I N V E S TO R P R E S E NTATION J U N E 2 0 2 0 N YS E : CIO F - - PowerPoint PPT Presentation

I N V E S TO R P R E S E NTATION

N YS E : CIO

J U N E 2 0 2 0

FORWARD-LOOKING STATEMENTS

This presentation contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A

• f the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Certain statements contained in this

presentation, including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, are forward- looking statements within the meaning of the federal securities laws and as such are based upon City Office REIT, Inc.’s (“CIO” or the “Company”) current beliefs as to the outcome and timing of future events. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “approximately,” “anticipate,” “assume,” “believe,” “budget,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “future,” “hypothetical,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will” or other similar words or expressions. There can be no assurance that actual forward-looking statements, including projected capital resources, projected profitability and portfolio performance, estimates or developments affecting the Company will be those anticipated by the Company. Examples of forward-looking statements include those pertaining to expectations regarding the Company’s financial performance, including under metrics such as NOI and FFO, market rental rates, national or local economic growth, estimated replacement costs of the Company’s properties, the Company’s expectations regarding tenant

• ccupancy, re-leasing periods, projected capital improvements, expected sources of financing, expectations as to the likelihood and timing of closing
• f acquisitions, dispositions, or other transactions, the expected operating performance of the Company’s current properties, anticipated near-term

acquisitions and descriptions relating to these expectations, including, without limitation, the anticipated net operating income yield and cap rates, and changes in local, regional, national and international economic conditions, including as a result of the recent COVID-19 pandemic. Forward-looking statements presented in this presentation are based on management’s beliefs and assumptions made by, and information currently available to, management. The forward-looking statements contained in this presentation are based on historical performance and management’s current plans, estimates and expectations in light of information currently available to the Company and are subject to uncertainty and changes in circumstances. There can be no assurance that future developments affecting the Company will be those that the Company has anticipated. Actual results may differ materially from these expectations due to the factors, risks and uncertainties described above, changes in global, regional or local political, economic, business, competitive, market, regulatory and other factors described in the Company’s news releases and filings with the U.S. Securities and Exchange Commission (the “SEC”), including but not limited to those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 under the heading “Risk Factors” and in the Company’s subsequent reports filed with the SEC, many of which are beyond the Company’s control. Should one or more of these risks or uncertainties materialize, or should any of the Company’s assumptions prove to be incorrect, the Company’s actual results may vary in material respects from what the Company may have expressed or implied by these forward-looking statements. CIO cautions that you should not place undue reliance on any of CIO’s forward-looking statements. Any forward-looking statement made by the Company in this presentation speaks only as of the date of this presentation. Factors or events that could cause the Company’s actual results to differ may emerge from time to time, and it is not possible for the Company or its management to predict all of them. The Company does not guarantee that the assumptions underlying such forward-looking statements contained in this presentation are free from errors. Unless otherwise stated, historical financial information and per share and other data are as of March 31, 2020 or relate to the quarter ended March 31, 2020. The Company has no

• bligation, and does not undertake, to publicly update any forward-looking statement, whether as a result of new information, future developments or
• therwise, except as may be required by applicable securities laws.

2

Central Fairwinds, Orlando 7595 Tech, Denver 5090 N 40th St, Phoenix 2525 McKinnon, Dallas Park Tower, Tampa Circle Point, Denver The Quad, Phoenix City Center, Tampa Mission City, San Diego

Market

• No. of

Buildings NRA (000s SF) Annualized Gross Rent per SF In Place Occupancy Lease Term Remaining Phoenix, AZ 22

1,213

$27.87 90.2% 3.2 Denver, CO 9

1,160

$26.27 90.2% 5.8 Tampa, FL 5

1,041

$25.66 93.8% 4.5 Orlando, FL 8

720

$25.95 96.8% 4.7 San Diego, CA 9

582

$34.62 88.4% 3.4 Dallas, TX 4

577

$29.18 87.9% 3.1 Portland, OR 5

331

$25.78 99.0% 4.0 Seattle, WA 3

207

$29.84 100.0% 8.8 Total 65 5,831 $27.58 92.2% 4.4 12%

Note: All information as of March 31, 2020 (1) Percentages based on management’s estimate of aggregate gross asset value in each market

