P R E S E NTATION M A Y 2 0 1 9 NYSE : CIO F ORWARD -L OOKING S - - PowerPoint PPT Presentation

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

NYSE : CIO

M A Y 2 0 1 9

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, 2018 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 March 31, 2019. 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 Sabah Mirza, 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

Market

• No. of

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

1,213

$27.02 95.6% 3.3 Tampa, FL 5

1,040

$24.83 95.1% 5.0 Denver, CO 9

1,039

$24.59 88.8% 6.1 Orlando, FL 8

720

$25.81 93.3% 4.4 San Diego, CA 10

671

$32.67 83.9% 3.8 Dallas, TX 4

577

$28.29 93.8% 3.8 Seattle, WA 3

207

$29.20 100.0% 9.8 Portland, OR 3

201

$23.68 96.9% 4.6 Total 64 5,668 $26.72 92.6% 4.7 13%

Note: All information as of March 31, 2019 (1) Percentage of portfolio NRA (2) Based on common share price of $11.31 as of March 29, 2019

Dedicated

Class A & B Office Owner

Targeted

High Growth, 18-Hour Cities

Flexible

Balance Sheet Positioned For Growth

Experienced

Management Team and Board of Directors

Attractive

8.3% Dividend Yield (2) City Office invests in high-quality office properties in 18-hour cities 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% 18% 10% 18% 21% SAN DIEGO, CA 12%

CURRENT MARKETS (1) 5

SEATTLE, WA 4%

COMPANY OVERVIEW

8.3% 7.5% 7.6% 7.2% 6.8% 7.1% 7.3%

2014 2015 2016 2017 2018 2019 YTD Avg.

2.8% 3.7% 6.9%

Gateway Markets National Avg CIO Markets

• 5

10 15 20 25 30 35 40 45 50

CIO TARGETS LEADING “18-HOUR CITIES”

NATION-LEADING OFFICE DEMAND DRIVERS (1)

Square Feet (in Millions)

6

NEW SUPPLY BELOW HISTORICAL AVERAGES (2) ATTRACTIVE 18-HOUR CITY CHARACTERISTICS OUTSIZED RETURN & GROWTH POTENTIAL

✓ 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 2019 - 2024 % PROJECTED EMPLOYMENT GROWTH 2019 - 2024 CONSTRUCTION DELIVERIES IN CIO CURRENT MARKETS 1978 - 2018 ANNOUNCED POST-IPO PROJECTED ACQUISITION CAP RATES (3) AVG (1) Source: SNL Financial, as of May 1, 2019. 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) 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

3.4% 4.4% 7.7%

Gateway Markets National Avg CIO Markets

TRENDS FAVORING CIO 18-HOUR CITIES

TOP 2019 “MARKETS TO WATCH” BY ULI AND PWC

7

DOMESTIC NET MIGRATION TO 18-HOUR CITIES

(1) Emerging Trends in Real Estate 2019 published by Urban Land Institute and PricewaterhouseCoopers (2) Based on population change from July 2016 to July 2017 as measured by the US Census Bureau

Scottsdale, AZ Uptown Dallas, TX

1. Dallas/Fort Worth, TX 2. Brooklyn, NY 3. Raleigh/Durham, NC 4. Orlando, FL 5. Nashville, TN 6. Austin, TX 7. Boston, MA 8. Denver, CO 9. Charlotte, NC 10. Tampa/St. Petersburg, FL

Top 10 markets for overall real estate prospects include nine 18-hour cities (1)

BLUE represents CIO market

+146k

+88k

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

+20k

Graphic depicts net migration (people per year) into CIO markets (2)

GROWTH AND VALUE CREATION STRATEGY

DISCIPLINED REAL ESTATE UNDERWRITING

8

❑

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

❑

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

❑

Less competition from larger institutional investors

❑

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

INVEST WHERE WE HAVE AN ADVANTAGE

❑

Target strong and diverse tenancy, below market in-place rents and acquisition prices below replacement cost

❑

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

CIO’s strategy is to produce attractive returns through a focused acquisition strategy in high growth markets and an active approach to increasing property cash flows

