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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM
10-Q
 
 
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024
OR
 
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
   
to
   
Commission File Number:
001-36409
 
 
 
CITY OFFICE REIT, INC.
(Exact name of registrant as specified in its charter)
 
 
 
Maryland
  
98-1141883
(State or other jurisdiction
of incorporation or organization)
  
(I.R.S. Employer
Identification No.)
666 Burrard Street
Suite 3210
Vancouver,
BC

V6C 2X8
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (604)
806-3366
Securities registered pursuant to Section 12(b) of the Act:
 
Title of Each Class
  
Trading Symbol(s)
  
Name of each Exchange on Which Registered
Common Stock, $0.01 par value
  
“CIO”
  
New York Stock Exchange
6.625% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share
  
“CIO.PrA”
  
New York Stock Exchange
 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
 ☒ ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
 ☒ 
Yes
 No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule
12b-2
of the Exchange Act.
 
Large accelerated filer   ☐    Accelerated filer  
☒
Non-accelerated
filer		   ☐    Smaller reporting company   ☐
     Emerging growth company   ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Exchange
Act). Yes
 ☐ 
☒
 No
The number of shares of Common Stock, $0.01 par value, of the registrant outstanding at October 28, 2024 was 40,154,055.
 
 
 
City Office REIT, Inc.
Quarterly Report on Form
10-Q
For the Quarter Ended September 30, 2024
Table of Contents
 
PART I. FINANCIAL INFORMATION     1  
  Item 1.       1  
        1  
        2  
        3  
        4  
        6  
        7  
  Item 2.       17  
  Item 3.       27  
  Item 4.       27  
PART II. OTHER INFORMATION     28  
  Item 1.   Legal Proceedings     28  
  Item 1A.       28  
  Item 2.       28  
  Item 3.       28  
  Item 4.       28  
  Item 5.       28  
  Item 6.       29  
  Signatures     30  
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
City Office REIT, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except par value and share data)
 
    
September 30,

2024
    
December 31,
2023
  
Assets
     
Real estate properties
     
Land
    $ 193,524     $ 193,524  
Building and improvement
      1,185,756       1,194,819  
Tenant improvement
      163,013       152,540  
Furniture, fixtures and equipment
      1,377       820  
  
 
 
    
 
 
  
     1,543,670       1,541,703  
Accumulated depreciation
      (248,420 )      (218,628 ) 
  
 
 
    
 
 
  
     1,295,250       1,323,075  
  
 
 
    
 
 
  
Cash and cash equivalents
      25,911       30,082  
Restricted cash
      17,118       13,310  
Rents receivable, net
      52,908       53,454  
Deferred leasing costs, net
      23,997       21,046  
Acquired lease intangible assets, net
      36,520       42,434  
Other assets
      23,580       27,975  
  
 
 
    
 
 
  
Total Assets
    $ 1,475,284     $ 1,511,376  
  
 
 
    
 
 
  
Liabilities and Equity
     
Liabilities:
     
Debt
    $ 648,173     $ 669,510  
Accounts payable and accrued liabilities
      39,597       29,070  
Deferred rent
      7,091       7,672  
Tenant rent deposits
      7,319       7,198  
Acquired lease intangible liabilities, net
      6,629       7,736  
Other liabilities
      18,906       17,557  
  
 
 
    
 
 
  
Total Liabilities
      727,715       738,743  
  
 
 
    
 
 
  
Commitments and Contingencies (Note 9)
     
Equity:
     
6.625% Series A Preferred stock, $0.01 par value per share, 5,600,000 shares authorized, 4,480,000 issued and outstanding as of September 30, 2024 and December 31, 2023
      112,000       112,000  
Common stock, $0.01 par value, 100,000,000 shares authorized, 40,154,055 and 39,938,451 shares issued and outstanding as of September 30, 2024 and December 31, 2023
      401       399  
Additional
paid-in
capital
      441,188       438,867  
Retained earnings
      196,466       221,213  
Accumulated other comprehensive loss
      (2,997 )      (248 ) 
  
 
 
    
 
 
  
Total Stockholders’ Equity
      747,058       772,231  
Non-controlling
interests in properties
      511       402  
  
 
 
    
 
 
  
Total Equity
      747,569       772,633  
  
 
 
    
 
 
  
Total Liabilities and Equity
    $ 1,475,284     $ 1,511,376  
  
 
 
    
 
 
  
The accompanying notes are an integral part of these condensed consolidated financial statements
.
 
1

City Office REIT, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
 
    
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  
    
2024
    
2023
    
2024
    
2023
  
Rental and other revenues
    $ 42,371     $ 44,214     $ 129,207     $ 134,775  
Operating expenses:
         
Property operating expenses
      17,783       17,644       53,020       52,610  
General and administrative
      3,790       3,531       11,321       10,963  
Depreciation and amortization
      14,642       14,723       44,440       45,795  
  
 
 
    
 
 
    
 
 
    
 
 
  
Total operating expenses
      36,215       35,898       108,781       109,368  
  
 
 
    
 
 
    
 
 
    
 
 
  
Operating income
      6,156       8,316       20,426       25,407  
Interest expense:
         
Contractual interest expense
      (8,274 )      (7,853 )      (24,502 )      (23,807 ) 
Amortization of deferred financing costs and debt fair value
      (369 )      (333 )      (1,030 )      (979 ) 
  
 
 
    
 
 
    
 
 
    
 
 
  
     (8,643 )      (8,186 )      (25,532 )      (24,786 ) 
Net loss on disposition of real estate property
      —        —        (1,462 )      (134 ) 
  
 
 
    
 
 
    
 
 
    
 
 
  
Net (loss)/income
      (2,487 )     130       (6,568 )     487  
Less:
         
Net income attributable to
non-controlling
interests in properties
      (152 )      (173 )      (412 )      (506 ) 
  
 
 
    
 
 
    
 
 
    
 
 
  
Net loss attributable to the Company
      (2,639 )     (43 )      (6,980 )     (19 ) 
Preferred stock distributions
      (1,855 )      (1,855 )      (5,565 )      (5,565 ) 
  
 
 
    
 
 
    
 
 
    
 
 
  
Net loss attributable to common stockholders
    $ (4,494 )   $ (1,898 )    $ (12,545 )   $ (5,584 ) 
  
 
 
    
 
 
    
 
 
    
 
 
  
Net loss per common share:
         
Basic
    $ (0.11 )    $ (0.05 )    $ (0.31 )    $ (0.14 ) 
  
 
 
    
 
 
    
 
 
    
 
 
  
Diluted
    $ (0.11 )    $ (0.05 )    $ (0.31 )    $ (0.14 ) 
  
 
 
    
 
 
    
 
 
    
 
 
  
Weighted average common shares outstanding:
         
Basic
      40,154       39,938       40,135       39,917  
  
 
 
    
 
 
    
 
 
    
 
 
  
Diluted
      40,154       39,938       40,135       39,917  
  
 
 
    
 
 
    
 
 
    
 
 
  
Dividend distributions declared per common share
    $ 0.10     $ 0.10     $ 0.30     $ 0.40  
  
 
 
    
 
 
    
 
 
    
 
 
  
The accompanying notes are an integral part of these condensed consolidated financial statements
.
 
2

City Office REIT, Inc.
Condensed Consolidated Statements of Comprehensive (Loss)/Income
(Unaudited)
(In thousands)
 
 
  
Three Months Ended

September 30,
 
 
Nine Months Ended

September 30,
 
 
  
2024
 
 
2023
 
 
2024
 
 
2023
 
Net (loss)/income
    $ (2,487 )   $ 130     $ (6,568 )   $ 487  
Other comprehensive (loss)/income:
         
Unrealized cash flow hedge (loss)/gain
      (3,087 )      1,447       470       3,732  
Amounts reclassified to interest expense
      (1,000 )      (1,019 )      (3,249 )      (2,309 ) 
  
 
 
    
 
 
    
 
 
    
 
 
  
Other comprehensive (loss)/income
      (4,087 )      428       (2,779 )      1,423  
  
 
 
    
 
 
    
 
 
    
 
 
  
Comprehensive (loss)/income
      (6,574 )     558       (9,347 )     1,910  
Less:
         
Comprehensive income attributable to
non-controlling
interests in properties
      (99 )      (174 )      (382 )      (507 ) 
  
 
 
    
 
 
    
 
 
    
 
 
  
Comprehensive (loss)/income attributable to the Company
    $ (6,673 )   $ 384     $ (9,729 )   $ 1,403  
  
 
 
    
 
 
    
 
 
    
 
 
  
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
3

City Office REIT, Inc.
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
(In thousands)
 
 
 
Number of
shares of
preferred
stock
 
 
Preferred

stock
 
 
Number

of

shares of
common
stock
 
 
Common

stock
 
 
Additional

paid-in

capital
 
 
Retained
earnings
 
 
Accumulated

other
comprehensive
(loss)/income
 
 
Total

stockholders’

equity
 
 
Non-

controlling

interests in

properties
 
 
Total

equity
 
Balance—December 31, 2023
     4,480     $ 112,000       39,938     $ 399     $ 438,867     $ 221,213     $ (248 )    $ 772,231     $ 402     $ 772,633  
Restricted stock award grants and vesting
     —        —        216       2       42       (45 )      —        (1 )      —        (1 ) 
Common stock dividend distribution declared
     —        —        —        —        —        (4,015 )      —        (4,015 )      —        (4,015 ) 
Preferred stock dividend distribution declared
     —        —        —        —        —        (1,855 )      —        (1,855 )      —        (1,855 ) 
Distributions
     —        —        —        —        —        —        —        —        (444 )      (444 ) 
Net (loss)/income
     —        —        —        —        —        (589 )      —        (589 )      135       (454 ) 
Other comprehensive income
     —        —        —        —        —        —        1,763       1,763       26       1,789  
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Balance—March 31, 2024
     4,480     $ 112,000       40,154     $ 401     $ 438,909     $ 214,709     $ 1,515     $ 767,534     $ 119     $ 767,653  
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Restricted stock award grants and vesting
     —        —        —        —        1,139       (56 )      —        1,083       —        1,083  
Common stock dividend distribution declared
     —        —        —        —        —        (4,015 )      —        (4,015 )      —        (4,015 ) 
Preferred stock dividend distribution declared
     —        —        —        —        —        (1,855 )      —        (1,855 )      —        (1,855 ) 
Contributions
     —        —        —        —        —        —        —        —        442       442  
Distributions
     —        —        —        —        —        —        —        —        (104 )      (104 ) 
Net (loss)/income
     —        —        —        —        —        (3,752 )      —        (3,752 )      125       (3,627 ) 
Other comprehensive loss
     —        —        —        —        —        —        (478 )      (478 )      (3 )      (481 ) 
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Balance—June 30, 2024
     4,480     $ 112,000       40,154     $ 401     $ 440,048     $ 205,031     $ 1,037     $ 758,517     $ 579     $ 759,096  
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Restricted stock award grants and vesting
     —        —        —        —        1,140       (56 )      —        1,084       —        1,084  
Common stock dividend distribution declared
     —        —        —        —        —        (4,015 )      —        (4,015 )      —        (4,015 ) 
Preferred stock dividend distribution declared
     —        —        —        —        —        (1,855 )      —        (1,855 )      —        (1,855 ) 
Contributions
     —        —        —        —        —        —        —        —        80       80  
Distributions
     —        —        —        —        —        —        —        —        (247 )      (247 ) 
Net (loss)/income
     —        —        —        —        —        (2,639 )     —        (2,639 )     152       (2,487 )
Other comprehensive loss
     —        —        —        —        —        —        (4,034 )      (4,034 )      (53 )      (4,087 ) 
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Balance—September 30, 2024
     4,480     $ 112,000       40,154     $ 401     $ 441,188     $ 196,466     $ (2,997 )   $ 747,058     $ 511     $ 747,569  
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
4
 
 
Number of
shares of
preferred
stock
 
 
Preferred

stock
 
 
Number

of

shares of
common
stock
 
 
Common

stock
 
 
Additional

paid-in

capital
 
 
Retained
earnings
 
 
Accumulated

other
comprehensive
income/(loss)
 
 
Total

stockholders’

equity
 
 
Non-

controlling

interests in

properties
 
 
Total

equity
 
Balance—December 31, 2022
     4,480     $ 112,000       39,718     $ 397     $ 436,161     $ 251,542     $ 2,731     $ 802,831     $ 343     $ 803,174  
Restricted stock award grants and vesting
     —        —        220       2       (535 )      (85 )      —        (618 )      —        (618 ) 
Common stock dividend distribution declared
     —        —        —        —        —        (7,988 )      —        (7,988 )      —        (7,988 ) 
Preferred stock dividend distribution declared
     —        —        —        —        —        (1,855 )      —        (1,855 )      —        (1,855 ) 
Contributions
     —        —        —        —        —        —        —        —        110       110  
Distributions
     —        —        —        —        —        —        —        —        (235 )      (235 ) 
Net income
     —        —        —        —        —        704       —        704       169       873  
Other comprehensive loss
     —        —        —        —        —        —        (1,942 )      (1,942 )      —        (1,942 ) 
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Balance—March 31, 2023
     4,480     $ 112,000       39,938     $ 399     $ 435,626     $ 242,318     $ 789     $ 791,132     $ 387     $ 791,519  
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Restricted stock award grants and vesting
     —        —        —        —        1,107       (84 )      —        1,023       —        1,023  
Common stock dividend distribution declared
     —        —        —        —        —        (3,994 )      —        (3,994 )      —        (3,994 ) 
Preferred stock dividend distribution declared
     —        —        —        —        —        (1,855 )      —        (1,855 )      —        (1,855 ) 
Distributions
     —        —        —        —        —        —        —        —        (226 )      (226 ) 
Net (loss)/income
     —        —        —        —        —        (680 )      —        (680 )      164       (516 ) 
Other comprehensive income
     —        —        —        —        —        —        2,937       2,937       —        2,937  
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Balance—June 30, 2023
     4,480     $ 112,000       39,938     $ 399     $ 436,733     $ 235,705     $ 3,726     $ 788,563     $ 325     $ 788,888  
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Restricted stock award grants and vesting
     —        —        —        —        1,067       (43 )      —        1,024       —        1,024  
Common stock dividend distribution declared
     —        —        —        —        —        (3,994 )      —        (3,994 )      —        (3,994 ) 
Preferred stock dividend distribution declared
     —        —        —        —        —        (1,855 )      —        (1,855 )      —        (1,855 ) 
Distributions
     —        —        —        —        —        —        —        —        (167 )      (167 ) 
Net (loss)/income
     —        —        —        —        —        (43 )      —        (43 )      173       130  
Other comprehensive income
     —        —        —        —        —        —        427       427       1       428  
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Balance—September 30, 2023
     4,480     $ 112,000       39,938     $ 399     $ 437,800     $ 229,770     $ 4,153     $ 784,122     $ 332     $ 784,454  
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
The accompanying notes are an integral part of these condensed consolidated financial statements
.
 
5

City Office REIT, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
 
    
Nine Months Ended

September 30,
  
    
2024
    
2023
  
Cash Flows from Operating Activities:
     
Net (loss)/income
    $ (6,568 )   $ 487  
Adjustments to reconcile net (loss)/income to net cash provided by operating activities:
     
Depreciation and amortization
      44,440       45,795  
Amortization of deferred financing costs and debt fair value
      1,030       979  
Amortization of above and below market leases
      (97 )      68  
Straight-line rent/expense
      (40 )      (6,402 ) 
Non-cash
stock compensation
      3,238       3,071  
Net loss on disposition of real estate property
      1,462       134  
Changes in
non-cash
working capital:
     
Rents receivable, net
      471       172  
Other assets
      178       (744 ) 
Accounts payable and accrued liabilities
      5,966       5,705  
Deferred rent
      (449 )      (1,304 ) 
Tenant rent deposits
      349       208  
  
 
 
    
 
 
  
Net Cash Provided By Operating Activities
      49,980       48,169  
  
 
 
    
 
 
  
Cash Flows to Investing Activities:
     
Additions to real estate properties
      (21,300 )      (23,338 ) 
Reduction of cash on disposition of real estate property
      (2,477 )      (4,051 ) 
Deferred leasing costs
      (5,980 )      (3,474 ) 
  
 
 
    
 
 
  
Net Cash Used In Investing Activities
      (29,757 )      (30,863 ) 
  
 
 
    
 
 
  
Cash Flows to Financing Activities:
     
Debt issuance and extinguishment costs
      (576 )      (737 ) 
Proceeds from borrowings
      59,000       35,000  
Repayment of borrowings
      (60,075 )     (15,889 ) 
Dividend distributions paid to stockholders
      (17,590 )      (25,490 ) 
Distributions to
non-controlling
interests in properties
      (795 )      (628 ) 
Shares withheld for payment of taxes on restricted stock unit vesting
      (1,072 )      (1,643 ) 
Contributions from
non-controlling
interests in properties
      522       110  
  
 
 
    
 
 
  
Net Cash Used In Financing Activities
      (20,586 )      (9,277 ) 
  
 
 
    
 
 
  
Net (Decrease)/Increase in Cash, Cash Equivalents and Restricted Cash
      (363 )      8,029  
Cash, Cash Equivalents and Restricted Cash, Beginning of Period
      43,392       44,262  
  
 
 
    
 
 
  
Cash, Cash Equivalents and Restricted Cash, End of Period
    $ 43,029     $ 52,291  
  
 
 
    
 
 
  
Reconciliation of Cash, Cash Equivalents and Restricted Cash:
     
Cash and Cash Equivalents, End of Period
      25,911       36,738  
Restricted Cash, End of Period
      17,118       15,553  
  
 
 
    
 
 
  
Cash, Cash Equivalents and Restricted Cash, End of Period
    $ 43,029     $ 52,291  
  
 
 
    
 
 
  
Supplemental Disclosures of Cash Flow Information:
     
Cash paid for interest
    $ 25,642     $ 22,586  
Purchase of additions in real estate properties included in accounts payable
    $ 11,237     $ 10,707  
Purchase of deferred leasing costs included in accounts payable
    $ 1,998     $ 919  
The accompanying notes are an integral part of these condensed consolidated financial statements
.
 
6

City Office REIT, Inc.
Notes to the Condensed Consolidated Financial Statements
1. Organization and Description of Business
City Office REIT, Inc. (the “Company”) was organized in the state of Maryland on November 26, 2013. On April 21, 2014, the Company completed its initial public offering (“IPO”) of shares of the Company’s common stock. The Company contributed the net proceeds of the IPO to City Office REIT Operating Partnership, L.P., a Maryland limited partnership (the “Operating Partnership”), in exchange for common units of limited partnership interest in the Operating Partnership (“common units”).
The Company’s interest in the Operating Partnership entitles the Company to share in distributions from, and allocations of profits and losses of, the Operating Partnership in proportion to the Company’s percentage ownership of common units. As the sole general partner of the Operating Partnership, the Company has the exclusive power under the Operating Partnership’s partnership agreement to manage and conduct the Operating Partnership’s business, subject to limited approval and voting rights of the limited partners.
The Company has elected to be taxed and will continue to operate in a manner that will allow it to continue to qualify as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”). Subject to qualification as a REIT, the Company will be permitted to deduct dividend distributions paid to its stockholders, eliminating the U.S. federal taxation of income represented by such distributions at the Company level. REITs are subject to a number of organizational and operational requirements. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to U.S. federal and state income tax on its taxable income at regular corporate tax rates and, for years prior to 2018, any applicable alternative minimum tax.
2. Summary of Significant Accounting Policies
Basis of Preparation and Summary of Significant Accounting Policies
The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with Securities and Exchange Commission (“SEC”) rules and regulations and generally accepted accounting principles in the United States of America (“US GAAP”) and in the opinion of management contain all adjustments (including normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form
10-K
for the year ended December 31, 2023.
Recent Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”)
No. 2023-07
(“ASU
2023-07”)
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which will enhance segment disclosures. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024, with early adoption permitted. This standard must be applied retrospectively to all periods presented in the financial statements. The Company has evaluated the impact of ASU
2023-07
and anticipates adoption will result in incremental disclosure in the notes to the consolidated financial statements for the year ended December 31, 2024.
 