Dedicated

Class A & B Office Owner

Targeted

High Growth, 18-Hour Cities

Diversified

Tenant Base

Experienced

Management Team

Strong

Balance Sheet with High Liquidity City Office owns high-quality office properties in 18-hour cities in the Southern and Western United States

DENVER, CO PORTLAND, OR DALLAS, TX ORLANDO, FL TAMPA, FL PHOENIX, AZ 5% 18% 9% 17% 21% SAN DIEGO, CA 14%

CURRENT MARKETS (1)

4

SEATTLE, WA 4%

COMPANY OVERVIEW

+146k

+88k

+64k +55k +56k +36k +30k

+20k

• 5

10 15 20 25 30 35 40 45 50

2.0% 3.4% 6.7%

Gateway Markets National Avg CIO Markets

CIO TARGETS LEADING “18-HOUR CITIES”

NATION-LEADING OFFICE DEMAND DRIVERS (1)

Square Feet (in Millions)

5

NEW SUPPLY BELOW HISTORICAL AVERAGES (2) ATTRACTIVE 18-HOUR CITY CHARACTERISTICS DOMESTIC NET MIGRATION TO 18-HOUR CITIES

✓ High-quality urban living experience in amenitized setting ✓ Live, work, play environments; attractive to millennials ✓ Diverse employment bases with national and international employers ✓ Educated workforces ✓ Low-cost centers for businesses to operate ✓ Sound transportation infrastructure with lower congestion ✓ Strong and stable demand generators such as state capitals or university proximity

% PROJECTED POPULATION GROWTH 2020 - 2025 % PROJECTED EMPLOYMENT GROWTH 2020 - 2025 CONSTRUCTION DELIVERIES IN CIO CURRENT MARKETS 1978 - 2019 DEPICTS NET MIGRATION (PEOPLE PER YEAR) INTO CIO MARKETS (3) AVG (1) Source: SNL Financial, as of February 1, 2020. Gateway markets represent New York, NY, Boston, MA, Chicago, IL, Los Angeles, CA, San Francisco, CA and Washington, D.C. (2) Source: CoStar Property. Construction deliveries represent Class A&B office building deliveries over 50,000 SF in CIO current markets (3) Based on population change from July 2016 to July 2017 as measured by the US Census Bureau

2.6% 4.1% 7.5%

Gateway Markets National Avg CIO Markets

VALUE CREATION STRATEGY

2020 ADAPTED STRATEGIC PRIORITIES

6

❑

Pause property acquisitions

❑

Allocate capital to $100 million share repurchase program

❑

Operate with lower leverage and higher levels of liquidity

❑

Focus on property operations, rent collection and driving property cash flow

Generate strong returns by driving property cash flow growth, enhancing NAV and a focused growth strategy

Circle Point, Denver The Quad, Phoenix

ACTIVE APPROACH TO CREATING VALUE

❑

Active in-house asset management with local market presence

❑

Selectively implement value-add initiatives to increase cash flows

❑

Long-term hold mentality but will selectively harvest value when capital can be redeployed accretively

(1) Includes all acquisitions since IPO; represents the weighted average cap rate for each year of announced, projected year one cap rates at the time of acquisition

8.3% 7.5% 7.6% 7.2% 6.8% 7.3% 7.3%

2014 2015 2016 2017 2018 2019 Avg.

