Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 04, 2016 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | CIO | |
Entity Registrant Name | City Office REIT, Inc. | |
Entity Central Index Key | 1,593,222 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 21,209,472 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Real estate properties, cost | ||
Land | $ 90,205 | $ 90,205 |
Building and improvement | 256,501 | 256,317 |
Tenant improvement | 39,027 | 35,069 |
Furniture, fixtures and equipment | 202 | 198 |
Real estate properties, gross | 385,935 | 381,789 |
Accumulated depreciation | (30,342) | (26,909) |
Real estate properties, net | 355,593 | 354,880 |
Cash and cash equivalents | 8,198 | 8,138 |
Restricted cash | 14,769 | 15,176 |
Rents receivable, net | 15,804 | 14,382 |
Deferred leasing costs, net of accumulated amortization | 5,228 | 5,074 |
Acquired lease intangibles assets, net | 37,880 | 40,990 |
Prepaid expenses and other assets | 1,586 | 1,567 |
Total Assets | 439,058 | 440,207 |
Liabilities: | ||
Debt | 345,117 | 341,278 |
Accounts payable and accrued liabilities | 13,182 | 8,745 |
Deferred rent | 2,084 | 2,653 |
Tenant rent deposits | 2,032 | 2,178 |
Acquired lease intangibles liability, net | 2,143 | 2,292 |
Dividend distributions payable | 5,701 | 3,663 |
Earn-out liability | 1,900 | 5,678 |
Total Liabilities | $ 372,159 | $ 366,487 |
Commitments and Contingencies (Note 9) | ||
Equity: | ||
Common stock, $0.01 par value, 100,000,000 shares authorized, 12,982,290 and 12,517,777 shares issued and outstanding | $ 130 | $ 125 |
Additional paid-in capital | 100,149 | 95,318 |
Accumulated deficit | (41,660) | (29,598) |
Total Stockholders' Equity | 58,619 | 65,845 |
Operating Partnership unitholders' non-controlling interests | 9,001 | 8,550 |
Non-controlling interests in properties | (721) | (675) |
Total Equity | 66,899 | 73,720 |
Total Liabilities and Equity | $ 439,058 | $ 440,207 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 12,982,290 | 12,517,777 |
Common stock, shares outstanding | 12,982,290 | 12,517,777 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Revenues: | ||
Rental income | $ 14,072 | $ 10,040 |
Expense reimbursement | 1,782 | 891 |
Other | 420 | 328 |
Total Revenues | 16,274 | 11,259 |
Operating Expenses: | ||
Property operating expenses | 6,157 | 4,116 |
Acquisition costs | 209 | |
Stock based compensation | 542 | 409 |
General and administrative | 699 | 408 |
Base management fee | 109 | 332 |
External advisor acquisition | 7,044 | |
Depreciation and amortization | 6,551 | 4,406 |
Total Operating Expenses | 21,102 | 9,880 |
Operating Income/(Loss) | (4,828) | 1,379 |
Interest Expense: | ||
Contractual interest expense | (3,740) | (2,009) |
Amortization of deferred financing costs | (221) | (169) |
Interest expense, net | (3,961) | (2,178) |
Net loss | (8,789) | (799) |
Less: Net income attributable to noncontrolling interests in properties | (69) | (121) |
Less: Net loss attributable to Operating Partnership unitholders' noncontrolling interests | 1,739 | 177 |
Net loss attributable to stockholders | $ (7,119) | $ (743) |
Net loss per share: | ||
Basic and diluted | $ (0.56) | $ (0.06) |
Weighted average common shares outstanding: | ||
Basic and diluted | 12,764 | 12,279 |
Dividends/distributions declared per common share and unit | $ 0.235 | $ 0.235 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Changes in Equity - 3 months ended Mar. 31, 2016 - USD ($) $ in Thousands | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Parent [Member] | Operating Partnership Unitholders' Non-controlling Interests [Member] | Non-controlling Interests in Properties [Member] |
Beginning balance at Dec. 31, 2015 | $ 73,720 | $ 125 | $ 95,318 | $ (29,598) | $ 65,845 | $ 8,550 | $ (675) |
Beginning balance, shares at Dec. 31, 2015 | 12,517,777 | 12,518,000 | |||||
Conversion of common units to shares, values | 61 | 61 | (61) | ||||
Conversion of common units to shares, shares | 20,000 | 20,000 | |||||
Restricted stock award grants, values | $ 542 | 542 | 542 | ||||
Internalization payment in shares, values | 3,464 | $ 3 | 3,461 | 3,464 | |||
Internalization payment in shares, shares | 297,000 | ||||||
Earn out payment in shares, values | 3,778 | $ 2 | 767 | 769 | 3,009 | ||
Earn out payment in shares, shares | 147,000 | ||||||
Dividend distributions declared | (5,701) | (4,943) | (4,943) | (758) | |||
Distributions | (115) | (115) | |||||
Net loss | (8,789) | (7,119) | (7,119) | (1,739) | 69 | ||
Ending balance at Mar. 31, 2016 | $ 66,899 | $ 130 | $ 100,149 | $ (41,660) | $ 58,619 | $ 9,001 | $ (721) |
Ending balance, shares at Mar. 31, 2016 | 12,982,290 | 12,982,000 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (8,789) | $ (799) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 6,551 | 4,406 |
Amortization of deferred financing costs | 221 | 169 |
