I N V E S TO R P R E S E NTATION A U G U S T 2 0 1 8 N YS E : CIO - - PowerPoint PPT Presentation

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

N YS E : CIO

A U G U S T 2 0 1 8

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. (“CIO” or the “Company”) and its current beliefs as to the outcome and timing of future events. 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 our financial and operating performance, including under metrics such as market rental rates, national or local economic growth, estimated replacement costs of our properties, projected capital improvements, expected sources of financing, expectations as to the timing of closing of acquisitions, dispositions, or other transactions, the expected operating performance of anticipated near-term or recent acquisitions and dispositions and descriptions relating to these expectations, including, without limitation, anticipated net operating income yield, cap rates and the Company’s projections for its performance in future periods. Forward-looking statements presented in this presentation are based on management’s beliefs and assumptions made by, and information currently available to, management. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “seek,” “anticipate,” “estimate,” “believe,” “could,” “project,” “predict,” “hypothetical,” “continue,” “future” or other similar words or expressions. All forward-looking statements included in this presentation are based upon information available to the Company on the date hereof and the Company is under no duty to update any of the forward-looking statements after the date of this presentation to conform these statements to actual

• results. The forward-looking statements involve a number of significant risks and uncertainties. Factors that could have a material adverse effect on

the Company’s operations and future prospects are set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and subsequent filings with the SEC, including the sections entitled “Risk Factors” contained therein. The factors set forth in the Risk Factors section and otherwise described in the Company’s filings with SEC could cause the Company’s actual results to differ significantly from those contained in any forward-looking statement contained in this presentation. The Company does not guarantee that the assumptions underlying such forward-looking statements are free from errors. Unless otherwise stated, historical financial information and per share and other data is as of June 30, 2018. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, the Company’s business, financial condition, liquidity, cash flows and results could differ materially from those expressed in any forward-looking statement. While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. Any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise over time, and it is not possible for us to predict the occurrence of those matters or the manner in which they may affect us. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. Use caution in relying on past forward-looking statements, which were based on results and trends at the time they were made, to anticipate future results or trends. 2

EXECUTIVES AND BOARD OF DIRECTORS

3 John McLernon, Chairman Jamie Farrar, CEO & Director William Flatt, Director Mark Murski, Director Stephen Shraiberg, 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 $2.0 billion of real estate since 2011



Prior experience with a family office focused on real estate and hospitality and 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 $2.5 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

Central Fairwinds, Orlando DTC Crossroads, Denver 5090 N 40th St, Phoenix 2525 McKinnon, Dallas Park Tower, Tampa Circle Point, Denver Pima Center, Phoenix City Center, Tampa Mission City, San Diego

11%

COMPANY OVERVIEW

Note: Unless otherwise noted, all information is as of June 30, 2018 adjusted for the acquisition of Circle Point and The Quad in July 2018 (1) Percentage of portfolio NRA (2) Based on common share price of $12.83 as of June 29, 2018

Dedicated

Class A & B Office Owner

Targeted

High Growth, Mid-Sized Metros

Flexible

Balance Sheet Positioned For Growth

Experienced

Management Team and Board of Directors

Attractive

7.3% Dividend Yield (2) City Office invests in high-quality office properties in mid-sized metropolitan areas with strong economic fundamentals, primarily in the Southern and Western United States

DENVER, CO PORTLAND, OR DALLAS, TX ORLANDO, FL TAMPA, FL PHOENIX, AZ 4% 23% 11% 19% 19% SAN DIEGO, CA 13%

CURRENT MARKETS (1)

5

Market

• No. of

Buildings NRA (000s SF) Annualized Gross Rent per SF In Place Occupancy Denver, CO 12

1,235

$23.56 85.4% Phoenix, CO 21

1,040

$25.80 97.5% Tampa, FL 5

1,039

$24.54 92.9% San Diego, CA 10

671

$31.51 81.4% Dallas, TX 4

577

$27.70 92.8% Orlando, FL 7

565

$26.68 86.9% Portland, OR 3

201

$22.64 94.8% Total 62 5,328 $25.88 90.0%

8.3% 7.5% 7.6% 7.2% 7.4% 7.5%

2014 2015 2016 2017 2018 YTD Avg.

