City Office REIT Reports $107.2 Million Net Loss and Pursues Phoenix Portfolio Sale

City Office REIT, Inc. reported significant financial challenges in its quarterly report for the period ending June 30, 2025. The company recorded a net loss attributable to common stockholders of $107.2 million, a stark contrast to a loss of $5.6 million in the same quarter of the previous year. Total revenues remained relatively stable at $42.3 million, nearly unchanged from $42.3 million in the prior year. However, the company faced a substantial impairment charge of $102.2 million related to its Phoenix Portfolio, which was classified as held for sale, contributing to the overall net loss.

In terms of operational performance, City Office REIT's properties were approximately 82.5% leased as of June 30, 2025, a slight decrease from the previous year. The company experienced a decline in rental revenues due to property dispositions, including the sale of the Superior Pointe property in January 2025 and the deconsolidation of the Cascade Station property in June 2024. These changes resulted in a year-over-year revenue decrease of $2.2 million for the first half of 2025 compared to the same period in 2024.

Strategically, City Office REIT is pursuing a significant transaction involving the sale of its Phoenix Portfolio for $296 million, which is expected to close subject to customary conditions. The company also announced a merger agreement with MCME Carell Holdings, which will see shareholders receive $7.00 per share in cash, pending approval. This merger is anticipated to reshape the company's future operations and financial structure.

The company’s financial position showed total assets of $1.33 billion as of June 30, 2025, down from $1.46 billion at the end of 2024. Total liabilities were reported at $712.7 million, with a slight increase in debt to $647.2 million. The company maintained a cash position of $18.3 million and restricted cash of $16.2 million, indicating a need for careful liquidity management amid ongoing operational challenges.

Looking ahead, City Office REIT faces a complex landscape influenced by economic conditions, including rising interest rates and evolving work-from-home trends that may impact office space demand. The company is focused on stabilizing its portfolio and enhancing occupancy rates while navigating the implications of the pending merger and property sales. The management remains cautious but optimistic about future opportunities to enhance shareholder value through strategic acquisitions and operational efficiencies.