7

3. Real Estate Investments
Disposition of Real Estate Property
Cascade Station
On
June 27, 2024, the Company entered into an assignment in lieu of foreclosure agreement to transfer possession and control of the Cascade Station property to the lender as a result of an event of default as defined in the property’s
non-
recourse
loan agreement. Given the terms of the assignment in lieu of foreclosure agreement, the Company assessed whether the entity holding the property should be reassessed for consolidation as a Variable Interest Entity (“VIE”) in accordance with ASC 810 – Consolidation.
Based on its analysis, the Company concluded that it is not the primary beneficiary of the VIE and therefore deconsolidated the property as of June 27, 2024. The Company deconsolidated the net carrying value of real estate assets of $17.9 million, the mortgage loan of $20.6 million, cash and restricted cash of $2.5 million and net current assets of $1.7 million. For the nine months ended September 30, 2024, the Company recognized a loss on deconsolidation of $1.5 million, which has been included within net loss on disposition of real estate property on the Company’s condensed consolidated statement of operations and statement of cash flows.
190 Office Center
On May 15, 2023, the Company consented to the appointment of a receiver to assume possession and control of the 190 Office Center property as a result of an event of default as defined in the property’s
non-recourse
loan agreement. Given the appointment of the receiver, the Company assessed whether the entity holding the property should be reassessed for consolidation as a VIE in accordance with ASC 810 – Consolidation.
Based on its analysis, the Company concluded that it is not the primary beneficiary of the VIE and therefore deconsolidated the property as of May 15, 2023. The Company deconsolidated the net carrying value of real estate assets of $35.7 million, the mortgage loan of $38.6 million, cash and restricted cash of $4.0 million and net current liabilities of $1.0 million. For the nine months ended September 30, 2023, the Company recognized a loss on deconsolidation of $0.1 million, which has been included within net loss on disposition of real estate property on the Company’s condensed consolidated statement of operations and statement of cash flows.
4. Lease Intangibles
Lease intangibles and the value of assumed lease obligations as of September 30, 2024 and December 31, 2023 were comprised of the following (in thousands):
 
 
  
Lease Intangible Assets
 
 
Lease Intangible Liabilities
 
September 30, 2024
  
Above

Market

Leases
 
 
In Place

Leases
 
 
Leasing

Commissions
 
 
Total
 
 
Below

Market

Leases
 
 
Below Market

Ground Lease
 
 
Total
 
Cost
    $ 16,647     $ 72,184     $ 31,481     $ 120,312     $ (14,510 )    $ (138 )    $ (14,648 ) 
Accumulated amortization
      (10,333 )      (53,340 )      (20,119 )      (83,792 )      7,960       59       8,019  
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
   $ 6,314     $ 18,844     $ 11,362     $ 36,520     $ (6,550 )    $ (79 )    $ (6,629 ) 
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
 
  
Lease Intangible Assets
 
 
Lease Intangible Liabilities
 
December 31, 2023
  
Above

Market

Leases
 
 
In Place

Leases
 
 
Leasing

Commissions
 
 
Total
 
 
Below

Market

Leases
 
 
Below Market

Ground Lease
 
 
Total
 
Cost
    $ 17,463     $ 73,128     $ 32,541     $ 123,132     $ (14,968 )    $ (138 )    $ (15,106 ) 
Accumulated amortization
      (10,222 )      (51,290 )      (19,186 )      (80,698 )      7,314       56       7,370  
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
   $ 7,241     $ 21,838     $ 13,355     $ 42,434     $ (7,654 )    $ (82 )    $ (7,736 ) 
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
8
The estimated aggregate amortization expense for lease intangibles for the next five years and in the aggregate are as follows (in thousands):
 
2024
    $ 1,561  
2025
      6,197  
2026
      5,889  
2027
      4,903  
2028
      4,209  
Thereafter
      7,132  
  
 
 
  
   $ 29,891  
  
 
 
  
5. Debt
The following table summarizes the indebtedness as of September 30, 2024 and December 31, 2023 (dollars in thousands), including the impact of the effective interest rate swaps described in Note 6:

Property
  
September 30,

2024
 
  
December 31,

2023
 
  
Interest Rate as

of September 30,

2024
(1)
 
 
Maturity
 
Unsecured Credit Facility
 (2)(3)
    $   255,000     $   200,000    
 
 SOFR +1.50%
(1)(2)
 
   
 
 November 2025
 
Term Loan
(3)
      25,000       25,000    
 
 6.00%
(3)
 
   
 
 January 2026
 
Mission City
      45,323       45,994    
 
 3.78%
 
   
 
 November 2027
 
Canyon Park
(4)
      38,356       38,932    
 
 4.30%
 
   
 
 March 2027
 
Circle Point
      38,339       38,789    
 
 4.49%
 
   
 
 September 2028
 
SanTan
(5)
      30,958       31,501    
 
 4.56%
 
   
 
 March 2027
 
The Quad
      30,600       30,600    
 
 4.20%
 
   
 
 September 2028
 
Intellicenter
      30,207       30,682    
 
 4.65%
 
   
 
 October 2025
 
2525 McKinnon
      27,000       27,000    
 
 4.24%
 
   
 
 April 2027
 
FRP Collection
      25,842       26,139    
 
 7.05%
(6)
 
   
 
 August 2028
 
Greenwood Blvd
      20,440       20,856    
 
 3.15%
 
   
 
 December 2025
 
5090 N. 40th St
      20,028       20,370    
 
 3.92%
 
   
 
 January 2027
 
AmberGlen
      20,000       20,000    
 
 3.69%
 
   
 
 May 2027
 
Central Fairwinds
      15,556       15,826    
 
 7.68%
(7)
 
   
 
 June 2029
 
Carillon Point
      14,254       14,419    
 
 7.05%
(6)
 
   
 
 August 2028
 
FRP Ingenuity Drive
(8)
      14,096       15,860    
 
 4.44%
 
   
 
 December 2026
 
Term Loan
 (9)
      —        50,000    
 
 — 
 
   
 
 — 
 
Cascade Station
(10)
      —        20,752    
 
 — 
 
   
 
 — 
 
  
 
 
    
 
 
    
 
 
   
 
 
Total Principal
      650,999       672,720    
 
 
   
 
 
Deferred financing costs, net
      (2,826 )      (3,258 )   
 
 
   
 
 
Unamortized fair value adjustments
      —        48    
 
 
   
 
 
  
 
 
    
 
 
    
 
 
   
 
 
Total
    $ 648,173     $ 669,510    
 
 
   
 
 
  
 
 
    
 
 
    
 
 
   
 
 

(1)
As of September 30, 2024, the daily-simple Secured Overnight Financing Rate (“SOFR”) was 4.96%.
(2)
Borrowings under our unsecured credit facility (the “Unsecured Credit Facility”) bear interest at a rate equal to the daily-simple SOFR rate plus a margin of between 135 to 235 basis points depending upon the Company’s consolidated leverage ratio. On February 9, 2023, the Company entered into a three-year interest rate swap for a notional amount of $140 million, effective March 8, 2023, effectively fixing the SOFR component of the borrowing rate for $140 million of the Unsecured Credit Facility at 4.19%. As of September 30, 2024, the Unsecured Credit Facility had $255.0 million drawn and a $2.5 million letter of credit to satisfy escrow requirements for a mortgage lender. The Unsecured Credit Facility matures in November 2025 and may be extended 12 months at the Company’s option upon meeting certain conditions. The Unsecured Credit Facility requires the Company to maintain a fixed charge coverage ratio of no less than 1.50x.
(3)
On January 5, 2023, the Company entered into a second amendment to its amended and restated credit agreement, dated
November 16, 2021, for the Unsecured Credit Facility and entered into a three-year $25 million term loan, increasing its total authorized borrowings from $350 million to $375 million. Borrowings under the $25 million term loan bear interest at a rate equal to the daily-simple SOFR rate plus a margin of 210 basis points. In conjunction with the term loan, the Company also entered into a three-year interest rate swap for a notional amount of $25 million, effectively fixing the SOFR component of the borrowing rate of the term loan at 3.90%.
(4)
The mortgage loan anticipated repayment date (“ARD”) is March 1, 2027. The final scheduled maturity date can be extended up to 5 years beyond the ARD. If the loan is not paid off at ARD, the loan’s interest rate shall be adjusted to the greater of (i) the initial interest rate plus 200 basis points or (ii) the yield on the five-year “on the run” treasury reported by Bloomberg market data service plus 450 basis points.
(5)
In the second quarter of 2023, the Debt Service Coverage Ratio (“DSCR”) and debt yield covenants for SanTan were not met, which triggered a ‘cash-sweep period’ that began in the second quarter of 2023. As of September 30, 2024, the DSCR and debt yield covenants were still not met. As of September 30, 2024, and December 31, 2023, total restricted cash for the property was $2.6 million and $4.1 million, respectively.
(6)
The FRP Collection and Carillon Point loans bear interest at a rate equal to the daily-simple SOFR rate plus a margin of 275 basis points. The SOFR component of the borrowing rate is effectively fixed for the remainder of the five-year term via interest rate swaps at 4.30%.
 
9
(7)
On May 23, 2024, the Company entered into an amended and restated loan agreement for Central Fairwinds, extending the term for an additional five years and amending the interest rate from fixed to floating. The loan bears interest at a rate equal to the daily-simple SOFR rate plus a margin of
 325
basis points. The Company also entered into a five-year interest rate swap agreement, effectively fixing the SOFR component of the borrowing rate of the loan at
4.43%.
(8)
In the third quarter of 2022, the DSCR covenant for FRP Ingenuity Drive was not met, which triggered a ‘cash-sweep period’ that began in the fourth quarter of 2022. As of September 30, 2024, and December 31, 2023, total restricted cash for the property was $3.8 million and $3.2 million, respectively.
 
On June 27, 2024, the Company entered into a loan modification and extension agreement for FRP Ingenuity Drive, which among other things, included a principal repayment of $1.6 million and extended the term for an additional two years to December 2026 with a one-year extension option. Under the terms of the agreement the ‘cash-sweep period’ will continue through the maturity of the loan. 
(9)
On September 27, 2024, the $50 million term loan matured and was
repaid with proceeds
from
the Unsecured Credit Facility
.
(10)
On May 1, 2024, the non-recourse property loan at our Cascade Station property in Portland, Oregon matured, and an event of default was triggered under the terms of the Cascade Station loan, following non-payment of the principal amount outstanding at loan maturity. On June 27,
2024, the
non-recourse
debt associated with the Cascade Station property was deconsolidated as a result of the Company entering into an assignment in lieu of foreclosure agreement to transfer possession and control of the property to the lender. The loan balance as of the date of deconsolidation was $20.6 million.
The scheduled principal repayments of debt as of September 30, 2024 are as follows (in thousands):
 
2024
    $ 1,361  
2025
      309,929  
2026
      43,899  
2027
      176,734  
2028
      104,586  
Thereafter
      14,490  
  
 
 
  
   $ 650,999  
  
 
 
  
6. Fair Value of Financial Instruments
Fair value measurements are based on assumptions that market participants would use in pricing an asset or a liability. The hierarchy for inputs used in measuring fair value is as follows:
Level 1 Inputs – quoted prices in active markets for identical assets or liabilities
Level 2 Inputs – observable inputs other than quoted prices in active markets for identical assets and liabilities
Level 3 Inputs – unobservable inputs
In September 2019, the Company entered into a London Interbank Offered Rate (“LIBOR”) interest rate swap for a notional amount of $50.0 million. In January 2023, the Company amended the $50.0 million interest rate swap to transition from LIBOR to daily-simple SOFR. The Company applied the practical expedients available for hedging relationships under the reference rate reform guidance, which preserves the presentation of the derivative consistent with past presentation and does not result in dedesignation of the hedging relationship. The interest rate swap effectively fixed the SOFR component of the corresponding loan at approximately 1.17% for the remainder of the five-year term. In September 2024, the $50.0 million interest rate swap matured.
In January 2023, the Company entered into an interest rate swap for a notional amount of $25.0 million. The interest rate swap effectively fixes the SOFR component of the corresponding loan at approximately 3.90% for the three-year term.
In February 2023, the Company entered into an interest rate swap for a notional amount of $140.0 million. The interest rate swap effectively fixes the SOFR component of the corresponding loan at approximately 4.19% for the three-year term.
In August 2023, the Company entered into an interest rate swap at FRP Collection for an initial notional amount of $26.3 million. The interest rate swap effectively fixes the SOFR component of the corresponding loan at approximately 4.30% for the five-year term. The notional amount of the interest rate swap amortizes over the term consistent with the balance of the corresponding
loan.
 
10
In
August 2023, the Company entered into an interest rate swap at Carillon Point for an initial notional amount of $14.5 million. The interest rate swap effectively fixes the SOFR component of the corresponding loan at approximately 4.30% for the five-year term. The notional amount of the interest rate swap amortizes over the term consistent with the balance of the corresponding loan.
In
May 2024, the Company entered into an interest rate swap at Central Fairwinds for an initial notional amount of $15.6 million. The interest rate swap effectively fixes the SOFR component of the corresponding loan at approximately 4.43% for the five-year term. The notional amount of the interest rate swap amortizes over the term consistent with the balance of the corresponding loan.
The fair value of the interest rate swaps have been classified as Level 2 fair value measurements.
The interest rate swaps have been designated and qualify as cash flow hedges and have been recognized on the condensed consolidated balance sheets at fair value, presented within other assets and other liabilities. Gains and losses resulting from changes in the fair value of derivatives that have been designated and qualify as cash flow hedges are reported as a component of other comprehensive income/(loss) and reclassified into earnings in the periods during which the hedged forecasted transaction affects earnings.
The following table summarizes the Company’s derivative financial instruments as of September 30, 2024 and December 31, 2023 (in thousands):
 
 
  
Notional Value
 
  
 
 
  
 
 
  
Fair Value

Assets/(Liabilities)
 
 
  
September 30, 2024
 
  
Effective Date
 
  
Maturity Date
 
  
September 30, 2024
 
 
December 31, 2023
 
Interest Rate Swap
    $ 25,000        January 2023        January 2026     
$

 (75 )   
$

 49  
Interest Rate Swap
      140,000        March 2023        November 2025        (707 )      (295 ) 
Interest Rate Swap
      25,842        August 2023        August 2028        (965 )      (846 ) 
Interest Rate Swap
      14,254        August 2023        August 2028        (533 )     (466 ) 
Interest Rate Swap
      15,556        May 2024        June 2029        (789 )     —   
Interest Rate Swap
      —         September 2019        September 2024        —        1,268  
  
 
 
           
 
 
    
 
 
  
   $ 220,652            $ (3,069 )    $ (290 ) 
  
 
 
           
 
 
    
 
 
  
For the nine months ended September 30, 2024, approximately $3.2 million of realized gains were reclassified to interest expense due to payments made to or received from the swap counterparty. For the nine months ended September 30, 2023, approximately $2.3 million of realized gains were reclassified to interest expense due to payments made to or received from the swap counterparty.
Cash, Cash Equivalents, Restricted Cash, Rents Receivable, Accounts Payable and Accrued Liabilities
The Company estimates that the fair value approximates carrying value due to the relatively short-term nature of these instruments.
Fair Value of Financial Instruments Not Carried at Fair Value
With the exception of fixed rate mortgage loans payable, the carrying amounts of the Company’s financial instruments approximate their fair value. The Company determines the fair value of its fixed rate mortgage loan payable based on a discounted cash flow analysis using a discount rate that approximates the current borrowing rates for instruments of similar maturities. Based on this, the Company has determined that the fair value of these instruments was $307.3 million and $343.1 million (compared to a carrying value of $315.3 million and $357.2 million) as of September 30, 2024, and December 31, 2023, respectively. Accordingly, the fair value of mortgage loans payable have been classified as Level 3 fair value measurements.
 
11
7. Related Party Transactions
Administrative Services Agreement
For the nine months ended September 30, 2024 and 2023, the Company earned $0.2 million and $0.4 million, respectively, in administrative services performed for Second City Real Estate II
Corporation
, Clarity Real Estate Ventures GP, Limited Partnership and their
affiliates.
8. Leases
Lessor Accounting
The Company is focused on acquiring, owning and operating office properties for lease to a stable and diverse tenant base. The Company’s properties have both full-service gross and net leases which are generally classified as operating leases. Rental income related to such leases is recognized on a straight-line basis over the remaining lease term. The Company’s total revenue includes fixed base rental payments provided under the lease and variable payments, which principally consist of tenant expense reimbursements for certain property operating expenses as provided under the lease.
The Company recognized fixed and variable lease payments for operating leases for the three and nine months ended September 30, 2024 and 2023 as follows (in thousands):
 
 
  
Three Months Ended

September 30,
 
  
Nine Months Ended

September 30,
 
 
  
2024
 
  
2023
 
  
2024
 
  
2023
 
Fixed payments
    $  35,794      $ 37,081      $ 109,428      $ 113,565  
Variable payments
      6,546        6,933        19,561        20,418  
  
 
 
     
 
 
     
 
 
     
 
 
  
   $  42,340      $ 44,014      $ 128,989      $ 133,983  
  
 
 
     
 
 
     
 
 
     
 
 
  
The Company ceased recognizing rental lease income with respect to the Cascade Station property on the deconsolidation of the entity on June 27, 2024. The Company ceased recognizing rental lease income with respect to the 190 Office Center property on the deconsolidation of the entity on May 15, 2023. Refer to Note 3 for further details.
Future minimum lease payments to be received by the Company as of September 30, 2024 under
non-cancellable
operating leases for the next five years and thereafter are as follows (in thousands):
 
2024
    $ 31,715  
2025
      123,574  
2026
      114,741  
2027
      98,053  
2028
      83,633  
Thereafter
      181,083  
  
 
 
  
   $ 632,799  
  
 
 
  
The Company’s leases may include various provisions such as scheduled rent increases, renewal options and termination options. The majority of the Company’s leases include defined rent increases rather than variable payments based on an index or unknown rate.
 
12
Lessee Accounting
As a lessee, the Company has ground and office
leases
which are classified as operating and financing leases. As of September 30, 2024, these leases had remaining terms of
two
to 64 years and a weighted average remaining lease term of 50 years.
Right-of-use
assets and lease liabilities have been included within other assets and other liabilities on the Company’s condensed consolidated balance sheets as follows (in thousands):

    
September 30, 2024
     
December 31, 2023
  
Right-of-use
asset – operating leases
    $  10,173      $  12,564  
Lease liability – operating leases
    $ 8,352      $ 8,550  
Right-of-use
asset – financing leases
    $ 9,650      $ 9,820  
Lease liability – financing leases
    $ 1,615      $ 1,551  
Lease
liabilities are measured at the commencement date based on the present value of future lease payments. One of the Company’s operating ground leases includes rental payment increases over the lease term based on increases in the Consumer Price Index (“CPI”). Changes in the CPI were not estimated as part of the measurement of the operating lease liability. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The Company used a weighted average discount rate of 6.2% in determining its lease liabilities. The discount rates were derived from the Company’s assessment of the credit quality of the Company and adjusted to reflect secured borrowing, estimated yield curves and long-term spread adjustments.
Right-of-use
assets include any prepaid lease payments and exclude any lease incentives and initial direct costs incurred. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The lease terms may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option.
Future minimum lease payments to be paid by the Company as a lessee for operating and financing leases as of September 30, 2024 for the next five years and thereafter are as follows (in thousands):

 
  
Operating
Leases
 
  
Financing

Leases
 
2024
    $ 74      $ 2  
2025
      770        8  
2026
      724        8  
2027
      587        8  
2028
      587        8  
Thereafter
      25,976        6,930  
  
 
 
     
 
 
  
Total future minimum lease payments
      28,718        6,964  
Discount
      (20,366 )       (5,349 ) 
  
 
 
     
 
 
  
Total
    $ 8,352      $ 1,615  
  
 
 
     
 
 
  
9. Commitments and Contingencies
The Company is obligated under certain tenant leases to fund tenant improvements and the expansion of the underlying leased properties.
Under various federal, state and local laws, ordinances and regulations relating to the protection of the environment, a current or previous owner or operator of real estate may be liable for the cost of removal or remediation of certain hazardous or toxic substances disposed, stored, generated, released, manufactured or discharged from, on, at, under, or in a property. As such, the Company may be potentially liable for costs associated with any potential environmental remediation at any of its formerly or currently owned properties.
The Company believes that it is in compliance in all material respects with all federal, state and local ordinances and regulations regarding hazardous or toxic substances. Management is not aware of any environmental liability that it believes would have a material adverse impact on the Company’s financial position or results of operations. Management is unaware of any instances in which the Company would incur significant environmental costs if any or all properties were sold, disposed of or abandoned. However, there can be no assurance that any such
non-compliance,
liability, claim or expenditure will not arise in the future.
 
1
3
The Company is involved from time to time in lawsuits and other disputes which arise in the ordinary course of business. As of September 30, 2024, management believes that these matters will not have a material adverse effect, individually or in the aggregate, on the Company’s financial position or results of
operations
.
10. Stockholders’ Equity
Share Repurchase Plan
On May 4, 2023, the Company’s Board of Directors (the “Board of Directors”) approved a share repurchase plan (“Repurchase Program”) authorizing the Company to repurchase up to $50 million of its outstanding shares of common stock or Series A Preferred Stock. Under the share repurchase program, the shares may be repurchased from time to time using a variety of methods, which may include open market transactions, privately negotiated transactions or otherwise, all in accordance with the rules of the SEC and other applicable legal requirements.
Repurchased shares of common stock will be classified as authorized and unissued shares. The Company recognizes the cost of shares of common stock it repurchases, including direct costs incurred, as a reduction in stockholders’ equity. Such reductions of stockholders equity due to the repurchases of shares of common stock will be applied first, to reduce common stock in the amount of the par value associated with the shares of common stock repurchased and second, to reduce additional
paid-in
capital by the amount that the purchase price for the shares of common stock repurchased exceed the par value.
There were no shares repurchased during the nine months ended September 30, 2024 and 2023.
Common Stock and Common Unit Distributions
On September 13, 2024, the Board of Directors approved and the Company declared a cash dividend distribution of $0.10 per common share for the quarterly period ended September 30, 2024. The dividend was paid subsequent to quarter end on October 24, 2024 to common stockholders and common unitholders of record as of the close of business on October 10, 2024, resulting in an aggregate payment of $4.0 million.
Preferred Stock Distributions
On September 13, 2024, the Board of Directors approved and the Company declared a cash dividend distribution of $0.4140625 per share of the Company’s 6.625% Series A Preferred Stock (“Series A Preferred Stock”) for an aggregate amount of $1.9 million for the quarterly period ended September 30, 2024. The dividend was paid subsequent to quarter end on October 24, 2024 to the holders of record of Series A Preferred Stock as of the close of business on October 10, 2024.
Equity Incentive Plan
The Company has an equity incentive plan (“Equity Incentive Plan”) for executive officers, directors and certain
non-executive
employees, and with approval of the Board of Directors, for subsidiaries and their respective affiliates. The Equity Incentive Plan provides for grants of restricted common stock, restricted stock units, phantom shares, stock options, dividend equivalent rights and other equity-based awards (including the grant of Operating Partnership long-term incentive plan units), subject to the total number of shares available for issuance under the plan. The Equity Incentive Plan is administered by the compensation committee of the Board of Directors (the “Compensation Committee”). The Equity Incentive Plan provides for the issuance of up to
 
3,763,580
shares of common stock. To the extent an award granted under the Equity Incentive Plan expires or terminates, the shares subject to any portion of the award that expires or terminates without having been exercised or paid, as the case may be, will again become available for the issuance of additional awards.
 