Amortization of above/below market leases | 61 | 128 |
Increase in straight-line rent | (1,144) | (83) |
Non-cash stock compensation | 542 | 409 |
Internalization shares issued | 3,464 | |
Changes in non-cash working capital: | ||
Rents receivable, net | (278) | (1,188) |
Prepaid expenses and other assets | (17) | 510 |
Accounts payable and accrued liabilities | 4,437 | (210) |
Deferred rent | (569) | (686) |
Tenant rent deposits | (146) | 15 |
Net Cash Provided By Operating Activities | 4,333 | 2,671 |
Cash Flows to Investing Activities: | ||
Additions to real estate properties | (4,359) | (485) |
Acquisition of real estate, net of cash assumed | (10,423) | |
Deferred leasing cost | (159) | (568) |
Net Cash Used In Investing Activities | (4,518) | (11,476) |
Cash Flows from Financing Activities: | ||
Debt issuance and extinguishment costs | (104) | |
Proceeds from secured credit facility | 4,000 | |
Repayment of mortgage loans payable | (280) | (271) |
Distributions to non-controlling interests in properties | (115) | (96) |
Dividend distributions paid to stockholders and Operating Partnership unitholders | (3,663) | (3,571) |
Change in restricted cash | 407 | 1,866 |
Net Cash Provided By/(Used In) Financing Activities | 245 | (2,072) |
Net Increase/(Decrease) in Cash and Cash Equivalents | 60 | (10,877) |
Cash and Cash Equivalents, Beginning of Period | 8,138 | 34,862 |
Cash and Cash Equivalents, End of Period | 8,198 | 23,985 |
Supplemental Disclosures of Cash Flow Information: | ||
Cash paid for interest | 3,732 | $ 2,097 |
Earn-out payment in shares | $ 3,778 |
Organization and Description of
Organization and Description of Business | 3 Months Ended |
Mar. 31, 2016 | |
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 in the Operating Partnership (“common units”). Both the Company and the Operating Partnership commenced operations upon completion of the IPO and certain related formation transactions (the “Formation Transactions”). 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 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 qualify as a real estate investment trust (“REIT”). 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 any applicable alternative minimum tax. On February 1, 2016, the Company closed on the previously announced management internalization (“the Internalization”). The Company had previously entered into a Stock Purchase Agreement (“Stock Purchase Agreement”) with certain stockholders of the Company’s external advisor, City Office Real Estate Management Inc. (the “Advisor”) pursuant to which the Company acquired all of the outstanding stock of the Advisor. Pursuant to this Stock Purchase Agreement, at closing, the Company issued 297,321 shares of its common stock with a fair market value of $3.5 million to the stockholders of the Advisor (the “Sellers”), which include the Company’s three executive officers and Samuel Belzberg, a director of the Company. In addition, the Company is required to make cash payments to the Sellers of up to $3.5 million if the Company’s fully diluted market capitalization reaches the following thresholds prior to December 31, 2016: $1 million upon the Company achieving a $200 million fully diluted market capitalization, an additional $1 million upon the Company achieving a $225 million fully diluted market capitalization and an additional $1.5 million upon the Company achieving a $250 million fully diluted market capitalization. As of April 5, 2016, the Company’s fully diluted market capitalization was $277.6 million. The Company accrued an additional $3.5 million in the first quarter of 2016 representing the payments to be made to the Sellers upon reaching these fully diluted market capitalizations, which, together with the initial payment and professional fees, resulted in a total cost of $7.0 million in the first quarter of 2016. The amount was recorded as an expense in the accompanying condensed consolidated statements of operations as it represented the cost of terminating the relationship. In connection with the closing of the Internalization, the Company entered into an amendment to the Advisory Agreement between the Company, our Operating Partnership and the Advisor (“Advisory Agreement”) that eliminates the payment of acquisition fees by the Company to the Advisor. In addition, each of the executive officers entered into an employment agreement with the Company and became employees of the Company, and, at the same time, approximately eleven additional current employees of the Advisor and its affiliates became employees of the Company. In connection with the closing of the transactions under the Stock Purchase Agreement, a subsidiary of the Company entered into an Administrative Services Agreement (the “Administrative Services Agreement”) with Second City Capital II Corporation and Second City Real Estate II Corporation, related entities controlled by Sam Belzberg, a director of the Company. The Administrative Services Agreement has a three year term and pursuant to the agreement, the Company will provide various administrative services and support to the related entities managing the Second City funds. The Company’s subsidiary will receive annual payments for these services under the Administrative Services Agreement as follows: first 12 months—$1.5 million, second 12 months—$1.15 million and third 12 months—$0.625 million, for a total of $3.275 million over the three-year term. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2016 | |
