)

On May 28, 2025, the Company entered into an amended and restated loan agreement for Greenwood Blvd, extending the term for an additional three years and amending the interest rate from fixed to floating. The loan bears interest at a rate equal to the daily-simple SOFR rate plus a margin of 250 basis points. The Company also entered into a three-year interest rate swap agreement, effectively fixing the SOFR component of the borrowing rate of the loan at 3.84%.

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(9)

The Central Fairwinds loan bears interest at a rate equal to the daily-simple SOFR rate plus a margin of 325 basis points. The SOFR component of the borrowing rate is effectively fixed for the remainder of the five-year term via an interest rate swap at 4.43%.

(10)

Under the terms of the FRP Ingenuity Drive loan modification and extension agreement signed in the second quarter of 2024, the property will be in a ‘cash-sweep period’ which will continue through the maturity of the loan. As of June 30, 2025 and December 31, 2024, total restricted cash for the property was $1.4 million and $3.6 million, respectively.

(11)

On June 18, 2025, the Company entered into a purchase and sale agreement to sell the Phoenix Portfolio which includes 5090 N 40th St, SanTan and The Quad. The mortgage loans associated with these properties are expected to be repaid upon the closing of the transaction.

The scheduled principal repayments of indebtedness as of June 30, 2025, without consideration of extension options, are as follows (in thousands):


2025	$	289,650
2026		44,267
2027		177,104
2028		123,733
2029		14,491
Thereafter		—
	$	649,245

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

In January 2023, the Company entered into an interest rate swap for a notional amount of $25.0 million. The interest rate swap effectively fixes the SOFR component of the corresponding loan at approximately 3.90% for the three-year term.

In February 2023, the Company entered into an interest rate swap for a notional amount of $140.0 million. The interest rate swap effectively fixes the SOFR component of the corresponding loan at approximately 4.19% for the three-year term.

In August 2023, the Company entered into an interest rate swap at FRP Collection for an initial notional amount of $26.3 million. The interest rate swap effectively fixes the SOFR component of the corresponding loan at approximately 4.30% for the five-year term. The notional amount of the interest rate swap amortizes over the term consistent with the balance of the corresponding loan.

In August 2023, the Company entered into an interest rate swap at Carillon Point for an initial notional amount of $14.5 million. The interest rate swap effectively fixes the SOFR component of the corresponding loan at approximately 4.30% for the five-year term. The notional amount of the interest rate swap amortizes over the term consistent with the balance of the corresponding loan.

In May 2024, the Company entered into an interest rate swap at Central Fairwinds for an initial notional amount of $15.6 million. The interest rate swap effectively fixes the SOFR component of the corresponding loan at approximately 4.43% for the five-year term. The notional amount of the interest rate swap amortizes over the term consistent with the balance of the corresponding loan.

In May 2025, the Company entered into an interest rate swap at Greenwood Blvd for an initial notional amount of $20.1 million. The interest rate swap effectively fixes the SOFR component of the corresponding loan at approximately 3.84% for the three-year term. The notional amount of the interest rate swap amortizes over the term consistent with the balance of the corresponding loan.

The fair value of the interest rate swaps have been classified as Level 2 fair value measurements.

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The interest rate swaps have been designated and qualify as cash flow hedges and have been recognized on the condensed consolidated balance sheets at fair value, presented within other assets and other liabilities. Gains and losses resulting from changes in the fair value of derivatives that have been designated and qualify as cash flow hedges are reported as a component of other comprehensive income/(loss) and reclassified into earnings in the periods during which the hedged forecasted transaction affects earnings.

The following table summarizes the Company’s derivative financial instruments as of June 30, 2025 and December 31, 2024 (in thousands):


					Fair Value Assets/(Liabilities)
	Notional Value June 30, 2025		Effective Date	Maturity Date	June 30, 2025			December 31, 2024
Interest Rate Swap	$	25,000	January 2023	January 2026	$	29		$	50
Interest Rate Swap		140,000	March 2023	November 2025		18			(75	)
Interest Rate Swap		25,525	August 2023	August 2028		(700	)		(275	)
Interest Rate Swap		14,079	August 2023	August 2028		(386	)		(152	)
Interest Rate Swap		15,379	May 2024	June 2029		(600	)		(284	)
Interest Rate Swap		20,077	May 2025	May 2028		(261	)		—
	$	240,060			$	(1,900	)	$	(736	)

For the six months ended June 30, 2025, approximately $0.2 million of net realized gains were reclassified to interest expense due to payments made to or received from the swap counterparty. For the six months ended June 30, 2024, approximately $2.2 million of net realized gains were reclassified to interest expense due to payments made to or received from the swap counterparty.