WHY CIO MARKETS?

• 1. NATION-LEADING OFFICE DEMAND DRIVERS (1)

Square Feet (in Millions)

6

• 2. NEW SUPPLY BELOW HISTORICAL AVERAGES (2)
• 3. ATTRACTIVE MARKET CHARACTERISTICS
• 4. OUTSIZED RETURN & GROWTH POTENTIAL

✓ CIO continues to be ranked #1 in market exposure to job-related demand in Deutsche Bank’s REIT Job Tracker (3) ✓ Diverse employment base with national and international employers ✓ Educated workforce ✓ Low-cost center for businesses to operate ✓ Strong and stable demand generators such as state capitals or university proximity ✓ Live, work, play environments; attractive to millennials

% PROJECTED POPULATION GROWTH 2018 - 2023 % PROJECTED EMPLOYMENT GROWTH 2018 - 2023

• 5

10 15 20 25 30 35 40 45

CONSTRUCTION DELIVERIES IN CIO CURRENT MARKETS 1977 - 2017 ANNOUNCED POST-IPO PROJECTED ACQUISITION CAP RATES (4) AVG

3.3% 4.4% 8.0%

Gateway Markets National Avg CIO Markets

2.7% 3.7% 7.1%

Gateway Markets National Avg CIO Markets (1) Source: SNL Financial, as of August 1, 2018. 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) As of May 31, 2018 for the trailing 12 months. For REITs under coverage by Deutsche Bank Equity Research – North America. Ranking based on weighted average year over year non-seasonally adjusted job growth rate for each REIT under coverage (4) 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

OUR STRATEGY

DISCIPLINED REAL ESTATE UNDERWRITING

7



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



Less competition from larger institutional investors



Leverage local partner and property manager relationships to source acquisition opportunities and efficiently operate



Build on existing infrastructure in our current markets

INVEST WHERE WE HAVE AN ADVANTAGE



High credit tenancy, below market in-place rents and acquisition prices below replacement cost



Average acquisition size of $49.0 million post-IPO (1)



Detailed underwriting process and due diligence; confront adverse findings during acquisition diligence



Passed on $1.6 billion of potential transactions in 2018 YTD for which detailed underwriting was completed

CIO’s strategy is to produce attractive returns through a focused acquisition strategy and increasing property cash flows

(1) As of June 30, 2018 adjusted for the acquisition of Circle Point and The Quad in July 2018 FRP Ingenuity Drive, Orlando Intellicenter, Tampa

$0 $30 $60 $90 $120 IPO (4/14) 2014 2015 2016 2017 2018 YTD

SUCCESSFULLY EXECUTING GROWTH STRATEGY

GROWTH AND DIVERSIFICATION IN REVENUES (3) EXPANSION INTO LEADING SUBMARKETS

8

OVER $1B IN TOTAL REAL ESTATE ACQUIRED (1,2) GAINING ECONOMIES OF SCALE IN ALL MARKETS (1)



Denver: Cherry Creek, Downtown Denver, Denver Technology Center, Greenwood Village, Northwest Corridor



Phoenix: Scottsdale, Tempe, Camelback Corridor, Chandler



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



Dallas: Uptown, Lewisville, Richardson/Plano



Orlando: Downtown Orlando, Florida Research Park



Portland: Sunset Corridor

$0 $300 $600 $900 $1,200 $1,500 IPO (4/14) 2014 2015 2016 2017 2018 YTD $1.2B $118M

• 2

4 6 IPO (4/14) 2014 2015 2016 2017 2018 YTD 5.3M SF 1.9M SF $307M $33M

($M) (M SF) ($M) (1) As of June 30, 2018, adjusted for the acquisition of Circle Point and The Quad in July 2018 (2) Represents implied asset value at IPO plus acquisitions at cost, and does not include impact of dispositions (3) IPO represents total revenue on a pro forma basis for the City Office Predecessor for the year ended December 31, 2013; 2018 YTD represents total revenues for the 12 months ended June 30, 2018 NET RENTABLE AREA