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 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 interim 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, 2015. New Accounting Pronouncements In April 2015, the FASB issued ASU 2015-3, Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in financial statements. ASU 2015-3 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. ASU 2015-3 is effective for annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The new guidance will be applied retrospectively to each prior period presented. The Company adopted ASU 2015-3 on January 1, 2016 and retrospectively reclassified $3.4 million of debt issuance costs as of December 31, 2015 from deferred financing costs, net. In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments. The update requires that acquiring entities in a business combination recognize adjustments to provisional amounts identified in the reporting period in which the adjustment amounts are determined, including the cumulative effect of the change in provisional amount, as if the accounting had been completed at the acquisition date. Adjustments related to previous reporting periods must be disclosed by income statement line item, either on the face of the income statement or in the notes, in the period for which the adjustment was identified. ASU 2015-16 was adopted January 1, 2016. The impact, if any, of adopting ASU 2015-16 on the Company’s financial statements will depend on the nature of business combinations that occur. In February 2016, the FASB issued ASU 2016-02, Leases. The update amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. ASU 2016-02 will be effective for annual reporting periods beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact of adopting the new leases standard on its consolidated financial statements. |
Real Estate Investments
Real Estate Investments | 3 Months Ended |
Mar. 31, 2016 | |
Real Estate [Abstract] | |
Real Estate Investments | 3. Real Estate Investments Acquisitions During the three months ended March 31, 2016 and 2015, the Company, through the Operating Partnership, acquired the following property: Property Date Acquired Percentage Owned Logan Tower February 2015 100% The above acquisition has been accounted for as a business combination. On February 4, 2015, the Company, through the Operating Partnership, acquired 100% of Logan Tower, a property in Denver, Colorado, for $10.4 million. The following table summarizes the Company’s allocation of the purchase price of assets acquired and liabilities assumed (in thousands): Logan Tower Land $ 1,306 Buildings and improvements 7,844 Tenant improvements 353 Acquired intangible assets 1,274 Accounts payable and other liabilities (48) Lease intangible liabilities (306) Total consideration $ 10,423 The following table presents the unaudited revenues and income from continuing operations for Logan Tower on a pro forma basis as if the Company had completed the acquisition of the property as of January 1, 2015 (in thousands): Three Months Ended March 31, 2016 Three Months Ended March 31, 2015 Total revenues as reported by City Office REIT, Inc. $ 16,274 $ 11,259 Plus: Logan Tower — 148 Pro forma total revenues $ 16,274 $ 11,407 Total operating income as reported by the City Office REIT, Inc. $ (4,828) $ 1,379 Plus: Logan Tower — (106) Pro forma operating income $ (4,828) $ 1,273 |
Lease Intangibles
Lease Intangibles | 3 Months Ended |
Mar. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Lease Intangibles | 4. Lease Intangibles Lease intangibles and the value of assumed lease obligations as of March 31, 2016 and December 31, 2015 were comprised as follows (in thousands): March 31, 2016 Above Market Leases In Place Leases Leasing Commissions Total Below Market Leases Below Market Ground Lease Total Cost $ 5,616 $ 44,478 $ 17,530 $ 67,624 $ (2,928) $ (138) $ (3,066) Accumulated amortization (3,040) (19,882) (6,822) (29,744) 898 25 923 $ 2,576 $ 24,596 $ 10,708 $ 37,880 $ (2,030) $ (113) $ (2,143) December 31, 2015 Above Market Leases In Place Leases Leasing Commissions Total Below Market Leases Below Market Ground Lease Total Cost $ 5,616 $ 44,478 $ 17,530 $ 67,624 $ (2,928) $ (138) $ (3,066) Accumulated amortization (2,830) (17,641) (6,163) (26,634) 750 24 774 $ 2,786 $ 26,837 $ 11,367 $ 40,990 $ (2,178) $ (114) $ (2,292) The estimated aggregate amortization expense for lease intangibles for the five succeeding years and in the aggregate are as follows (in thousands): 2016 $ 8,234 2017 8,473 2018 5,469 2019 4,041 2020 3,218 Thereafter 6,302 $ 35,737 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Debt | 5. Debt The following table summarizes the secured indebtedness as of March 31, 2016 and December 31, 2015 (in thousands): Property March 31, 2016 December 31, 2015 Interest Rate as of March 31, 2016 Maturity Term Loan (1) $ 14,000 $ 14,000 LIBOR+6.00% (2) September 2016 Secured Credit Facility (3) 54,000 50,000 LIBOR +2.75% (2) June 2018 Washington Group Plaza (4) 33,502 33,669 3.85 July 2018 AmberGlen Mortgage Loan (5) 24,618 24,729 4.38 May 2019 Midland Life Insurance (6) 95,000 95,000 4.34 May 2021 Lake Vista Pointe (4) 18,460 18,460 4.28 August 2024 Florida Research Park (4)(7) 17,000 17,000 4.44 December 2024 Plaza 25 (4)(8) 17,000 17,000 4.10 July 2025 190 Office Center (8) 7) 41,250 41,250 4.79 October 2025 Intellicenter (8) 33,562 33,563 4.65 October 2025 Total Principal $ 348,392 $ 344,671 Deferred financing costs, net (3,275) (3,393) Total $ 345,117 $ 341,278 All interest rates are fixed interest rates with the exception of the secured credit facility (“Secured Credit Facility”) and Term Loan (“Term Loan”) as explained in footnote 1 below. (1) The Company is required to maintain a maximum total leverage ratio of 65%, a minimum liquidity of $3 million and a debt service coverage ratio of no less than 1.60x. (2) As of March 31, 2016, the one month LIBOR rate was 0.40% (3) At March 31, 2016 the Secured Credit Facility had $75 million authorized and $54 million drawn. In addition, the Secured Credit Facility has an accordion feature that will permit the Company to borrow up to $150 million, subject to additional collateral availability and lender approval. The Credit Agreement has a maturity date of June 26, 2018, which may be extended to June 26, 2019 at the Company’s option upon meeting certain conditions. The Secured Credit Facility requires the Company to maintain a fixed charge coverage ratio of no less than 1.60x. At March 31, 2016, the Secured Credit Facility is cross-collateralized by Central Fairwinds, Logan Tower, Superior Pointe and DTC Crossroads. (4) Interest on mortgage loan is payable monthly plus principal based on 360 months of amortization. (5) The Company is required to maintain a minimum net worth of $25 million and a minimum liquidity of $2 million. (6) The mortgage loan is cross-collateralized by Corporate Parkway, Cherry Creek and City Center. The loan is interest only until June 2016, after which it is interest payable monthly plus principal based on 360 months of amortization. The loan bears a fixed interest rate of 4.34% and matures on May 6, 2021. (7) The Company is required to maintain a minimum net worth of $17 million, minimum liquidity of $1.7 million and a debt service coverage ratio of no less than 1.15x. (8) The Company is required to maintain a debt service coverage ratio of no less than 1.45x, 1.15x and 1.20x respectively for each of Plaza 25, 190 Office Center and Intellicenter. The scheduled principal repayments of debt as of March 31, 2016 are as follows (in thousands): 2016 $ 15,756 2017 3,036 2018 89,160 2019 26,629 2020 3,917 Thereafter 209,894 Total $ 348,392 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2016 | |
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 Earn-Out Liability The fair value of the Central Fairwinds earn-out (note 9) was derived by making assumptions on the timing of the lease up of vacant space and the gross effective rents of those new leases and then applying an 8% discount rate to the resulting cash-flows to obtain a present value. The earn-out valuation assumes that approximately 1,500 square feet of additional leasing is completed between the date of the valuation and the end of the calculation period which would take the earn-out occupancy from 88% at March 31, 2016 to 89% by July 2016 and stabilized at that level thereafter. The net effective rent and incremental operating costs per square foot is assumed to be $14 and $3, respectively. The estimated fair value of the earn-out liability decreased from $5.7 million at December 31, 2015 to $1.9 million at March 31, 2016 due to a $3.8 million payment in March 2016, satisfied through the issuance of common stock. Level 3 sensitivity analysis: The Company applies judgment in determining unobservable inputs used to calculate the fair value of Level 3 instruments. Level 3 instruments held by the Company include the earn-out. The unobservable inputs used in the valuation of the earn-out primarily include the net effective rent assumptions. A sensitivity analysis has been