I N V E S TO R P R E S E NTATION A U G U S T 2 0 2 0 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 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 ongoing 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 June 30, 2020 or relate to the quarter ended June 30, 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 Denver 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

1,214

$28.02 89.3% 3.1 Denver, CO 9

1,160

$26.40 90.0% 5.5 Tampa, FL 5

1,041

$26.10 93.8% 4.2 Orlando, FL 8

720

$25.83 97.0% 4.5 San Diego, CA 9

582

$34.95 87.4% 3.4 Dallas, TX 4

577

$29.43 87.9% 2.9 Portland, OR 5

331

$26.06 99.0% 3.8 Seattle, WA 3

207

$29.84 100.0% 8.6 Total 65 5,832 $27.77 91.9% 4.2 12%

Note: All information as of June 30, 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% 16% 21% SAN DIEGO, CA 15%

CURRENT MARKETS (1)

4

SEATTLE, WA 4%

COMPANY OVERVIEW

+126k

+92k

+54k +49k +50k +37k +21k

+10k

• 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 NET MIGRATION TO 18-HOUR CITIES

✓ High-quality urban living experience in amenitized setting ✓ Low or no state taxes in most markets ✓ 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 1979 - 2019 DEPICTS POPULATION CHANGE (PEOPLE PER YEAR) INTO CIO MARKETS (3) AVG (1) Source: SNL Financial, as of August 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) Average annual population change from July 2017 to July 2019 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 value-enhancing leasing, rent collection and growing 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 flow

❑

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, 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

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 40 acres of prime, developable land

❑

Located in Denver, Orlando, San Diego and Tampa

❑

7.8-acre portion of Circle Point Land sold in July 2020 for $6.5 million

❑

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 improvement plan to be completed in 2020; post-renovation rents expected to be ~20% higher than in-place

❑

190 Office Center, Dallas – 81.2% quarter end occupancy

❑

Backfill quality block of 25,000 SF; other small vacancies have been improved for leasing appeal

❑

Pima Center, Phoenix – 85.0% quarter end occupancy

❑

Lease large, contiguous 46,000 SF block of space

❑

Sorrento Mesa, San Diego – 85.3% quarter end occupancy

❑

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

VALUE-ENHANCEMENT CASE STUDY

9

MISSION CITY – 4 BUILDING CAMPUS ACQUIRED

❑

Prime location in Mission Valley, San Diego

❑

Completed full property renovation

❑

Stabilized tenancy with key strategic renewals

❑

Increased in-place base rental rate by 5.9%

❑

Redevelopment of adjacent Qualcomm Stadium site to be a long term catalyst

CIO acquired a 10-building portfolio in San Diego in 2017 for $175 million. Created significant value to date

SORRENTO MESA – 6 LIFE SCIENCE BUILDINGS ACQUIRED

❑

Well-located in desirable life science submarket

❑

Properties repositioned through strategic leasing and renovations

❑

Prime 5-acre land parcel entitled for up to 180,000 SF of office and life science

(1) Represents the increase in base rental revenue associated with the renewal rate over the expiring rate on 51,000 SF, as well as the increase in base rental revenue associated with the rate of the 26,000 SF of expansion space as compared to the expiring rate of the prior tenant. The renewal is expected to commence December 2020 and the expansion is expected to commence September 2021

❑

10421 Building – 77,000 SF renewal / expansion for 12 year term; $2.8 million annual base rental revenue increase (1)

❑

10394 Building – extended 59,000 SF lease from 2026 to 2032

❑

10390 Building – re-tenanted with 69,000 SF life science company

❑

10398 Building – conditioned vacant space, well positioned for leasing

❑

10445 Building – leased to Qualcomm at below market rates

❑

10455 Building – divested for $16.5 million

❑

High-end fitness center and outdoor lounge

❑

Spec suite program to drive new leasing

SELECTIVELY HARVESTING VALUE

(1) Levered IRR calculated using allocated equity value at IPO, acquisition equity investment or implied acquisition equity, as applicable. AmberGlen and Sorrento Mesa – 10455 were acquired as components

• f 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

10

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 the property

Prudent capital recycling: CIO’s seven dispositions have generated $73 million of gains