9

RECENT ACQUISITIONS AND PIPELINE



Two-building complex in the Northwest submarket of Denver, CO



$59.8 million / 271,528 SF



6.8% anticipated year one cash NOI cap rate



In-place rents approximately 10% below market



93% leased at close with avg. lease term remaining of 7.0 years



Premier Class A office campus with excellent mountain views, contemporary finishes, onsite café and a landscaped park area



Closed $167 million of acquisitions YTD 2018 (1)



Advanced acquisition pipeline with over $500 million of potential investment opportunities (1)



Concentrated in CIO current markets and potential expansion markets with similar characteristics



Focus on ~7.0% + cap rates; potential upside through below market rental rates and elevating the property’s market position

CIRCLE POINT – ACQUIRED JULY 2018 THE QUAD – ACQUIRED JULY 2018



14-building campus on 13 acres in Scottsdale, AZ



$51.0 million / 162,902 SF



7.1% anticipated year one cash NOI cap rate



97% leased at close with avg. lease term remaining of 5.0 years



2018 NAIOP Redevelopment of the Year award winner



One-of-a-kind creative campus, featuring best-in-class buildouts, collaborative environment and comprehensive amenity package

Conference and Amenity Center Creative Office Indoor / Outdoor Spaces (1) As of August 1, 2018

VALUE CREATION & EMBEDDED VALUE

(1) Calculated using estimated allocated equity value at IPO and known closing costs as of the date of the presentation (2) Based on forward net operating income at the time the property was placed under contract for sale (3) Calculated using estimated allocated equity value at IPO; IRR prorates initial equity value, cash flows from the property and final distribution based on the square footage of the two assets sold divided by the total square footage of the five buildings that initially comprised the AmberGlen property

10

EMBEDDED VALUE EXAMPLE - LAND HOLDINGS



Land holdings at three properties in San Diego, Tampa and Orlando



29 acres of prime, developable land



Opportunity to monetize land or participate in development ventures

WASHINGTON GROUP PLAZA – BOISE, ID



Sold in Q1 2018 for $86.5 million



22% IRR and $47.0 million gain (1)



~5.8% disposition cap rate (2)



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 three dispositions have generated over $70 million of gains

PRIOR ASSET SALES



Corporate Parkway – Allentown, PA



51% IRR and $15.9 million gain



AmberGlen – Portland, OR



17% IRR and $9.2 million gain for CIO’s 76% ownership (3)

EMBEDDED VALUE EXAMPLE - FRP INGENUITY DRIVE



Acquired in 2014 at an elevated 9.0% cap rate as a single tenant building with a portion of the building subleased and a portion unused



Completed 78,470 SF lease transaction (63% of NRA) to multi-tenant the building and extend lease term to 10 years on that portion



Solidified the property’s future cash flow and repositioned the entire property for a superior market valuation

RECENT COMPANY HIGHLIGHTS

11

SECOND QUARTER 2018



Core FFO of $0.26 per share and AFFO of $0.19 per share



Executed approximately 140,000 square feet of new and renewal leases during the quarter



Occupancy ended the quarter at 89.6%; 90.0% occupancy including Circle Point and The Quad

LEASE-UP AT PARK TOWER IN TAMPA, FL



Extensive multi-million dollar renovation of the building’s façade, lobby and amenities



Marketing efforts gaining traction, with ten new leases signed YTD 2018 for a total of over 35,000 SF (1)



Executing leases at rents approximately 20% higher than in- place rents at the time of acquisition

Rendering

MAJOR LEASING TRANSACTION IN SAN DIEGO



CIO acquired a 69,000 SF value-add building as part of the San Diego portfolio acquisition, which was 100% leased to a tenant that was expected to vacate December 31, 2018



In July 2018, CIO executed a 69,000 SF lease to a life sciences tenant that commences on January 1, 2019



Attractive terms with $37.80 NNN starting rate and no downtime

(1) Includes two leases executed after June 30, 2018

Finance And Insurance 25% Technology and Information 17% Government 16% Professional and Technical Services 15% Health Care and Life Sciences 11% Real Estate 3% Educational Services 3% Accommodation and Food 3% Construction 2% Other 5%