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) As of March 31, 2019, excludes Circle Point land acquisition in Denver, CO

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

• 2

4 6 IPO (4/14) 2014 2015 2016 2017 2018 $0 $300 $600 $900 $1,200 $1,500 IPO (4/14) 2014 2015 2016 2017 2018

SUCCESSFULLY EXECUTING GROWTH STRATEGY

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

9

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

❑

Phoenix: Scottsdale, Tempe, Camelback Corridor, Chandler

❑

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

❑

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

❑

Orlando: Downtown Orlando, Florida Research Park, Lake Mary

❑

San Diego: Mission Valley, Sorrento Mesa

❑

Dallas: Uptown, Lewisville, Richardson/Plano

❑

Seattle: Eastside/Bothell

❑

Portland: Sunset Corridor

$1.4B $129M 5.7M SF 1.9M SF $307M $33M

($M) (M SF) ($M) (1) Represents implied asset value at IPO plus acquisitions at cost, and does not include impact of dispositions (2) IPO represents total revenue on a pro forma basis for the City Office Predecessor for the year ended December 31, 2013 NET RENTABLE AREA Canyon Park (Q1 ‘19) Canyon Park / Plaza 25 (Q1 ‘19)

$23.31 $23.61 $23.66 $23.90 $24.12 $24.03 $24.20 $24.27 $24.34

(1) $78 million represents purchase price after release of escrowed $2 million to CIO when certain renewal leasing thresholds were not achieved in the first year of ownership (2) Annualized cash NOI for November 2016 as compared to annualized cash NOI for December 2018; November 2016 adjusted to remove revenue from tenant move-out expected at acquisition

ACHIEVING OCCUPANCY GAINS AND STABILIZATION

87% 81% 80% 83% 86% 85% 89% 90% 92%

VALUE-ADD PROGRAM: PARK TOWER CASE STUDY

10

AFTER

BUSINESS PLAN EXECUTION

❑

Prominent downtown Tampa, FL skyline building

❑

Acquired November 2016 for $78 million / 471,000 SF (1)

❑

$11 million transformative renovation completed, including building exterior, lobby, amenities, spec suite buildouts

❑

27 new leases signed (79,000 SF) since acquisition

❑

~$1 million in incremental annualized cash NOI (2)

14%

SIGNIFICANT INCREASES TO IN-PLACE RENT PER SF

12%

Known Vacate at Acquisition RECENT LEASES SIGNED AT $26.50 STARTING RATE Q1 ‘17 Q1 ’19 Q1 ‘17 Q1 ’19

SELECTIVELY HARVESTING VALUE

(1) IRR calculated using allocated equity value at IPO (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 or acquisition equity investment, as applicable

11

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 four dispositions have generated over $70 million of gains

ALL PRIOR ASSET SALES

❑

Combined IRR of approximately 18% across four dispositions (3)

❑

The four dispositions have generated over $70 million in gains

❑

Corporate Parkway Allentown, PA June 2016

❑

AmberGlen Portland, OR May 2017

❑

WGP Boise, ID March 2018

❑

Plaza 25 Denver, CO February 2019

❑

Sorrento Mesa – 10455 under contract for sale in May 2019

12

RECENT ACQUISITIONS

❑

Closed $63 million Seattle, WA acquisition in February 2019; under contract to acquire a $33 million property in Portland, OR (1)

❑

Robust acquisition pipeline with over $500 million of potential investment opportunities (2)

❑

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

(1) Subject to the assumption of an existing loan on the property and customary closing conditions (2) As of May 1, 2019 Conference and Amenity Center

CANYON PARK – FEB 2019

❑

Three-building, class A office campus located in Eastside/ Bothell submarket of Seattle, WA