1
4
On January 27, 2020, each of the Board of Directors and the Compensation Committee approved a new form of performance-based restricted unit award agreement that will be used to grant performance-based restricted stock unit awards (“Performance RSU Awards”) pursuant
to the Equity Incentive Plan. The Performance RSU Awards are based upon the total stockholder return (“TSR”) of the Company’s common stock over a three-year measurement period beginning January 1 of the year of grant (the “Measurement Period”) relative to the TSR of a defined peer group list of other US Office REIT companies (the “Peer Group”) as of the first trading date in the year of grant. The payouts under the Performance RSU Awards are evaluated on a sliding scale as follows: TSR below the 30th percentile of the Peer Group would result in a 50% payout; TSR at the 50th percentile of the Peer Group would result in a 100% payout; and TSR at or above the 75th percentile of the Peer Group would result in a 150% payout. Payouts are mathematically interpolated between these stated percentile targets, subject to a 150% maximum. To the extent earned, the payouts of the Performance RSU Awards are intended to be settled in the form of shares of the Company’s common stock, pursuant to the Equity Incentive Plan. Upon satisfaction of the vesting conditions, dividend equivalents in an amount equal to all regular and special dividends declared with respect to the Company’s common stock during each annual measurement period during the Measurement Period are determined and paid on a cumulative, reinvested basis over the term of the applicable Performance RSU Award, at the time such award vests and based on the number of shares of the Company’s common stock that are earned.
During the first quarter of 2024, the Performance RSU Awards granted in January 2021, with a January 1, 2021 through December 31, 2023 Measurement Period, were earned at 120% of the target number of shares granted based on achievement of a TSR that was at or above the 60th percentile of the 2021 RSU Peer Group.
The following table summarizes the activity of the awards under the Equity Incentive Plan for the three and nine months ended September 30, 2024:
 
    
Number of
RSUs
     
Number of
Performance
RSUs
  
Outstanding at December 31, 2023
      451,741        424,888  
Granted
      324,414        324,952  
Issuance of dividend equivalents
      8,290        —   
Vested
      (228,747 )       (120,000 ) 
  
 
 
     
 
 
  
Outstanding at March 31, 2024
      555,698        629,840  
Issuance of dividend equivalents
      12,161        —   
  
 
 
     
 
 
  
Outstanding at June 30, 2024
      567,859        629,840  
Issuance of dividend equivalents
      10,039        —   
  
 
 
     
 
 
  
Outstanding at September 30, 2024
      577,898        629,840  
The following table summarizes the activity of the awards under the Equity
Incentive
Plan for the three and nine months ended September 30, 2023:

 
  
Number of
RSUs
 
  
Number of
Performance
RSUs
 
Outstanding at December 31, 2022
      428,320        307,500  
Granted
      198,022        214,888  
Issuance of dividend equivalents
      9,485        —   
Vested
      (216,520 )       (97,500 ) 
  
 
 
     
 
 
  
Outstanding at March 31, 2023
      419,307        424,888  
Issuance of dividend equivalents
      14,356        —   
  
 
 
     
 
 
  
Outstanding at June 30, 2023
      433,663        424,888  
Issuance of dividend equivalents
      7,844        —   
  
 
 
     
 
 
  
Outstanding at September 30, 2023
      441,507        424,888  
 
1
5
During the nine months ended September 30, 2024 and September 30, 2023, the Company granted the following restricted stock units (“RSUs”) and Performance RSU Awards to directors, executive officers and certain
non-executive
employees:
 
    
Units Granted
     
Grant Date
Fair Value

(in thousands)
     
Weighted Average
Grant Date Fair
Value Per Share
  
    
RSUs
     
Performance
RSUs
  
2024
      324,414        324,952      $ 3,539      $  5.45  
2023
      198,022        214,888        3,729        9.03  
The RSU Awards will vest in three equal, annual installments on each of the first three anniversaries of the grant date. The Performance RSU Awards will vest on the last day of the three-year measurement period.
During the three months ended September 30, 2024 and September 30, 2023, the Company recognized net compensation expense for the RSUs and Performance RSU Awards as follows (in thousands):
 
    
RSUs
     
Performance
RSUs
     
Total
  
2024
    $     643      $    441      $   1,084  
2023
      633        391        1,024  
During the nine months ended September 30, 2024 and September 30, 2023, the Company recognized net compensation expense for the RSUs and Performance RSU Awards as follows (in thousands):

    
RSUs
     
Performance
RSUs
     
Total
  
2024
    $   1,928      $   1,310      $   3,238  
2023
      1,910        1,161        3,071  
 
1
6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis is based on, and should be read in conjunction with, the condensed consolidated financial statements and the related notes thereto of the City Office REIT, Inc. contained in this Quarterly Report on Form
10-Q
(this “Report”).
As used in this section, unless the context otherwise requires, references to “we,” “our,” “us,” and “our company” refer to City Office REIT, Inc., a Maryland corporation, together with our consolidated subsidiaries, including City Office REIT Operating Partnership L.P., a Maryland limited partnership, of which we are the sole general partner and which we refer to in this section as our Operating Partnership, except where it is clear from the context that the term only means City Office REIT, Inc.
Cautionary Statement Regarding Forward-Looking Statements
 
This Report, including “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains both historical and forward-looking statements. All statements, other than statements of historical fact are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We have used the words “approximately,” “anticipate,” “assume,” “believe,” “budget,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “future,” “hypothetical,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will” and similar terms and phrases to identify forward-looking statements in this Report. All of our forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we are expecting, including:
 
  •  
adverse economic or real estate developments in the office sector or the markets in which we operate;
 
  •  
increased interest rates, any resulting increase in financing or operating costs, the impact of inflation and a stall in economic growth or an economic recession;
 
  •  
changes in local, regional, national and international economic conditions, including as a result of recent pandemics or any future epidemics or pandemics;
 
  •  
the extent to which “work-from-home” and hybrid work policies continue;
 
  •  
our inability to compete effectively;
 
  •  
our inability to collect rent from tenants or renew tenants’ leases on attractive terms if at all;
 
  •  
our dependence upon significant tenants, bankruptcy or insolvency of a major tenant or a significant number of small tenants or borrowers, or defaults on or
non-renewal
of leases by tenants;
 
  •  
demand for and market acceptance of our properties for rental purposes, including as a result of near-term market fluctuations or long-term trends that result in an overall decrease in the demand for office space;
 
  •  
decreased rental rates or increased vacancy rates;
 
  •  
our failure to obtain necessary financing or access the capital markets on favorable terms or at all;
 
  •  
changes in the availability of acquisition opportunities;
 
  •  
availability of qualified personnel;
 
  •  
our inability to successfully complete real estate acquisitions or dispositions on the terms and timing we expect, or at all;
 
  •  
our failure to successfully operate acquired properties and operations;
 
17
  •  
changes in our business, financing or investment strategy or the markets in which we operate;
 
  •  
our failure to generate sufficient cash flows to service our outstanding indebtedness;
 
  •  
environmental uncertainties and risks related to adverse weather conditions and natural disasters;
 
  •  
our failure to maintain our qualification as a REIT for U.S. federal income tax purposes;
 
  •  
government approvals, actions and initiatives, including the need for compliance with environmental requirements;
 
  •  
outcome of claims and litigation involving or affecting us;
 
  •  
financial market fluctuations;
 
  •  
changes in real estate, taxation and zoning laws and other legislation and government activity and changes to real property tax rates and the taxation of REITs in general; and
 
  •  
other factors described in our news releases and filings with the SEC, including but not limited to those described in our Annual Report on Form
10-K
for the year ended December 31, 2023 under the sections captioned “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” and in our subsequent reports filed with the SEC.
The forward-looking statements contained in this Report are based on historical performance and management’s current plans, estimates and expectations in light of information currently available to us and are subject to uncertainty and changes in circumstances. There can be no assurance that future developments affecting us will be those that we have 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 our news releases and filings with the SEC, including but not limited to those described in our Annual Report on Form
10-K
for the year ended December 31, 2023 under the heading “Risk Factors” and elsewhere in this Form
10-Q
and any updates to those factors set forth in our subsequent Quarterly Reports on Form
10-Q
or other public filings with the SEC, many of which are beyond our control. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove to be incorrect, our actual results may vary in material respects from what we may have expressed or implied by these forward-looking statements. We caution that you should not place undue reliance on any of our forward-looking statements. Any forward-looking statement made by us in this Report speaks only as of the date of this Report. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by applicable securities laws.
Overview
Company
We were formed as a Maryland corporation on November 26, 2013. On April 21, 2014, we completed our IPO of shares of common stock. We contributed the net proceeds of the IPO to our Operating Partnership in exchange for common units in our Operating Partnership. Both we and our Operating Partnership commenced operations upon completion of the IPO and certain related formation transactions.
Revenue Base
As of September 30, 2024, we owned 23 properties comprised of 56 office buildings with a total of approximately 5.6 million square feet of net rentable area (“NRA”). As of September 30, 2024, our properties were approximately 83.4% leased.
 
18
Office Leases
Historically, most leases for our properties have been on a full-service gross or net lease basis, and we expect to continue to use such leases in the future. A full-service gross lease generally has a base year expense “stop,” whereby we pay a stated amount of expenses as part of the rent payment while future increases (above the base year stop) in property operating expenses are billed to the tenant based on such tenant’s proportionate square footage in the property. The property operating expenses are reflected in operating expenses; however, only the increased property operating expenses above the base year stop recovered from tenants are reflected as tenant recoveries within rental and other revenues on our condensed consolidated statements of operations. In a triple net lease, the tenant is typically responsible for all property taxes and operating expenses. As such, the base rent payment does not include any operating expenses, but rather all such expenses are billed to or paid by the tenant. The full amount of the expenses for this lease type is reflected in operating expenses, and the reimbursement is reflected as tenant recoveries. We are also a lessor for a fee simple ground lease at the AmberGlen property.
Factors That May Influence Our Operating Results and Financial Condition
Economic Environment and Inflation
The broader economy in the U.S. has experienced increased levels of inflation, higher interest rates and tightened monetary and fiscal policies. The banking and lending sector in particular has been impacted by the interest rate environment. Recently, interest rates, monetary policy and inflation have begun to shift towards an improved economic environment. Office capital markets activity continues to be suppressed, largely driven by limited debt availability for the sector. However, it remains difficult to predict the full impact of recent events and any future changes in interest rates or inflation, and this evolving economic environment impacts our operating activities as:
 
  •  
business leaders may generally become more reticent to make large capital allocation decisions, such as entry into a new lease, given the uncertain economic environment;
 
  •  
our cost of capital has increased due to higher interest rates and credit spreads, and private market debt financing is significantly more challenging to arrange; and
 
  •  
retaining and attracting new tenants has become increasingly challenging due to potential business layoffs, downsizing and industry slowdowns.
Despite the current economic environment, there is increasing evidence that many businesses have or will tighten up
in-person
work policies particularly if economic conditions worsen. Many of these companies increased their workforce beginning in 2020 without increasing their available space. We expect these factors will help offset, at least partially, the headwinds to office space demand.
Work-From-Home Trends
Our business has been and will likely continue to be impacted by tenant uncertainty regarding office space needs given the evolving remote and hybrid working trends. Usage of our assets in the near future depends on corporate and individual decisions regarding return to usage of office space, which is impossible to estimate. As of September 30, 2024, 13.0% of net rentable area under our portfolio was vacant, when excluding committed leases, as compared to 13.7% as of September 30, 2023.
Leasing activity has been and is expected to be impacted by the evolving work-from-home trend until and unless tenants increase the utilization of their spaces. We have experienced and we expect that we will continue to experience slower new leasing, and there remains uncertainty over existing tenants’ long-term space requirements. Overall, this could reduce our anticipated rental revenues. In addition, certain tenants in our markets have and may explore opportunities to sublease all or a portion of their leased square footage to other tenants or third parties. While subleasing generally does not impact the ability to collect payment from the original lessee and will not result in any decrease in the rental revenues expected to be received from the primary tenant, this trend could reduce our ability to lease incremental square footage to new tenants, could increase the square footage of our properties that “goes dark,” could reduce anticipated rental revenue should tenants determine their long-term needs for square footage are lower than originally anticipated and could impact the pricing and competitiveness for leasing office space in our markets.
 
19
We will continue to actively evaluate business operations and strategies to optimally position ourselves given current economic and industry conditions.
Business and Strategy
We focus on owning and acquiring office properties in our footprint of growth markets predominantly in the Sun Belt. Our markets generally possess growing populations with above-average employment growth forecasts, a large number of government offices, large international, national and regional employers across diversified industries, generally lower-cost centers for business operations and a high quality of life. We believe these characteristics have made our markets desirable, as evidenced by domestic net migration generally towards our geographic footprint. A majority of our properties are well located, have good access and functionality to our markets, are new or in new condition, attract high-quality tenants and are professionally managed. We utilize our management’s market-specific knowledge and relationships as well as the expertise of local real estate property and leasing managers to identify acquisition opportunities that we believe will offer cash flow stability and long-term value appreciation.
Rental Revenue and Tenant Recoveries
The amount of net rental revenue generated by our properties will depend principally on our ability to maintain the occupancy rates of currently leased space and to lease currently available space and space that becomes available from lease terminations. As of September 30, 2024, the operating properties in our portfolio were 83.4% leased, with 2.3% of our leases scheduled to expire over the remainder of the calendar year, without regard to renewal options. The amount of rental revenue generated also depends on our ability to maintain or increase rental rates at our properties. Our leases typically include rent escalation provisions designed to provide annual growth in our rental income as well as an ability to pass through cost escalations to our tenants, and in the normal course of business we do not typically waive these rent escalation provisions. Certain leases contain termination provisions which permit the tenant to terminate the arrangement generally upon payment of a termination fee, which we believe acts as a deterrent to cancelling the lease. These early termination provisions applied to approximately 16.7% of the net rentable area in our portfolio as of September 30, 2024. In 2024, no tenant has exercised an early termination provision. Negative trends in one or more of these factors could adversely affect our rental revenue in future periods. We continually monitor our tenants’ ability to meet their lease obligations to pay us rent to determine if any adjustments should be reflected currently. Future economic downturns or regional downturns affecting our markets or submarkets or downturns in our tenants’ industries, including as a result of high interest rates and the fluctuating likelihood of a U.S. recession, that impair our ability to renew or
re-let
space and the ability of our tenants to fulfill their lease commitments, as in the case of tenant bankruptcies, could adversely affect our ability to maintain or increase rental rates at our properties. In addition, growth in rental revenue will also partially depend on our ability to acquire additional properties that meet our investment criteria.
At the beginning of the year the Company, through wholly owned subsidiaries, was the landlord under leases at three of the Company’s properties totaling approximately 177,000 square feet with subsidiaries of WeWork, which had announced that it had entered Chapter 11 bankruptcy protection during the previous year. During the first quarter of 2024, WeWork announced that it rejected the lease at our Block 23 property totaling 46,000 square feet. The Company recorded a termination fee of $0.9 million during the period ended March 31, 2024. During the second quarter of 2024, the Company entered into lease amendments with WeWork at our Bloc 83 and The Terraces properties to reduce WeWork’s leased space by a total of 53,000 square feet by the end of 2024. WeWork exited Chapter 11 bankruptcy proceedings during the second quarter of 2024. Subsequent to September 30, 2024, the Company entered into a lease amendment with WeWork at our Bloc 83 property to renew 28,000 square feet through December 2026. The remaining 78,000 square feet are leased by subsidiaries of WeWork under long-term leases.
 
20
Leasing Activity
The following table presents our leasing activity for the three months ended September 30, 2024.
 
Three Months Ended September 30, 2024 Leasing Activity
   
New Leasing
     
Renewal Leasing
    
Total Leasing
  
                     
Square Feet (000’s)
      78        63    
 
141
 
Average Effective Rents per Square Foot
    $ 33.91      $ 32.87    
$
33.44
 
Tenant Improvements per Square Foot
    $ 40.52      $ 6.99    
$
25.47
 
Leasing Commissions per Square Foot
    $ 11.25      $ 9.34    
$
10.39
 
% Change in Renewal Cash Rent vs. Expiring
         0 %   
Retention Rate %
         42 %   
Our Properties
As of September 30, 2024, we owned 23 properties comprised of 56 office buildings with a total of approximately 5.6 million square feet of NRA in the metropolitan areas of Dallas, Denver, Orlando, Phoenix, Portland, Raleigh, San Diego, Seattle and Tampa. The following table presents an overview of our portfolio as of September 30, 2024.
 
Metropolitan
Area    
  
Property
  
Year of

Construction
    
Economic
Interest
    
NRA

(000’s Square
Feet)
    
In Place

Occupancy
    
Annualized
Average
Effective Rent
per Square
Foot
(1)
    
Annualized Base
Rent per Square
Foot
    
Annualized Gross
Rent per Square
Foot
(2)
    
Annualized
Base Rent
(3)

($000’s)
  
Phoenix, AZ

(27.3% of NRA)
  
Block 23
     2019       100.0 %      307       81.1 %    $ 27.66     $ 29.18     $ 32.73     $ 7,265  
 
Pima Center
    
2006-2008
       100.0 %      272       55.2 %    $ 28.65     $ 30.13     $ 30.13     $ 4,518  
 
SanTan
     2000-2003       100.0 %      267       51.3 %    $ 31.83     $ 33.33     $ 33.33     $ 4,557  
 
5090 N. 40
th
St
     1988       100.0 %      173       70.7 %    $ 33.07     $ 35.70     $ 35.70     $ 4,366  
 
Camelback Square
     1978       100.0 %      173       86.3 %    $ 33.19     $ 35.45     $ 35.45     $ 5,280  
 
The Quad
     1982       100.0 %      163       97.4 %    $ 33.00     $ 34.35     $ 34.70     $ 5,452  
 
Papago Tech
     1993-1995       100.0 %      163       79.2 %    $ 25.43     $ 26.49     $ 26.49     $ 3,413  
Tampa, FL

(19.0%)
  
Park Tower
     1973       94.8 %      482       91.9 %    $ 29.22     $ 29.23     $ 29.23     $ 12,938  
 
City Center
     1984       95.0 %      245       75.8 %    $ 33.29     $ 34.05     $ 34.05     $ 6,325  
 
Intellicenter
     2008       100.0 %      204       76.1 %    $ 24.31     $ 25.96     $ 25.96     $ 4,023  
 
Carillon Point
     2007       100.0 %      124       100.0 %    $ 30.41     $ 31.59     $ 31.59     $ 3,923  
Denver, CO

(14.5%)
  
Denver Tech
     1997; 1999       100.0 %      381       85.6 %    $ 23.58     $ 24.51     $ 29.70     $ 7,999  
 
Circle Point
     2001       100.0 %      272       84.0 %    $ 18.56     $ 20.42     $ 35.99     $ 4,666  
 
Superior Pointe
     2000       100.0 %      152       69.5 %    $ 17.27     $ 19.11     $ 33.11     $ 2,023  
Orlando, FL

(12.9%)
  
Florida Research Park
     1999       96.6 %      397       87.2 %    $ 25.61     $ 26.62     $ 28.78     $ 9,193  
 
Central Fairwinds
     1982       97.0 %      168       91.6 %    $ 27.97     $ 29.45     $ 29.45     $ 4,539  
 
Greenwood Blvd
     1997       100.0 %      155       100.0 %    $ 24.84     $ 25.25     $ 25.25     $ 3,915  
Raleigh, NC

(8.9%)
  
Bloc 83
     2019; 2021       100.0 %      494       87.6 %    $ 39.00     $ 39.47     $ 40.19     $ 17,117  
Dallas, TX

(5.1%)
  
The Terraces
     2017       100.0 %      173       85.6 %    $ 39.00     $ 38.64     $ 59.64     $ 5,710  
 
2525 McKinnon
     2003       100.0 %      111       68.7 %    $ 29.48     $ 31.24     $ 51.24     $ 2,388  
San Diego, CA

(5.1%)
  
Mission City
     1990-2007       100.0 %      281       93.4 %    $ 38.67     $ 40.03     $ 40.03     $ 10,521  
Seattle, WA

(3.6%)
  
Canyon Park
     1993; 1999       100.0 %      207       100.0 %    $ 22.31     $ 24.58     $ 30.58     $ 5,082  
Portland, OR

(3.6%)
  
AmberGlen
     1984-1998       76.0 %      203       97.0 %    $ 22.74     $ 24.23     $ 27.52     $ 4,784  
       
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Total / Weighted Average – September 30, 2024
(4)
 
  
 
5,567
 
  
 
83.4
% 
  
$
29.01
 
  
$
30.16
 
  
$
33.44
 
  
$
139,997
 
       
 
 
            
 
 
  
 
21
 
(1)
Annualized Average Effective Rent accounts for the impact of straight-line rent adjustments, including the amortization of rent escalations and base rent concessions (e.g., free rent abatements) contained in the lease. The square foot result per property is calculated by multiplying (i) Average Effective Rent for the month ended September 30, 2024 by (ii) 12, divided by the occupied square footage in that period.
(2)
Annualized gross rent per square foot includes adjustment for estimated expense reimbursements of triple net leases.
(3)
Annualized base rent is calculated by multiplying (i) rental payments (defined as cash rents before abatements) for the month ended September 30, 2024 by (ii) 12.
(4)
Averages weighted based on the property’s NRA, adjusted for occupancy.
Operating Expenses
Our operating expenses generally consist of utilities, property and ad valorem taxes, insurance and site maintenance costs. Increases in these expenses over tenants’ base years (until the base year is reset at expiration) are generally passed along to tenants in our full-service gross leased properties and are generally paid in full by tenants in our net leased properties.
Conditions in Our Markets
Positive or negative changes in economic or other conditions in the markets we operate in, including state budgetary shortfalls, employment rates, natural hazards and other factors, may impact our overall performance. While we generally expect the trend of positive population and economic growth in our Sun Belt cities to continue, there is no way for us to predict whether these trends will continue, especially in light of inflation and elevated interest rates as well as potential changes in tax policy, fiscal policy and monetary policy. In addition, it is uncertain and impossible to estimate the potential impact that the work-from-home trend will have on the short- and long-term demand for office space in our markets.
Critical Accounting Policies and Estimates
The interim condensed consolidated financial statements follow the same policies and procedures as outlined in the audited consolidated financial statements for the year ended December 31, 2023 included in our Annual Report on Form
10-K
for the year ended December 31, 2023.
Results of Operations
Comparison of Three Months Ended September 30, 2024 to Three Months Ended September 30, 2023
Rental and Other Revenues.
Rental and other revenues include net rental income, parking, signage and other income, as well as the recovery of operating costs and property taxes from tenants. Rental and other revenues decreased $1.8 million, or 4%, to $42.4 million for the three months ended September 30, 2024, compared to $44.2 million for the three months ended September 30, 2023. Revenue decreased year over year due to the disposition of Cascade Station in June 2024 which reduced revenue by $1.0 million. Revenue also decreased at Intellicenter and 2525 McKinnon by $0.4 million and $0.3 million, respectively, due to lower occupancy at the properties compared to the prior year. Lastly, revenue also decreased at Block 23 and The Terraces by $0.6 million and $0.5 million, respectively, largely due to the
write-off
of straight-line rent associated with the WeWork leases at these two properties. Offsetting these decreases, revenue increased year over year at Mission City and Bloc 83 by $0.3 million and $0.3 million, respectively, due to higher occupancy. The remaining properties’ rental and other revenues were marginally higher in comparison to the prior year period.
 