8.7% 3.5% 8.1% 9.1% 15.1% 13.0% 10.9% 6.5% 4.3% 13.7% 5.8%

1.3% Contracted 0.0% 10.0% 20.0% 30.0% Vacant & Contracted 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 & Thereafter

DIVERSIFIED TENANT BASE (1)

TENANT PROFILE

12

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

Tenant / Parent Credit Rating (S&P / Moody's) Tenant Since NRA (000s) % of Net Rentable Area State of Colorado Dept. of Health Aa1 1993 319 6.0% United Healthcare Services, Inc. A+ 2008 198 3.7% Ally Financial Inc. BB+ 2008 163 3.1%

• H. Lee Moffitt Cancer Center

A3 2008 155 2.9% Toyota Motor Credit Corporation AA- 2011 133 2.5% Kaplan, Inc. (3) BB+ 2008 125 2.3% GSA – US Attorneys Office (4) AA+ 1998 108 2.0% Paychex, Inc

• 2009

98 1.8% First American Title Insurance A- 2009 97 1.8% Epsilon Data Management, LLC

• 2018

83 1.6% Total 1,479 27.7% (1) Percentage of portfolio NRA as of June 30, 2018; derived from the North American Industry Classification System (NAICS) (2) As of June 30, 2018, adjusted for the acquisitions of Circle Point and The Quad in July 2018 (3) Lease is to Kaplan, Inc. which is a subsidiary of Graham Holdings Company (4) The credit rating indicated is for the United States Government



Q4 2018 Core FFO of $0.31 to $0.34 per diluted share

▪

Represents 12% increase over Q4 2017 Core FFO, removing the impact of termination fee income in Q4 2017



90.0% - 93.0% December 31, 2018 Occupancy

PATH TO INCREASED OCCUPANCY AND CORE FFO

13



Q2 2018 occupancy of 90.0% (1)



Continue to focus on a small group of assets with lower occupancy



Portfolio 94.4% occupied removing the four assets below (1)

LEASING OPPORTUNITIES IN THE PORTFOLIO

DTC CROSSROADS, DENVER – 71.7% OCCUPIED

 53,000 SF of vacant space  Restacked building to create top floor availability  Amenity addition and upgrade in process

PLAZA 25, DENVER – 59.8% OCCUPIED

 79,000 SF of vacant space  Significant repositioning plan created  Repositioning on hold while options evaluated

FRP COLLECTION, ORLANDO – 75.5% OCCUPIED

 67,000 SF of vacant space (13,000 contracted)  44,000 SF tenant recently moved out  Desirable building, low submarket vacancy

SORRENTO MESA – 76.2% OCCUPIED

 Vacancy consists of two blocks – one 44,000

SF building and one 48,000 SF space in a partially occupied building

 Desirable buildings, low submarket vacancy

2018 GUIDANCE UPDATE (AS OF JUNE 30, 2018) (2)

INCREASED REAFFIRMED



2018 Core FFO per diluted share

▪

New: $1.10 to $1.14 per diluted share

▪

Previous: $1.08 to $1.13 per diluted share



2018 property of acquisitions of $210 million to $240 million completed by the end of Q3 2018

▪

$167 million of acquisitions closed as of July 2018



No 2018 dispositions or capital raises have been assumed

(1) As of June 30, 2018 adjusted for the acquisition of Circle Point and The Quad in July 2018 (2) See our 2018 earnings press releases for further discussion of the material assumptions underlying the Company’s guidance. This outlook reflects management’s view of current and future acquisitions and market conditions which management cannot guarantee will occur as expected, or at all

GUIDANCE MATERIAL ASSUMPTIONS (2)

$0 $100,000 $200,000 $300,000 $400,000 $500,000 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

$87,787 Interest Rate: 4.34% $46,386 Interest Rate: 3.73% $50,175 Interest Rate: 4.25% $91,547 Interest Rate: 4.61% $150,961 Interest Rate: 4.05% $58,500 Interest Rate: 3.28%

CONSERVATIVE STRUCTURE WITH LOCKED IN RATES



44.4% leverage



7.0x Net Debt / Annualized Adjusted EBITDA



4.1% weighted average interest rate



88% fixed rate debt



6.2 year weighted average debt maturity



$250 million unsecured credit facility with an additional $250 million accordion feature