performed to determine the potential gain or loss by varying the significant unobservable inputs by increasing or decreasing them by 10%. The impact of applying these other reasonably possible inputs is a potential loss of $0.1 million and a potential gain of $0.1 million. This potential gain or loss would be recorded through profit and loss. Cash Equivalents, Restricted Cash, Accounts 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 $293.2 million and $285.9 million as of March 31, 2016 and December 31, 2015, respectively. Although the Company has determined the majority of the inputs used to value its fixed rate debt fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its fixed rate debt utilize Level 3 inputs, such as estimates of current credit spreads. Accordingly, mortgage loans payable have been classified as Level 3 fair value measurements. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 7. Related Party Transactions Equity Transactions On February 1, 2016, the Company closed on the previously announced Internalization. The Company had previously entered into a Stock Purchase Agreement with certain stockholders of the Company’s Advisor pursuant to which the Company acquired all of the outstanding stock of the Advisor (see Note 1). Property Management Fees Three of the Company’s properties (City Center, Central Fairwinds and AmberGlen) have engaged related parties to perform asset and property management services for a fee ranging from 3.0% to 3.5% of gross revenue. Management fees paid to the minority partners of these three properties totaled $0.1 million for each of the three months ended March 31, 2016 and 2015, respectively. Advisory Fee During the three month periods ended March 31, 2016, the Company incurred $0.1 million in advisory fees payable to the Advisor. Subsequent to the Internalization, such payments will no longer be made. Earn-Out Payments During the year ended December 31, 2015, the 70% and 80% earn-out occupancy and net operating income thresholds were met at the Central Fairwinds property. This triggered a payment of approximately $3.2 million to Second City which was made on August 6, 2015 and a second payment of approximately $3.8 million which was made on March 3, 2016. The estimated fair value of the earn-out liability decreased from $5.7 million at December 31, 2015 to $1.9 million at March 31, 2016 due to a $3.8 million payment in March 2016, satisfied through the issuance of common stock and Operating Partnership units. |
Future Minimum Rent Schedule
Future Minimum Rent Schedule | 3 Months Ended |
Mar. 31, 2016 | |
Leases [Abstract] | |
Future Minimum Rent Schedule | 8. Future Minimum Rent Schedule Future minimum lease payments to be received as of March 31, 2016 under noncancellable operating leases for the next five years and thereafter are as follows (in thousands): 2016 $ 40,375 2017 52,508 2018 45,086 2019 38,941 2020 35,295 Thereafter 132,990 $ 345,195 The above minimum lease payments to be received do not include reimbursements from tenants for certain operating expenses and real estate taxes and do not include early termination payments provided for in certain leases. Fifteen state government tenants currently have the exercisable right to terminate their lease if the state does not appropriate rent in its annual budgets. The Company has determined that the occurrence of the government tenant not appropriating the rent in its annual budget is a remote contingency and accordingly recognizes lease revenue on a straight-line basis over the respective lease term. These tenants represent approximately 19.6% of the Company’s total future minimum lease payments as of March 31, 2016. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 9. Commitments and Contingencies Earn-Out As part of the Formation Transactions and contribution agreement with respect to the Central Fairwinds property, the Company is obligated to make additional payments to Second City (each, an “Earn-Out Payment”) for up to a five year period commencing on the initial IPO date of April 21, 2014. Earn-Out Payments are contingent on the property reaching certain specified occupancy levels through new leases to qualified tenants and exceeding a net operating income threshold, which grows annually. Second City is entitled to receive an Earn-Out Payment (net of the associated leasing costs and inclusive of leasing commissions and tenant improvements/allowances and free rent) as and when the occupancy of Central Fairwinds reaches each of 70%, 80% and 90% (each, an “Earn-Out Threshold”) based on the incremental cash flow generated by new leases and a 7.75% stabilized capitalization rate. The Company will make any additional Earn-Out Payment within 30 days of the end of the earn-out term based on new qualified leases entered into since the achievement of the last Earn-Out Threshold. Earn-Out Payments will be subject to a claw-back if a qualified tenant defaults in the payment of rent and is not replaced with another qualified tenant (see note 6). Other 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 March 31, 2016 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. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2016 | |