22
Operating Expenses
Total Operating Expenses.
Total operating expenses consist of property operating expenses, general and administrative expenses and depreciation and amortization. Total operating expenses increased $0.3 million, or 1%, to $36.2 million for the three months ended September 30, 2024, from $35.9 million for the three months ended September 30, 2023. Total operating expenses at Bloc 83 increased by $0.5 million due to higher property operating expenses and depreciation and amortization associated with higher occupancy. The disposition of Cascade Station in June 2024 decreased total operating expenses by $0.6 million. The remaining properties’ total operating expenses were marginally higher in comparison to the prior year period.
Property Operating Expenses.
Property operating expenses are comprised mainly of building common area and maintenance expenses, insurance, property taxes, property management fees, as well as certain expenses that are not recoverable from tenants, the majority of which are related to costs necessary to maintain the appearance and marketability of vacant space. In the normal course of business, property expenses fluctuate and are impacted by various factors including, but not limited to, occupancy levels, weather, utility costs, repairs, maintenance and
re-leasing
costs. Property operating expenses increased $0.2 million, or 1%, to $17.8 million for the three months ended September 30, 2024, from $17.6 million for the three months ended September 30, 2023. The disposition of Cascade Station in June 2024 decreased property operating expenses by $0.2 million. The remaining properties’ property operating expenses were marginally higher in comparison to the prior year period.
General and Administrative.
General and administrative expenses are comprised of public company reporting costs and the compensation of our management team and Board of Directors, as well as
non-cash
stock-based compensation expenses. General and administrative expenses increased $0.3 million, or 7%, to $3.8 million for the three months ended September 30, 2024, from $3.5 million reported in the prior year period. General and administrative expenses increased due to marginally higher professional fees incurred in the current period.
Depreciation and Amortization.
Depreciation and amortization decreased $0.1 million, or 1%, to $14.6 million for the three months ended September 30, 2024, from $14.7 million reported for the same period in 2023. The disposition of Cascade Station in June 2024 decreased depreciation and amortization expense by $0.3 million. The remaining properties’ depreciation expenses were marginally higher in comparison to the prior year period.
Other Expense (Income)
Interest Expense.
Interest expense increased $0.4 million, or 6%, to $8.6 million for the three months ended September 30, 2024, from $8.2 million for the three months ended September 30, 2023. The increase was primarily attributable to higher interest rates.
Comparison of Nine Months Ended September 30, 2024 to Nine Months Ended September 30, 2023
Rental and Other Revenues.
Rental and other revenues include net rental income, parking, signage and other income, as well as the recovery of operating costs and property taxes from tenants. Rental and other revenues decreased $5.6 million, or 4%, to $129.2 million for the nine months ended September 30, 2024 compared to $134.8 million for the nine months ended September 30, 2023. Revenue decreased year over year due to the dispositions and tenant departures at 190 Office Center in May 2023 and Cascade Station in June 2024, which reduced revenue by $2.3 million and $1.9 million, respectively. Revenue also decreased at 2525 McKinnon, Intellicenter and Superior Pointe by $0.8 million, $0.6 million and $0.5 million, respectively, due to lower occupancy at the properties compared to the prior year. Lastly, revenue also decreased at The Terraces and Block 23 by $0.7 million and $0.3 million, respectively, largely due to the
write-off
of straight-line rent associated with the WeWork leases at these two properties. Offsetting these decreases, revenue increased year over year at Park Tower, Mission City and Bloc 83 by $0.7 million, $0.5 million and $0.4 million, respectively, due to higher occupancy. The remaining properties’ rental and other revenues were relatively unchanged in comparison to the prior year period.
Operating Expenses
Total Operating Expenses.
Total operating expenses consist of property operating expenses, general and administrative expenses and depreciation and amortization. Total operating expenses decreased $0.6 million, or 1%, to $108.8 million for the nine months ended September 30, 2024, from $109.4 million for the nine months ended September 30, 2023. The dispositions of 190 Office Center in May 2023 and Cascade Station in June 2024 decreased total operating expenses by $1.9 million and $0.8 million, respectively. Offsetting these decreases, total operating expenses at Bloc 83 increased by $0.9 million due to higher property operating expenses and depreciation and amortization associated with higher occupancy. The remaining properties’ total operating expenses were $1.2 million higher in comparison to the prior year period, primarily due to inflation.
 
23
Property Operating Expenses.
Property operating expenses are comprised mainly of building common area and maintenance expenses, insurance, property taxes, property management fees, as well as certain expenses that are not recoverable from tenants, the majority of which are related to costs necessary to maintain the appearance and marketability of vacant space. In the normal course of business, property expenses fluctuate and are impacted by various factors including, but not limited to, occupancy levels, weather, utility costs, repairs, maintenance and
re-leasing
costs. Property operating expenses increased $0.4 million, or 1%, to $53.0 million for the nine months ended September 30, 2024, from $52.6 million for the nine months ended September 30, 2023. Property operating expenses at Bloc 83 increased by $0.8 million primarily due to higher electricity costs and property taxes. Offsetting this increase, the disposition of 190 Office Center in May 2023 decreased property operating expenses by $1.2 million. The remaining properties’ property operating expenses were $0.8 million higher in comparison to the prior year period, primarily due to inflation.
General and Administrative.
General and administrative expenses are comprised of public company reporting costs and the compensation of our management team and Board of Directors, as well as
non-cash
stock-based compensation expenses. General and administrative expenses increased $0.3 million, or 3%, to $11.3 million for the nine months ended September 30, 2024, from $11.0 million reported for the same period in 2023. General and administrative expenses increased due to marginally higher professional fees and stock-based compensation expense.
Depreciation and Amortization.
Depreciation and amortization decreased $1.4 million, or 3%, to $44.4 million for the nine months ended September 30, 2024, from $45.8 million reported for the same period in 2023. The dispositions of 190 Office Center in May 2023 and Cascade Station in June 2024 decreased depreciation and amortization expense by $0.6 million and $0.5 million, respectively. The remaining properties’ depreciation expenses were marginally lower in comparison to the prior year period.
Other Expense (Income)
Interest Expense.
Interest expense increased $0.7 million, or 3%, to $25.5 million for the nine months ended September 30, 2024, from $24.8 million for the nine months ended September 30, 2023. The increase was primarily attributable to higher interest rates.
Net Loss on Disposition of Real Estate Property.
 During the second quarter of 2024, the Company entered into an assignment in lieu of foreclosure agreement to transfer possession and control of the Cascade Station property to the lender as a result of an event of default as defined in the property’s loan agreement. Given the terms of the assignment in lieu of foreclosure agreement, the Company deconsolidated the entity holding the property and related assets and liabilities during the second quarter of 2024. For the nine months ended September 30, 2024, the Company recognized a loss on deconsolidation of $1.5 million. In the prior year, the Company consented to the appointment of a receiver to assume possession and control of the 190 Office Center property as a result of an event of default as defined in the property’s loan agreement. Given the appointment of the receiver, the Company deconsolidated the entity holding the property and related assets and liabilities during the second quarter of 2023. For the nine months ended September 30, 2023, the Company recognized a loss on deconsolidation of $0.1 million.
Cash Flows
Comparison of Nine Months Ended September 30, 2024 to Nine Months Ended September 30, 2023
Cash, cash equivalents and restricted cash were $43.0 million and $52.3 million as of September 30, 2024 and September 30, 2023, respectively.
Cash flow from operating activities.
Net cash provided by operating activities increased $1.8 million to $50.0 million for the nine months ended September 30, 2024, compared to $48.2 million for the same period in 2023. The increase was primarily attributable to changes in working capital.
 
24
Cash flow to investing activities.
Net cash used in investing activities decreased $1.1 million to $29.8 million for the nine months ended September 30, 2024, compared to $30.9 million for the same period in 2023. The decrease in cash used in investing activities was primarily attributable to lower additions to real estate properties in the current year. This decrease was partially offset by an increase in cash used in investing activities attributable to higher deferred leasing costs in the current year.
Cash flow to financing activities.
Net cash used in financing activities increased $11.3 million to $20.6 million for the nine months ended September 30, 2024, compared to $9.3 million for the same period in 2023. The increase in cash used in financing activities was primarily attributable to lower net proceeds from borrowings partially offset by lower dividend distributions paid to stockholders for the nine months ended September 30, 2024.
Liquidity and Capital Resources
Analysis of Liquidity and Capital Resources
We had approximately $25.9 million of cash and cash equivalents and $17.1 million of restricted cash as of September 30, 2024.
On March 15, 2018, the Company entered into a credit agreement for the Unsecured Credit Facility that provided for commitments of up to $250 million, which included an accordion feature that allowed the Company to borrow up to $500 million, subject to customary terms and conditions. On September 27, 2019, the Company entered into a five-year $50 million term loan, increasing its authorized borrowings under the Company’s Unsecured Credit Facility from $250 million to $300 million. On November 16, 2021, the Company entered into an Amended and Restated Credit Agreement that increased the total authorized borrowings from $300 million to $350 million. On January 5, 2023, the Company entered into a second amendment to the Amended and Restated Credit Agreement for the Unsecured Credit Facility and entered into a three-year $25 million term loan, increasing its total authorized borrowings from $350 million to $375 million. The Unsecured Credit Facility matures in November 2025 and may be extended 12 months at the Company’s option upon meeting certain conditions. On September 27, 2024, the $50 million term loan matured and was repaid with proceeds from the Unsecured Credit Facility, reducing total authorized borrowings from $375 million to $325 million. As of September 30, 2024, we had approximately $255.0 million outstanding under our Unsecured Credit Facility and a $2.5 million letter of credit to satisfy escrow requirements for a mortgage lender.
On May 23, 2024, the Company entered into an amended and restated loan agreement for Central Fairwinds, extending the term for an additional five years and amending the interest rate from fixed to floating. The loan bears interest at a rate equal to the daily-simple SOFR rate plus a margin of 325 basis points. The Company also entered into a five-year interest rate swap agreement, effectively fixing the SOFR component of the borrowing rate of the loan at 4.43%.
On June 27, 2024, the Company entered into a loan modification and extension agreement for FRP Ingenuity Drive, which among other things, included a principal repayment of $1.6 million and extended the term for an additional two years to December 2026 with a
one-year
extension option.
On February 26, 2020, the Company and the Operating Partnership entered into equity distribution agreements (collectively, the “Agreements”) with each of KeyBanc Capital Markets Inc., Raymond James & Associates, Inc., BMO Capital Markets Corp., RBC Capital Markets, LLC, B. Riley FBR, Inc., D.A. Davidson & Co. and Janney Montgomery Scott LLC (the “Sales Agents”) pursuant to which the Company may issue and sell from time to time up to 15,000,000 shares of common stock and up to 1,000,000 shares of Series A Preferred Stock through the Sales Agents, acting as agents or principals (the “ATM Program”). On May 7, 2021 the Company delivered to D.A. Davidson & Co. a notice of termination of the Agreement, effective May 7, 2021. The Company did not issue any shares of common stock or Series A Preferred Stock under the ATM Program during the nine months ended September 30, 2024.
Following changes in property-level occupancy rates, it is possible that we could fail certain financial covenants within certain property-level mortgage borrowings. For mortgages with financial covenants, the lenders’ remedy of a covenant failure would be a requirement to escrow funds for the purpose of meeting our future debt payment obligations. As of September 30, 2024, the lender for our mortgage borrowings at the SanTan property has elected their right to direct property cash flows into lender-controlled restricted cash accounts to fund property operations until certain thresholds are met. Further, under the terms of the loan modification and extension agreement at the FRP Ingenuity Drive property, signed in the second quarter of 2024, property cash flows from this property will be directed into lender-controlled restricted cash accounts through the maturity of the loan. For these two properties, the total restricted cash as of September 30, 2024 was $6.4 million.
 
25
Our short-term liquidity requirements primarily consist of operating expenses and other expenditures associated with our properties, distributions to our limited partners and distributions to our stockholders required to qualify for REIT status, capital expenditures and, potentially, acquisitions. We expect to meet our short-term liquidity requirements through net cash provided by operations and reserves established from existing cash. We have further sources such as proceeds from our public offerings, including under our ATM Program, and borrowings under our mortgage loans and our Unsecured Credit Facility.
Our long-term liquidity needs consist primarily of funds necessary for the repayment of debt at maturity, property acquisitions and
non-recurring
capital improvements. We expect to meet our long-term liquidity requirements with net cash from operations, long-term secured and unsecured indebtedness and the issuance of equity and debt securities. We also may fund property acquisitions and
non-recurring
capital improvements using our Unsecured Credit Facility pending longer term financing.
We believe we have access to multiple sources of capital to fund our long-term liquidity requirements, including the incurrence of additional debt and the issuance of additional equity securities. However, we cannot assure you that this is or will continue to be the case. Our ability to incur additional debt is dependent on a number of factors, including our degree of leverage, interest rates, the value of our unencumbered assets and borrowing restrictions that may be imposed by lenders. Our ability to access the equity capital markets is dependent on a number of factors as well, including general market conditions for REITs and market perceptions about us.
In addition to the incurrence of debt and the offering of equity securities, dispositions of property may serve as additional capital resources and sources of liquidity. We may recycle capital from stabilized assets or from sales of properties. Capital from these types of transactions is intended to be redeployed into property acquisitions, capital improvements, or to pay down existing debt.
Contractual Obligations and Other Long-Term Liabilities
The following table provides information with respect to our commitments as of September 30, 2024, including any guaranteed or minimum commitments under contractual obligations. The table does not reflect available debt extension options.
 
    
Payments Due by Period (in thousands)
  
Contractual Obligations
   
Total
     
2024
     
2025-2026
     
2027-2028
     
More than

5 years
  
                                    
Principal payments on mortgage loans
    $ 650,999      $ 1,361      $ 353,828      $ 281,320      $ 14,490  
Interest payments
(1)
      70,518        8,524        46,648        14,816        530  
Tenant-related commitments
      11,522        7,850        3,672        —         —   
Lease obligations
      35,682        76        1,510        1,190        32,906  
  
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
Total
    $ 768,721      $ 17,811      $ 405,658      $ 297,326      $ 47,926  
  
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
 
(1)
Contracted interest on the floating rate borrowings under our Unsecured Credit Facility was calculated based on the balance and interest rate at September 30, 2024. Contracted interest on our loans which we have applied interest rate swaps was calculated based on the swap rate fixing the SOFR component of the borrowing rates.
Inflation
Substantially all of our office leases include expense reimbursement provisions that provide for property operating expense escalations. In addition, most of the leases provide for fixed rent increases. We believe that expense increases due to inflation may be at least partially offset by these contractual rent increases and expense escalations. However, a longer period of inflation could affect our cash flows or earnings, or impact our borrowings, as discussed elsewhere in this Report.
 
26
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Our future income, cash flows and fair values relevant to financial instruments are dependent upon prevailing market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. We use derivative financial instruments to manage or hedge interest rate risks related to borrowings. We do not use derivatives for trading or speculative purposes. We have entered, and we will only enter into, contracts with major financial institutions based on their credit rating and other factors. See Note 6 to our condensed consolidated financial statements in Item 1 of this Report for more information regarding our derivatives.
We currently consider our interest rate exposure to be moderate because as of September 30, 2024, approximately $536.0 million, or 82.3%, of our debt had fixed interest rates, or effectively fixed rates when factoring in interest rate swaps, and $115.0 million, or 17.7%, had variable interest rates. The $536.0 million fixed rate debt includes our loans against which we have applied interest rate swaps. The interest rate swaps effectively fix the SOFR component of the borrowing rates until maturity of the debt. A 1% increase in SOFR would result in a $1.2 million increase to our annual interest costs on debt outstanding as of September 30, 2024 and would decrease the fair value of our outstanding debt, as well as increase interest costs associated with future debt issuances or borrowings under our Unsecured Credit Facility. A 1% decrease in SOFR would result in a $1.2 million decrease to our annual interest costs on debt outstanding as of September 30, 2024 and would increase the fair value of our outstanding debt, as well as decrease interest costs associated with future debt issuances or borrowings under our Unsecured Credit Facility.
Interest rate risk amounts are our management’s estimates based on our Company’s capital structure and were determined by considering the effect of hypothetical interest rates on our financial instruments. These analyses do not consider the effect of any change in overall economic activity that could occur in that environment. We may take actions to further mitigate our exposure to changes in interest rates. However, due to the uncertainty of the specific actions that would be taken and their possible effects, these analyses assume no changes in our Company’s financial structure.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Based on the most recent evaluation, the Company’s Chief Executive Officer and Chief Financial Officer determined that the Company’s disclosure controls and procedures (as defined in Rules
13a-15(e)
and
15d-15(e)
under the Securities and Exchange Act of 1934, as amended) were effective as of September 30, 2024.
Management’s Report on Internal Control Over Financial Reporting
There have been no changes to our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
27
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We and our subsidiaries are, from time to time, parties to litigation arising from the ordinary course of business. As of September 30, 2024, management does not believe that any such litigation will have a material adverse effect, individually or in the aggregate, on our financial position or results of operations.
Item 1A. Risk Factors
As of the date of this Quarterly Report on Form
10-Q,
there have been no material changes to the risk factors disclosed in our Annual Report on Form
10-K
for the fiscal year ended December 31, 2023, except for those included below. Any of those risk factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the Securities and Exchange Commission.
Risks Related to Our Business and Our Properties
Real estate is a competitive business and that competition may adversely impact us.
We compete with a large number of property owners, operators and developers, some of whom may be willing to accept lower returns on their investments. Principal factors of competition are the quality and age of the property, attractiveness of location and the breadth and the quality of the amenities offered. These factors may negatively impact leasing efforts and lead to higher
re-leasing
costs, as we believe our tenants and prospective new tenants across our portfolio sometimes compare the cost and the value of leasing space in our buildings to the value of newer space with more amenities asking higher rent in other buildings in the market. Substantially all of our properties face competition from similar properties in the same market, which may adversely impact the rents we can charge at those properties, leasing costs, occupancy rates and our results of operations.
Our commercial office properties are located primarily in Sun Belt markets, which generally exhibit positive population and economic growth. The number of competitive office properties in these areas, which may be newer, more amenitized or better located than our properties, could have a material adverse effect on our ability to lease office space at our properties and on the effective rents we are able to charge.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
During the three months ended September 30, 2024, no director or officer of the Company adopted or terminated a “Rule
10b5-1
trading arrangement” or
“non-Rule
10b5-1
trading arrangement,” as each term is defined in Item 408(a) of Regulation
S-K.
 
28
Item 6. Exhibits
 
Exhibit
Number
   
Description
3.1    Articles of Amendment and Restatement of City Office REIT, Inc., as amended and supplemented (incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K filed on March 1, 2018).
3.2    Third Amended and Restated Bylaws of City Office REIT, Inc., effective as of August 2, 2023 (incorporated by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q filed on August 3, 2023).
4.1    Certificate of Common Stock of City Office REIT, Inc. (incorporated by reference to Exhibit 4.1 of the Company’s Registration Statement on Form S-11/A filed with the Commission on February 18, 2014).
4.2    Form of certificate representing the 6.625% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form 8-A filed with the Commission on September 30, 2016).
10.1    Amended and Restated Loan Agreement, dated as of August 16, 2023, by and among CIO Research Commons, LLC, CIO Technology Point I & II, LLC and CIO University Tech, LLC, each and collectively as borrower, and BankUnited, N.A. (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Commission on August 18, 2023).
10.2    Amended and Restated Renewal Promissory Note, dated as of August 16, 2023, by and among CIO Research Commons, LLC, CIO Technology Point I & II, LLC and CIO University Tech, LLC, each and collectively as borrower, and BankUnited, N.A. (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the Commission on August 18, 2023).
10.3    Form of Performance Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on May 3, 2024).*
31.1    Certification by Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002. †
31.2    Certification by Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002. †
32.1    Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. †
32.2    Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. †
101.INS    INLINE XBRL INSTANCE DOCUMENT†
101.SCH    INLINE XBRL SCHEMA DOCUMENT†
101.CAL    INLINE XBRL CALCULATION LINKBASE DOCUMENT†
101.LAB    INLINE XBRL LABELS LINKBASE DOCUMENT†
101.PRE    INLINE XBRL PRESENTATION LINKBASE DOCUMENT†
101.DEF    INLINE XBRL DEFINITION LINKBASE DOCUMENT†
104    Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) †
 
†
Filed herewith.
*
Compensatory Plan or arrangement.
 
29
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CITY OFFICE REIT, INC.
Date: October 31, 2024
 
   
  By:  
/s/ James Farrar
    James Farrar
   
Chief Executive Officer and Director
   
(Principal Executive Officer)
Date: October 31, 2024
 
   
  By:  
/s/ Anthony Maretic
    Anthony Maretic
   
Chief Financial Officer, Secretary and Treasurer
   
(Principal Financial Officer and Principal Accounting Officer)
 
30

Exhibit 31.1

Certification

I, James Farrar, certify that:

 

  1.

I have reviewed this Quarterly Report on Form 10-Q for the period ended September 30, 2024 of City Office REIT, Inc.;

 

  2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

  3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

  4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

 

  a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c.

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  d.

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

  5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

October 31, 2024      

/s/ James Farrar

Date       James Farrar
      Chief Executive Officer and Director
      (Principal Executive Officer)

Exhibit 31.2

Certification

I, Anthony Maretic, certify that:

 

  1.

I have reviewed this Quarterly Report on Form 10-Q for the period ended September 30, 2024 of City Office REIT, Inc.;

 

  2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

  3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

  4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

 

  a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c.

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  d.

