City Office REIT's Major Acquisition Deal Announced
City Office REIT Announces Major Sale Agreement
City Office REIT, Inc. (CIO) has taken a significant step by entering a definitive agreement with MCME Carell Holdings, LP and MCME Carell Holdings, LLC, aimed at acquiring all outstanding shares of City Office. Under this agreement, shareholders will receive a cash offer of $7.00 per share, translating the entire transaction into a valuation of around $1.1 billion.
Transaction Details
This acquisition deal signifies a substantial premium of 26% compared to City Office's common stock closing price prior to the announcement and a 39% premium based on the average share price over the past 90 days. Shareholders will be compensated in cash at the transaction's closing, ensuring immediate financial benefits.
Impact on Preferred Stockholders
Moreover, holders of the Company’s 6.625% Series A Cumulative Preferred Stock will also receive $25.00 per share in cash. The entire transaction includes the assumption or repayment of existing debts, the redemption of preferred stock, and the divestment of certain assets.
Strategic Insights from Leadership
City Office's CEO, James Farrar, expressed satisfaction with the agreement, highlighting the added value it brings for shareholders amidst challenging market conditions. The strategic move aims to showcase a commitment to the stakeholders while navigating a competitive office sector.
MCME Carell's Perspective
From the buyer's perspective, Mukang Cho, CEO of Morning Calm Management, indicated that this acquisition reflects an opportunity to invest in high-quality office assets in robust growth markets, affirming confidence in the recovery of the office sector.
Transaction Closures and Approvals
The deal is anticipated to close in the fourth quarter, contingent on standard closing conditions, including the approval required from City Office's shareholders. Notably, the Board of Directors has unanimously endorsed the transaction, signaling strong internal support.
Dividend Updates
In consideration of the transaction, City Office plans to proceed with its second-quarter dividend. However, future common stock dividends will be suspended until the transaction is completed.
Transition to a Private Company
Following the transaction's closure, City Office will transition into a private entity, with shares of its common stock and Series A Cumulative Preferred Stock ceasing to trade publicly.
Company Overview
City Office REIT, Inc. is recognized as an internally managed real estate company focused on office properties primarily located in Sun Belt markets. Presently, the company maintains ownership or controlling interests in approximately 5.4 million square feet of office space.
About MCME Carell
MCME Carell operates as part of Elliott Investment Management L.P. and Morning Calm Management, LLC. The firm is notable for its investment strategies and holds a substantial portfolio of commercial real estate assets.
Frequently Asked Questions
What is the purchase price per share in the acquisition?
The purchase price per share is set at $7.00 in cash.
When is the expected closure date for the transaction?
The transaction is expected to close in the fourth quarter of 2025.
What premium does the acquisition offer to shareholders?
The acquisition provides a 26% premium over the closing share price prior to the announcement.
Will City Office REIT continue to pay dividends?
City Office will pay its second-quarter dividend but plans to suspend future common stock dividends until the transaction is finalized.
What will happen to City Office's common stock post-transaction?
After the transaction, City Office will become a private company, and its common shares will no longer be traded on the NYSE.
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