City Office REIT, which specializes in office properties in Sun Belt markets, has closed the first phase of the sale of its Phoenix portfolio, generating gross proceeds of $266 million. The transaction includes six of the company's seven office properties located in Phoenix, Arizona. The remaining asset, Pima Center, remains under contract for $30 million and is expected to close later, contingent upon the approval of conditions related to its ground lease.
The sale of the Phoenix portfolio is part of City Office REIT’s merger with MCME Carell Holdings and MCME Carell Merger. The agreement, signed on July 23, calls on MCME Carell buying City Office for about $1.1 billion. Shareholders will receive $7 per share in cash, which is 26% higher than the previous day’s closing price and 39% higher than the 90-day average.
City Office’s board of directors unanimously approved the agreement, which is not contingent on financing and is expected to be finalized in the fourth quarter. Upon completion, City Office will become a private entity and its shares will be delisted from the New York Stock Exchange.
City Office REIT currently owns or has an interest in more than 5 million square feet of office property, concentrated in multiple U.S. metropolitan areas. The company remains internally managed and holds a REIT status for tax purposes.
MCME Carell is affiliated with Elliott Investment Management, which oversees about $73 billion in assets, and Morning Calm Management, a firm with 10 million square feet of property under ownership and management. These entities cite confidence in the office sector’s prospects and in opportunities to acquire high-quality assets in robust growth markets.
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