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

  5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

October 31, 2024      

/s/ Anthony Maretic

Date       Anthony Maretic
      Chief Financial Officer, Secretary and Treasurer
      (Principal Financial Officer and Principal Accounting Officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Quarterly Report on Form 10-Q for the period ended September 30, 2024 of City Office REIT, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James Farrar, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

October 31, 2024      

/s/ James Farrar

Date       James Farrar
      Chief Executive Officer and Director
      (Principal Executive Officer)

This written report is being furnished to the Securities and Exchange Commission as an exhibit to the Report. A signed original of this written statement required by Section 906 has been provided to City Office REIT, Inc. and will be retained by City Office REIT, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Quarterly Report on Form 10-Q for the period ended September 30, 2024 of City Office REIT, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Anthony Maretic, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

October 31, 2024      

/s/ Anthony Maretic

Date       Anthony Maretic
      Chief Financial Officer, Secretary and Treasurer
      (Principal Financial Officer and Principal Accounting Officer)

This written report is being furnished to the Securities and Exchange Commission as an exhibit to the Report. A signed original of this written statement required by Section 906 has been provided to City Office REIT, Inc. and will be retained by City Office REIT, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

v3.24.3
Cover Page - shares
 9 Months Ended
Sep. 30, 2024
Oct. 28, 2024
Document Information [Line Items]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Sep. 30, 2024  
Document Fiscal Year Focus 2024  
Document Fiscal Period Focus Q3  
Entity Interactive Data Current Yes  
Current Fiscal Year End Date --12-31  
Entity Current Reporting Status Yes  
Entity Registrant Name CITY OFFICE REIT, INC.  
Entity Central Index Key 0001593222  
Entity Filer Category Accelerated Filer  
Entity Shell Company false  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Common Stock, Shares Outstanding   40,154,055
Entity Address, State or Province BC  
Document Transition Report false  
Document Quarterly Report true  
Entity File Number 001-36409  
Entity Incorporation, State or Country Code MD  
Entity Tax Identification Number 98-1141883  
Entity Address, City or Town Vancouver  
Entity Address, Address Line One 666 Burrard Street  
Entity Address, Address Line Two Suite 3210  
Entity Address, Postal Zip Code V6C 2X8  
City Area Code 604  
Local Phone Number 806-3366  
Common Stock [Member]    
Document Information [Line Items]    
Trading Symbol CIO  
Security Exchange Name NYSE  
Title of 12(b) Security Common Stock, $0.01 par value  
6.625% Series A Cumulative Redeemable Preferred Stock [Member]    
Document Information [Line Items]    
Trading Symbol CIO.PrA  
Security Exchange Name NYSE  
Title of 12(b) Security 6.625% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share  
v3.24.3
Condensed Consolidated Balance Sheets - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Real estate properties    
Land $ 193,524 $ 193,524
Building and improvement 1,185,756 1,194,819
Tenant improvement 163,013 152,540
Furniture, fixtures and equipment 1,377 820
Real estate properties, gross 1,543,670 1,541,703
Accumulated depreciation (248,420) (218,628)
Real estate properties, net 1,295,250 1,323,075
Cash and cash equivalents 25,911 30,082
Restricted cash 17,118 13,310
Rents receivable, net 52,908 53,454
Deferred leasing costs, net 23,997 21,046
Acquired lease intangible assets, net 36,520 42,434
Other assets 23,580 27,975
Total Assets 1,475,284 1,511,376
Liabilities [Abstract]    
Debt 648,173 669,510
Accounts payable and accrued liabilities 39,597 29,070
Deferred rent 7,091 7,672
Tenant rent deposits 7,319 7,198
Acquired lease intangible liabilities, net 6,629 7,736
Other liabilities 18,906 17,557
Total Liabilities 727,715 738,743
Commitments and Contingencies (Note 9)
Equity:    
6.625% Series A Preferred stock, $0.01 par value per share, 5,600,000 shares authorized, 4,480,000 issued and outstanding as of September 30, 2024 and December 31, 2023 112,000 112,000
Common stock, $0.01 par value, 100,000,000 shares authorized, 40,154,055 and 39,938,451 shares issued and outstanding as of September 30, 2024 and December 31, 2023 401 399
Additional paid-in capital 441,188 438,867
Retained earnings 196,466 221,213
Accumulated other comprehensive loss (2,997) (248)
Total Stockholders' Equity 747,058 772,231
Non-controlling interests in properties 511 402
Total Equity 747,569 772,633
Total Liabilities and Equity $ 1,475,284 $ 1,511,376
v3.24.3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares
 9 Months Ended 12 Months Ended
Sep. 30, 2024
Dec. 31, 2023
Statement of Financial Position [Abstract]    
Preferred stock, Dividend rate percentage 6.625% 6.625%
Preferred stock, par value per share $ 0.01 $ 0.01
Preferred stock, shares authorized 5,600,000 5,600,000
Preferred stock, shares issued 4,480,000 4,480,000
Preferred stock, shares outstanding 4,480,000 4,480,000
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 100,000,000 100,000,000
Common stock, shares issued 40,154,055 39,938,451
Common stock, shares outstanding 40,154,055 39,938,451
v3.24.3
Condensed Consolidated Statements of Operations - USD ($)
shares in Thousands, $ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Income Statement [Abstract]        
Rental and other revenues $ 42,371 $ 44,214 $ 129,207 $ 134,775
Operating expenses:        
Property operating expenses 17,783 17,644 53,020 52,610
General and administrative 3,790 3,531 11,321 10,963
Depreciation and amortization 14,642 14,723 44,440 45,795
Total operating expenses 36,215 35,898 108,781 109,368
Operating income 6,156 8,316 20,426 25,407
Interest expense:        
Contractual interest expense (8,274) (7,853) (24,502) (23,807)
Amortization of deferred financing costs and debt fair value (369) (333) (1,030) (979)
Interest expense, net (8,643) (8,186) (25,532) (24,786)
Net loss on disposition of real estate property 0 0 (1,462) (134)
Net (loss)/income (2,487) 130 (6,568) 487
Net income attributable to non-controlling interests in properties (152) (173) (412) (506)
Net (loss)/income attributable to the Company (2,639) (43) (6,980) (19)
Preferred stock distributions (1,855) (1,855) (5,565) (5,565)
Net loss attributable to common stockholders $ (4,494) $ (1,898) $ (12,545) $ (5,584)
Net loss per common share:        
Basic $ (0.11) $ (0.05) $ (0.31) $ (0.14)
Diluted $ (0.11) $ (0.05) $ (0.31) $ (0.14)
Weighted average common shares outstanding:        
Basic 40,154 39,938 40,135 39,917
Diluted 40,154 39,938 40,135 39,917
Dividend distributions declared per common share $ 0.1 $ 0.1 $ 0.3 $ 0.4
v3.24.3
Condensed Consolidated Statements of Comprehensive (Loss)/Income - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Statement of Comprehensive Income [Abstract]        
Net (loss)/income $ (2,487) $ 130 $ (6,568) $ 487
Other comprehensive (loss)/income:        
Unrealized cash flow hedge (loss)/gain (3,087) 1,447 470 3,732
Amounts reclassified to interest expense (1,000) (1,019) (3,249) (2,309)
Other comprehensive (loss)/income (4,087) 428 (2,779) 1,423
Comprehensive (loss)/income (6,574) 558 (9,347) 1,910
Comprehensive income attributable to non-controlling interests in properties (99) (174) (382) (507)
Comprehensive (loss)/income attributable to the Company $ (6,673) $ 384 $ (9,729) $ 1,403
v3.24.3
Condensed Consolidated Statements of Changes in Equity - USD ($)
$ in Thousands
Total
Preferred stock [Member]
Common stock [Member]
Additional paid-in capital [Member]
Retained earnings [Member]
Accumulated other comprehensive (loss)/income [Member]
Total stockholders' equity [Member]
Non-controlling interests in properties [Member]
Beginning balance at Dec. 31, 2022 $ 803,174 $ 112,000 $ 397 $ 436,161 $ 251,542 $ 2,731 $ 802,831 $ 343
Beginning balance, shares at Dec. 31, 2022   4,480,000 39,718,000          
Restricted stock award grants and vesting, values (618)   $ 2 (535) (85)   (618)  
Restricted stock award grants and vesting, shares     220,000          
Common stock dividend distribution declared (7,988)       (7,988)   (7,988)  
Preferred stock dividend distribution declared (1,855)       (1,855)   (1,855)  
Contributions 110             110
Distributions (235)             (235)
Net (loss)/income 873       704   704 169
Other comprehensive income (loss) (1,942)         (1,942) (1,942)  
Ending balance at Mar. 31, 2023 791,519 $ 112,000 $ 399 435,626 242,318 789 791,132 387
Ending balance, shares at Mar. 31, 2023   4,480,000 39,938,000          
Beginning balance at Dec. 31, 2022 803,174 $ 112,000 $ 397 436,161 251,542 2,731 802,831 343
Beginning balance, shares at Dec. 31, 2022   4,480,000 39,718,000          
Net (loss)/income 487              
Other comprehensive income (loss) 1,423              
Ending balance at Sep. 30, 2023 784,454 $ 112,000 $ 399 437,800 229,770 4,153 784,122 332
Ending balance, shares at Sep. 30, 2023   4,480,000 39,938,000          
Beginning balance at Mar. 31, 2023 791,519 $ 112,000 $ 399 435,626 242,318 789 791,132 387
Beginning balance, shares at Mar. 31, 2023   4,480,000 39,938,000          
Restricted stock award grants and vesting, values 1,023     1,107 (84)   1,023  
Common stock dividend distribution declared (3,994)       (3,994)   (3,994)  
Preferred stock dividend distribution declared (1,855)       (1,855)   (1,855)  
Distributions (226)             (226)
Net (loss)/income (516)       (680)   (680) 164
Other comprehensive income (loss) 2,937         2,937 2,937  
Ending balance at Jun. 30, 2023 788,888 $ 112,000 $ 399 436,733 235,705 3,726 788,563 325
Ending balance, shares at Jun. 30, 2023   4,480,000 39,938,000          
Restricted stock award grants and vesting, values 1,024     1,067 (43)   1,024  
Common stock dividend distribution declared (3,994)       (3,994)   (3,994)  
Preferred stock dividend distribution declared (1,855)       (1,855)   (1,855)  
Distributions (167)             (167)
Net (loss)/income 130       (43)   (43) 173
Other comprehensive income (loss) 428         427 427 1
Ending balance at Sep. 30, 2023 784,454 $ 112,000 $ 399 437,800 229,770 4,153 784,122 332
Ending balance, shares at Sep. 30, 2023   4,480,000 39,938,000          
Beginning balance at Dec. 31, 2023 772,633 $ 112,000 $ 399 438,867 221,213 (248) 772,231 402
Beginning balance, shares at Dec. 31, 2023   4,480,000 39,938,000          
Restricted stock award grants and vesting, values (1)   $ 2 42 (45)   (1)  
Restricted stock award grants and vesting, shares     216,000          
Common stock dividend distribution declared (4,015)       (4,015)   (4,015)  
Preferred stock dividend distribution declared (1,855)       (1,855)   (1,855)  
Distributions (444)             (444)
Net (loss)/income (454)       (589)   (589) 135
Other comprehensive income (loss) 1,789         1,763 1,763 26
Ending balance at Mar. 31, 2024 767,653 $ 112,000 $ 401 438,909 214,709 1,515 767,534 119
Ending balance, shares at Mar. 31, 2024   4,480,000 40,154,000          
Beginning balance at Dec. 31, 2023 772,633 $ 112,000 $ 399 438,867 221,213 (248) 772,231 402
Beginning balance, shares at Dec. 31, 2023   4,480,000 39,938,000          
Net (loss)/income (6,568)              
Other comprehensive income (loss) (2,779)              
Ending balance at Sep. 30, 2024 747,569 $ 112,000 $ 401 441,188 196,466 (2,997) 747,058 511
Ending balance, shares at Sep. 30, 2024   4,480,000 40,154,000          
Beginning balance at Mar. 31, 2024 767,653 $ 112,000 $ 401 438,909 214,709 1,515 767,534 119
Beginning balance, shares at Mar. 31, 2024   4,480,000 40,154,000          
Restricted stock award grants and vesting, values 1,083     1,139 (56)   1,083  
Common stock dividend distribution declared (4,015)       (4,015)   (4,015)  
Preferred stock dividend distribution declared (1,855)       (1,855)   (1,855)  
Contributions 442             442
Distributions (104)             (104)
Net (loss)/income (3,627)       (3,752)   (3,752) 125
Other comprehensive income (loss) (481)         (478) (478) (3)
Ending balance at Jun. 30, 2024 759,096 $ 112,000 $ 401 440,048 205,031 1,037 758,517 579
Ending balance, shares at Jun. 30, 2024   4,480,000 40,154,000          
Restricted stock award grants and vesting, values 1,084     1,140 (56)   1,084  
Common stock dividend distribution declared (4,015)       (4,015)   (4,015)  
Preferred stock dividend distribution declared (1,855)       (1,855)   (1,855)  
Contributions 80             80
Distributions (247)             (247)
Net (loss)/income (2,487)       (2,639)   (2,639) 152
Other comprehensive income (loss) (4,087)         (4,034) (4,034) (53)
Ending balance at Sep. 30, 2024 $ 747,569 $ 112,000 $ 401 $ 441,188 $ 196,466 $ (2,997) $ 747,058 $ 511
Ending balance, shares at Sep. 30, 2024   4,480,000 40,154,000          
v3.24.3
Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Cash Flows from Operating Activities:        
Net (loss)/income $ (2,487) $ 130 $ (6,568) $ 487
Adjustments to reconcile net (loss)/income to net cash provided by operating activities:        
Depreciation and amortization 14,642 14,723 44,440 45,795
Amortization of deferred financing costs and debt fair value 369 333 1,030 979
Amortization of above and below market leases     (97) 68
Straight-line rent/expense     (40) (6,402)
Non-cash stock compensation     3,238 3,071
Net loss on disposition of real estate property 0 0 1,462 134
Changes in non-cash working capital:        
Rents receivable, net     471 172
Other assets     178 (744)
Accounts payable and accrued liabilities     5,966 5,705
Deferred rent     (449) (1,304)
Tenant rent deposits     349 208
Net Cash Provided By Operating Activities     49,980 48,169
Cash Flows to Investing Activities:        
Additions to real estate properties     (21,300) (23,338)
Reduction of cash on disposition of real estate property     (2,477) (4,051)
Deferred leasing costs     (5,980) (3,474)
Net Cash Used In Investing Activities     (29,757) (30,863)
Cash Flows to Financing Activities:        
Debt issuance and extinguishment costs     (576) (737)
Proceeds from borrowings     59,000 35,000
Repayment of borrowings     (60,075) (15,889)
Dividend distributions paid to stockholders     (17,590) (25,490)
Distributions to non-controlling interests in properties     (795) (628)
Shares withheld for payment of taxes on restricted stock unit vesting     (1,072) (1,643)
Contributions from non-controlling interests in properties     522 110
Net Cash Used In Financing Activities     (20,586) (9,277)
Net (Decrease)/Increase in Cash, Cash Equivalents and Restricted Cash     (363) 8,029
Cash, Cash Equivalents and Restricted Cash, Beginning of Period     43,392 44,262
Cash, Cash Equivalents and Restricted Cash, End of Period 43,029 52,291 43,029 52,291
Reconciliation of Cash, Cash Equivalents and Restricted Cash:        
Cash and Cash Equivalents, End of Period 25,911 36,738 25,911 36,738
Restricted Cash, End of Period 17,118 15,553 17,118 15,553
Cash, Cash Equivalents and Restricted Cash, End of Period $ 43,029 $ 52,291 43,029 52,291
Supplemental Disclosures of Cash Flow Information:        
Cash paid for interest     25,642 22,586
Purchase of additions in real estate properties included in accounts payable     11,237 10,707
Purchase of deferred leasing costs included in accounts payable     $ 1,998 $ 919
v3.24.3
Pay vs Performance Disclosure - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Pay vs Performance Disclosure        
Net Income (Loss) $ (2,639) $ (43) $ (6,980) $ (19)
v3.24.3
Insider Trading Arrangements
 3 Months Ended
Sep. 30, 2024
Trading Arrangements, by Individual  
Rule 10b5-1 Arrangement Adopted false
Non-Rule 10b5-1 Arrangement Adopted false
Rule 10b5-1 Arrangement Terminated false
Non-Rule 10b5-1 Arrangement Terminated false
v3.24.3
Organization and Description of Business
 9 Months Ended
Sep. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and Description of Business
1. Organization and Description of Business
City Office REIT, Inc. (the “Company”) was organized in the state of Maryland on November 26, 2013. On April 21, 2014, the Company completed its initial public offering (“IPO”) of shares of the Company’s common stock. The Company contributed the net proceeds of the IPO to City Office REIT Operating Partnership, L.P., a Maryland limited partnership (the “Operating Partnership”), in exchange for common units of limited partnership interest in the Operating Partnership (“common units”).
The Company’s interest in the Operating Partnership entitles the Company to share in distributions from, and allocations of profits and losses of, the Operating Partnership in proportion to the Company’s percentage ownership of common units. As the sole general partner of the Operating Partnership, the Company has the exclusive power under the Operating Partnership’s partnership agreement to manage and conduct the Operating Partnership’s business, subject to limited approval and voting rights of the limited partners.
The Company has elected to be taxed and will continue to operate in a manner that will allow it to continue to qualify as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”). Subject to qualification as a REIT, the Company will be permitted to deduct dividend distributions paid to its stockholders, eliminating the U.S. federal taxation of income represented by such distributions at the Company level. REITs are subject to a number of organizational and operational requirements. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to U.S. federal and state income tax on its taxable income at regular corporate tax rates and, for years prior to 2018, any applicable alternative minimum tax.
v3.24.3
Summary of Significant Accounting Policies
 9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies
2. Summary of Significant Accounting Policies
Basis of Preparation and Summary of Significant Accounting Policies
The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with Securities and Exchange Commission (“SEC”) rules and regulations and generally accepted accounting principles in the United States of America (“US GAAP”) and in the opinion of management contain all adjustments (including normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form
10-K
for the year ended December 31, 2023.
Recent Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”)
No. 2023-07
(“ASU
2023-07”)
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which will enhance segment disclosures. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024, with early adoption permitted. This standard must be applied retrospectively to all periods presented in the financial statements. The Company has evaluated the impact of ASU
2023-07
and anticipates adoption will result in incremental disclosure in the notes to the consolidated financial statements for the year ended December 31, 2024.
v3.24.3
Real Estate Investments
 9 Months Ended
Sep. 30, 2024
Real Estate [Abstract]  
Real Estate Investments
3. Real Estate Investments
Disposition of Real Estate Property
Cascade Station
On
June 27, 2024, the Company entered into an assignment in lieu of foreclosure agreement to transfer possession and control of the Cascade Station property to the lender as a result of an event of default as defined in the property’s
non-
recourse
loan agreement. Given the terms of the assignment in lieu of foreclosure agreement, the Company assessed whether the entity holding the property should be reassessed for consolidation as a Variable Interest Entity (“VIE”) in accordance with ASC 810 – Consolidation.
Based on its analysis, the Company concluded that it is not the primary beneficiary of the VIE and therefore deconsolidated the property as of June 27, 2024. The Company deconsolidated the net carrying value of real estate assets of $17.9 million, the mortgage loan of $20.6 million, cash and restricted cash of $2.5 million and net current assets of $1.7 million. For the nine months ended September 30, 2024, the Company recognized a loss on deconsolidation of $1.5 million, which has been included within net loss on disposition of real estate property on the Company’s condensed consolidated statement of operations and statement of cash flows.
190 Office Center
On May 15, 2023, the Company consented to the appointment of a receiver to assume possession and control of the 190 Office Center property as a result of an event of default as defined in the property’s
non-recourse
loan agreement. Given the appointment of the receiver, the Company assessed whether the entity holding the property should be reassessed for consolidation as a VIE in accordance with ASC 810 – Consolidation.
Based on its analysis, the Company concluded that it is not the primary beneficiary of the VIE and therefore deconsolidated the property as of May 15, 2023. The Company deconsolidated the net carrying value of real estate assets of $35.7 million, the mortgage loan of $38.6 million, cash and restricted cash of $4.0 million and net current liabilities of $1.0 million. For the nine months ended September 30, 2023, the Company recognized a loss on deconsolidation of $0.1 million, which has been included within net loss on disposition of real estate property on the Company’s condensed consolidated statement of operations and statement of cash flows.
v3.24.3
Lease Intangibles
 9 Months Ended
Sep. 30, 2024
Goodwill and Intangible Assets Disclosure [Abstract]  
Lease Intangibles
4. Lease Intangibles
Lease intangibles and the value of assumed lease obligations as of September 30, 2024 and December 31, 2023 were comprised of the following (in thousands):
 
 
  
Lease Intangible Assets
 
 
Lease Intangible Liabilities
 
September 30, 2024
  
Above

Market

Leases
 
 
In Place

Leases
 
 
Leasing

Commissions
 
 
Total
 
 
Below

Market

Leases
 
 
Below Market

Ground Lease
 
 
Total
 
Cost
    $ 16,647     $ 72,184     $ 31,481     $ 120,312     $ (14,510 )    $ (138 )    $ (14,648 ) 
Accumulated amortization
      (10,333 )      (53,340 )      (20,119 )      (83,792 )      7,960       59       8,019  
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
   $ 6,314     $ 18,844     $ 11,362     $ 36,520     $ (6,550 )    $ (79 )    $ (6,629 ) 
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
 
  
Lease Intangible Assets
 
 
Lease Intangible Liabilities
 
December 31, 2023
  
Above

Market

Leases
 
 
In Place

Leases
 
 
Leasing

Commissions
 
 
Total
 
 
Below

Market

Leases
 
 
Below Market

Ground Lease
 
 
Total
 
Cost
    $ 17,463     $ 73,128     $ 32,541     $ 123,132     $ (14,968 )    $ (138 )    $ (15,106 ) 
Accumulated amortization
      (10,222 )      (51,290 )      (19,186 )      (80,698 )      7,314       56       7,370  
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
   $ 7,241     $ 21,838     $ 13,355     $ 42,434     $ (7,654 )    $ (82 )    $ (7,736 ) 
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 

The estimated aggregate amortization expense for lease intangibles for the next five years and in the aggregate are as follows (in thousands):
 
2024
    $ 1,561  
2025
      6,197  
2026
      5,889  
2027
      4,903  
2028
      4,209  
Thereafter
      7,132  
  