ANNOUNCED POST-IPO PROJECTED ACQUISITION CAP RATES (1)

❑

Focus on properties valued between $25 million and $100 million

❑

Less competition from larger institutional investors

❑

Leverage existing infrastructure and deep relationships in our current markets to source acquisitions and operate efficiently

LONG TERM: INVEST WHERE WE HAVE AN ADVANTAGE

• 2

4 6 2014 2015 2016 2017 2018 2019 $0 $300 $600 $900 $1,200 $1,500 2014 2015 2016 2017 2018 2019 $0 $40 $80 $120 $160 2014 2015 2016 2017 2018 2019

SUCCESSFUL EXECUTION OF GROWTH STRATEGY

GROWTH AND DIVERSIFICATION IN REVENUES (2) EXPANSION INTO LEADING SUBMARKETS

7

$1.5B IN TOTAL REAL ESTATE ACQUIRED (1) GAINING ECONOMIES OF SCALE IN ALL MARKETS

❑

Phoenix: Scottsdale, Tempe, Camelback Corridor, Chandler

❑

Denver: Cherry Creek / Glendale, Downtown Denver, Denver Technology Center, Northwest Corridor

❑

Tampa: Downtown Tampa, Downtown St. Petersburg, I-75 Corridor, Carillon Office Park

❑

San Diego: Mission Valley, Sorrento Mesa

❑

Orlando: Downtown Orlando, Florida Research Park, Lake Mary

❑

Dallas: Uptown, Lewisville, Richardson/Plano

❑

Portland: Sunset Corridor, Airport Way

❑

Seattle: Eastside / Bothell

$1.5B $156M 5.8M SF 2.3M SF $387M $37M

($M) (M SF) ($M) (1) Represents implied asset value at IPO plus acquisitions at cost and does not include impact of dispositions (2) Represents total “Rental and other revenues” NET RENTABLE AREA

EMBEDDED PORTFOLIO OPPORTUNITIES

(1) Source: CoStar Property. Comparison of office and flex rental rates for Sorrento Mesa in Q3 2017 vs Q1 2020 (2) Certain conditions to closing remain and the Company cannot assure that the sale will occur on the terms expected, or at all

OTHER OPERATIONAL AND VALUE-ENHANCING OPPORTUNITIES

❑

Future cash flow increases related to raising below-market rental rates and the successful completion of value-add programs

❑

Opportunity to monetize land holdings or participate in development

❑

Total of 49 acres of prime, developable land

❑

Located in Denver, Orlando, San Diego and Tampa

❑

8-acre portion of Circle Point Land under contract for sale (2)

❑

Capital recycling opportunities if accretive to portfolio cash flow

8

Circle Point Land, Denver

INCREASE CASH FLOW FROM LARGEST VACANCIES

❑

Denver Tech, Denver – 78.0% quarter end occupancy

❑

60,000 SF of executed leases to take property to 93.7% occupancy in Q3 2020

❑

Camelback Square, Phoenix – 78.8% quarter end occupancy

❑

$3 million value-add capital improvement plan to be completed in 2020; post-renovation rents expected to be ~20% higher than in-place

❑

Sorrento Mesa, San Diego – 85.3% quarter end occupancy

❑

Vacancy concentrated in a single building; in-place rents significantly below market (14% increase in market rent since 2017 acquisition) (1)

Sorrento Mesa, San Diego

SELECTIVELY HARVESTING VALUE

(1) Levered IRR calculated using allocated equity value at IPO or acquisition equity investment, as applicable. AmberGlen and Sorrento Mesa – 10455 were acquired as components of portfolios, and certain values, income and expenses have been estimated in the IRR calculation based on portfolio pro rata share (2) Based on forward net operating income at the time the property was placed under contract for sale (3) IRR calculated using allocated equity value at IPO

9

WASHINGTON GROUP PLAZA – BOISE, ID

❑

Sold in Q1 2018 for $86.5 million

❑

~5.8% disposition cap rate (2)

❑

22% IRR and $47.0 million gain (3)

❑

Renovations to common areas and mechanical systems

❑

Implemented significant operating expense savings

❑

Increased NRA by 23,000 SF through re-measurement

❑

Completed significant leasing transactions, including 148,000 SF, 10-year lease to St. Luke’s Hospital

