I N V E S TO R P R E S E NTATION N O V E M B E R 2 0 1 7 N YS E : - - PowerPoint PPT Presentation

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

N YS E : CIO

N O V E M B E R 2 0 1 7

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 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 acquisitions and dispositions and descriptions relating to these expectations, including, without limitation, the anticipated net operating income yield and cap rates. 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, 2016, 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 September 30, 2017.

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 Jeffrey Kohn, 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 $1.9 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 $2.0 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, of which 12 years were spent within the real estate industry



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



Held financial management positions with a U.S. based senior living real estate company and Bentall Kennedy

✓ ✓ ✓ ✓ ✓ ✓ ✓ Indicates Independent Director

COMPANY OVERVIEW

(1) Except for SSNOI and Avg Lease Term, which are as of September 30, 2017, all other information is as of September 30, 2017 adjusted for the acquisition of Papago Tech in October 2017 (2) Washington Group Plaza in Boise is under contract for disposition; this property is CIO’s only property in Boise (3) For a more detailed description of same store cash NOI as of September 30, 2017, please see our Q3 2017 Supplemental Financial Information package, available on our website (4) Annualized base rent is calculated by multiplying (i) rental payments (defined as cash rents before abatements) for the month ended September 30, 2017 by (ii) 12

48

Buildings

7.3%

2017 YTD SSNOI (3)

8

Markets

4.7 yrs

Avg Lease Term

5.2mm SF

Total NRA

$104.8mm

ABR (4)

88.9%

Occupancy

$24.23

Annualized Gross Rent /SF 4

% OF PORTFOLIO NRA DENVER, CO PORTLAND, OR DALLAS, TX ORLANDO, FL TAMPA, FL BOISE, ID (2) PHOENIX, AZ 4% 11% 18% 11% 11% 20%

CURRENT MARKETS (1)

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

12% SAN DIEGO, CA (1) 13%

4.6% 6.3% 7.9% 11.4% 11.7% 11.8% 11.9% 12.4% 12.6% 14.0% 0.0% 3.0% 6.0% 9.0% 12.0% 15.0%

Gateway Markets National Average San Diego, CA Portland, OR Denver, CO Phoenix, AZ Tampa, FL Dallas, TX Boise, ID Orlando, FL

2.4% 4.2% 5.0% 8.4% 8.8% 9.0% 9.3% 9.6% 9.8% 10.7% 0.0% 3.0% 6.0% 9.0% 12.0%

Gateway Markets National Average San Diego, CA Portland, OR Tampa, FL Denver, CO Phoenix, AZ Dallas, TX Boise, ID Orlando, FL

ATTRACTIVE MARKET CHARACTERISTICS

✓

Strong economic fundamentals and demographics

✓

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

✓

Demonstrated recovery in local real estate conditions

% PROJECTED JOB GROWTH FROM 2017 TO 2023 % PROJECTED POPULATION GROWTH FROM 2017 TO 2023

Source: SNL Financial as of November 1, 2017

(1) (1)

(1) Gateway markets represent New York, NY, Boston, MA, Chicago, IL, Los Angeles, CA, San Francisco, CA and Washington, D.C.

5

OUR STRATEGY

INVEST WHERE WE HAVE AN ADVANTAGE

(1) For a more detailed description of same store cash NOI, please see our Q3 2017 Supplemental Financial Information package, available on our website (2) As of September 30, 2017 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 (3) 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 (4) Includes 2525 McKinnon, the San Diego Portfolio and Papago Tech, which was acquired in October 2017

6



Focus on properties valued between $25-100 million



Supply-constrained market dynamics



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



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

OUTPERFORMANCE OF NON-GATEWAY OFFICE MARKETS



Outsized population and employment growth catalysts



Less competition from larger institutional investors



CIO same store cash NOI growth for the first nine months of 2017 was 7.3%, as compared to the first nine months of 2016 (1)



CIO continues to be ranked #1 in market exposure to job-related demand in Deutsche Bank’s REIT Job Tracker (2)

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

Announced Post – IPO Acquisition Cap Rates (3)

8.3% 7.5% 7.6% 7.2% 7.5% 2014 2015 2016 2017 YTD Avg.