 
 
  
   $ 29,891  
  
 
 
  
v3.24.3
Debt
 9 Months Ended
Sep. 30, 2024
Debt Disclosure [Abstract]  
Debt
5. Debt
The following table summarizes the indebtedness as of September 30, 2024 and December 31, 2023 (dollars in thousands), including the impact of the effective interest rate swaps described in Note 6:

Property
  
September 30,

2024
 
  
December 31,

2023
 
  
Interest Rate as

of September 30,

2024
(1)
 
 
Maturity
 
Unsecured Credit Facility
 (2)(3)
    $   255,000     $   200,000    
 
 SOFR +1.50%
(1)(2)
 
   
 
 November 2025
 
Term Loan
(3)
      25,000       25,000    
 
 6.00%
(3)
 
   
 
 January 2026
 
Mission City
      45,323       45,994    
 
 3.78%
 
   
 
 November 2027
 
Canyon Park
(4)
      38,356       38,932    
 
 4.30%
 
   
 
 March 2027
 
Circle Point
      38,339       38,789    
 
 4.49%
 
   
 
 September 2028
 
SanTan
(5)
      30,958       31,501    
 
 4.56%
 
   
 
 March 2027
 
The Quad
      30,600       30,600    
 
 4.20%
 
   
 
 September 2028
 
Intellicenter
      30,207       30,682    
 
 4.65%
 
   
 
 October 2025
 
2525 McKinnon
      27,000       27,000    
 
 4.24%
 
   
 
 April 2027
 
FRP Collection
      25,842       26,139    
 
 7.05%
(6)
 
   
 
 August 2028
 
Greenwood Blvd
      20,440       20,856    
 
 3.15%
 
   
 
 December 2025
 
5090 N. 40th St
      20,028       20,370    
 
 3.92%
 
   
 
 January 2027
 
AmberGlen
      20,000       20,000    
 
 3.69%
 
   
 
 May 2027
 
Central Fairwinds
      15,556       15,826    
 
 7.68%
(7)
 
   
 
 June 2029
 
Carillon Point
      14,254       14,419    
 
 7.05%
(6)
 
   
 
 August 2028
 
FRP Ingenuity Drive
(8)
      14,096       15,860    
 
 4.44%
 
   
 
 December 2026
 
Term Loan
 (9)
      —        50,000    
 
 — 
 
   
 
 — 
 
Cascade Station
(10)
      —        20,752    
 
 — 
 
   
 
 — 
 
  
 
 
    
 
 
    
 
 
   
 
 
Total Principal
      650,999       672,720    
 
 
   
 
 
Deferred financing costs, net
      (2,826 )      (3,258 )   
 
 
   
 
 
Unamortized fair value adjustments
      —        48    
 
 
   
 
 
  
 
 
    
 
 
    
 
 
   
 
 
Total
    $ 648,173     $ 669,510    
 
 
   
 
 
  
 
 
    
 
 
    
 
 
   
 
 

(1)
As of September 30, 2024, the daily-simple Secured Overnight Financing Rate (“SOFR”) was 4.96%.
(2)
Borrowings under our unsecured credit facility (the “Unsecured Credit Facility”) bear interest at a rate equal to the daily-simple SOFR rate plus a margin of between 135 to 235 basis points depending upon the Company’s consolidated leverage ratio. On February 9, 2023, the Company entered into a three-year interest rate swap for a notional amount of $140 million, effective March 8, 2023, effectively fixing the SOFR component of the borrowing rate for $140 million of the Unsecured Credit Facility at 4.19%. As of September 30, 2024, the Unsecured Credit Facility had $255.0 million drawn and a $2.5 million letter of credit to satisfy escrow requirements for a mortgage lender. The Unsecured Credit Facility matures in November 2025 and may be extended 12 months at the Company’s option upon meeting certain conditions. The Unsecured Credit Facility requires the Company to maintain a fixed charge coverage ratio of no less than 1.50x.
(3)
On January 5, 2023, the Company entered into a second amendment to its amended and restated credit agreement, dated
November 16, 2021, for the Unsecured Credit Facility and entered into a three-year $25 million term loan, increasing its total authorized borrowings from $350 million to $375 million. Borrowings under the $25 million term loan bear interest at a rate equal to the daily-simple SOFR rate plus a margin of 210 basis points. In conjunction with the term loan, the Company also entered into a three-year interest rate swap for a notional amount of $25 million, effectively fixing the SOFR component of the borrowing rate of the term loan at 3.90%.
(4)
The mortgage loan anticipated repayment date (“ARD”) is March 1, 2027. The final scheduled maturity date can be extended up to 5 years beyond the ARD. If the loan is not paid off at ARD, the loan’s interest rate shall be adjusted to the greater of (i) the initial interest rate plus 200 basis points or (ii) the yield on the five-year “on the run” treasury reported by Bloomberg market data service plus 450 basis points.
(5)
In the second quarter of 2023, the Debt Service Coverage Ratio (“DSCR”) and debt yield covenants for SanTan were not met, which triggered a ‘cash-sweep period’ that began in the second quarter of 2023. As of September 30, 2024, the DSCR and debt yield covenants were still not met. As of September 30, 2024, and December 31, 2023, total restricted cash for the property was $2.6 million and $4.1 million, respectively.
(6)
The FRP Collection and Carillon Point loans bear interest at a rate equal to the daily-simple SOFR rate plus a margin of 275 basis points. The SOFR component of the borrowing rate is effectively fixed for the remainder of the five-year term via interest rate swaps at 4.30%.
 

(7)
On May 23, 2024, the Company entered into an amended and restated loan agreement for Central Fairwinds, extending the term for an additional five years and amending the interest rate from fixed to floating. The loan bears interest at a rate equal to the daily-simple SOFR rate plus a margin of
 325
basis points. The Company also entered into a five-year interest rate swap agreement, effectively fixing the SOFR component of the borrowing rate of the loan at
4.43%.
(8)
In the third quarter of 2022, the DSCR covenant for FRP Ingenuity Drive was not met, which triggered a ‘cash-sweep period’ that began in the fourth quarter of 2022. As of September 30, 2024, and December 31, 2023, total restricted cash for the property was $3.8 million and $3.2 million, respectively.
 
On June 27, 2024, the Company entered into a loan modification and extension agreement for FRP Ingenuity Drive, which among other things, included a principal repayment of $1.6 million and extended the term for an additional two years to December 2026 with a one-year extension option. Under the terms of the agreement the ‘cash-sweep period’ will continue through the maturity of the loan. 
(9)
On September 27, 2024, the $50 million term loan matured and was
repaid with proceeds
from
the Unsecured Credit Facility
.
(10)
On May 1, 2024, the non-recourse property loan at our Cascade Station property in Portland, Oregon matured, and an event of default was triggered under the terms of the Cascade Station loan, following non-payment of the principal amount outstanding at loan maturity. On June 27,
2024, the
non-recourse
debt associated with the Cascade Station property was deconsolidated as a result of the Company entering into an assignment in lieu of foreclosure agreement to transfer possession and control of the property to the lender. The loan balance as of the date of deconsolidation was $20.6 million.
The scheduled principal repayments of debt as of September 30, 2024 are as follows (in thousands):
 
2024
    $ 1,361  
2025
      309,929  
2026
      43,899  
2027
      176,734  
2028
      104,586  
Thereafter
      14,490  
  
 
 
  
   $ 650,999  
  
 
 
  
v3.24.3
Fair Value of Financial Instruments
 9 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments
6. Fair Value of Financial Instruments
Fair value measurements are based on assumptions that market participants would use in pricing an asset or a liability. The hierarchy for inputs used in measuring fair value is as follows:
Level 1 Inputs – quoted prices in active markets for identical assets or liabilities
Level 2 Inputs – observable inputs other than quoted prices in active markets for identical assets and liabilities
Level 3 Inputs – unobservable inputs
In September 2019, the Company entered into a London Interbank Offered Rate (“LIBOR”) interest rate swap for a notional amount of $50.0 million. In January 2023, the Company amended the $50.0 million interest rate swap to transition from LIBOR to daily-simple SOFR. The Company applied the practical expedients available for hedging relationships under the reference rate reform guidance, which preserves the presentation of the derivative consistent with past presentation and does not result in dedesignation of the hedging relationship. The interest rate swap effectively fixed the SOFR component of the corresponding loan at approximately 1.17% for the remainder of the five-year term. In September 2024, the $50.0 million interest rate swap matured.
In January 2023, the Company entered into an interest rate swap for a notional amount of $25.0 million. The interest rate swap effectively fixes the SOFR component of the corresponding loan at approximately 3.90% for the three-year term.
In February 2023, the Company entered into an interest rate swap for a notional amount of $140.0 million. The interest rate swap effectively fixes the SOFR component of the corresponding loan at approximately 4.19% for the three-year term.
In August 2023, the Company entered into an interest rate swap at FRP Collection for an initial notional amount of $26.3 million. The interest rate swap effectively fixes the SOFR component of the corresponding loan at approximately 4.30% for the five-year term. The notional amount of the interest rate swap amortizes over the term consistent with the balance of the corresponding
loan.
 
In
August 2023, the Company entered into an interest rate swap at Carillon Point for an initial notional amount of $14.5 million. The interest rate swap effectively fixes the SOFR component of the corresponding loan at approximately 4.30% for the five-year term. The notional amount of the interest rate swap amortizes over the term consistent with the balance of the corresponding loan.
In
May 2024, the Company entered into an interest rate swap at Central Fairwinds for an initial notional amount of $15.6 million. The interest rate swap effectively fixes the SOFR component of the corresponding loan at approximately 4.43% for the five-year term. The notional amount of the interest rate swap amortizes over the term consistent with the balance of the corresponding loan.
The fair value of the interest rate swaps have been classified as Level 2 fair value measurements.
The interest rate swaps have been designated and qualify as cash flow hedges and have been recognized on the condensed consolidated balance sheets at fair value, presented within other assets and other liabilities. Gains and losses resulting from changes in the fair value of derivatives that have been designated and qualify as cash flow hedges are reported as a component of other comprehensive income/(loss) and reclassified into earnings in the periods during which the hedged forecasted transaction affects earnings.
The following table summarizes the Company’s derivative financial instruments as of September 30, 2024 and December 31, 2023 (in thousands):
 
 
  
Notional Value
 
  
 
 
  
 
 
  
Fair Value

Assets/(Liabilities)
 
 
  
September 30, 2024
 
  
Effective Date
 
  
Maturity Date
 
  
September 30, 2024
 
 
December 31, 2023
 
Interest Rate Swap
    $ 25,000        January 2023        January 2026     
$

 (75 )   
$

 49  
Interest Rate Swap
      140,000        March 2023        November 2025        (707 )      (295 ) 
Interest Rate Swap
      25,842        August 2023        August 2028        (965 )      (846 ) 
Interest Rate Swap
      14,254        August 2023        August 2028        (533 )     (466 ) 
Interest Rate Swap
      15,556        May 2024        June 2029        (789 )     —   
Interest Rate Swap
      —         September 2019        September 2024        —        1,268  
  
 
 
           
 
 
    
 
 
  
   $ 220,652            $ (3,069 )    $ (290 ) 
  
 
 
           
 
 
    
 
 
  
For the nine months ended September 30, 2024, approximately $3.2 million of realized gains were reclassified to interest expense due to payments made to or received from the swap counterparty. For the nine months ended September 30, 2023, approximately $2.3 million of realized gains were reclassified to interest expense due to payments made to or received from the swap counterparty.
Cash, Cash Equivalents, Restricted Cash, Rents Receivable, Accounts Payable and Accrued Liabilities
The Company estimates that the fair value approximates carrying value due to the relatively short-term nature of these instruments.
Fair Value of Financial Instruments Not Carried at Fair Value
With the exception of fixed rate mortgage loans payable, the carrying amounts of the Company’s financial instruments approximate their fair value. The Company determines the fair value of its fixed rate mortgage loan payable based on a discounted cash flow analysis using a discount rate that approximates the current borrowing rates for instruments of similar maturities. Based on this, the Company has determined that the fair value of these instruments was $307.3 million and $343.1 million (compared to a carrying value of $315.3 million and $357.2 million) as of September 30, 2024, and December 31, 2023, respectively. Accordingly, the fair value of mortgage loans payable have been classified as Level 3 fair value measurements.
v3.24.3
Related Party Transactions
 9 Months Ended
Sep. 30, 2024
Related Party Transactions [Abstract]  
Related Party Transactions
7. Related Party Transactions
Administrative Services Agreement
For the nine months ended September 30, 2024 and 2023, the Company earned $0.2 million and $0.4 million, respectively, in administrative services performed for Second City Real Estate II
Corporation
, Clarity Real Estate Ventures GP, Limited Partnership and their
affiliates.
v3.24.3
Leases
 9 Months Ended
Sep. 30, 2024
Leases [Abstract]  
Leases
8. Leases
Lessor Accounting
The Company is focused on acquiring, owning and operating office properties for lease to a stable and diverse tenant base. The Company’s properties have both full-service gross and net leases which are generally classified as operating leases. Rental income related to such leases is recognized on a straight-line basis over the remaining lease term. The Company’s total revenue includes fixed base rental payments provided under the lease and variable payments, which principally consist of tenant expense reimbursements for certain property operating expenses as provided under the lease.
The Company recognized fixed and variable lease payments for operating leases for the three and nine months ended September 30, 2024 and 2023 as follows (in thousands):
 
 
  
Three Months Ended

September 30,
 
  
Nine Months Ended

September 30,
 
 
  
2024
 
  
2023
 
  
2024
 
  
2023
 
Fixed payments
    $  35,794      $ 37,081      $ 109,428      $ 113,565  
Variable payments
      6,546        6,933        19,561        20,418  
  
 
 
     
 
 
     
 
 
     
 
 
  
   $  42,340      $ 44,014      $ 128,989      $ 133,983  
  
 
 
     
 
 
     
 
 
     
 
 
  
The Company ceased recognizing rental lease income with respect to the Cascade Station property on the deconsolidation of the entity on June 27, 2024. The Company ceased recognizing rental lease income with respect to the 190 Office Center property on the deconsolidation of the entity on May 15, 2023. Refer to Note 3 for further details.
Future minimum lease payments to be received by the Company as of September 30, 2024 under
non-cancellable
operating leases for the next five years and thereafter are as follows (in thousands):
 
2024
    $ 31,715  
2025
      123,574  
2026
      114,741  
2027
      98,053  
2028
      83,633  
Thereafter
      181,083  
  
 
 
  
   $ 632,799  
  
 
 
  
The Company’s leases may include various provisions such as scheduled rent increases, renewal options and termination options. The majority of the Company’s leases include defined rent increases rather than variable payments based on an index or unknown rate.
 
Lessee Accounting
As a lessee, the Company has ground and office
leases
which are classified as operating and financing leases. As of September 30, 2024, these leases had remaining terms of
two
to 64 years and a weighted average remaining lease term of 50 years.
Right-of-use
assets and lease liabilities have been included within other assets and other liabilities on the Company’s condensed consolidated balance sheets as follows (in thousands):

    
September 30, 2024
     
December 31, 2023
  
Right-of-use
asset – operating leases
    $  10,173      $  12,564  
Lease liability – operating leases
    $ 8,352      $ 8,550  
Right-of-use
asset – financing leases
    $ 9,650      $ 9,820  
Lease liability – financing leases
    $ 1,615      $ 1,551  
Lease
liabilities are measured at the commencement date based on the present value of future lease payments. One of the Company’s operating ground leases includes rental payment increases over the lease term based on increases in the Consumer Price Index (“CPI”). Changes in the CPI were not estimated as part of the measurement of the operating lease liability. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The Company used a weighted average discount rate of 6.2% in determining its lease liabilities. The discount rates were derived from the Company’s assessment of the credit quality of the Company and adjusted to reflect secured borrowing, estimated yield curves and long-term spread adjustments.
Right-of-use
assets include any prepaid lease payments and exclude any lease incentives and initial direct costs incurred. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The lease terms may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option.
Future minimum lease payments to be paid by the Company as a lessee for operating and financing leases as of September 30, 2024 for the next five years and thereafter are as follows (in thousands):

 
  
Operating
Leases
 
  
Financing

Leases
 
2024
    $ 74      $ 2  
2025
      770        8  
2026
      724        8  
2027
      587        8  
2028
      587        8  
Thereafter
      25,976        6,930  
  
 
 
     
 
 
  
Total future minimum lease payments
      28,718        6,964  
Discount
      (20,366 )       (5,349 ) 
  
 
 
     
 
 
  
Total
    $ 8,352      $ 1,615  
  
 
 
     
 
 
  
v3.24.3
Commitments and Contingencies
 9 Months Ended
Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
9. Commitments and Contingencies
The Company is obligated under certain tenant leases to fund tenant improvements and the expansion of the underlying leased properties.
Under various federal, state and local laws, ordinances and regulations relating to the protection of the environment, a current or previous owner or operator of real estate may be liable for the cost of removal or remediation of certain hazardous or toxic substances disposed, stored, generated, released, manufactured or discharged from, on, at, under, or in a property. As such, the Company may be potentially liable for costs associated with any potential environmental remediation at any of its formerly or currently owned properties.
The Company believes that it is in compliance in all material respects with all federal, state and local ordinances and regulations regarding hazardous or toxic substances. Management is not aware of any environmental liability that it believes would have a material adverse impact on the Company’s financial position or results of operations. Management is unaware of any instances in which the Company would incur significant environmental costs if any or all properties were sold, disposed of or abandoned. However, there can be no assurance that any such
non-compliance,
liability, claim or expenditure will not arise in the future.
 
The Company is involved from time to time in lawsuits and other disputes which arise in the ordinary course of business. As of September 30, 2024, management believes that these matters will not have a material adverse effect, individually or in the aggregate, on the Company’s financial position or results of
operations
.
v3.24.3
Stockholder's Equity
 9 Months Ended
Sep. 30, 2024
Federal Home Loan Banks [Abstract]  
Stockholder's Equity
10. Stockholders’ Equity
Share Repurchase Plan
On May 4, 2023, the Company’s Board of Directors (the “Board of Directors”) approved a share repurchase plan (“Repurchase Program”) authorizing the Company to repurchase up to $50 million of its outstanding shares of common stock or Series A Preferred Stock. Under the share repurchase program, the shares may be repurchased from time to time using a variety of methods, which may include open market transactions, privately negotiated transactions or otherwise, all in accordance with the rules of the SEC and other applicable legal requirements.
Repurchased shares of common stock will be classified as authorized and unissued shares. The Company recognizes the cost of shares of common stock it repurchases, including direct costs incurred, as a reduction in stockholders’ equity. Such reductions of stockholders equity due to the repurchases of shares of common stock will be applied first, to reduce common stock in the amount of the par value associated with the shares of common stock repurchased and second, to reduce additional
paid-in
capital by the amount that the purchase price for the shares of common stock repurchased exceed the par value.
There were no shares repurchased during the nine months ended September 30, 2024 and 2023.
Common Stock and Common Unit Distributions
On September 13, 2024, the Board of Directors approved and the Company declared a cash dividend distribution of $0.10 per common share for the quarterly period ended September 30, 2024. The dividend was paid subsequent to quarter end on October 24, 2024 to common stockholders and common unitholders of record as of the close of business on October 10, 2024, resulting in an aggregate payment of $4.0 million.
Preferred Stock Distributions
On September 13, 2024, the Board of Directors approved and the Company declared a cash dividend distribution of $0.4140625 per share of the Company’s 6.625% Series A Preferred Stock (“Series A Preferred Stock”) for an aggregate amount of $1.9 million for the quarterly period ended September 30, 2024. The dividend was paid subsequent to quarter end on October 24, 2024 to the holders of record of Series A Preferred Stock as of the close of business on October 10, 2024.
Equity Incentive Plan
The Company has an equity incentive plan (“Equity Incentive Plan”) for executive officers, directors and certain
non-executive
employees, and with approval of the Board of Directors, for subsidiaries and their respective affiliates. The Equity Incentive Plan provides for grants of restricted common stock, restricted stock units, phantom shares, stock options, dividend equivalent rights and other equity-based awards (including the grant of Operating Partnership long-term incentive plan units), subject to the total number of shares available for issuance under the plan. The Equity Incentive Plan is administered by the compensation committee of the Board of Directors (the “Compensation Committee”). The Equity Incentive Plan provides for the issuance of up to
 
3,763,580
shares of common stock. To the extent an award granted under the Equity Incentive Plan expires or terminates, the shares subject to any portion of the award that expires or terminates without having been exercised or paid, as the case may be, will again become available for the issuance of additional awards.
 