WELL STAGGERED DEBT MATURITIES ($000S) – JUNE 30, 2018

14

Debt Balance: $485.4 million (1)(2)

PREDOMINANTLY FIXED RATE DEBT SUMMARY AS OF JUNE 30, 2018

12.0% Line of Credit

88.0% Fixed Rate

(1) $9.0 million of indebtedness attributable to non-controlling interests (2) $485.4 million represents the principal debt balance as of June 30, 2018 before deferred financing costs

FULLY DEPLOYED

STRONG AND STABLE PERFORMANCE

38% TOTAL RETURN SINCE 2014 IPO (2) INCREASING LIQUIDITY OF COMMON STOCK (4)

15

CORE FFO / SHARE NET DEBT TO ENTERPRISE VALUE (1)

$0.21 $0.19 $0.31 $0.28 $0.26

$0.00 $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

40% 49% 45% 43% 44%

0% 10% 20% 30% 40% 50% 60% Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

• 100,000

200,000 300,000 400,000 500,000 2014 2015 2016 2017 2018

• 20%

0% 20% 40% 2014 2015 2016 2017 2018

Daily Trading Volume (Shares)

+38% +27%

CIO Office REITS (3)

(1) Net Debt to Enterprise Value calculated as CIO share of debt less CIO share of unrestricted cash divided by market value as of quarter end (2) Source: SNL Financial, total return to common shareholders including reinvestment of dividends (3) SNL US Office REIT Index (4) Source: SNL Financial

High Quality Properties with Strong Tenants

COMPANY HIGHLIGHTS

16



Well-located office properties in amenity-rich and transit-oriented locations



Approximately 40% of CIO’s base rental revenue is derived from tenants that are government agencies, investment grade companies or their subsidiaries (1)



Staggered lease maturities with a 4.7 year weighted average remaining lease term (1)



Core markets are located in high growth areas within the Southern and Western US



National leaders in employment growth and population growth



CIO’s three dispositions have generated in excess of $70 million of gains (2)



Conservative leverage profile with Net Debt / Enterprise Value of 44.4% (3)



Primarily fixed rate debt with a weighted average interest rate of 4.1% (3)



6.2 year weighted average debt maturity (3)



Predictable earnings model with built-in rental rate growth



Management has an average of over 20 years of experience with over $2.0 billion of real estate acquisitions since 2011



Internalized management team in February 2016

Proven Value Creation and Markets Positioned for Growth Strong Balance Sheet with Consistent Cash Flow Generation Experienced and Committed Management

(1) As of June 30, 2018, adjusted for the acquisitions of Circle Point and The Quad in July 2018 (2) Corporate Parkway was sold in June 2016, two buildings at AmberGlen were sold in May 2017 and Washington Group Plaza was sold in March 2018 (3) As of June 30, 2018

APPENDIX: PROPERTY OVERVIEW

17

(1) For Superior Pointe, FRP Ingenuity Drive, Lake Vista Pointe, and Sorrento Mesa the annualized base rent per square foot on a triple net basis was increased by $12, $8, $8, and $5 respectively, to estimate a gross equivalent base rent. AmberGlen has a net lease for one tenant which has been grossed-up by $7 on a pro rata basis. FRP Collection has net leases for three tenants which have been grossed up by $8

• n a pro-rata basis. 2525 McKinnon has net leases for nine tenants which have been grossed up by $16 on a pro-rata basis. Circle Point has net leases for fourteen tenants which have been grossed up by $13
• n a pro-rata basis. The Quad has one tenant with a net lease, which has been grossed up by $7 on a pro-rata basis

(2) Annualized base rent is calculated by multiplying (i) rental payments (defined as cash rents before abatements) for the month ended June 30, 2018 by (ii) 12 (3) Averages weighted based on the property’s NRA, adjusted for occupancy Metropolitan Area Property Date Acquired Economic Interest NRA (000s SF) In Place Occupancy Annualized Base Rent per SF Annualized Gross Rent per SF1 Annualized Base Rent2 (000s) Largest Tenant by NRA Park Tower Nov-16 94.80% 470 85.0% $24.03 $24.03 $9,599 GSA US Attorneys Office City Center Apr-14 95.0% 241 98.5% $24.96 $24.96 $5,930 Kobie Marketing, Inc. Intellicenter Sep-15 100.0% 204 100.0% $23.36 $23.36 $4,754