(4)

April 2014 IPO Q4 2014 Q4 2015 Q4 2016 2017 YTD

PROVEN GROWTH STRATEGY

7

(1) As of September 30, 2017, adjusted for the acquisition of Papago Tech in October 2017 (2) Represents total revenue on a pro forma basis for the City Office Predecessor for the year ended December 31, 2013 and for the trailing 12 months ended September 30, 2017 (3) Financings subsequent to IPO, as of September 30, 2017, adjusted for the financing of Mission City in October 2017 (4) Represents implied asset value at IPO plus acquisitions at cost, and does not include impact of dispositions

OVER $1 BILLION IN TOTAL REAL ESTATE ACQUIRED

$307 Million $1.1 Billion



Multiple properties in nearly all current markets; creating significant economies of scale



Increased net rentable square footage to 5.2 million from 1.9 million at IPO (1)



Operating revenue increased to $96.6 million from $32.6 million at IPO (2)



Increased average annualized base rent per SF to $22.64 from $17.95 at IPO (1)

EFFICIENT ACCESS TO CAPITAL

TOTAL REAL ESTATE (4) $387 Million $559 Million



$216 million in common stock follow-on offerings



$112 million Series A preferred stock offering



$342 million in property-level debt financings (3) $816 Million

(1)

PROVEN VALUE CREATION

(1) The potential buyer has completed its due diligence review, waived certain conditions precedent for closing and made a $5 million non-refundable deposit. Customary conditions to closing remain

• utstanding, and there can be no assurance that the terms and timing of the disposition, if any, will meet our expectations

(2) Estimated accounting gain on sale based on an approximately $37 million net book value as of September 30, 2017

8

CORPORATE PARKWAY – ALLENTOWN, PA



$15.9 million gain on sale in June 2016



~6.6% disposition cap rate



Completed an early 10 year lease extension and secured the investment grade parent as the tenant

WASHINGTON GROUP PLAZA – BOISE, ID



Under contract for $86.5 million (1)



Greater than $45 million potential gain on sale (2)



~5.8% anticipated disposition cap rate



Completed numerous leasing transactions and implemented extensive operational improvements and cost savings



Opportunistic sale to largest tenant in the complex CIO’s three dispositions, including one under contract, are expected to generate in excess of $70 million of gains

AMBERGLEN – PORTLAND, OR



$9.2 million gain on sale in May 2017 for CIO’s 76% ownership



Retained three of the five building at AmberGlen, with long term lease profiles and quality tenants

Corporate Parkway Washington Group Plaza

RECENT COMPANY HIGHLIGHTS

9

THIRD QUARTER 2017



Core FFO of $0.19 per share and AFFO of $0.16 per share; had the San Diego Portfolio and Papago Tech closed at the beginning of the third quarter, we would have returned to full dividend coverage on a pro forma Core FFO and AFFO basis (1)



Same Store Cash NOI increased 4.1%, as compared to the third quarter of 2016, and 7.3% YTD



Closed the acquisition of a ten-building portfolio in San Diego, CA for $174.5 million (the “San Diego Portfolio”)



Increased the borrowing capacity under the Secured Credit Facility from $100 million to $150 million



Subsequent to quarter end, closed a $47.0 million property level financing for Mission City at a fixed rate of 3.8%



Subsequent to quarter end, closed on the $33.3 million acquisition of Papago Tech in Phoenix, AZ

(1) Analysis based on hypothetical net operating income and interest expense analysis; actual results may have differed and the Company is not providing any form of guidance with this statement

COMMENCED RENOVATIONS AT PARK TOWER IN TAMPA, FL



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



Marketing efforts gaining traction, with three new leases signed in the third quarter