Cash and 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 loans 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 $285.2 million and $301.8 million (compared to a carrying value of $291.7 million and $314.1 million) as of June 30, 2025 and December 31, 2024, respectively. Accordingly, the fair value of mortgage loans payable have been classified as Level 3 fair value measurements.

7. Related Party Transactions

Administrative Services Agreements

During the six months ended June 30, 2025 and 2024, the Company earned $0.1 million and $0.1 million, respectively, in administrative services performed for Second City Real Estate II Corporation, Clarity Real Estate Ventures GP, Limited Partnership and their affiliates.

8. Leases

Lessor Accounting

The Company is focused on acquiring, owning and operating office properties for lease to a stable and diverse tenant base. The Company’s properties have both full-service gross and net leases which are generally classified as operating leases. Rental income related to such leases is recognized on a straight-line basis over the remaining lease term. The Company’s total revenue includes fixed base rental payments provided under the lease and variable payments, which principally consist of tenant expense reimbursements for certain property operating expenses as provided under the lease.

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The Company recognized fixed and variable lease payments for operating leases for the three and six months ended June 30, 2025 and 2024 as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Fixed payments	$	37,079	$	36,042	$	73,525	$	73,634
Variable payments		5,194		6,237		10,788		13,015
	$	42,273	$	42,279	$	84,313	$	86,649

The Company ceased recognizing rental lease income with respect to the Cascade Station property on the deconsolidation of the entity on June 27, 2024. Refer to Note 3 for further details.

Future minimum lease payments to be received by the Company as of June 30, 2025 under non-cancellable operating leases for the next five years and thereafter are as follows (in thousands):


2025	$	63,602
2026		124,214
2027		106,555
2028		93,759
2029		73,689
Thereafter		149,157
	$	610,976

The Company’s leases may include various provisions such as scheduled rent increases, renewal options and termination options. The majority of the Company’s leases include defined rent increases rather than variable payments based on an index or unknown rate.

Lessee Accounting

As a lessee, the Company has ground and office leases which are classified as operating and financing leases. Leases at properties classified as held for sale as at June 30, 2025 have been excluded from the following disclosures. Refer to Note 3 for further details. As of June 30, 2025, the Company's leases had remaining terms of one to 11 years and a weighted average remaining lease term of 10 years. Right-of-use assets and lease liabilities have been included within other assets and other liabilities on the Company’s condensed consolidated balance sheets as follows (in thousands):


	June 30, 2025		December 31, 2024
Right-of-use asset – operating leases	$	1,692	$	10,101
Lease liability – operating leases	$	1,661	$	8,286
Right-of-use asset – financing leases	$	—	$	9,593
Lease liability – financing leases	$	—	$	1,637

Lease liabilities are measured at the commencement date based on the present value of future lease payments. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The Company used a weighted average discount rate of 5.0% in determining its lease liabilities. The discount rates were derived from the Company’s assessment of the credit quality of the Company and adjusted to reflect secured borrowing, estimated yield curves and long-term spread adjustments.

Right-of-use assets include any prepaid lease payments and exclude any lease incentives and initial direct costs incurred. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The lease terms may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option.

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Future minimum lease payments to be paid by the Company as a lessee for operating leases as of June 30, 2025 for the next five years and thereafter are as follows (in thousands):


	Operating Leases
2025	$	163
2026		310
2027		173
2028		173
2029		173
Thereafter		1,098
Total future minimum lease payments		2,090
Discount		(429	)
Total	$	1,661

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, 2025, 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

Share Repurchase Plan

On May 4, 2023, the Company's Board of Directors (the “Board of Directors”) approved a share repurchase plan (“Repurchase Program”) authorizing the Company to repurchase up to $50 million of its outstanding shares of common stock or Series A Preferred Stock. Under the share repurchase program, the shares may be repurchased from time to time using a variety of methods, which may include open market transactions, privately negotiated transactions or otherwise, all in accordance with the rules of the SEC and other applicable legal requirements.