❑

$63.0 million / 206,770 SF

❑

7.1% cap rate on year 1 expected cash NOI

❑

100% leased to a leading biotechnology company

❑

Tenant investing significantly in the campus

❑

Excellent cash flow profile with lease expiration in 2028

GREENWOOD BLVD – DEC 2018

❑

Class A building located in premium Orlando, FL submarket of Lake Mary

❑

$34.5 million / 155,048 SF

❑

7.4% cap rate on year 1 expected cash NOI

❑

100% occupied by a strong and growing healthcare management services provider

❑

Excellent cash flow profile with lease expiration in 2028

13

VALUE-ADD ACQUISITION: CAMELBACK SQUARE

CAMELBACK MOUNTAIN PARADISE VALLEY ARCADIA

(1) Expected cap rate and yield. Metrics include renovation budget. 7%+ yield represents stabilized yield to cost after renovation and lease-up period

❑

Located in Oldtown Scottsdale, a dense, mixed-use pocket with a radius of approximately one mile that features world- class amenities in a walkable environment

❑

Directly across from Scottsdale Fashion Square

❑

1,000+ feet of frontage at a premier intersection

❑

One of the state’s top restaurants is located at the property

SCOTTSDALE, AZ – ACQUIRED DEC 2018

❑

$53.2 million / 173,206 SF / $307 per SF

❑

5.1% year 1 cash NOI cap rate / stabilizing to 7%+ yield (1)

❑

81.1% leased at December 31, 2018

❑

Estimated replacement cost of ~$400 per SF

CIO TO IMPLEMENT VALUE-ADD PROGRAM

❑

Planning over $3 million of up-front capital improvements

❑

In-place rents 20%+ below anticipated post-reno rental rates

❑

81% occupancy is below anticipated stabilized occupancy

❑

Opportunity to add amenities and activate common areas

❑

Convert traditional tenant spaces to creative suites

❑

Improve curb appeal and signage at high-traffic intersection

“AAA” LOCATION AT PRIME INTERSECTION

SCOTTSDALE FASHION SQUARE CAMELBACK SQUARE

RECENT COMPANY HIGHLIGHTS

14

FIRST QUARTER 2019

❑

Core FFO of $0.29 per share and AFFO of $0.21 per share

❑

Executed approximately 78,000 SF of new and renewal leases

❑

Occupancy of 92.6%

❑

Same store cash NOI growth of 1.8% year over year, expected to accelerate through the balance of 2019

SIGNIFICANT OCCUPANCY GAINS IN 2018 AND YTD 2019

❑

Increased portfolio occupancy from 87.7% on December 31, 2017 to 92.6% on March 31, 2019

❑

Backfilled 44,000 SF vacancy at FRP Collection, Orlando with three leases

❑

Executed 79,000 SF of new leases at Park Tower, Florida since November 2016 acquisition bringing occupancy above 90%

❑

Sale of Washington Group Plaza and Plaza 25; lower occupancy assets, generated combined gain of over $40 million

❑

Expecting positive impact to same store cash NOI growth for 2019

FRP Collection, Orlando, FL Mission City, San Diego, CA Spec Suite

Low High Net Property Acquisitions (2) $78M $90M Core FFO per Diluted Share $1.15 $1.20 Same Store Cash NOI Growth 2.0% 4.0% December 31, 2019 Occupancy 91.0% 94.0%

2019 GUIDANCE & EMBEDDED OPPORTUNITIES

(1) See our Q4 2018 and Q1 2019 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 (2) Total property acquisitions less total property dispositions

POTENTIAL OPPORTUNITIES ACCRETIVE TO GUIDANCE ESTIMATES FULL YEAR 2019 GUIDANCE (1)

❑

Includes $63 million Seattle acquisition, completed Feb 2019

❑

Includes $33 million Portland acquisition, under contract

❑

Includes $18 million sale of Plaza 25 in Denver, completed Feb 2019

❑

No incremental capital raising activities assumed

❑

High end of Core FFO range achievable through further occupancy gains, recycling of assets or incremental acquisitions

MATERIAL ASSUMPTIONS UNDERLYING GUIDANCE

❑

Lease-up of attractive, larger blocks of vacant space

❑

Opportunity to monetize land holdings or participate in development

❑

49 acres of prime, developable land

❑

Located in Denver, Orlando, San Diego and Tampa

❑

Future cash flow increases related to the successful completion of value-add programs, such as Camelback Square in Scottsdale, AZ

❑

Capital recycling opportunities if accretive to portfolio cash flow 15

Circle Point Land, Denver

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 5.6% Seattle Genetics, Inc.