ALL PRIOR ASSET SALES

❑

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

❑

The seven dispositions have generated $73 million of gains

Sorrento Mesa – 10455, San Diego Corporate Parkway, Allentown

RECENT COMPANY HIGHLIGHTS

11

SECOND QUARTER 2020

❑

Core FFO per share of $0.29 and AFFO per share of $0.14

❑

Executed approximately 326,000 SF of new and renewal leases

❑

Occupancy of 91.9%

❑

Same store cash NOI growth of 2.3% for the quarter and 3.2% year-to-date, compared to prior year periods

❑

Executed $100 million common share repurchase program of 11.4 million shares at an average price of $8.80 per share (1)

❑

After quarter end, closed the disposition of 7.8 acres of land at Circle Point in Denver for $6.5 million

❑

After quarter end, executed 136,000 SF of leasing with a life science tenant at Sorrento Mesa in San Diego; expected to generate $2.8 million in incremental base rental revenue upon commencement (2)

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

7595 TECH 7601 TECH

(1) Includes share repurchases subsequent to quarter end (2) Represents the increase in base rental revenue associated with the renewal rate over the expiring rate on 51,000 SF, as well as the increase in base rental revenue associated with the rate of the 26,000 SF of expansion space as compared to the expiring rate of the prior tenant. The renewal is expected to commence December 2020 and the expansion is expected to commence September 2021

Low High Low High Property Acquisitions Nil Nil Nil Nil December 31, 2020 Occupancy 88.5% 91.0% 88.5% 90.5% Same Store Cash NOI Change (4.5)% (1.5)% (1.0)% 2.0% Core FFO per Diluted Share $1.07 $1.12 $1.15 $1.18 Previous Updated Full Year 2020

2020 OUTLOOK

(1) See the Company’s Q1 2020 and Q2 2020 earnings press releases for further discussion of the material assumptions underlying the Company’s guidance. This outlook reflects management’s current view of current and future operations and market conditions, which management cannot guarantee will occur as expected, or at all, including the impact of the COVID-19 pandemic, which is impossible to predict

2020 GUIDANCE (1)

❑

No acquisitions anticipated for 2020

❑

Elimination of new leasing assumptions for balance of 2020

❑

Guidance reflects a general provision for uncollectible rents of 0.5% to 2.0% of rental revenue in each of 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

12

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

A2 2008 155 2.7% Toyota Motor Credit Corporation A+ 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

13

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

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

6.2% 4.4% 10.4% 14.3% 13.5% 9.8% 7.7% 12.8% 8.5% 4.4% 6.1% 1.9% 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 43.8% Tenants 21-40 20 815 41 15.2% Remaining 296 2,196 7 41.0% Total 336 5,362 16 100.0% Select Industry Exposure Total Coworking 4 58 15 1.1% Total Retail Related 6 49 8 0.9% Total Restaurant & Café 10 29 3 0.5% Total Live Event Related 3 24 8 0.4% Total Travel & Accommodation 4 10 3 0.2% Total Energy

• 0.0%

Total Select Industries 27 170 6 3.1%

LOW EXPOSURE TO SELECT INDUSTRIES (1)

TENANT COMPOSITION AND INDUSTRY EXPOSURE

14

(1) As of June 30, 2020 (2) As of August 3, 2020 FRP Collection, Orlando

RENT COLLECTION AND COMMENTARY

❑

Collected over 99% of Q2 2020 contractual base rent (2)

❑

Partial rent relief has been granted to tenants representing 1.1% of

• ccupied NRA which equated to 0.6% of Q2 contractual base rent

❑

Collected over 98% of July contractual base rent (2)

❑

100% of top 40 tenants paid Q2 2020 contractual base rent

❑

Top 40 tenants represent 59.0% of occupied SF

❑

No exposure to energy-related tenants

❑

Limited coworking exposure

Mission City, San Diego New Fitness Center Florida Research Park, Orlando

$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

❑

45.8% leverage (1)(2)

❑

6.7x Net Debt / Annualized Adjusted EBITDA (2)

❑

3.7% weighted average interest rate

❑

85.9% fixed rate debt (3)

❑

4.6 year weighted average debt maturity

WELL STAGGERED DEBT MATURITIES ($000S) – JUNE 30, 2020

15

Debt Balance: $709.2 million (4)(5)

LIQUIDITY AS OF JUNE 30, 2020 LEVERAGE METRICS AS OF JUNE 30, 2020

(1) Calculated as net debt to enterprise value, using common share price of last capital raise in October 2019 ($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) $709.2 million represents the principal debt balance as of June 30, 2020 before deferred financing costs and unamortized fair value adjustments (5) $7.9 million of indebtedness attributable to non-controlling interests