Repurchased shares of common stock will be classified as authorized and unissued shares. The Company recognizes the cost of shares of common stock it repurchases, including direct costs incurred, as a reduction in stockholders’ equity. Such reductions of stockholders equity due to the repurchases of shares of common stock will be applied first, to reduce common stock in the amount of the par value associated with the shares of common stock repurchased and second, to reduce additional paid-in capital by the amount that the purchase price for the shares of common stock repurchased exceed the par value.

There were no shares repurchased during the six months ended June 30, 2025 and 2024.

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Common Stock and Common Unit Distributions

On June 13, 2025, the Board of Directors approved and the Company declared a cash dividend distribution of $0.10 per common share for the quarterly period ended June 30, 2025. The dividend was paid subsequent to quarter end on July 24, 2025 to common stockholders and common unitholders of record as of the close of business on July 10, 2025, resulting in an aggregate payment of $4.0 million.

Preferred Stock Distributions

On June 13, 2025, the Board of Directors approved and the Company declared a cash dividend distribution of $0.4140625 per share of the Company’s 6.625% Series A Preferred Stock (“Series A Preferred Stock”) for an aggregate amount of $1.9 million for the quarterly period ended June 30, 2025. The dividend was paid subsequent to quarter end on July 24, 2025 to the holders of record of Series A Preferred Stock as of the close of business on July 10, 2025.

Equity Incentive Plan

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 the grant of Operating Partnership long-term incentive plan 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 “Compensation Committee”). On May 1, 2025, the Company's stockholders approved an amendment to the Equity Incentive Plan increasing the maximum number of shares of common stock that may be issued under the Equity Incentive Plan from 3,763,580 shares to 5,763,580 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.

On May 2, 2024, each of the Board of Directors and the Compensation Committee approved a new form of performance-based restricted unit award agreement (the “Performance RSU Award Agreement”) that will be used to grant performance-based restricted stock unit awards (“Performance RSU Awards”) pursuant to the Equity Incentive Plan. The Performance RSU Awards are based upon the total stockholder return (“TSR”) of the Company’s common stock over a three-year measurement period beginning January 1 of the year of grant (the “Measurement Period”) relative to the TSR of a defined peer group list of other US Office REIT companies (the “Peer Group”) as of the first trading date in the year of grant. The payouts under the Performance RSU Awards are evaluated on a sliding scale as follows: TSR below the 30th percentile of the Peer Group would result in a 50% payout; TSR at the 50th percentile of the Peer Group would result in a 100% payout; and TSR at or above the 75th percentile of the Peer Group would result in a 150% payout. Payouts are mathematically interpolated between these stated percentile targets, subject to a 150% maximum. To the extent earned, the payouts of the Performance RSU Awards are intended to be settled in the form of shares of the Company’s common stock, pursuant to the Equity Incentive Plan. Upon satisfaction of the vesting conditions, dividend equivalents in an amount equal to all regular and special dividends declared with respect to the Company’s common stock during each annual measurement period during the Measurement Period are determined and paid on a cumulative, reinvested basis over the term of the applicable Performance RSU Award, at the time such award vests and based on the number of shares of the Company’s common stock that are earned. Shares of the Company’s common stock issuable pursuant to the Performance RSU Awards and dividend equivalents granted pursuant to the Performance RSU Award Agreement, taken together with the shares issuable pursuant to any other grants under the Equity Incentive Plan, shall not exceed the annual limitation set forth in Section 6 of the Equity Incentive Plan.

During the first quarter of 2025, the Performance RSU Awards granted in January 2022, with a January 1, 2022 through December 31, 2024 Measurement Period, were earned at 50% of the target number of shares granted based on achievement of a TSR that was at or above the 26th percentile of the 2022 Peer Group.

During the first quarter of 2024, the Performance RSU Awards granted in January 2021, with a January 1, 2021 through December 31, 2023 Measurement Period, were earned at 120% of the target number of shares granted based on achievement of a TSR that was at or above the 60th percentile of the 2021 Peer Group.

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Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging Growth Company

City Office REIT, Inc. 10-Q