• 2019

207 3.7% United Healthcare Services, Inc. A+ 2008 198 3.5% Ally Financial Inc. BB+ 2008 163 2.9% 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 2.2% GSA – US Attorneys Office (4) AA+ 1998 108 1.9% Paychex, Inc.

• 2009

98 1.7% Total 1,661 29.2% Finance and Insurance 22% Professional and Technical Services 20% Technology and Information 15% Government 14% Health Care and Life Sciences 14% Real Estate 4% Educational Services 3% Accommodation and Food 2% Construction 2% Other 4%

DIVERSIFIED TENANT BASE (1)(2)

DIVERSE TENANT PROFILE

16

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

(1) Percentage of portfolio NRA; derived from the North American Industry Classification System (NAICS) (2) As of March 31, 2019 (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

6.6% 5.0% 9.3% 14.2% 12.8% 12.1% 8.7% 4.7% 13.1% 2.7% 10.0%

0.8% Contracted 0% 5% 10% 15% 20% 25% 30% Vacant & Contracted 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 & Thereafter

$0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

CONSERVATIVE STRUCTURE WITH LOCKED IN RATES

❑

49.3% leverage (1)(2)

❑

7.6x Net Debt / Annualized Adjusted EBITDA (2)

❑

4.2% weighted average interest rate

❑

78% fixed rate debt

❑

5.7 year weighted average debt maturity

❑

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

WELL STAGGERED DEBT MATURITIES ($000S) – MARCH 31, 2019

17

Debt Balance: $701.2 million (3)(4)

PREDOMINANTLY FIXED RATE DEBT SUMMARY AS OF MARCH 31, 2019

22% Line of Credit

78% Fixed Rate

(1) Calculated as net debt as of March 31, 2019 divided by net debt plus liquidation value of preferred stock plus value of common equity, using consensus analyst estimate of NAV on March 31, 2019 (2) Net debt calculated as debt principal less cash, cash equivalents and restricted cash (3) $8.0 million of indebtedness attributable to non-controlling interests (4) $701.2 million represents the principal debt balance as of March 31, 2019 before deferred financing costs

$86,560 Interest Rate: 4.34% $45,681 Interest Rate: 3.73% $52,761 Interest Rate: 4.24% $97,025 Interest Rate: 4.70% $191,442 Interest Rate: 4.10% Credit Facility $157,500 Interest Rate: 4.09% $70,250 Interest Rate: 4.36%

FOCUSED 18-HOUR CITY INVESTMENT STRATEGY

COMPANY HIGHLIGHTS

18

❑

Diversified portfolio of 5.7 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, 2019 (2) Corporate Parkway was sold in June 2016, two buildings at AmberGlen were sold in May 2017, Washington Group Plaza was sold in March 2018 and Plaza 25 was sold in February 2019

❑

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

❑

Built in rental rate growth enhanced through value-add programs, asset recycling and strategic land holdings

❑

CIO’s four dispositions have generated over $70 million of gains and combined IRR of approximately 18% (2)

PROVEN GROWTH AND VALUE CREATION APPROACH

❑

Primarily fixed rate debt with a weighted average interest rate of 4.2%

❑

5.7 year weighted average debt maturity; no near-term maturities

❑

Consistent access to capital and flexibility to grow with $250 million unsecured credit facility

WELL-POSITIONED, LONG TERM BALANCE SHEET

❑

Average over 20 years of experience with over $2.0 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 Denver, CO