$84,425 Interest Rate: 4.34% $44,399 Interest Rate: 3.10% $123,878 Interest Rate: 3.54% $95,684 Interest Rate: 4.36% $190,540 Interest Rate: 4.10% $70,250 Interest Rate: 4.36% ❑

$67 million of cash and cash equivalents

❑

$16 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 June 30, 2020

Credit Facility $100,000 Interest Rate: 1.66%

FOCUSED 18-HOUR CITY INVESTMENT STRATEGY

COMPANY HIGHLIGHTS

16

❑

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 submarkets

(1) As of June 30, 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 seven dispositions have generated $73 million of gains and a combined IRR of approximately 17%

PROVEN VALUE CREATION APPROACH

❑

Conservative balance sheet operating with lower leverage

❑

4.6 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

APPENDIX: EXECUTIVES AND BOARD OF DIRECTORS

17 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 SF1 Annualized Base Rent2 (000s) Largest Tenant by NRA Pima Center 100.0% 272 85.0% $27.50 $27.50 $6,354 First American Title Insurance SanTan 100.0% 267 93.1% $28.73 $28.73 $7,128 Toyota Motor Credit 5090 N 40th St 100.0% 175 89.3% $29.51 $29.51 $4,614 Bar-S-Foods Co. Camelback Square 100.0% 174 78.8% $29.42 $29.42 $4,034 Digital Air Strike The Quad 100.0% 163 100.0% $29.80 $30.11 $4,857 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 93.5% $18.03 $32.03 $4,585 Epsilon Data Management, LLC Denver Tech3 100.0% 381 78.0% $23.13 $27.19 $6,652 Jackson National Life Insurance Company Superior Pointe 100.0% 151 96.5% $18.16 $30.63 $2,652 KeyBank National Association Park Tower 94.8% 471 91.5% $26.15 $26.15 $11,281 GSA US Attorneys Office City Center 95.0% 242 91.4% $26.05 $26.05 $5,769 Kobie Marketing, Inc. Intellicenter 100.0% 204 100.0% $24.53 $24.53 $4,993

• H. Lee Moffitt Cancer Center

Carillon Point 100.0% 124 97.2% $28.65 $28.65 $3,457 Paychex, Inc. Florida Research Park4 96.6% 397 98.5% $23.41 $26.84 $9,134 GSA - PEO STRI (US Dept of Defence) Central Fairwinds 97.0% 168 90.5% $25.85 $25.85 $3,936 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% $25.94 $33.94 $6,550 Genopis, Inc. Mission City 100.0% 286 89.7% $35.95 $35.95 $9,214 Midland Credit Mgmt, Inc. 190 Office Center 100.0% 303 81.2% $25.65 $25.65 $6,313 United Healthcare Services, Inc. Lake Vista Pointe 100.0% 163 100.0% $16.50 $25.50 $2,695 Ally Financial Inc. 2525 McKinnon 100.0% 111 88.5% $28.42 $45.42 $2,801 The Retail Connection AmberGlen 76.0% 203 98.4% $22.01 $24.55 $4,388 Planar Systems, Inc. Cascade Station 100.0% 128 100.0% $27.04 $28.41 $3,448 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 - June 30, 2020 ⁵ 5,832 91.9% $24.83 $27.77 $132,909 Portland, OR Phoenix, AZ Orlando, FL Denver, CO Tampa, FL Dallas, TX San Diego, CA

APPENDIX: PROPERTY OVERVIEW

18

(1) Annualized gross rent per square foot includes adjustment for estimated expense reimbursements of triple net leases for the year ended June 30, 2020. (2) Annualized base rent is calculated by multiplying (i) rental payments (defined as cash rents before abatements) for the month ended June 30, 2020 by (ii) 12. (3) Denver Tech is comprised of 7601 Tech 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.