Park Tower, Rendering

RECENT ACQUISITION – PAPAGO TECH

10

EXECUTION AND PIPELINE



Two buildings in Phoenix, AZ



$33.3 million / 162,748 SF



7.5% anticipated year one cap rate



Located in desirable Tempe submarket, with over $8.0 million recently invested in exceptional creative suite buildouts



Advanced acquisition pipeline with over $700 million of potential investment opportunities (1)



Concentrated in high growth markets, including Dallas, Denver, Orlando, Phoenix, Salt Lake City and Seattle



Focus on cap rates ranging from 7% to 8%; potential upside through below market rental rates

RECENT ACQUISITION HIGHLIGHTS SORRENTO MESA PAPAGO TECH

October 2017

(1) As of November 1, 2017

MISSION CITY

September 2017 September 2017



Six buildings in San Diego, CA



384,558 SF, Class B office and flex complex located in the Sorrento Mesa submarket



Value-add opportunities and 5.0 acre development parcel



Four buildings in San Diego, CA



285,095 SF, Class A office campus located in the Mission Valley submarket



Excellent freeway access, proximity to executive housing and strong corporate presence

$174.5 million San Diego Portfolio 7.4% combined pro forma cap rate

Tenant / Parent Credit Rating (S&P / Moody's) Property Tenant since NRA (000s) % of Net Rentable Area State of Colorado Aa1 Cherry Creek 1993 319 6.3% United Healthcare Services, Inc. A+ 190 Office Center 2008 198 3.9%

• St. Luke's Regional Medical Center

A3 Washington Group Plaza 2015 175 3.5% Ally Financial Inc. BB+ Lake Vista Pointe 2008 163 3.2%

• H. Lee Moffitt Cancer Center

A3 Intellicenter 2008 155 3.1% GSA – US Attorneys Office (2) AA+ Multiple 1998 144 2.9% Toyota Motor Credit Corporation AA- SanTan Corporate Center 2011 133 2.6% Kaplan, Inc. (3) BB+ FRP Ingenuity Drive 2008 125 2.5% Idaho State Tax Commission Aa1 Washington Group Plaza 1992 111 2.2% Paychex, Inc.

• Carillon Point

2010 98 1.9% Total 1,621 32.1%



Approximately 48.8% of CIO’s base rental revenue is derived from tenants that are government agencies, investment grade companies or their subsidiaries (1)



Portfolio in-place occupancy of 88.9% (1)



Benefit from low in-place rental rates with weighted average gross rental rate per square foot of $24.23 (1)

TOP TEN TENANTS OF OUR PROPERTIES

TENANT PROFILE

(1) As of September 30, 2017, adjusted for the acquisition of Papago Tech in October 2017 (2) The credit rating indicated is for the United States Government (3) Lease is to Kaplan, Inc. which is a subsidiary of Graham Holdings Company

11

LEASE EXPIRATIONS



Stable, long-term tenancy profile with well-staggered expirations



4.7 year weighted average remaining lease term (1)

LEASE MATURITY SCHEDULE (2) – SEPTEMBER 30, 2017

(1) As of September 30, 2017 (2) Percentage represents the square footage of the leases divided by the total square footage of the portfolio, as of September 30, 2017

12

8.7%

11.3% 1.6% 8.8% 7.7% 8.3% 15.5% 9.5% 6.1% 5.5% 2.8% 16.5% 3.0% 12.2% 0% 5% 10% 15% 20% 25% 30% Vacant & Contracted 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Thereafter

3.4% Washington Group Plaza – under contract for sale

$88,974 Interest Rate: 4.34% $47,071 Interest Rate: 3.73% $50,609 Interest Rate: 4.25% $91,767 Interest Rate: 4.61% $104,100 Interest Rate: 4.17%

$- $100,000 $200,000 $300,000 $400,000 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