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 96.5% $27.14 $27.14 $7,119 First American Title Insurance SanTan 100.0% 267 98.6% $27.35 $27.35 $7,187 Toyota Motor Credit 5090 N 40th St 100.0% 175 95.8% $28.89 $28.89 $4,837 Bar-S-Foods Co. Camelback Square 100.0% 173 81.1% $29.17 $29.17 $4,097 Digital Air Strike The Quad 100.0% 163 100.0% $27.98 $28.23 $4,561 Opendoor Labs, Inc. Papago Tech 100.0% 163 100.0% $21.33 $21.33 $3,471 Regional Acceptance Corp. Cherry Creek 100.0% 356 100.0% $18.53 $18.53 $6,591 State of Colorado Department of Health Circle Point 100.0% 272 98.8% $17.43 $30.33 $4,684 Epsilon Data Management, LLC DTC Crossroads 100.0% 189 53.7% $26.24 $26.24 $2,665 ProBuild Holdings, Inc. Superior Pointe 100.0% 151 92.8% $17.27 $29.27 $2,420 KeyBank National Association Logan Tower 100.0% 71 80.1% $20.88 $20.88 $1,192 State of Colorado Governor's Energy Park Tower 94.8% 471 91.9% $24.34 $24.34 $10,521 GSA US Attorneys Office City Center 95.0% 241 94.9% $25.47 $25.47 $5,833 Kobie Marketing, Inc. Intellicenter 100.0% 204 100.0% $23.44 $23.44 $4,771

• H. Lee Moffitt Cancer Center

Carillon Point 100.0% 124 100.0% $27.65 $27.65 $3,434 Paychex, Inc. FRP Collection 95.0% 272 87.9% $24.30 $26.53 $5,802 GSA - PEO STRI (US Dept of Defence) Central Fairwinds 97.0% 168 91.1% $24.77 $24.77 $3,795 Fairwinds Credit Union Greenwood Blvd 100.0% 155 100.0% $22.75 $22.75 $3,527 HF Management Services LLC FRP Ingenuity Drive 100.0% 125 100.0% $21.50 $29.50 $2,677 Kaplan, Inc. Sorrento Mesa 100.0% 296 85.3% $25.02 $31.02 $6,318 Genopis, Inc. Mission City 100.0% 286 94.4% $34.90 $34.90 $9,416 InnovaSystems International 190 Office Center 100.0% 303 89.5% $25.05 $25.05 $6,801 United Healthcare Services, Inc. Lake Vista Pointe 100.0% 163 100.0% $15.50 $23.50 $2,532 Ally Financial Inc. 2525 McKinnon 100.0% 111 96.5% $27.47 $43.76 $2,952 The Retail Connection Seattle, WA Canyon Park 100.0% 207 100.0% $21.20 $29.20 $4,384 Seattle Genetics Inc. Portland, OR AmberGlen 76.0% 201 96.9% $21.09 $23.68 $4,110 Planar Systems, Inc. Total / Weighted Average - Excluding Assets Held For Sale³ 5,579 93.4% $24.13 $26.71 $125,697 San Diego, CA Sorrento Mesa - 10455 100.0% 89 45.8% $22.11 $28.11 $897 Trex Enterprises Corporation Total / Weighted Average - March 31, 2019 ³ 5,668 92.6% $24.12 $26.72 $126,594 Phoenix, AZ Orlando, FL Denver, CO Tampa, FL Dallas, TX San Diego, CA

APPENDIX: PROPERTY OVERVIEW

19

(1) For Superior Pointe, FRP Ingenuity Drive, Lake Vista Pointe, Sorrento Mesa, and Canyon Park the annualized base rent per square foot on a triple net basis was increased by $12, $8, $8, $6, and $8 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 five tenants which have been grossed up by $9 on a pro-rata

• basis. 2525 McKinnon has net leases for nine tenants which have been grossed up by $17 on a pro-rata basis. Circle Point has net leases for fourteen tenants which have been grossed up by $13 on a pro-rata basis. The Quad

has one tenant with a net lease, which has been grossed up by $8 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 March 31, 2019 by (ii) 12. (3) Averages weighted based on the property’s NRA, adjusted for occupancy

APPENDIX: JLL CAP RATE SURVEY

20

(1) Weighted based on the NRA of CIO properties in each market as of March 31, 2019

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

Weighted Average of JLL H1 2018 Suburban Class A Cap Rate Survey for CIO Markets is 6.6% (1)