Q2 2020 Q1 2020 Q4 2019 Q3 2019 Q2 2019 INCOME ITEMS Net income/(loss) 623 $ 1,006 $ 2,988 $ (947) $ 1,321 $ NOI 25,533 $ 25,428 $ 24,499 $ 24,562 $ 26,645 $ Same Store Cash NOI Growth 2.3% 4.1% 3.9% 5.8% 5.9% Net (loss)/income per share - diluted (0.03) $ (0.02) $ 0.02 $ (0.07) $ (0.02) $ Core FFO / Share 0.29 $ 0.26 $ 0.25 $ 0.29 $ 0.34 $ AFFO / Share 0.14 $ 0.14 $ 0.14 $ 0.22 $ 0.26 $ EBITDA (CIO share) 23,006 $ 22,798 $ 21,919 $ 21,830 $ 23,327 $ CAPITALIZATION Common shares 44,511 53,175 54,591 47,647 39,647 Unvested restricted shares 418 545 335 416 408 Total shares 44,929 53,720 54,926 48,063 40,055 Weighted average common shares outstanding - diluted 48,023 54,966 54,416 43,005 40,054 Share price at quarter end 10.06 $ 7.23 $ 13.52 $ 14.39 $ 11.99 $ Market value of common equity 451,987 $ 388,393 $ 742,606 $ 691,629 $ 480,262 $ 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 619,316 $ 539,017 $ 517,762 $ 617,518 $ 677,017 $ Total enterprise value (including net debt) 1,183,303 $ 1,039,410 $ 1,372,368 $ 1,421,147 $ 1,269,279 $ DEBT STATISTICS AND RATIOS Total principal debt (CIO share) 701,288 $ 702,846 $ 604,369 $ 649,114 $ 707,047 $ Weighted average maturity 4.6 years 4.9 years 5.6 years 5.6 years 5.4 years Weighted average interest rate 3.7% 3.8% 4.0% 4.0% 4.2% Fixed rate debt as a percentage of total debt1 85.9% 85.9% 100.0% 93.4% 79.0% LEASING STATISTICS In-Place occupancy 91.9% 92.2% 91.9% 91.2% 93.4% Weighted average remaining lease term 4.2 years 4.4 years 4.4 years 4.5 years 4.5 years

APPENDIX: FINANCIAL HIGHLIGHTS

19

(in thousands, except per share data)

(1) The fixed rate debt percentage for Q2 2020, 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

Q2 2020 Q1 2020 Q4 2019 Q3 2019 Q2 2019

Net (loss)/income attributable to common stockholders (1,411) $ (1,031) $ 987 $ (2,966) $ (699) $ (+) Depreciation and amortization 15,080 14,953 15,102 15,035 14,604 (-) Net gain on sale of real estate property

• (2,934)
• (478)

13,669 13,922 13,155 12,069 13,427 Non-controlling interests in properties: (+) Share of net income 179 182 146 164 165 (-) Share of FFO (342) (342) (305) (310) (312) Funds from Operations ("FFO") 13,506 $ 13,762 $ 12,996 $ 11,923 $ 13,280 $ (+) Stock based compensation 588 569 432 431 435 Core FFO 14,094 $ 14,331 $ 13,428 $ 12,354 $ 13,715 $ (+) Net recurring straight-line rent/expense adjustment (77) (361) (52) (127) (850) (+) Net amortization of above and below market leases (59) 16 40 24 (66) (+) Net amortization of deferred financing costs and debt fair value 339 321 330 318 331 (-) Net recurring tenant improvements and incentives (6,395) (2,475) (3,147) (1,723) (1,694) (-) Net recurring leasing commissions (472) (2,464) (1,521) (971) (592) (-) Net recurring capital expenditures (836) (1,455) (1,221) (526) (496) Adjusted Funds from Operations ("AFFO") 6,594 $ 7,913 $ 7,857 $ 9,349 $ 10,348 $ FFO per common share 0.28 $ 0.25 $ 0.24 $ 0.28 $ 0.33 $ Core FFO per common share 0.29 $ 0.26 $ 0.25 $ 0.29 $ 0.34 $ AFFO per common share 0.14 $ 0.14 $ 0.14 $ 0.22 $ 0.26 $ Dividends declared per common share 0.150 $ 0.150 $ 0.235 $ 0.235 $ 0.235 $ FFO Payout Ratio 53% 60% 98% 85% 71% Core FFO Payout Ratio 51% 58% 95% 82% 69% AFFO Payout Ratio 109% 104% 163% 108% 91% Weighted average common shares outstanding - diluted 48,023 54,966 54,416 43,005 40,054

APPENDIX: FFO, CORE FFO AND AFFO

20

(in thousands, except per share data)

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