❑

Two largest tenants competed to acquire property

Prudent capital recycling: CIO’s six dispositions have generated $72 million of gains

ALL PRIOR ASSET SALES

❑

Combined IRR of approximately 17% across six dispositions (1)

❑

The six dispositions have generated $72 million of gains

Sorrento Mesa – 10455, San Diego Corporate Parkway, Allentown

RECENT COMPANY HIGHLIGHTS

10

FIRST QUARTER 2020

❑

Core FFO per share of $0.26 and AFFO per share of $0.14

❑

Executed approximately 221,000 SF of new and renewal leases

❑

Occupancy of 92.2%, or 94.2% including signed leases that commence after quarter end

❑

Same store cash NOI growth of 4.1% for the quarter, compared to prior year quarter

❑

Repurchased 1,451,249 shares of common stock at an average gross price of $7.99 per share for a total cost of $11.6 million

LEASING SUCCESS HAS STABILIZED DENVER TECH PORTFOLIO

❑

Acquired 7595 Tech in 2015 at a price reflecting significant known future vacancy; recently completed substantial renovation of amenities, common areas and vacant space

❑

Acquired 7601 Tech in 2019; located directly adjacent to 7595 Tech and was integrated to create a 381,000 SF campus with complementary amenities

❑

At end of 2019, the campus was 62.7% occupied

❑

128,000 SF of recent leasing activity completed; expected to bring campus occupancy to 93.7% after tenants take occupancy

❑

Largest was a 70,000 SF, 10-year lease signed in Q1 2020

SUBSEQUENT TO QUARTER END

❑

As of May 5, 2020, repurchased an additional 5,872,328 shares of common stock. Including repurchases during the first quarter, 7,323,577 shares have been repurchased at an average gross price of $8.26 per share for a total cost of $60.5 million (1)

7595 TECH 7601 TECH

(1) “Repurchased” indicates shares that had settled by May 5, 2020

Low High Low High Net Property Acquisitions (2) $340M $380M Nil Nil December 31, 2020 Occupancy 92.0% 94.0% 88.5% 91.0% Same Store Cash NOI Change 1.0% 3.0% (4.5)% (1.5)% Core FFO per Diluted Share $1.13 $1.18 $1.07 $1.12 Full Year 2020 Previous Updated

2020 OUTLOOK

(1) See the Company’s Q4 2019 and Q1 2020 earnings press releases for further discussion of the material assumptions underlying the Company’s guidance. This outlook reflects management’s current view

• f current and future operations and market conditions, which management cannot guarantee will occur as expected, or at all

(2) Total property acquisitions less total property dispositions

2020 GUIDANCE (1)

❑

No acquisitions anticipated for 2020; assumed capital is reallocated to common share repurchase program and leverage reduction

❑

Assumes elimination of new leasing assumptions for balance of 2020

❑

Guidance reflects a general provision for uncollectible rents of 1%-3%

• f rental revenue in each of Q2, Q3 and Q4 related to COVID-19 and a

corresponding reduction to occupancy, Same Store Cash NOI Change and Core FFO per Diluted Share

❑

Significant uncertainty related to the effect of COVID-19 on the economy and CIO tenant base

COMMENTARY

11

Mission City, San Diego

Tenant / Parent Credit Rating (S&P / Moody's) Tenant Since NRA (000s) % of Net Rentable Area State of Colorado Dept. of Health AA+ 1993 319 5.5% Seattle Genetics, Inc.