$154,469 Interest Rate: 3.56%

GROWTH-ORIENTED BALANCE SHEET

 Conservative debt structure at favorable interest rates as of September 30, 2017 ▪

48.9% leverage

▪

4.1% weighted average interest rate

▪

77.3% fixed rate debt

▪

5.2 year average debt maturity

 $150 million authorized under Secured Credit Facility (increased authorized amount by $50 million in Q3 2017)  ~$50 million net proceeds expected to be received in early 2018 from Washington Group Plaza sale

DEBT MATURITY SCHEDULE ($000S) – SEPTEMBER 30, 2017

13

(1) $9.0 million of indebtedness attributable to non-controlling interests (2) $537.0 million represents the debt balance as of September 30, 2017 before deferred financing costs

Debt Balance: $537.0 million (1)(2)

$32,469 Washington Group Plaza – under contract for sale $122,000 Secured Credit Facility

STRONG AND STABLE PERFORMANCE

NET DEBT TO ENTERPRISE VALUE (2)

(1) Assumes that (i) other than Papago Tech, no acquisitions or dispositions occur in Q4 2017, (ii) CIO does not raise capital in Q4 2017, and (iii) no material changes to portfolio property performance (2) 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

QUARTERLY COMMON DIVIDENDS PAID

14

$0.235 $0.235 $0.235 $0.235 $0.235

$0.00 $0.05 $0.10 $0.15 $0.20 $0.25 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

11.6% AVERAGE ANNUAL TOTAL RETURN CORE FFO / SHARE

$0.23 $0.26 $0.21 $0.19 $0.29 - $0.31

$0.00 $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Guidance

(1) (1)

48% 45% 42% 40% 49%

0% 10% 20% 30% 40% 50% 60% Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

• 20%
• 10%

0% 10% 20% 30% 40% 50% 2014 2015 2016 2017

Total return from IPO through September 30, 2017 40.3% Source: SNL Financial

High Quality Properties with Strong Tenants

COMPANY HIGHLIGHTS

15



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



Approximately 48.8% 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 (2)



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 are expected to generate in excess of $70 million of gains (3)



YTD 2017 same store cash NOI growth of 7.3%, compared to the prior year period (2)



Conservative leverage profile with Net Debt / Enterprise Value of 48.9% (2)



Primarily fixed rate debt with a weighted average interest rate of 4.1% (2)



5.2 year average debt maturity (2)



Predictable earnings model with built-in rental rate growth



Management has an average of over 20 years of experience with over $1.9 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 September 30, 2017, adjusted for the acquisition of Papago Tech in October 2017 (2) As of September 30, 2017 (3) Corporate Parkway was sold on June 15, 2016, two buildings at AmberGlen were sold on May 2, 2017 and Washington Group Plaza is currently under contract for sale

APPENDIX: PROPERTY OVERVIEW

16

(1) Net leases have been grossed up by $10 for Superior Pointe, $8 for Lake Vista Pointe, $8 for FRP Ingenuity Drive, and $5 for Sorrento Mesa. 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 on a pro-rata basis. 2525 McKinnon has net leases for seven tenants which have been grossed up by $14 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 September 30, 2017 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 94.8% 473 79.8% $23.66 $23.66 $8,917 GSA US Attorneys Office City Center Apr-14 95.0% 241 99.0% $24.44 $24.44 $5,834 Kobie Marketing, Inc. Intellicenter Sep-15 100.0% 204 100.0% $22.82 $22.82 $4,645