• H. Lee Moffitt Cancer Center

Carillon Point Jun-16 100.0% 124 100.0% $27.36 $27.36 $3,398 Paychex, Inc. Cherry Creek Apr-14 100.0% 356 100.0% $18.10 $18.10 $6,438 State of Colorado Department of Health Plaza 25 Jun-14 100.0% 196 59.8% $20.14 $20.14 $2,359 Catamaran PBM of Colorado, LLC DTC Crossroads Jun-15 100.0% 189 71.7% $25.12 $25.12 $3,407 ProBuild Holdings, Inc. Superior Pointe Jun-15 100.0% 151 92.1% $16.88 $28.88 $2,342 KeyBank National Association Logan Tower Feb-15 100.0% 71 76.9% $20.33 $20.33 $1,105 State of Colorado Governor's Energy Sorrento Mesa Sep-17 100.0% 385 76.2% $24.04 $29.04 $7,041 VICAL, Inc. Mission City Sep-17 100.0% 286 88.3% $34.38 $34.38 $8,680 InnovaSystems International Pima Center Apr-18 100.0% 272 99.4% $26.70 $26.70 $7,214 First American Title Insurance SanTan Dec-16 100.0% 267 98.6% $27.13 $27.13 $7,131 Toyota Motor Credit 5090 N 40th St Nov-16 100.0% 175 92.4% $28.62 $28.62 $4,622 Bar-S-Foods Co. Papago Tech Oct-17 100.0% 163 98.0% $20.17 $20.17 $3,219 Regional Acceptance Corp. 190 Office Center Sep-15 100.0% 303 88.9% $24.64 $24.64 $6,645 United Healthcare Services, Inc. Lake Vista Pointe Jul-14 100.0% 163 100.0% $15.50 $23.50 $2,532 Ally Financial Inc. 2525 McKinnon Jan-17 100.0% 111 93.0% $27.01 $42.32 $2,795 The Retail Connection FRP Collection Jul-16 95.0% 272 75.5% $25.19 $27.12 $5,165 GSA - PEO STRI (US Dept of Defence) Central Fairwinds Apr-14 90.0% 168 95.6% $24.31 $24.31 $3,908 Fairwinds Credit Union FRP Ingenuity Drive Nov-14 100.0% 125 100.0% $21.00 $29.00 $2,615 Kaplan, Inc. Portland, OR AmberGlen Apr-14 76.0% 201 94.8% $19.99 $22.64 $3,813 Planar Systems, Inc. Total / Weighted Average - Jun 30, 2018 ³ 4,893 89.6% $23.89 $25.69 $104,712 Denver, CO Circle Point Jul-18 100.0% 272 92.7% $16.91 $29.80 $4,258 Epsilon Data Management, LLC Phoenix, AZ The Quad Jul-18 100.0% 163 97.4% $24.63 $24.85 $3,910 Opendoor Labs, Inc Total / Weighted Average - Including recent acquisitions 5,328 90.0% $23.55 $25.88 $112,880 Orlando, FL Tampa, FL Denver, CO San Diego, CA Phoenix, AZ Dallas, TX

APPENDIX: JLL CAP RATE SURVEY

18

Weighted Average of JLL H2 2017 Suburban Class A Cap Rate Survey for CIO Markets is 6.5% (1)

(1) Weighted based on the NRA of CIO properties in each market as of June 30, 2018, adjusted for the acquisition of Circle Point and The Quad in July 2018

Statistics below are for suburban cap rates. Approximately 1/3 of our portfolio is located in the CBD or the city’s highest rent, premium submarkets which typically command a lower cap rate

