City Office REIT Shareholders Approve $1.1 Billion Privatization Deal

The path to privatization has been cleared for City Office REIT as shareholders overwhelmingly approved its acquisition by MCME Carell Holdings. The $1.1 billion transaction, which received final investor endorsement in mid-October, is expected to conclude before the end of the current quarter.

Investors holding a substantial majority of outstanding shares voted in favor of the takeover on October 16, removing the final significant obstacle to the deal's completion. Under the agreement, shareholders will receive $7.00 per common share, representing a substantial premium over the trading price observed before the acquisition was initially announced in July.

Portfolio Restructuring Precedes Final Deal

A key prerequisite for the acquisition involved the divestment of City Office REIT's Phoenix property portfolio. The company successfully completed the initial phase of this strategic disposal in August, generating $266 million from the sale of six properties. The remaining asset, Pima Center, remains under contract for $30 million, with the final transfer awaiting ground lease approval—a contingency that market observers consider to carry minimal risk.

Should investors sell immediately? Or is it worth buying City Office Reit?

Final Stages of Transition

In preparation for the impending ownership change, City Office REIT has discontinued quarterly dividend distributions for common shares and ceased providing forward-looking financial guidance. Following the transaction's formal closure, both the common and preferred shares will be delisted from the New York Stock Exchange.

While some investor opposition emerged, including criticism from one stakeholder who characterized the sale as a "giveaway," the board's strategic direction ultimately prevailed. This acquisition reflects the ongoing challenges within the office real estate sector while providing shareholders with an attractive exit opportunity under favorable terms.