City Office REIT, Inc. (NYSE: CIO) has inked an agreement to dump all of its stakes in the Sorrento Mesa submarket of San Diego for $576 million. The deal is likely to generate net profits, of nearly $546 million, which equates to $12.38 per common share. The properties to be sold are unencumbered by debt.
The firm believes that this is a revolutionary deal for the firm. The sale and redeployment position the firm to harmonize and improve the quality of its office portfolio through buying across some of the highest employment and population growth cities in the south and west. It has been disclosed that finalizing this strategy will create a pathway to improve its earnings per share, grow its net asset value and bolster its balance sheet.
Furthermore, the sales will be finalized in accordance with the two separate agreements. The northern portion of the portfolio is planned to execute in December 2021 for $395 million. The southern portion of the portfolio is planned to execute in February 2023 for $181 million. City Office can quicken the execution date to align themselves with redeployment opportunities. Both sales are dependent on customary closing conditions.
In addition to this, CIO disclosed that since its initial buying of properties in Sorrento Mesa in 2017, the firm has re-positioned, re-tenanted, renovated, and strategically improved its portfolio. The subsequent aggregation of life science assets and over one million square feet of zoned life science development potential formed an extremely valuable portfolio.