Investor Presentaiton
APPENDIX: CREATION OF SHAREHOLDER VALUE
CITY OFFICE REIT
Enormous Growth in Estimated Net Asset Value Per Share from Life Science Sale
☐ The following table illustrates various share prices and the implied portfolio cap rates on CIO's office assets
☐
In today's market, CIO estimates that its properties range from a ~5% cap rate for premier properties in the most desirable
locations with long-term credit tenants to ~8%+ for a small number of value-add assets requiring near-term leasing
☐
A $24.00 Net Asset Value per share equates to a blended ~7.0% cap rate on CIO's office portfolio
(in millions)
Pro Forma Net Asset Value Per Share Range
$
22.00
24.00
$
(1)
Market value of common equity using share price assumption
970.4
1,058.6
26.00
1,146.8
Liquidation preference of preferred equity
112.0
112.0
112.0
CIO share of net debt at June 30, 2021 (2)
574.1
574.1
574.1
Expected net proceeds from Sorrento Mesa sale
(3)
(546.0)
(546.0)
(546.0)
Implied enterprise value
1,110.5
1,198.7
1,286.9
Book value of remaining land
(4)
(5)
(7.3)
(7.3)
(7.3)
Working capital adjustments
36.7
Implied asset value - office portfolio
$
1,139.9 $
36.7
1,228.1 $
36.7
1,316.3
2021 Cash Net Operating Income (NOI) Guidance Without Sorrento Mesa
2021 Net Operating Income guidance - midpoint
Less: 2021 termination fees (non-recurring)
Less: non-cash GAAP adjustments within guidance (6)
(2)
$
105.3 $
105.3 $
105.3
(8.0)
(8.0)
(8.0)
Less: minority interest
(1.7)
(1.7)
(1.7)
2021 Cash NOI guidance - excluding termination fees
95.6
95.6
95.6
Elimination of Sorrento Mesa 2021 cash NOI in guidance
Pro forma cash NOI - office portfolio
(9.2)
(9.2)
(9.2)
$
86.4 $
86.4 $
86.4
Implied Cap Rate - office portfolio
7.6%
7.0%
6.6%
(7)
Implied Price Per Square Foot - office portfolio
$
220 $
237 $
254
(1) Based on 44.1 million common shares outstanding as of June 30, 2021
(2)
(4)
Please reference the Company's Q2 2021 earnings press release and financial supplement for further discussion of the material assumptions and reconciliations underlying the Company's guidance and calculations
Represents aggregate gross proceeds of $576 million less $30 million of estimated closing and transaction costs, some of which may be spent prior to closing
Deducts the book value of the Company's land holdings at FRP Collection, Intellicenter and Circle Point to isolate the Company's office assets
(5)
(6)
Working capital adjustments - Add: Rents Receivable & Other Assets; Less: Straight Line Rent Receivable, Accounts Payable and Accrued Liabilities, Deferred Rent, Tenant Rent Deposits and Other Liabilities
Includes net impact of straight line rent adjustment and above and below market leases
20
(7)
Based on approximately 5,178,000 net rentable square feet of the office portfolio as of June 30, 2021, after the sale of Sorrento MesaView entire presentation