• 2019

207 3.5% United Healthcare Services, Inc. A+ 2008 173 3.0% Ally Financial Inc. BBB- 2008 163 2.8% HF Management Services LLC

• 2012

155 2.7%

• H. Lee Moffitt Cancer Center

A3 2008 155 2.7% Toyota Motor Credit Corporation AA- 2011 133 2.3% Kaplan, Inc. (3) BB 2008 125 2.1% Jackson National Life Insurance Co. A+ 2007 122 2.1% GSA – US Attorneys Office (4) AA+ 1998 108 1.9% Total 1,660 28.6%

DIVERSE TENANT PROFILE

12

TOP TEN TENANTS OF OUR PROPERTIES (2) LEASE MATURITIES – STABLE, LONG-TERM TENANCY PROFILE WITH WELL-STAGGERED EXPIRATIONS (1)

(1) As of March 31, 2020 (2) Credit ratings as of April 30, 2020 (3) Parent entity is Graham Holding Company (4) The credit rating indicated is for the United States Government

5.8% 5.4% 12.7% 12.1% 13.4% 9.8% 7.4% 12.3% 8.5% 4.4% 6.2% 2.0% Contracted

0% 5% 10% 15% 20% 25% 30% Vacant & Contracted 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 & Thereafter

Finance and Insurance 25% Professional and Technical Services 24% Technology and Information 14% Government 13% Health Care and Life Sciences 12% Real Estate 3% Educational Services 3% Accommodation and Food 2% Construction 1% Other 3%

DIVERSIFIED TENANT BASE (1)

Breakdown by Size # of Tenants NRA (000s) Avg SF (000s) % of Occ SF Top 20 20 2,351 117 43.7% Tenants 21-40 20 815 41 15.2% Remaining 298 2,211 7 41.1% Total 338 5,377 16 100.0% Select Industry Exposure Total Coworking 4 58 15 1.1% Total Retail Related 6 47 8 0.9% Total Restaurant & Café 11 31 3 0.6% Total Live Event Related 3 24 8 0.4% Total Travel & Accommodation 4 10 3 0.2% Total Energy

• 0.0%

Total Select Industries 28 170 6 3.2%

LOW EXPOSURE TO SELECT INDUSTRIES (1)

TENANT COMPOSITION AND INDUSTRY EXPOSURE

13

RENT COLLECTION AND COMMENTARY

(1) As of May 28, 2020 (2) Subsequent to quarter end, as of May 5, 2020

❑

Collected approximately 99% of April contractual base rent (2)

❑

Collected approximately 98% of May contractual base rent (2)

❑

100% of top 40 tenants paid April and May contractual base rent (2)

❑

Top 40 tenants represent 58.9% of occupied SF

❑

No exposure to energy-related tenants

❑

Limited coworking exposure, no exposure to WeWork

FRP Collection, Orlando Mission City, San Diego New Fitness Center

$0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

CONSERVATIVE STRUCTURE WITH STRONG LIQUIDITY

❑

38.6% leverage (1)(2)

❑

5.9x Net Debt / Annualized Adjusted EBITDA (2)

❑

3.8% weighted average interest rate

❑

85.9% fixed rate debt (3)

❑

4.9 year weighted average debt maturity

WELL STAGGERED DEBT MATURITIES ($000S) – MARCH 31, 2020

14

Debt Balance: $710.8 million (4)(5)

LIQUIDITY AS OF MARCH 31, 2020 LEVERAGE METRICS AS OF MARCH 31, 2020

(1) Calculated as net debt to enterprise value, using common share price of last capital raise ($13.85) (2) Net debt calculated as debt principal less cash, cash equivalents and restricted cash (3) Included in fixed rate debt is $50 million of term loan debt that has been effectively fixed throughout the duration of the term loan pursuant to a swap agreement (4) $710.8 million represents the principal debt balance as of March 31, 2020 before deferred financing costs and unamortized fair value adjustments (5) $7.9 million of indebtedness attributable to non-controlling interests

$84,861 Interest Rate: 4.34% $44,672 Interest Rate: 3.10% $124,215 Interest Rate: 3.54% $95,964 Interest Rate: 4.36% $190,789 Interest Rate: 4.10% $70,250 Interest Rate: 4.36% ❑

$147 million of cash and cash equivalents

❑

$18 million of restricted cash at property level

❑

$300 million unsecured credit facility of which $50 million is a term loan and $250 million is a revolving line of credit

❑

$100 million of the $250 million revolving line of credit was drawn at March 31, 2020