On January 27, 2020, each of the Board of Directors and the Compensation Committee approved a new form of performance-based restricted unit award agreement that will be used to grant performance-based restricted stock unit awards (“Performance RSU Awards”) pursuant
to the Equity Incentive Plan. The Performance RSU Awards are based upon the total stockholder return (“TSR”) of the Company’s common stock over a three-year measurement period beginning January 1 of the year of grant (the “Measurement Period”) relative to the TSR of a defined peer group list of other US Office REIT companies (the “Peer Group”) as of the first trading date in the year of grant. The payouts under the Performance RSU Awards are evaluated on a sliding scale as follows: TSR below the 30th percentile of the Peer Group would result in a 50% payout; TSR at the 50th percentile of the Peer Group would result in a 100% payout; and TSR at or above the 75th percentile of the Peer Group would result in a 150% payout. Payouts are mathematically interpolated between these stated percentile targets, subject to a 150% maximum. To the extent earned, the payouts of the Performance RSU Awards are intended to be settled in the form of shares of the Company’s common stock, pursuant to the Equity Incentive Plan. Upon satisfaction of the vesting conditions, dividend equivalents in an amount equal to all regular and special dividends declared with respect to the Company’s common stock during each annual measurement period during the Measurement Period are determined and paid on a cumulative, reinvested basis over the term of the applicable Performance RSU Award, at the time such award vests and based on the number of shares of the Company’s common stock that are earned.
During the first quarter of 2024, the Performance RSU Awards granted in January 2021, with a January 1, 2021 through December 31, 2023 Measurement Period, were earned at 120% of the target number of shares granted based on achievement of a TSR that was at or above the 60th percentile of the 2021 RSU Peer Group.
The following table summarizes the activity of the awards under the Equity Incentive Plan for the three and nine months ended September 30, 2024:
 
    
Number of
RSUs
     
Number of
Performance
RSUs
  
Outstanding at December 31, 2023
      451,741        424,888  
Granted
      324,414        324,952  
Issuance of dividend equivalents
      8,290        —   
Vested
      (228,747 )       (120,000 ) 
  
 
 
     
 
 
  
Outstanding at March 31, 2024
      555,698        629,840  
Issuance of dividend equivalents
      12,161        —   
  
 
 
     
 
 
  
Outstanding at June 30, 2024
      567,859        629,840  
Issuance of dividend equivalents
      10,039        —   
  
 
 
     
 
 
  
Outstanding at September 30, 2024
      577,898        629,840  
The following table summarizes the activity of the awards under the Equity
Incentive
Plan for the three and nine months ended September 30, 2023:

 
  
Number of
RSUs
 
  
Number of
Performance
RSUs
 
Outstanding at December 31, 2022
      428,320        307,500  
Granted
      198,022        214,888  
Issuance of dividend equivalents
      9,485        —   
Vested
      (216,520 )       (97,500 ) 
  
 
 
     
 
 
  
Outstanding at March 31, 2023
      419,307        424,888  
Issuance of dividend equivalents
      14,356        —   
  
 
 
     
 
 
  
Outstanding at June 30, 2023
      433,663        424,888  
Issuance of dividend equivalents
      7,844        —   
  
 
 
     
 
 
  
Outstanding at September 30, 2023
      441,507        424,888  
 
During the nine months ended September 30, 2024 and September 30, 2023, the Company granted the following restricted stock units (“RSUs”) and Performance RSU Awards to directors, executive officers and certain
non-executive
employees:
 
    
Units Granted
     
Grant Date
Fair Value

(in thousands)
     
Weighted Average
Grant Date Fair
Value Per Share
  
    
RSUs
     
Performance
RSUs
  
2024
      324,414        324,952      $ 3,539      $  5.45  
2023
      198,022        214,888        3,729        9.03  
The RSU Awards will vest in three equal, annual installments on each of the first three anniversaries of the grant date. The Performance RSU Awards will vest on the last day of the three-year measurement period.
During the three months ended September 30, 2024 and September 30, 2023, the Company recognized net compensation expense for the RSUs and Performance RSU Awards as follows (in thousands):
 
    
RSUs
     
Performance
RSUs
     
Total
  
2024
    $     643      $    441      $   1,084  
2023
      633        391        1,024  
During the nine months ended September 30, 2024 and September 30, 2023, the Company recognized net compensation expense for the RSUs and Performance RSU Awards as follows (in thousands):

    
RSUs
     
Performance
RSUs
     
Total
  
2024
    $   1,928      $   1,310      $   3,238  
2023
      1,910        1,161        3,071  
v3.24.3
Summary of Significant Accounting Policies (Policies)
 9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
Basis of Preparation and Summary of Significant Accounting Policies
Basis of Preparation and Summary of Significant Accounting Policies
The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with Securities and Exchange Commission (“SEC”) rules and regulations and generally accepted accounting principles in the United States of America (“US GAAP”) and in the opinion of management contain all adjustments (including normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form
10-K
for the year ended December 31, 2023.
Recent Accounting Pronouncements
Recent Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”)
No. 2023-07
(“ASU
2023-07”)
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which will enhance segment disclosures. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024, with early adoption permitted. This standard must be applied retrospectively to all periods presented in the financial statements. The Company has evaluated the impact of ASU
2023-07
and anticipates adoption will result in incremental disclosure in the notes to the consolidated financial statements for the year ended December 31, 2024.
v3.24.3
Lease Intangibles (Tables)
 9 Months Ended
Sep. 30, 2024
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Lease Intangibles and Value of Assumed Lease Obligations
Lease intangibles and the value of assumed lease obligations as of September 30, 2024 and December 31, 2023 were comprised of the following (in thousands):
 
 
  
Lease Intangible Assets
 
 
Lease Intangible Liabilities
 
September 30, 2024
  
Above

Market

Leases
 
 
In Place

Leases
 
 
Leasing

Commissions
 
 
Total
 
 
Below

Market

Leases
 
 
Below Market

Ground Lease
 
 
Total
 
Cost
    $ 16,647     $ 72,184     $ 31,481     $ 120,312     $ (14,510 )    $ (138 )    $ (14,648 ) 
Accumulated amortization
      (10,333 )      (53,340 )      (20,119 )      (83,792 )      7,960       59       8,019  
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
   $ 6,314     $ 18,844     $ 11,362     $ 36,520     $ (6,550 )    $ (79 )    $ (6,629 ) 
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
 
  
Lease Intangible Assets
 
 
Lease Intangible Liabilities
 
December 31, 2023
  
Above

Market

Leases
 
 
In Place

Leases
 
 
Leasing

Commissions
 
 
Total
 
 
Below

Market

Leases
 
 
Below Market

Ground Lease
 
 
Total
 
Cost
    $ 17,463     $ 73,128     $ 32,541     $ 123,132     $ (14,968 )    $ (138 )    $ (15,106 ) 
Accumulated amortization
      (10,222 )      (51,290 )      (19,186 )      (80,698 )      7,314       56       7,370  
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
   $ 7,241     $ 21,838     $ 13,355     $ 42,434     $ (7,654 )    $ (82 )    $ (7,736 ) 
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Estimated Aggregate Amortization Expense for Lease Intangibles
The estimated aggregate amortization expense for lease intangibles for the next five years and in the aggregate are as follows (in thousands):
 
2024
    $ 1,561  
2025
      6,197  
2026
      5,889  
2027
      4,903  
2028
      4,209  
Thereafter
      7,132  
  
 
 
  
   $ 29,891  
  
 
 
  
v3.24.3
Debt (Tables)
 9 Months Ended
Sep. 30, 2024
Debt Disclosure [Abstract]  
Summary of Outstanding Indebtness
The following table summarizes the indebtedness as of September 30, 2024 and December 31, 2023 (dollars in thousands), including the impact of the effective interest rate swaps described in Note 6:

Property
  
September 30,

2024
 
  
December 31,

2023
 
  
Interest Rate as

of September 30,

2024
(1)
 
 
Maturity
 
Unsecured Credit Facility
 (2)(3)
    $   255,000     $   200,000    
 
 SOFR +1.50%
(1)(2)
 
   
 
 November 2025
 
Term Loan
(3)
      25,000       25,000    
 
 6.00%
(3)
 
   
 
 January 2026
 
Mission City
      45,323       45,994    
 
 3.78%
 
   
 
 November 2027
 
Canyon Park
(4)
      38,356       38,932    
 
 4.30%
 
   
 
 March 2027
 
Circle Point
      38,339       38,789    
 
 4.49%
 
   
 
 September 2028
 
SanTan
(5)
      30,958       31,501    
 
 4.56%
 
   
 
 March 2027
 
The Quad
      30,600       30,600    
 
 4.20%
 
   
 
 September 2028
 
Intellicenter
      30,207       30,682    
 
 4.65%
 
   
 
 October 2025
 
2525 McKinnon
      27,000       27,000    
 
 4.24%
 
   
 
 April 2027
 
FRP Collection
      25,842       26,139    
 
 7.05%
(6)
 
   
 
 August 2028
 
Greenwood Blvd
      20,440       20,856    
 
 3.15%
 
   
 
 December 2025
 
5090 N. 40th St
      20,028       20,370    
 
 3.92%
 
   
 
 January 2027
 
AmberGlen
      20,000       20,000    
 
 3.69%
 
   
 
 May 2027
 
Central Fairwinds
      15,556       15,826    
 
 7.68%
(7)
 
   
 
 June 2029
 
Carillon Point
      14,254       14,419    
 
 7.05%
(6)
 
   
 
 August 2028
 
FRP Ingenuity Drive
(8)
      14,096       15,860    
 
 4.44%
 
   
 
 December 2026
 
Term Loan
 (9)
      —        50,000    
 
 — 
 
   
 
 — 
 
Cascade Station
(10)
      —        20,752    
 
 — 
 
   
 
 — 
 
  
 
 
    
 
 
    
 
 
   
 
 
Total Principal
      650,999       672,720    
 
 
   
 
 
Deferred financing costs, net
      (2,826 )      (3,258 )   
 
 
   
 
 
Unamortized fair value adjustments
      —        48    
 
 
   
 
 
  
 
 
    
 
 
    
 
 
   
 
 
Total
    $ 648,173     $ 669,510    
 
 
   
 
 
  
 
 
    
 
 
    
 
 
   
 
 

(1)
As of September 30, 2024, the daily-simple Secured Overnight Financing Rate (“SOFR”) was 4.96%.
(2)
Borrowings under our unsecured credit facility (the “Unsecured Credit Facility”) bear interest at a rate equal to the daily-simple SOFR rate plus a margin of between 135 to 235 basis points depending upon the Company’s consolidated leverage ratio. On February 9, 2023, the Company entered into a three-year interest rate swap for a notional amount of $140 million, effective March 8, 2023, effectively fixing the SOFR component of the borrowing rate for $140 million of the Unsecured Credit Facility at 4.19%. As of September 30, 2024, the Unsecured Credit Facility had $255.0 million drawn and a $2.5 million letter of credit to satisfy escrow requirements for a mortgage lender. The Unsecured Credit Facility matures in November 2025 and may be extended 12 months at the Company’s option upon meeting certain conditions. The Unsecured Credit Facility requires the Company to maintain a fixed charge coverage ratio of no less than 1.50x.
(3)
On January 5, 2023, the Company entered into a second amendment to its amended and restated credit agreement, dated
November 16, 2021, for the Unsecured Credit Facility and entered into a three-year $25 million term loan, increasing its total authorized borrowings from $350 million to $375 million. Borrowings under the $25 million term loan bear interest at a rate equal to the daily-simple SOFR rate plus a margin of 210 basis points. In conjunction with the term loan, the Company also entered into a three-year interest rate swap for a notional amount of $25 million, effectively fixing the SOFR component of the borrowing rate of the term loan at 3.90%.
(4)
The mortgage loan anticipated repayment date (“ARD”) is March 1, 2027. The final scheduled maturity date can be extended up to 5 years beyond the ARD. If the loan is not paid off at ARD, the loan’s interest rate shall be adjusted to the greater of (i) the initial interest rate plus 200 basis points or (ii) the yield on the five-year “on the run” treasury reported by Bloomberg market data service plus 450 basis points.
(5)
In the second quarter of 2023, the Debt Service Coverage Ratio (“DSCR”) and debt yield covenants for SanTan were not met, which triggered a ‘cash-sweep period’ that began in the second quarter of 2023. As of September 30, 2024, the DSCR and debt yield covenants were still not met. As of September 30, 2024, and December 31, 2023, total restricted cash for the property was $2.6 million and $4.1 million, respectively.
(6)
The FRP Collection and Carillon Point loans bear interest at a rate equal to the daily-simple SOFR rate plus a margin of 275 basis points. The SOFR component of the borrowing rate is effectively fixed for the remainder of the five-year term via interest rate swaps at 4.30%.
 

(7)
On May 23, 2024, the Company entered into an amended and restated loan agreement for Central Fairwinds, extending the term for an additional five years and amending the interest rate from fixed to floating. The loan bears interest at a rate equal to the daily-simple SOFR rate plus a margin of
 325
basis points. The Company also entered into a five-year interest rate swap agreement, effectively fixing the SOFR component of the borrowing rate of the loan at
4.43%.
(8)
In the third quarter of 2022, the DSCR covenant for FRP Ingenuity Drive was not met, which triggered a ‘cash-sweep period’ that began in the fourth quarter of 2022. As of September 30, 2024, and December 31, 2023, total restricted cash for the property was $3.8 million and $3.2 million, respectively.
 
On June 27, 2024, the Company entered into a loan modification and extension agreement for FRP Ingenuity Drive, which among other things, included a principal repayment of $1.6 million and extended the term for an additional two years to December 2026 with a one-year extension option. Under the terms of the agreement the ‘cash-sweep period’ will continue through the maturity of the loan. 
(9)
On September 27, 2024, the $50 million term loan matured and was
repaid with proceeds
from
the Unsecured Credit Facility
.
(10)
On May 1, 2024, the non-recourse property loan at our Cascade Station property in Portland, Oregon matured, and an event of default was triggered under the terms of the Cascade Station loan, following non-payment of the principal amount outstanding at loan maturity. On June 27,
2024, the
non-recourse
debt associated with the Cascade Station property was deconsolidated as a result of the Company entering into an assignment in lieu of foreclosure agreement to transfer possession and control of the property to the lender. The loan balance as of the date of deconsolidation was $20.6 million.
Schedule of Principal Repayments of Mortgage Payable
The scheduled principal repayments of debt as of September 30, 2024 are as follows (in thousands):
 
2024
    $ 1,361  
2025
      309,929  
2026
      43,899  
2027
      176,734  
2028
      104,586  
Thereafter
      14,490  
  
 
 
  
   $ 650,999  
  
 
 
  
v3.24.3
Fair Value of Financial Instruments (Tables)
 9 Months Ended
Sep. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Summary of company's derivative financial instruments
The following table summarizes the Company’s derivative financial instruments as of September 30, 2024 and December 31, 2023 (in thousands):
 
 
  
Notional Value
 
  
 
 
  
 
 
  
Fair Value

Assets/(Liabilities)
 
 
  
September 30, 2024
 
  
Effective Date
 
  
Maturity Date
 
  
September 30, 2024
 
 
December 31, 2023
 
Interest Rate Swap
    $ 25,000        January 2023        January 2026     
$

 (75 )   
$

 49  
Interest Rate Swap
      140,000        March 2023        November 2025        (707 )      (295 ) 
Interest Rate Swap
      25,842        August 2023        August 2028        (965 )      (846 ) 
Interest Rate Swap
      14,254        August 2023        August 2028        (533 )     (466 ) 
Interest Rate Swap
      15,556        May 2024        June 2029        (789 )     —   
Interest Rate Swap
      —         September 2019        September 2024        —        1,268  
  
 
 
           
 
 
    
 
 
  
   $ 220,652            $ (3,069 )    $ (290 ) 
  
 
 
           
 
 
    
 
 
  
v3.24.3
Leases (Tables)
 9 Months Ended
Sep. 30, 2024
Leases [Abstract]  
Operating Lease Lease Income
The Company recognized fixed and variable lease payments for operating leases for the three and nine months ended September 30, 2024 and 2023 as follows (in thousands):
 
 
  
Three Months Ended

September 30,
 
  
Nine Months Ended

September 30,
 
 
  
2024
 
  
2023
 
  
2024
 
  
2023
 
Fixed payments
    $  35,794      $ 37,081      $ 109,428      $ 113,565  
Variable payments
      6,546        6,933        19,561        20,418  
  
 
 
     
 
 
     
 
 
     
 
 
  
   $  42,340      $ 44,014      $ 128,989      $ 133,983  
  
 
 
     
 
 
     
 
 
     
 
 
  
Schedule of Future Minimum Rental Payments for Operating Leases
Future minimum lease payments to be received by the Company as of September 30, 2024 under
non-cancellable
operating leases for the next five years and thereafter are as follows (in thousands):
 
2024
    $ 31,715  
2025
      123,574  
2026
      114,741  
2027
      98,053  
2028
      83,633  
Thereafter
      181,083  
  
 
 
  
   $ 632,799  
  
 
 
  
Schedule Of Supplemental Balance Sheet Information Related To Leases
Right-of-use
assets and lease liabilities have been included within other assets and other liabilities on the Company’s condensed consolidated balance sheets as follows (in thousands):

    
September 30, 2024
     
December 31, 2023
  
Right-of-use
asset – operating leases
    $  10,173      $  12,564  
Lease liability – operating leases
    $ 8,352      $ 8,550  
Right-of-use
asset – financing leases
    $ 9,650      $ 9,820  
Lease liability – financing leases
    $ 1,615      $ 1,551  
Schedule future minimum lease payments to be paid
Future minimum lease payments to be paid by the Company as a lessee for operating and financing leases as of September 30, 2024 for the next five years and thereafter are as follows (in thousands):

 
  
Operating
Leases
 
  
Financing

Leases
 
2024
    $ 74      $ 2  
2025
      770        8  
2026
      724        8  
2027
      587        8  
2028
      587        8  
Thereafter
      25,976        6,930  
  
 
 
     
 
 
  
Total future minimum lease payments
      28,718        6,964  
Discount
      (20,366 )       (5,349 ) 
  
 
 
     
 
 
  
Total
    $ 8,352      $ 1,615  
  
 
 
     
 
 
  
v3.24.3
Stockholder's Equity (Tables)
 9 Months Ended
Sep. 30, 2024
Federal Home Loan Banks [Abstract]  
Summary of Activity of Awards under Equity Incentive Plan
The following table summarizes the activity of the awards under the Equity Incentive Plan for the three and nine months ended September 30, 2024:
 
    
Number of
RSUs
     
Number of
Performance
RSUs
  
Outstanding at December 31, 2023
      451,741        424,888  
Granted
      324,414        324,952  
Issuance of dividend equivalents
      8,290        —   
Vested
      (228,747 )       (120,000 ) 
  
 
 
     
 
 
  
Outstanding at March 31, 2024
      555,698        629,840  
Issuance of dividend equivalents
      12,161        —   
  
 
 
     
 
 
  
Outstanding at June 30, 2024
      567,859        629,840  
Issuance of dividend equivalents
      10,039        —   
  
 
 
     
 
 
  
Outstanding at September 30, 2024
      577,898        629,840  
The following table summarizes the activity of the awards under the Equity
Incentive
Plan for the three and nine months ended September 30, 2023:

 
  
Number of
RSUs
 
  
Number of
Performance
RSUs
 
Outstanding at December 31, 2022
      428,320        307,500  
Granted
      198,022        214,888  
Issuance of dividend equivalents
      9,485        —   
Vested
      (216,520 )       (97,500 ) 
  
 
 
     
 
 
  
Outstanding at March 31, 2023
      419,307        424,888  
Issuance of dividend equivalents
      14,356        —   
  
 
 
     
 
 
  
Outstanding at June 30, 2023
      433,663        424,888  
Issuance of dividend equivalents
      7,844        —   
  
 
 
     
 
 
  
Outstanding at September 30, 2023
      441,507        424,888  
Summary of Restricted Stock Units ("RSUs") and Performance RSU
During the nine months ended September 30, 2024 and September 30, 2023, the Company granted the following restricted stock units (“RSUs”) and Performance RSU Awards to directors, executive officers and certain
non-executive
employees:
 
    
Units Granted
     
Grant Date
Fair Value

(in thousands)
     
Weighted Average
Grant Date Fair
Value Per Share
  
    
RSUs
     
Performance
RSUs
  
2024
      324,414        324,952      $ 3,539      $  5.45  
2023
      198,022        214,888        3,729        9.03  
Summary of Recognized Compensation Expense for RSUs and Performance RSU
During the three months ended September 30, 2024 and September 30, 2023, the Company recognized net compensation expense for the RSUs and Performance RSU Awards as follows (in thousands):
 
    
RSUs
     
Performance
RSUs
     
Total
  
2024
    $     643      $    441      $   1,084  
2023
      633        391        1,024  
During the nine months ended September 30, 2024 and September 30, 2023, the Company recognized net compensation expense for the RSUs and Performance RSU Awards as follows (in thousands):