Equity [Abstract] | |
Stockholders' Equity | 10. Stockholders’ Equity On February 1, 2016, the Company closed on the Internalization. Upon closing of the Internalization, the Company and Buyer Sub acquired all of the outstanding stock of the Advisor. Pursuant to the Stock Purchase Agreement, at closing, the Company issued 297,321 shares of its common stock to the Sellers. In addition, the Company recorded $3.5 million in the first quarter of 2016 in payments to the Sellers upon reaching certain fully diluted market capitalization thresholds. Non-controlling Interests Non-controlling interests in the Company represent common units of the Operating Partnership not held by the Company. Non-controlling interests consisted of 3,226,085 Operating Partnership common units and represented an approximately 19.6% interest in the Operating Partnership as of March 31, 2016. Operating Partnership units and shares of common stock have essentially the same economic characteristics, as they share equally in the total net income or loss distributions of the Operating Partnership. Beginning on or after the date which is 12 months after the date on which a person first became a holder of common units, each limited partner and assignees of limited partners will have the right, subject to the terms and conditions set forth in the partnership agreement, to require the Operating Partnership to redeem all or a portion of the common units held by such limited partner or assignee in exchange for a cash amount per common unit equal to the value of one share of common stock, determined in accordance with and subject to adjustment under the partnership agreement. The Company has the sole option at its discretion to redeem the common units by issuing common stock on a one-for-one basis. The Operating Partnership unitholders are entitled to share in cash distributions from the Operating Partnership in proportion to its percentage ownership of common units. During the three months ended March 31, 2016, 20,000 common units were converted to common stock. Common Stock and Common Unit Distributions On March 15, 2016, the Company’s board of directors declared a cash dividend distribution of $0.235 per share for the quarterly period ended March 31, 2016. The dividend was paid on April 19, 2016 to stockholders and common unitholders of record on April 5, 2016 for an aggregate of $4.9 million in dividends to stockholders and $0.8 million to common unitholders, totaling $5.7 million. Restricted Stock Units The Company has an equity incentive plan (“Equity Incentive Plan”) for certain officers, directors, advisors and personnel, 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 LTIP 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 “plan administrator”). The maximum number of shares of common stock that may be issued under the Equity Incentive Plan is 1,263,580 shares. 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. During the three months ended March 31, 2016, 76,750 restricted stock units (“RSUs”) were granted to directors and non-executive employees with a fair value of $0.9 million. The awards will vest in three equal, annual installments on each of the first three anniversaries of the date of grant. For the three months ended March 31, 2016, the Company recognized net compensation expense of $0.5 million related to the RSUs. A RSU award represents the right to receive shares of the Company’s common stock in the future, after the applicable vesting criteria, determined by the plan administrator, has been satisfied. The holder of an award of RSU has no rights as a stockholder until shares of common stock are issued in settlement of vested RSUs. The plan administrator may provide for a grant of dividend equivalent rights in connection with the grant of RSU; provided, however, that if the RSUs do not vest solely upon satisfaction of continued employment or service, any payment in respect to the related dividend equivalent rights will be held by the Company and paid when, and only to the extent that, the related RSU vest. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | 11. Subsequent Events On April 5, 2016, the Company completed a public offering pursuant to which we sold 8,050,000 shares of our common stock to the public at a price of $11.40 per share, inclusive of the overallotment option. We raised $91.8 million in gross proceeds, resulting in net proceeds to us of approximately $86.7 million after deducting $5.1 million in underwriting discounts and other expenses related to the offering. |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