• H. Lee Moffitt Cancer

Center Carillon Point Jun-16 100.0% 124 100.0% $26.77 $26.77 $3,325 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 53.3% $21.63 $21.63 $2,254 NTT America Inc. DTC Crossroads Jun-15 100.0% 191 77.2% $25.12 $25.12 $3,703 ProBuild Holdings, Inc. Superior Pointe Jun-15 100.0% 149 86.3% $16.42 $26.42 $2,111 KeyBank National Association Logan Tower Feb-15 100.0% 70 91.0% $19.90 $19.90 $1,273 State of Colorado Governor's Energy Sorrento Mesa Sep-17 100.0% 385 87.5% $22.88 $27.88 $7,700 VICAL, Inc. Mission City Sep-17 100.0% 285 86.7% $33.94 $33.94 $8,384 Innova Systems Boise, ID (11.5%) Washington Group Plaza Apr-14 100.0% 581 83.0% $17.64 $17.64 $8,504

• St. Lukes Regional

Medical Center 190 Office Center Sep-15 100.0% 303 88.6% $23.50 $23.50 $6,317 United Healthcare Services, Inc. Lake Vista Pointe Jul-14 100.0% 163 100.0% $15.00 $23.00 $2,450 Ally Financial Inc. 2525 McKinnon Jan-17 100.0% 111 100.0% $26.29 $36.04 $2,927 The Retail Connection FRP Collection Jul-16 95.0% 272 82.6% $22.65 $25.03 $5,085 GSA - PEO STRI (US Dept of Defence) Central Fairwinds Apr-14 90.0% 170 89.0% $23.92 $23.92 $3,611 Fairwinds Credit Union FRP Ingenuity Drive Nov-14 100.0% 125 100.0% $20.50 $28.50 $2,552 Kaplan, Inc. SanTan Dec-16 100.0% 267 100.0% $26.58 $26.58 $7,085 Toyota Motor Credit 5090 N 40th St Nov-16 100.0% 176 89.0% $28.21 $28.21 $4,417 Bar-S-Foods Co. Portland, OR (4.0%) AmberGlen Apr-14 76.0% 201 96.0% $19.17 $21.68 $3,702 Planar Systems, Inc. Total / Weighted Average - September 30, 2017 3 5,043 88.7% $22.66 $24.30 $101,234 Phoenix, AZ Papago Oct-17 100.0% 163 98.0% $22.18 $22.18 $3,539 Regional Acceptance Corp. Total / Weighted Average - Including Papago Acquisition 5,206 88.9% $22.64 $24.23 $104,773 Phoenix, AZ (8.8%) Denver, CO (19.1%) Orlando, FL (11.2%) Tampa, FL (20.6% of NRA) Dallas, TX (11.5%) San Diego, CA (13.3%)

APPENDIX: FINANCIAL HIGHLIGHTS

17

(in thousands, except per share data) Q3 2017 Q2 2017 Q1 2017 Q4 2016 Q3 2016 INCOME ITEMS NOI 14,057 $ 14,483 $ 15,787 $ 12,778 $ 11,406 $ Same Store Cash NOI Growth 4.1% 19.1% 0.7% 5.1% N/A Adjusted Cash NOI (CIO share) 13,779 $ 14,125 $ 14,497 $ 12,641 $ 10,155 $ Net (loss)/income per share- fully diluted (0.12) $ 0.27 $ (0.11) $ (0.21) $ (0.08) $ Core FFO / Share 0.19 $ 0.21 $ 0.26 $ 0.23 $ 0.27 $ AFFO / Share 0.16 $ 0.17 $ 0.20 $ 0.17 $ 0.19 $ EBITDA (CIO share) 12,531 $ 12,856 $ 13,947 $ 11,125 $ 9,983 $ Annualized dividend 0.94 $ 0.94 $ 0.94 $ 0.94 $ 0.94 $ Dividend yield 6.8% 7.4% 7.7% 7.1% 7.4% CAPITALIZATION Common shares 30,262 30,257 30,257 24,382 24,382 Unvested restricted shares 302 302 304 269 264 Common units 40 40 Total shares and units 30,564 30,559 30,561 24,691 24,686 Weighted average shares and units outstanding 30,562 30,563 29,804 24,689 24,685 Share price at quarter end 13.77 $ 12.70 $ 12.15 $ 13.17 $ 12.73 $ Market value of common equity 420,861 $ 388,101 $ 371,312 $ 325,174 $ 314,257 $ Total Series A preferred shares 4,480 4,480 4,480 4,480