Credit Facility $100,000 Interest Rate: 2.49%

FOCUSED 18-HOUR CITY INVESTMENT STRATEGY

COMPANY HIGHLIGHTS

15

❑

Diversified portfolio of 5.8 million SF across leading 18-hour cities in the Southern and Western US (1)

❑

Markets positioned to outperform, driven by outsized employment and population growth

❑

Focused on well-located office properties in vibrant, amenity-rich and transit-oriented submarkets

(1) As of March 31, 2020

❑

Disciplined underwriting and active asset management to generate long-term value creation opportunities

❑

Focused on unlocking cash flow potential in the portfolio

❑

CIO’s six dispositions have generated $72 million of gains and a combined IRR of approximately 17%

PROVEN VALUE CREATION APPROACH

❑

Conservative balance sheet operating with lower leverage

❑

4.9 year weighted average debt maturity; no near-term maturities (1)

❑

Flexibility and consistent access to capital with $300 million unsecured credit facility

WELL-POSITIONED BALANCE SHEET WITH STRONG LIQUIDITY

❑

Average over 20 years of experience with over $2.5 billion of real estate acquisitions since 2010

❑

Deep relationships in CIO markets and strong reputation for execution

EXPERIENCED AND COMMITTED MANAGEMENT TEAM

Sorrento Mesa, San Diego Mission City, San Diego Central Fairwinds, Orlando Uptown Dallas, TX

EXECUTIVES AND BOARD OF DIRECTORS

16 John McLernon, Chairman Jamie Farrar, CEO & Director William Flatt, Director Sabah Mirza, Director Mark Murski, Director John Sweet, Director

BOARD OF DIRECTORS

JAMIE FARRAR, CHIEF EXECUTIVE OFFICER

❑

Over 20 years of real estate, private equity and corporate finance industry experience

❑

Completed the acquisition of over $2.5 billion of real estate since 2011

❑

Prior experience with a family office focused on real estate and hospitality as well as the private equity group of the TD Bank

GREG TYLEE, CHIEF OPERATING OFFICER & PRESIDENT

❑

Over 20 years of diverse real estate experience that includes acquisitions of income-producing properties as well as high-rise development

❑

Involved in real estate transactions, incl. development and management, with a combined enterprise value of over $3.0 billion

❑

Former President of Bosa Properties Inc., a prominent real estate development company with over 400 employees

TONY MARETIC, CHIEF FINANCIAL OFFICER, SECRETARY & TREASURER

❑

Over 20 years of experience, including over 15 years of experience in senior financial and operational roles

❑

Former Chief Operating Officer and Chief Financial Officer of Earls Restaurants Ltd., a multi-national hospitality company

❑

Held financial management positions with Bentall Kennedy and a senior living real estate company

✓ ✓ ✓ ✓ ✓ ✓ Indicates Independent Director

Metropolitan Area Property Economic Interest NRA (000s SF) In Place Occupancy Annualized Base Rent per SF Annualized Gross Rent per SF 1 Annualized Base Rent 2 (000s) Largest Tenant by NRA Pima Center 100.0% 272 87.0% $27.44 $27.44 $6,491 First American Title Insurance SanTan 100.0% 267 91.7% $28.11 $28.11 $6,868 Toyota Motor Credit 5090 N 40th St 100.0% 174 94.6% $28.58 $28.58 $4,714 Bar-S-Foods Co. Camelback Square 100.0% 174 78.8% $31.25 $31.25 $4,284 Digital Air Strike The Quad 100.0% 163 100.0% $29.20 $29.51 $4,759 Opendoor Labs, Inc. Papago Tech 100.0% 163 90.9% $22.46 $22.46 $3,322 Regional Acceptance Corp. Cherry Creek 100.0% 356 100.0% $18.59 $19.31 $6,612 State of Colorado Department of Health Circle Point 100.0% 272 94.3% $17.88 $31.76 $4,583 Epsilon Data Management, LLC Denver Tech 3 100.0% 381 78.0% $22.96 $27.02 $6,591 Jackson National Life Insurance Company Superior Pointe 100.0% 151 96.5% $18.08 $30.55 $2,641 KeyBank National Association Park Tower 94.8% 471 89.8% $25.58 $25.58 $10,820 GSA US Attorneys Office City Center 95.0% 242 93.1% $25.83 $25.83 $5,814 Kobie Marketing, Inc. Intellicenter 100.0% 204 100.0% $23.99 $23.99 $4,881

