City Office REIT has entered into a definitive merger agreement with MCME Carell to be acquired in a transaction valued at approximately US$1.1 billion, including debt.
Following the close of the transaction, Vancouver-based City Office will become a private company and its shares will be delisted from the New York Stock Exchange.
City Office is an internally managed REIT that acquires, owns and operates office properties located primarily in U.S. Sunbelt markets. The REIT has a controlling interest in 5.4 million square feet of office assets.
Grand Prairie, TX-based MCME Carell is an affiliate of multi-strategy Elliott Investment Management and Morning Calm Management, which are headquartered in West Palm Beach and Boca Raton, FL, respectively.
Under the terms of the agreement, MCME Carell Holdings LP and MCME Carell Holdings LLP will acquire all issued and outstanding shares of City Office REIT, other than those already owned by the buyer or its affiliates, for US$7 per share in cash. The price represents a 26% premium to the company’s closing share price on the NYSE prior to the announcement and a 39% premium to the 90-day volume-weighted average.
The transaction is contingent on several conditions, including shareholder approval, the sale of City Office’s Phoenix portfolio and the assumption or repayment of indebtedness. Holders of the company’s 6.625% Series A cumulative preferred stock will receive US$25 per share in cash plus accrued and unpaid distributions.
“After conducting an extensive process to explore potential strategic alternatives, we are pleased to have reached an agreement with MCME Carell,” said James Farrar, CEO of City Office. “In light of a challenging environment for the office sector, this transaction delivers immediate and significant value to our shareholders.”
The deal is expected to close in the fourth quarter of 2025 and has received unanimous approval from City Office’s board of directors. It is not contingent on financing.
“We are pleased to have reached an agreement with City Office to effectuate this transaction,” said Mukang Cho, Morning Calm, CEO. This opportunity underscores our partnership’s continued belief in the recovery of the office sector and our interest in acquiring high-quality office assets in strong growth markets,”
City Office will pay its second-quarter dividend on July 24, 2025, but has suspended future quarterly dividends on common stock. Dividends on its Series A preferred stock will continue.
The company does not plan to host a conference call or webcast for its Q2 results but expects to release earnings on July 31, 2025.
Raymond James & Associates and Jones Lang LaSalle Securities acted as City Office’s financial advisors. DLA Piper LLP served as M&A counsel, and Hogan Lovells LLP acted as corporate counsel. Eastdil Secured advised the buyer, and Gibson Dunn & Crutcher LLP provided legal counsel.
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