• Liquidation preference per preferred share

25.00 $ 25.00 $ 25.00 $ 25.00 $

• $

Aggregate liquidation preference 112,000 $ 112,000 $ 112,000 $ 112,000 $

• $

Net debt - CIO share 509,835 $ 339,568 $ 347,019 $ 353,121 $ 285,951 $ Total enterprise value (including net debt ) 1,042,696 $ 839,669 $ 830,331 $ 790,295 $ 600,208 $ DEBT STATISTICS AND RATIOS Total principal debt (CIO share) 527,959 $ 406,863 $ 397,079 $ 366,332 $ 297,591 $ Weighted average maturity 5.2 years 6.7 years 6.5 years 5.3 years 6.1 years Average interest rate 4.1% 4.2% 4.3% 4.1% 4.3% Fixed rate debt as percentage of total debt 77.3% 100.0% 100.0% 86.0% 100.0% Adjusted interest coverage (CIO share) 2.9x 2.9x 3.2x 3.7x 2.9x Fixed charge coverage (CIO share) 1.9x 1.8x 2.0x 2.1x 2.7x Net debt/annualized adjusted EBITDA 8.1x 6.6x 6.1x 6.9x 7.1x LEASING STATISTICS In-Place occupancy 88.7% 90.1% 90.2% 91.0% 91.5% Weighted average remaining lease term 4.7 years 5.0 years 5.2 years 5.2 years 4.9 years

APPENDIX: FFO, CORE FFO AND AFFO

18

(in thousands, except per share data) Q3 2017 Q2 2017 Q1 2017 Q4 2016 Q3 2016 Net (loss)/income attributable to common stockholders (3,630) $ 8,208 $ (3,313) $ (5,080) $ (1,944) $ (+) Depreciation and amortization 9,449 9,148 10,498 9,345 7,763 (-) Net gain on sale of real estate property

• (12,116)
• (-) Operating Partnership unitholders' noncontrolling interest
• (5)

(3) 5,819 5,240 7,185 4,260 5,816 Non-controlling interests in properties: (+) Share of net income 52 3,104 168 111 65 (-) Share of FFO (245) (286) (373) (303) (206) Funds from Operations ("FFO") 5,626 $ 8,058 $ 6,980 $ 4,068 $ 5,675 $ (+) Stock based compensation 259 352 827 649 630 (-) Change in fair value of contingent consideration

• (2,000)
• (+) Acquisition costs
• 353

252 (+) Change in fair value of earn-out

• 500
• Core FFO

5,885 $ 6,410 $ 7,807 $ 5,570 $ 6,557 $ (+) Net recurring straight line rent adjustment 114 104 (129) 328 (967) (+) Net amortization of above and below market leases (53) (80) (3) 159 17 (+) Net amortization of deferred financing costs 366 325 315 277 195 (-) Net recurring tenant improvements and incentives (627) (426) (253) (565) (674) (-) Net recurring leasing commissions (379) (551) (1,281) (998) (217) (-) Net recurring capital expenditures (272) (446) (431) (568) (279) Adjusted Funds from Operations ("AFFO") 5,034 $ 5,336 $ 6,025 $ 4,203 $ 4,632 $ Core FFO per common share and unit 0.19 $ 0.21 $ 0.26 $ 0.23 $ 0.27 $ AFFO per common share and unit 0.16 $ 0.17 $ 0.20 $ 0.17 $ 0.19 $ Dividends per common share and unit 0.235 $ 0.235 $ 0.235 $ 0.235 $ 0.235 $ Core FFO Payout Ratio 122% 112% 90% 104% 88% AFFO Payout Ratio 143% 135% 116% 138% 125% Weighted average common stock and common units outstanding 30,562 30,563 29,804 24,689 24,685

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