Q1 2019 Q4 2018 Q3 2018 Q2 2018 Q1 2018 INCOME ITEMS Net (loss)/income (920) $ (6,684) $ (1,161) $ (684) $ 47,198 $ NOI 23,276 $ 20,921 $ 20,294 $ 18,488 $ 19,909 $ Same Store Cash NOI Growth 1.8% 0.7% 0.8% (3.1%) (1.4%) Net (loss)/income per share - diluted (0.07) $ (0.22) $ (0.08) $ (0.07) $ 1.24 $ Core FFO / Share 0.29 $ 0.26 $ 0.28 $ 0.26 $ 0.28 $ AFFO / Share 0.21 $ 0.19 $ 0.20 $ 0.19 $ 0.18 $ EBITDA (CIO share) 21,027 $ 18,590 $ 18,442 $ 16,503 $ 17,886 $ CAPITALIZATION Common shares 39,636 39,544 39,544 36,133 36,132 Unvested restricted shares 413 354 347 341 335 Total shares 40,049 39,898 39,891 36,474 36,467 Weighted average common shares outstanding - diluted 40,017 39,896 37,839 36,473 36,432 Share price at quarter end 11.31 $ 10.25 $ 12.62 $ 12.83 $ 11.56 $ Market value of common equity 452,949 $ 408,959 $ 503,428 $ 467,965 $ 421,564 $ 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 (see page 15) 657,080 $ 611,076 $ 511,173 $ 444,807 $ 381,003 $ Total enterprise value (including net debt) 1,222,029 $ 1,132,035 $ 1,126,601 $ 1,024,772 $ 914,567 $ DEBT STATISTICS AND RATIOS Total principal debt (CIO share) 693,248 $ 643,419 $ 544,171 $ 476,382 $ 418,850 $ Weighted average maturity 5.7 years 5.8 years 6.5 years 6.2 years 6.8 years Weighted average interest rate 4.2% 4.1% 4.2% 4.1% 4.2% Fixed rate debt as percentage of total debt 77.5% 77.4% 90.4% 88.0% 100.0% LEASING STATISTICS In-Place occupancy 92.6% 90.4% 90.1% 89.6% 88.3% Weighted average remaining lease term 4.7 years 4.6 years 4.5 years 4.5 years 4.7 years

APPENDIX: FINANCIAL HIGHLIGHTS

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Q1 2019 Q4 2018 Q3 2018 Q2 2018 Q1 2018

Net (loss)/income attributable to common stockholders (2,944) $ (8,656) $ (3,151) $ (2,653) $ 45,208 $ (+) Depreciation and amortization 14,417 15,308 13,379 11,771 11,893 (-) Net gain on sale of real estate property

• (46,980)

(+) Impairment of real estate

• 3,497
• 11,473

10,149 10,228 9,118 10,121 Non-controlling interests in properties: (+) Share of net income 169 117 135 114 135 (-) Share of FFO (316) (263) (278) (283) (302) Funds from Operations ("FFO") 11,326 $ 10,003 $ 10,085 $ 8,949 $ 9,954 $ (+) Stock based compensation 444 356 356 356 350 Core FFO 11,770 $ 10,359 $ 10,441 $ 9,305 $ 10,304 $ (+) Net recurring straight line rent/expense adjustment (978) (553) (735) (738) (763) (+) Net amortization of above and below market leases (29) (41) (5) 58 (202) (+) Net amortization of deferred financing costs 334 320 308 348 626 (-) Net recurring tenant improvements and incentives (1,298) (1,242) (761) (807) (1,509) (-) Net recurring leasing commissions (918) (447) (1,313) (589) (760) (-) Net recurring capital expenditures (542) (962) (396) (514) (985) Adjusted Funds from Operations ("AFFO") 8,339 $ 7,434 $ 7,539 $ 7,063 $ 6,711 $ Core FFO per common share 0.29 $ 0.26 $ 0.28 $ 0.26 $ 0.28 $ AFFO per common share 0.21 $ 0.19 $ 0.20 $ 0.19 $ 0.18 $ Dividends per common share 0.235 $ 0.235 $ 0.235 $ 0.235 $ 0.235 $ Core FFO Payout Ratio 80% 91% 85% 92% 83% AFFO Payout Ratio 113% 126% 118% 121% 128% Weighted average common shares outstanding - diluted 40,017 39,896 37,839 36,473 36,432

APPENDIX: FFO, CORE FFO AND AFFO

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