    
RSUs
     
Performance
RSUs
     
Total
  
2024
    $   1,928      $   1,310      $   3,238  
2023
      1,910        1,161        3,071  
v3.24.3
Organization and Description of Business - Additional Information (Detail)
 9 Months Ended
Sep. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Company formation date Nov. 26, 2013
Operation commencement date Apr. 21, 2014
v3.24.3
Real Estate Investments - Additional Information (Detail) - Variable Interest Entity, Not Primary Beneficiary [Member] - USD ($)
$ in Millions
 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Jun. 27, 2024
May 15, 2023
190 Office Center [Member]        
Real Estate [Line Items]        
Real estate assets deconsolidated in the period       $ 35.7
Mortgage loan deconsolidated in the period       38.6
Cash and restricted cash deconsolidated in the period       4.0
Loss on deconsolidation   $ 0.1    
Net current liabilities deconsolidated in the period       $ 1.0
Cascade Station [Member]        
Real Estate [Line Items]        
Real estate assets deconsolidated in the period     $ 17.9  
Mortgage loan deconsolidated in the period     20.6  
Cash and restricted cash deconsolidated in the period     2.5  
Net current assets deconsolidated during the period     $ 1.7  
Loss on deconsolidation $ 1.5      
v3.24.3
Lease Intangibles - Schedule of Lease Intangibles and Value of Assumed Lease Obligations (Detail) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Finite-Lived Intangible Assets [Line Items]    
Cost, Lease Intangible Assets $ 120,312 $ 123,132
Accumulated amortization, Lease Intangible Assets (83,792) (80,698)
Total, Lease Intangible Assets 36,520 42,434
Cost, Lease Intangible Liabilities (14,648) (15,106)
Accumulated amortization, Lease Intangible Liabilities 8,019 7,370
Total, Lease Intangible Liabilities (6,629) (7,736)
Above Market Leases [Member]    
Finite-Lived Intangible Assets [Line Items]    
Cost, Lease Intangible Assets 16,647 17,463
Accumulated amortization, Lease Intangible Assets (10,333) (10,222)
Total, Lease Intangible Assets 6,314 7,241
In Place Leases [Member]    
Finite-Lived Intangible Assets [Line Items]    
Cost, Lease Intangible Assets 72,184 73,128
Accumulated amortization, Lease Intangible Assets (53,340) (51,290)
Total, Lease Intangible Assets 18,844 21,838
Leasing Commissions [Member]    
Finite-Lived Intangible Assets [Line Items]    
Cost, Lease Intangible Assets 31,481 32,541
Accumulated amortization, Lease Intangible Assets (20,119) (19,186)
Total, Lease Intangible Assets 11,362 13,355
Below Market Tenant Lease [Member]    
Finite-Lived Intangible Assets [Line Items]    
Cost, Lease Intangible Liabilities (14,510) (14,968)
Accumulated amortization, Lease Intangible Liabilities 7,960 7,314
Total, Lease Intangible Liabilities (6,550) (7,654)
Below Market Ground Lease [Member]    
Finite-Lived Intangible Assets [Line Items]    
Cost, Lease Intangible Liabilities (138) (138)
Accumulated amortization, Lease Intangible Liabilities 59 56
Total, Lease Intangible Liabilities $ (79) $ (82)
v3.24.3
Lease Intangibles - Estimated Aggregate Amortization Expense for Lease Intangibles (Detail)
$ in Thousands
Sep. 30, 2024
USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]  
2024 $ 1,561
2025 6,197
2026 5,889
2027 4,903
2028 4,209
Thereafter 7,132
Total $ 29,891
v3.24.3
Debt - Summary of Outstanding Indebtedness (Detail) - USD ($)
$ in Thousands
 9 Months Ended
Sep. 30, 2024
Dec. 31, 2023
Debt Instrument [Line Items]    
Indebtedness $ 650,999 $ 672,720
Deferred financing costs, net (2,826) (3,258)
Unamortized fair value adjustments   48
Total 648,173 669,510
Unsecured Debt [Member] | Term loan [Member]    
Debt Instrument [Line Items]    
Indebtedness   50,000
Unsecured Debt [Member] | Term Loan Two [Member]    
Debt Instrument [Line Items]    
Indebtedness $ 25,000 25,000
Interest Rate 6.00%  
Maturity 2026-01  
Credit Facility [Member] | Unsecured Debt [Member]    
Debt Instrument [Line Items]    
Indebtedness $ 255,000 200,000
Interest Rate, terms 1.50  
Interest Rate, spread 1.50%  
Maturity 2025-11  
Mission City [Member] | Secured Debt [Member]    
Debt Instrument [Line Items]    
Indebtedness $ 45,323 45,994
Interest Rate 3.78%  
Maturity 2027-11  
Canyon Park [Member] | Secured Debt [Member]    
Debt Instrument [Line Items]    
Indebtedness $ 38,356 38,932
Interest Rate 4.30%  
Maturity 2027-03  
Circle Point [Member] | Secured Debt [Member]    
Debt Instrument [Line Items]    
Indebtedness $ 38,339 38,789
Interest Rate 4.49%  
Maturity 2028-09  
SanTan [Member] | Secured Debt [Member]    
Debt Instrument [Line Items]    
Indebtedness $ 30,958 31,501
Interest Rate 4.56%  
Maturity 2027-03  
The Quad [Member] | Secured Debt [Member]    
Debt Instrument [Line Items]    
Indebtedness $ 30,600 30,600
Interest Rate 4.20%  
Maturity 2028-09  
Intellicenter [Member] | Secured Debt [Member]    
Debt Instrument [Line Items]    
Indebtedness $ 30,207 30,682
Interest Rate 4.65%  
Maturity 2025-10  
2525 McKinnon [Member] | Secured Debt [Member]    
Debt Instrument [Line Items]    
Indebtedness $ 27,000 27,000
Interest Rate 4.24%  
Maturity 2027-04  
FRP Collection [Member] | Secured Debt [Member]    
Debt Instrument [Line Items]    
Indebtedness $ 25,842 26,139
Interest Rate 7.05%  
Maturity 2028-08  
Greenwood Blvd [Member] | Secured Debt [Member]    
Debt Instrument [Line Items]    
Indebtedness $ 20,440 20,856
Interest Rate 3.15%  
Maturity 2025-12  
5090 N 40th St [Member] | Secured Debt [Member]    
Debt Instrument [Line Items]    
Indebtedness $ 20,028 20,370
Interest Rate 3.92%  
Maturity 2027-01  
AmberGlen Property [Member] | Secured Debt [Member]    
Debt Instrument [Line Items]    
Indebtedness $ 20,000 20,000
Interest Rate 3.69%  
Maturity 2027-05  
Central Fairwinds [Member] | Secured Debt [Member]    
Debt Instrument [Line Items]    
Indebtedness $ 15,556 15,826
Interest Rate 7.68%  
Maturity 2029-06  
Carillon Point [Member] | Secured Debt [Member]    
Debt Instrument [Line Items]    
Indebtedness $ 14,254 14,419
Interest Rate 7.05%  
Maturity 2028-08  
FRP Ingenuity Drive [Member] | Secured Debt [Member]    
Debt Instrument [Line Items]    
Indebtedness $ 14,096 15,860
Interest Rate 4.44%  
Maturity 2026-12  
Cascade Station [Member] | Secured Debt [Member]    
Debt Instrument [Line Items]    
Indebtedness   $ 20,752
v3.24.3
Debt - Summary of Outstanding Indebtedness (Parenthetical) (Detail) - USD ($)
$ in Thousands
 9 Months Ended
Sep. 27, 2024
Jun. 27, 2024
May 23, 2024
Sep. 30, 2024
Dec. 31, 2023
Aug. 16, 2023
Mar. 08, 2023
Feb. 09, 2023
Jan. 06, 2023
Jan. 05, 2023
Debt Instrument [Line Items]                    
Derivative, Notional Amount $ 50,000     $ 220,652            
Interest Rate Swap [Member]                    
Debt Instrument [Line Items]                    
Derivative, Notional Amount               $ 140,000 $ 50,000 $ 25,000
Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | Interest Rate Swap [Member] | Term Loan Two [Member]                    
Debt Instrument [Line Items]                    
Derivative, Fixed Interest Rate                   3.90%
Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | Interest Rate Swap [Member] | Term loan [Member]                    
Debt Instrument [Line Items]                    
Derivative, Fixed Interest Rate                 1.17%  
Unsecured Debt [Member] | Term Loan Two [Member]                    
Debt Instrument [Line Items]                    
Term loan                   $ 25,000
Unsecured Debt [Member] | Term loan [Member]                    
Debt Instrument [Line Items]                    
Repayments of unsecured debt $ 50,000                  
Unsecured Debt [Member] | Margin [Member] | Term Loan Two [Member]                    
Debt Instrument [Line Items]                    
Interest Rate, Description       210.00%            
SanTan [Member] | Debt Service Coverage Ratio [Member] | Debt Yield [Member]                    
Debt Instrument [Line Items]                    
Restricted Cash       $ 2,600 $ 4,100          
FRP Collection [Member] | Interest Rate Swap [Member]                    
Debt Instrument [Line Items]                    
Derivative, Notional Amount           $ 26,300        
FRP Collection [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | Interest Rate Swap [Member]                    
Debt Instrument [Line Items]                    
Derivative, Fixed Interest Rate           4.30%        
FRP Collection [Member] | Secured Debt [Member] | Margin [Member]                    
Debt Instrument [Line Items]                    
Interest Rate, Description       275.00%            
Central Fairwinds [Member] | Interest Rate Swap [Member]                    
Debt Instrument [Line Items]                    
Derivative, Notional Amount     $ 15,600              
Central Fairwinds [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | Interest Rate Swap [Member]                    
Debt Instrument [Line Items]                    
Derivative, Fixed Interest Rate     4.43%              
Central Fairwinds [Member] | Secured Debt [Member] | Margin [Member]                    
Debt Instrument [Line Items]                    
Interest Rate, Description     325.00%              
Carillon Point [Member] | Interest Rate Swap [Member]                    
Debt Instrument [Line Items]                    
Derivative, Notional Amount           $ 14,500        
Carillon Point [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | Interest Rate Swap [Member]                    
Debt Instrument [Line Items]                    
Derivative, Fixed Interest Rate           4.30%        
Carillon Point [Member] | Secured Debt [Member] | Margin [Member]                    
Debt Instrument [Line Items]                    
Interest Rate, Description       275.00%            
Canyon Park [Member] | Secured Debt [Member] | Minimum [Member]                    
Debt Instrument [Line Items]                    
Interest Rate, Description       200.00%            
Canyon Park [Member] | Secured Debt [Member] | Maximum [Member]                    
Debt Instrument [Line Items]                    
Interest Rate, Description       450.00%            
FRP Ingenuity Drive [Member] | Debt Service Coverage Ratio [Member]                    
Debt Instrument [Line Items]                    
Restricted Cash       $ 3,800 $ 3,200          
FRP Ingenuity Drive [Member] | Secured Debt [Member]                    
Debt Instrument [Line Items]                    
Repayment of principal amount of debt debt modification   $ 1,600                
Cascade Station [Member] | Secured Debt [Member] | Variable Interest Entity, Not Primary Beneficiary [Member]                    
Debt Instrument [Line Items]                    
Mortgage loan deconsolidated in the period   $ 20,600                
Credit Facility [Member]                    
Debt Instrument [Line Items]                    
Revolving Credit Facility, outstanding               $ 140,000    
Credit Facility [Member] | Letter of Credit [Member]                    
Debt Instrument [Line Items]                    
Revolving Credit Facility, outstanding       2,500            
Credit Facility [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | Interest Rate Swap [Member]                    
Debt Instrument [Line Items]                    
Derivative, Fixed Interest Rate             4.19%      
Credit Facility [Member] | Unsecured Debt [Member]                    
Debt Instrument [Line Items]                    
Revolving Credit Facility, outstanding       $ 255,000            
Interest Rate, Description       1.50%            
Credit Facility [Member] | Unsecured Debt [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | Term loan [Member]                    
Debt Instrument [Line Items]                    
One month SOFR rate       4.96%            
Credit Facility [Member] | Unsecured Debt [Member] | Minimum [Member]                    
Debt Instrument [Line Items]                    
Revolving Credit Facility, authorized amount                   350,000
Interest Rate, Description       135.00%            
Fixed charge coverage ratio       1.50%            
Credit Facility [Member] | Unsecured Debt [Member] | Maximum [Member]                    
Debt Instrument [Line Items]                    
Revolving Credit Facility, authorized amount                   $ 375,000
Interest Rate, Description       235.00%            
v3.24.3
Debt - Schedule of Principal Repayments of Mortgage Payable (Detail) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Debt Disclosure [Abstract]    
2024 $ 1,361  
2025 309,929  
2026 43,899  
2027 176,734  
2028 104,586  
Thereafter 14,490  
Total $ 650,999 $ 672,720
v3.24.3
Fair Value of Financial Instruments - Summary of Company's Derivative Financial Instruments (Detail) - USD ($)
$ in Thousands
Sep. 30, 2024
Sep. 27, 2024
Dec. 31, 2023
Feb. 09, 2023
Jan. 06, 2023
Jan. 05, 2023
Derivatives, Fair Value [Line Items]            
Notional Value $ 220,652 $ 50,000        
Fair Value (3,069)   $ (290)      
Interest Rate Swap [Member]            
Derivatives, Fair Value [Line Items]            
Notional Value       $ 140,000 $ 50,000 $ 25,000
January 2026 [Member] | Interest Rate Swap [Member]            
Derivatives, Fair Value [Line Items]            
Notional Value 25,000          
Fair Value, Assets     49      
Fair Value, Liability (75)          
November 2025 [Member] | Interest Rate Swap [Member]            
Derivatives, Fair Value [Line Items]            
Notional Value 140,000          
Fair Value, Liability (707)   (295)      
August 2028 [Member] | Interest Rate Swap [Member] | Derivative Instruments Maturity One [Member]            
Derivatives, Fair Value [Line Items]            
Notional Value 25,842          
Fair Value, Liability (965)   (846)      
August 2028 [Member] | Interest Rate Swap [Member] | Derivative Instruments Maturity Two [Member]            
Derivatives, Fair Value [Line Items]            
Notional Value 14,254          
Fair Value, Liability (533)   (466)      
June 2029 [Member] | Interest Rate Swap [Member]            
Derivatives, Fair Value [Line Items]            
Notional Value 15,556          
Fair Value, Liability (789)   0      
September 2024 [Member] | Interest Rate Swap [Member]            
Derivatives, Fair Value [Line Items]            
Notional Value 0          
Fair Value, Assets $ 0   $ 1,268      
v3.24.3
Fair Value of Financial Instruments - Additional Information (Detail) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Sep. 27, 2024
May 23, 2024
Dec. 31, 2023
Aug. 16, 2023
Mar. 08, 2023
Feb. 09, 2023
Jan. 06, 2023
Jan. 05, 2023
Sep. 30, 2019
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]                          
Notional amount $ 220,652   $ 220,652   $ 50,000                
Interest rate swap gain (loss) reclassified to interest expense 1,000 $ 1,019 3,249 $ 2,309                  
Debt instrument carrying amount 650,999   650,999       $ 672,720            
Interest Rate Swap [Member]                          
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]                          
Notional amount                   $ 140,000 $ 50,000 $ 25,000  
Interest rate swap gain (loss) reclassified to interest expense     3,200 $ 2,300                  
Interest Rate Swap [Member] | FRP Collection [Member]                          
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]                          
Notional amount               $ 26,300          
Interest Rate Swap [Member] | FRP Collection [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]                          
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]                          
Fixed interest rate               4.30%          
Interest Rate Swap [Member] | Carillon Point [Member]                          
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]                          
Notional amount               $ 14,500          
Interest Rate Swap [Member] | Carillon Point [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]                          
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]                          
Fixed interest rate               4.30%          
Interest Rate Swap [Member] | Central Fairwinds [Member]                          
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]                          
Notional amount           $ 15,600              
Interest Rate Swap [Member] | Central Fairwinds [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]                          
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]                          
Fixed interest rate           4.43%              
Interest Rate Swap [Member] | Credit Facility [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]                          
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]                          
Fixed interest rate                 4.19%        
Interest Rate Swap [Member] | Term loan [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]                          
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]                          
Fixed interest rate                     1.17%    
Interest Rate Swap [Member] | Term Loan Two [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]                          
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]                          
Fixed interest rate                       3.90%  
LIBOR interest rate swap [Member]                          
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]                          
Notional amount                         $ 50,000
Fair Value, Inputs, Level 3 [Member]                          
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]                          
Mortgage loans payable, fair value 307,300   307,300       343,100            
Debt instrument carrying amount $ 315,300   $ 315,300       $ 357,200            
v3.24.3
Related Party Transactions - Additional Information (Detail) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Related Party Transaction [Line Items]        
Annual payment receivable for services $ 42,371 $ 44,214 $ 129,207 $ 134,775
Administrative Services Agreement [Member] | SCRE II [Member] | Clarity Real Estate Ventures GP Limited [Member]        
Related Party Transaction [Line Items]        
Annual payment receivable for services     $ 200 $ 400
v3.24.3
Leases - Additional Information (Detail)
Sep. 30, 2024
Weighted-average remaining lease term - operating leases 50 years
Weighted-average discount rate - operating leases 6.20%
Finance Lease, Weighted Average Remaining Lease Term 50 years
Finance Lease, Weighted Average Discount Rate, Percent 6.20%
Maximum [Member]  
Remaining lease terms 64 years
Remaining lease terms, Financing leases 64 years
Minimum [Member]  
Remaining lease terms 2 years
Remaining lease terms, Financing leases 2 years
v3.24.3
Leases - Schedule of Operating Leases (Detail) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Fixed payments $ 35,794 $ 37,081 $ 109,428 $ 113,565
Variable payments 6,546 6,933 19,561 20,418
Operating Lease, Lease Income $ 42,340 $ 44,014 $ 128,989 $ 133,983
Operating Lease, Lease Income, Statement of Income or Comprehensive Income [Extensible Enumeration] Operating Income (Loss) Operating Income (Loss) Operating Income (Loss) Operating Income (Loss)
v3.24.3
Leases - Schedule of Future Minimum Lease Payments under Non-cancellable Operating Leases (Detail)
$ in Thousands
Sep. 30, 2024
USD ($)
Leases [Abstract]  
2024 $ 31,715
2025 123,574
2026 114,741
2027 98,053
2028 83,633
Thereafter 181,083
Total future minimum lease payments to be received $ 632,799
v3.24.3
Leases - Schedule of Operating Right-of-Use Assets and Lease Liabilities (Detail) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Right-of-use asset - operating leases $ 10,173 $ 12,564
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] Other Assets Other Assets
Lease liability – operating leases $ 8,352 $ 8,550
Operating Lease, Liability, Statement of Financial Position [Extensible List] Other Liabilities Other Liabilities
Right-of-use asset – financing leases $ 9,650 $ 9,820
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] Other Assets Other Assets
Lease liability – financing leases $ 1,615 $ 1,551
Finance Lease, Liability, Statement of Financial Position [Extensible Enumeration] Other Liabilities Other Liabilities
v3.24.3
Leases - Schedule Future Minimum Lease Payments To Be Paid (Detail) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
2024 $ 74  
2025 770  
2026 724  
2027 587  
2028 587  
Thereafter 25,976  
Total future minimum lease payments 28,718  
Discount (20,366)  
Total 8,352 $ 8,550
2024 2  
2025 8  
2026 8  
2027 8  
2028 8  
Thereafter 6,930  
Total future minimum lease payments 6,964  
Discount (5,349)  
Total $ 1,615 $ 1,551
v3.24.3
Stockholder's Equity - Additional Information (Detail) - USD ($)
$ / shares in Units, $ in Thousands
 3 Months Ended 9 Months Ended 12 Months Ended
Oct. 24, 2024
Sep. 30, 2024
Jun. 30, 2024
Mar. 31, 2024
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Sep. 30, 2024
Sep. 30, 2023
Dec. 31, 2023
May 04, 2023
May 04, 2022
Class of Stock [Line Items]                        
Preferred stock, Dividend rate percentage               6.625%   6.625%    
Maximum number of shares issued under Equity Incentive Plan                       3,763,580
Stock Repurchase Program, Authorized Amount                     $ 50,000  
Stock Repurchased During Period, Shares               0 0      
Schedule of Share Based Compensation Arrangement by Share Based Payment Award For Defined Performance               The payouts under the Performance RSU Awards are evaluated on a sliding scale as follows: TSR below the 30th percentile of the Peer Group would result in a 50% payout; TSR at the 50th percentile of the Peer Group would result in a 100% payout; and TSR at or above the 75th percentile of the Peer Group would result in a 150% payout. Payouts are mathematically interpolated between these stated percentile targets, subject to a 150% maximum.        
Share-based Payment Award, Award Vesting Period               3 years        
Dividends, Preferred Stock   $ 1,855 $ 1,855 $ 1,855 $ 1,855 $ 1,855 $ 1,855          
Dividends, Common Stock   $ 4,015 $ 4,015 $ 4,015 $ 3,994 $ 3,994 $ 7,988          
O 2024 Q3 Dividends [Member] | Common Stock [Member]                        
Class of Stock [Line Items]                        
Declared cash dividend distribution per share   $ 0.1           $ 0.1        
Dividends paid, declared date   Sep. 13, 2024                    
Dividends paid date   Oct. 24, 2024                    
Dividends paid, date of record   Oct. 10, 2024                    
Dividends, Common Stock $ 4,000                      
S 2024 Q3 Dividends [Member] | Preferred Stock [Member]                        
Class of Stock [Line Items]                        
Declared cash dividend distribution per share   $ 0.4140625           $ 0.4140625        
Dividends paid, declared date   Sep. 13, 2024                    
Dividends paid date   Oct. 24, 2024                    
Dividends paid, date of record   Oct. 10, 2024                    
Dividends, Preferred Stock $ 1,900                      
S 2024 Q3 Dividends [Member] | Series A Preferred Stock [Member]                        
Class of Stock [Line Items]                        
Preferred stock, Dividend rate percentage               6.625%        
Executive Officer [Member]                        
Class of Stock [Line Items]                        
Share-based Payment Award, Award Vesting Period               3 years        
v3.24.3
Stockholder's Equity - Summary of Activity of Awards under Equity Incentive Plan (Detail) - shares
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Jun. 30, 2024
Mar. 31, 2024
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Sep. 30, 2024
Sep. 30, 2023
Restricted Stock Units (RSUs) [Member]                
Schedule Of Share Based Compensation Restricted Stock Units Award Activity [Line Items]                
Beginning balance 567,859 555,698 451,741 433,663 419,307 428,320 451,741 428,320
Granted     324,414     198,022 324,414 198,022
Issuance of dividend equivalents 10,039 12,161 8,290 7,844 14,356 9,485    
Vested     (228,747)     (216,520)    
Ending balance 577,898 567,859 555,698 441,507 433,663 419,307 577,898 441,507
Performance Restricted Stock Unit [Member]                
Schedule Of Share Based Compensation Restricted Stock Units Award Activity [Line Items]                
Beginning balance 629,840 629,840 424,888 424,888 424,888 307,500 424,888 307,500
Granted     324,952     214,888 324,952 214,888
Issuance of dividend equivalents 0 0 0 0 0 0    
Vested     (120,000)     (97,500)    
Ending balance 629,840 629,840 629,840 424,888 424,888 424,888 629,840 424,888
v3.24.3
Stockholder's Equity - Summary of Restricted Stock Units ("RSUs") and Performance RSU (Detail) - USD ($)
$ / shares in Units, $ in Thousands
 3 Months Ended 9 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Sep. 30, 2024
Sep. 30, 2023
Schedule Of Share Based Compensation Restricted Stock Units Award Activity Granted [Line Items]        
Grant Date Fair Value     $ 3,539 $ 3,729
Weighted Average Grant Date Fair Value Per Share     $ 5.45 $ 9.03
Restricted Stock Units (RSUs) [Member]        
Schedule Of Share Based Compensation Restricted Stock Units Award Activity Granted [Line Items]        
Units Granted 324,414 198,022 324,414 198,022
Performance Restricted Stock Unit [Member]        
Schedule Of Share Based Compensation Restricted Stock Units Award Activity Granted [Line Items]        
Units Granted 324,952 214,888 324,952 214,888
v3.24.3
Stockholder's Equity - Summary of Recognized Compensation Expense for RSUs and Performance RSU (Detail) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Schedule Of Recognized Net Compensation Expense [Line Items]        
Share-based Payment Arrangement, Amount Capitalized $ 1,084 $ 1,024 $ 3,238 $ 3,071
Restricted Stock Units (RSUs) [Member]        
Schedule Of Recognized Net Compensation Expense [Line Items]        
Share-based Payment Arrangement, Amount Capitalized 643 633 1,928 1,910
Performance Restricted Stock Unit [Member]        
Schedule Of Recognized Net Compensation Expense [Line Items]        
Share-based Payment Arrangement, Amount Capitalized $ 441 $ 391 $ 1,310 $ 1,161
City Office REIT (NYSE:CIO-A)
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