• H. Lee Moffitt Cancer Center

Carillon Point 100.0% 124 100.0% $28.36 $28.36 $3,522 Paychex, Inc. Florida Research Park 4 96.6% 397 96.9% $23.93 $27.39 $9,171 GSA - PEO STRI (US Dept of Defence) Central Fairwinds 97.0% 168 93.7% $25.10 $25.10 $3,956 Fairwinds Credit Union Greenwood Blvd 100.0% 155 100.0% $23.25 $23.25 $3,605 HF Management Services LLC Sorrento Mesa 100.0% 296 85.3% $25.77 $33.77 $6,507 Genopis, Inc. Mission City 100.0% 286 91.6% $35.43 $35.43 $9,276 Midland Credit Mgmt, Inc. 190 Office Center 100.0% 303 81.2% $25.55 $25.55 $6,288 United Healthcare Services, Inc. Lake Vista Pointe 100.0% 163 100.0% $16.00 $25.00 $2,613 Ally Financial Inc. 2525 McKinnon 100.0% 111 88.5% $28.23 $45.23 $2,782 The Retail Connection AmberGlen 76.0% 203 98.4% $21.78 $24.32 $4,342 Planar Systems, Inc. Cascade Station 100.0% 128 100.0% $26.69 $28.06 $3,403 Wells Fargo Bank, N.A. Seattle, WA Canyon Park 100.0% 207 100.0% $21.84 $29.84 $4,515 Seattle Genetics Inc. Total / Weighted Average - March 31, 2020 ⁵ 5,831 92.2% $24.66 $27.58 $132,360 Portland, OR Phoenix, AZ Orlando, FL Denver, CO Tampa, FL Dallas, TX San Diego, CA

APPENDIX: PROPERTY OVERVIEW

17

(1) Annualized gross rent per square foot includes adjustment for estimated expense reimbursements of triple net leases for the year ended March 31, 2020 (2) Annualized base rent is calculated by multiplying (i) rental payments (defined as cash rents before abatements) for the month ended March 31, 2020 by (ii) 12 (3) Denver Tech is comprised of 7601 Tech, which was acquired during the third quarter of 2019, and 7595 Tech (formerly “DTC Crossroads”) (4) Florida Research Park is comprised of FRP Collection and FRP Ingenuity Drive (5) Averages weighted based on the property’s NRA, adjusted for occupancy