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 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 interim 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, 2015. |
New Accounting Pronouncements | New Accounting Pronouncements In April 2015, the FASB issued ASU 2015-3, Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in financial statements. ASU 2015-3 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. ASU 2015-3 is effective for annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The new guidance will be applied retrospectively to each prior period presented. The Company adopted ASU 2015-3 on January 1, 2016 and retrospectively reclassified $3.4 million of debt issuance costs as of December 31, 2015 from deferred financing costs, net. In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments. The update requires that acquiring entities in a business combination recognize adjustments to provisional amounts identified in the reporting period in which the adjustment amounts are determined, including the cumulative effect of the change in provisional amount, as if the accounting had been completed at the acquisition date. Adjustments related to previous reporting periods must be disclosed by income statement line item, either on the face of the income statement or in the notes, in the period for which the adjustment was identified. ASU 2015-16 was adopted January 1, 2016. The impact, if any, of adopting ASU 2015-16 on the Company’s financial statements will depend on the nature of business combinations that occur. In February 2016, the FASB issued ASU 2016-02, Leases. The update amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. ASU 2016-02 will be effective for annual reporting periods beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact of adopting the new leases standard on its consolidated financial statements. |
Real Estate Investments (Tables
Real Estate Investments (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Schedule of Acquired Properties through Operating Partnership | During the three months ended March 31, 2016 and 2015, the Company, through the Operating Partnership, acquired the following property: Property Date Acquired Percentage Owned Logan Tower February 2015 100% |
Logan Tower [Member] | |
Schedule of Allocation of Purchase Price of Assets Acquired and Liabilities Assumed | The following table summarizes the Company’s allocation of the purchase price of assets acquired and liabilities assumed (in thousands): Logan Tower Land $ 1,306 Buildings and improvements 7,844 Tenant improvements 353 Acquired intangible assets 1,274 Accounts payable and other liabilities (48) Lease intangible liabilities (306) Total consideration $ 10,423 |
Schedule of Business Acquisition Pro Forma Results of Operations | The following table presents the unaudited revenues and income from continuing operations for Logan Tower on a pro forma basis as if the Company had completed the acquisition of the property as of January 1, 2015 (in thousands): Three Months Ended March 31, 2016 Three Months Ended March 31, 2015 Total revenues as reported by City Office REIT, Inc. $ 16,274 $ 11,259 Plus: Logan Tower — 148 Pro forma total revenues $ 16,274 $ 11,407 Total operating income as reported by the City Office REIT, Inc. $ (4,828) $ 1,379 Plus: Logan Tower — (106) Pro forma operating income $ (4,828) $ 1,273 |
Lease Intangibles (Tables)
Lease Intangibles (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
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 March 31, 2016 and December 31, 2015 were comprised as follows (in thousands): March 31, 2016 Above Market Leases In Place Leases Leasing Commissions Total Below Market Leases Below Market Ground Lease Total Cost $ 5,616 $ 44,478 $ 17,530 $ 67,624 $ (2,928) $ (138) $ (3,066) Accumulated amortization (3,040) (19,882) (6,822) (29,744) 898 25 923 $ 2,576 $ 24,596 $ 10,708 $ 37,880 $ (2,030) $ (113) $ (2,143) December 31, 2015 Above Market Leases In Place Leases Leasing Commissions Total Below Market Leases Below Market Ground Lease Total Cost $ 5,616 $ 44,478 $ 17,530 $ 67,624 $ (2,928) $ (138) $ (3,066) Accumulated amortization (2,830) (17,641) (6,163) (26,634) 750 24 774 $ 2,786 $ 26,837 $ 11,367 $ 40,990 $ (2,178) $ (114) $ (2,292) |