Q2 2018 Q1 2018 Q4 2017 Q3 2017 Q2 2017 INCOME ITEMS Net (loss)/income (684) $ 47,198 $ (987) $ (1,723) $ 13,167 $ NOI 18,488 $ 19,909 $ 19,273 $ 14,057 $ 14,483 $ Same Store Cash NOI Growth (3.1%) (1.4%) (3.6%) 4.1% 19.1% Net (loss)/income per share- fully diluted (0.07) $ 1.24 $ (0.09) $ (0.12) $ 0.27 $ Core FFO / Share 0.26 $ 0.28 $ 0.31 $ 0.19 $ 0.21 $ AFFO / Share 0.19 $ 0.18 $ 0.21 $ 0.16 $ 0.17 $ EBITDA (CIO share) 16,503 $ 17,886 $ 17,603 $ 12,531 $ 12,856 $ CAPITALIZATION Common shares 36,133 36,132 36,012 30,262 30,257 Unvested restricted shares 341 335 307 302 302 Total shares 36,474 36,467 36,319 30,564 30,559 Weighted average shares outstanding 36,473 36,432 31,193 30,562 30,563 Share price at quarter end 12.83 $ 11.56 $ 13.01 $ 13.77 $ 12.70 $ Market value of common equity 467,965 $ 421,564 $ 472,511 $ 420,861 $ 388,101 $ 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 462,519 $ 401,078 $ 473,550 $ 509,835 $ 339,568 $ Total enterprise value (including net debt ) 1,042,484 $ 934,642 $ 1,058,061 $ 1,042,696 $ 839,669 $ DEBT STATISTICS AND RATIOS Total principal debt (CIO share) 476,382 $ 418,850 $ 485,465 $ 527,959 $ 406,863 $ Weighted average maturity 6.2 years 6.8 years 6.2 years 5.2 years 6.7 years Weighted average interest rate 4.1% 4.2% 4.2% 4.1% 4.2% Fixed rate debt as percentage of total debt 88.0% 100.0% 93.2% 77.3% 100.0% LEASING STATISTICS In-Place occupancy 89.6% 88.3% 87.7% 88.7% 90.1% Weighted average remaining lease term 4.5 years 4.7 years 4.7 years 4.7 years 5.0 years

APPENDIX: FINANCIAL HIGHLIGHTS

19

APPENDIX: FFO, CORE FFO AND AFFO

20

Q2 2018 Q1 2018 Q4 2017 Q3 2017 Q2 2017

Net (loss)/income attributable to common stockholders (2,653) $ 45,208 $ (2,920) $ (3,630) $ 8,208 $ (+) Depreciation and amortization 11,771 11,893 12,499 9,449 9,148 (-) Net gain on sale of real estate property

• (46,980)
• (12,116)

9,118 10,121 9,579 5,819 5,240 Non-controlling interests in properties: (+) Share of net income 114 135 78 52 3,104 (-) Share of FFO (283) (302) (261) (245) (286) Funds from Operations ("FFO") 8,949 $ 9,954 $ 9,396 $ 5,626 $ 8,058 $ (+) Stock based compensation 356 350 241 259 352 (-) Change in fair value of contingent consideration

• (2,000)

Core FFO 9,305 $ 10,304 $ 9,637 $ 5,885 $ 6,410 $ (+) Net recurring straight line rent adjustment (738) (763) (255) 114 104 (+) Net amortization of above and below market leases 58 (202) (213) (53) (80) (+) Net amortization of deferred financing costs 348 626 419 366 325 (-) Net recurring tenant improvements and incentives (807) (1,509) (1,125) (627) (426) (-) Net recurring leasing commissions (589) (760) (1,442) (379) (551) (-) Net recurring capital expenditures (514) (985) (457) (272) (446) Adjusted Funds from Operations ("AFFO") 7,063 $ 6,711 $ 6,564 $ 5,034 $ 5,336 $ Core FFO per common share 0.26 $ 0.28 $ 0.31 $ 0.19 $ 0.21 $ AFFO per common share 0.19 $ 0.18 $ 0.21 $ 0.16 $ 0.17 $ Dividends per common share 0.235 $ 0.235 $ 0.235 $ 0.235 $ 0.235 $ Core FFO Payout Ratio 92% 83% 76% 122% 112% AFFO Payout Ratio 121% 128% 112% 143% 135% Weighted average common shares outstanding 36,473 36,432 31,193 30,562 30,563

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