Q1 2020 Q4 2019 Q3 2019 Q2 2019 Q1 2019 INCOME ITEMS Net income/(loss) 1,006 $ 2,988 $ (947) $ 1,321 $ (920) $ NOI 25,428 $ 24,499 $ 24,562 $ 26,645 $ 23,276 $ Same Store Cash NOI Growth 4.1% 3.9% 5.8% 5.9% 1.8% Net (loss)/income per share - diluted (0.02) $ 0.02 $ (0.07) $ (0.02) $ (0.07) $ Core FFO / Share 0.26 $ 0.25 $ 0.29 $ 0.34 $ 0.29 $ AFFO / Share 0.14 $ 0.14 $ 0.22 $ 0.26 $ 0.21 $ EBITDA (CIO share) 22,798 $ 21,919 $ 21,830 $ 23,327 $ 21,027 $ CAPITALIZATION Common shares 53,175 54,591 47,647 39,647 39,636 Unvested restricted shares 545 335 416 408 413 Total shares 53,720 54,926 48,063 40,055 40,049 Weighted average common shares outstanding - diluted 54,966 54,416 43,005 40,054 40,017 Share price at quarter end 7.23 $ 13.52 $ 14.39 $ 11.99 $ 11.31 $ Market value of common equity 388,393 $ 742,606 $ 691,629 $ 480,262 $ 452,949 $ Total Series A preferred shares outstanding 4,480 4,480 4,480 4,480 4,480 Liquidation preference per preferred share 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ Aggregate liquidation preference of preferred shares 112,000 $ 112,000 $ 112,000 $ 112,000 $ 112,000 $ Net debt - CIO share 539,017 $ 517,762 $ 617,518 $ 677,017 $ 657,080 $ Total enterprise value (including net debt) 1,039,410 $ 1,372,368 $ 1,421,147 $ 1,269,279 $ 1,222,029 $ DEBT STATISTICS AND RATIOS Total principal debt (CIO share) 702,846 $ 604,369 $ 649,114 $ 707,047 $ 693,248 $ Weighted average maturity 4.9 years 5.6 years 5.6 years 5.4 years 5.7 years Weighted average interest rate 3.8% 4.0% 4.0% 4.2% 4.2% Fixed rate debt as a percentage of total debt1 85.9% 100.0% 93.4% 79.0% 77.5% LEASING STATISTICS In-Place occupancy 92.2% 91.9% 91.2% 93.4% 92.6% Weighted average remaining lease term 4.4 years 4.4 years 4.5 years 4.5 years 4.7 years

APPENDIX: FINANCIAL HIGHLIGHTS

18

(in thousands, except per share data)

(1) The fixed rate debt percentage for Q1 2020, Q4 2019, and Q3 2019 factors in an interest rate swap applied against the $50 million term loan which effectively fixes the 30 day LIBOR rate component of the term loan at 1.27% throughout the duration of the loan

Q1 2020 Q4 2019 Q3 2019 Q2 2019 Q1 2019

Net (loss)/income attributable to common stockholders (1,031) $ 987 $ (2,966) $ (699) $ (2,944) $ (+) Depreciation and amortization 14,953 15,102 15,035 14,604 14,417 (-) Net gain on sale of real estate property

• (2,934)
• (478)
• 13,922

13,155 12,069 13,427 11,473 Non-controlling interests in properties: (+) Share of net income 182 146 164 165 169 (-) Share of FFO (342) (305) (310) (312) (316) Funds from Operations ("FFO") 13,762 $ 12,996 $ 11,923 $ 13,280 $ 11,326 $ (+) Stock based compensation 569 432 431 435 444 Core FFO 14,331 $ 13,428 $ 12,354 $ 13,715 $ 11,770 $ (+) Net recurring straight line rent/expense adjustment (361) (52) (127) (850) (978) (+) Net amortization of above and below market leases 16 40 24 (66) (29) (+) Net amortization of deferred financing costs and debt fair value 321 330 318 331 334 (-) Net recurring tenant improvements and incentives (2,475) (3,147) (1,723) (1,694) (1,298) (-) Net recurring leasing commissions (2,464) (1,521) (971) (592) (918) (-) Net recurring capital expenditures (1,455) (1,221) (526) (496) (542) Adjusted Funds from Operations ("AFFO") 7,913 $ 7,857 $ 9,349 $ 10,348 $ 8,339 $ Core FFO per common share 0.26 $ 0.25 $ 0.29 $ 0.34 $ 0.29 $ AFFO per common share 0.14 $ 0.14 $ 0.22 $ 0.26 $ 0.21 $ Dividends per common share 0.150 $ 0.235 $ 0.235 $ 0.235 $ 0.235 $ Core FFO Payout Ratio 58% 95% 82% 69% 80% AFFO Payout Ratio 104% 163% 108% 91% 113% Weighted average common shares outstanding - diluted 54,966 54,416 43,005 40,054 40,017

APPENDIX: FFO, CORE FFO AND AFFO

19

(in thousands, except per share data)

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