Estimated Aggregate Amortization Expense for Lease Intangibles | The estimated aggregate amortization expense for lease intangibles for the five succeeding years and in the aggregate are as follows (in thousands): 2016 $ 8,234 2017 8,473 2018 5,469 2019 4,041 2020 3,218 Thereafter 6,302 $ 35,737 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Summary of Secured Indebtedness | The following table summarizes the secured indebtedness as of March 31, 2016 and December 31, 2015 (in thousands): Property March 31, 2016 December 31, 2015 Interest Rate as of March 31, 2016 Maturity Term Loan (1) $ 14,000 $ 14,000 LIBOR+6.00% (2) September 2016 Secured Credit Facility (3) 54,000 50,000 LIBOR +2.75% (2) June 2018 Washington Group Plaza (4) 33,502 33,669 3.85 July 2018 AmberGlen Mortgage Loan (5) 24,618 24,729 4.38 May 2019 Midland Life Insurance (6) 95,000 95,000 4.34 May 2021 Lake Vista Pointe (4) 18,460 18,460 4.28 August 2024 Florida Research Park (4)(7) 17,000 17,000 4.44 December 2024 Plaza 25 (4)(8) 17,000 17,000 4.10 July 2025 190 Office Center (8) 7) 41,250 41,250 4.79 October 2025 Intellicenter (8) 33,562 33,563 4.65 October 2025 Total Principal $ 348,392 $ 344,671 Deferred financing costs, net (3,275) (3,393) Total $ 345,117 $ 341,278 All interest rates are fixed interest rates with the exception of the secured credit facility (“Secured Credit Facility”) and Term Loan (“Term Loan”) as explained in footnote 1 below. (1) The Company is required to maintain a maximum total leverage ratio of 65%, a minimum liquidity of $3 million and a debt service coverage ratio of no less than 1.60x. (2) As of March 31, 2016, the one month LIBOR rate was 0.40% (3) At March 31, 2016 the Secured Credit Facility had $75 million authorized and $54 million drawn. In addition, the Secured Credit Facility has an accordion feature that will permit the Company to borrow up to $150 million, subject to additional collateral availability and lender approval. The Credit Agreement has a maturity date of June 26, 2018, which may be extended to June 26, 2019 at the Company’s option upon meeting certain conditions. The Secured Credit Facility requires the Company to maintain a fixed charge coverage ratio of no less than 1.60x. At March 31, 2016, the Secured Credit Facility is cross-collateralized by Central Fairwinds, Logan Tower, Superior Pointe and DTC Crossroads. (4) Interest on mortgage loan is payable monthly plus principal based on 360 months of amortization. (5) The Company is required to maintain a minimum net worth of $25 million and a minimum liquidity of $2 million. (6) The mortgage loan is cross-collateralized by Corporate Parkway, Cherry Creek and City Center. The loan is interest only until June 2016, after which it is interest payable monthly plus principal based on 360 months of amortization. The loan bears a fixed interest rate of 4.34% and matures on May 6, 2021. (7) The Company is required to maintain a minimum net worth of $17 million, minimum liquidity of $1.7 million and a debt service coverage ratio of no less than 1.15x. (8) The Company is required to maintain a debt service coverage ratio of no less than 1.45x, 1.15x and 1.20x respectively for each of Plaza 25, 190 Office Center and Intellicenter. |
Schedule of Principal Repayments of Debt | The scheduled principal repayments of debt as of March 31, 2016 are as follows (in thousands): 2016 $ 15,756 2017 3,036 2018 89,160 2019 26,629 2020 3,917 Thereafter 209,894 Total $ 348,392 |
Future Minimum Rent Schedule (T
Future Minimum Rent Schedule (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Leases [Abstract] | |
Schedule of Future Minimum Lease Payments under Noncancellable Operating Leases | Future minimum lease payments to be received as of March 31, 2016 under noncancellable operating leases for the next five years and thereafter are as follows (in thousands): 2016 $ 40,375 2017 52,508 2018 45,086 2019 38,941 2020 35,295 Thereafter 132,990 $ 345,195 |
Organization and Description 23
Organization and Description of Business - Additional Information (Detail) - USD ($) $ in Thousands | Feb. 01, 2016 | Mar. 31, 2016 | Apr. 05, 2016 |
Business Description And Basis Of Presentation [Line Items] | |||
Company formation date | Nov. 26, 2013 | ||
Operation commencement date | Apr. 21, 2014 | ||
Total cost of business acquisition | $ 7,044 | ||
Subsequent Event [Member] | |||
Business Description And Basis Of Presentation [Line Items] | |||
Diluted market capitalization | $ 277,600 | ||
External Advisor, City Office Real Estate Management, Inc [Member] | Thresholds Payment Condition 1 [Member] | |||
Business Description And Basis Of Presentation [Line Items] | |||
Additional cash payment for business acquisition | $ 1,000 | ||
Diluted market capitalization | 200,000 | ||
External Advisor, City Office Real Estate Management, Inc [Member] | Thresholds Payment Condition 2 [Member] | |||
Business Description And Basis Of Presentation [Line Items] | |||
Additional cash payment for business acquisition | 1,000 | ||
Diluted market capitalization | 225,000 | ||
External Advisor, City Office Real Estate Management, Inc [Member] | Thresholds Payment Condition 3 [Member] | |||
Business Description And Basis Of Presentation [Line Items] | |||
Additional cash payment for business acquisition | 1,500 | ||
Diluted market capitalization | $ 250,000 | ||
External Advisor, City Office Real Estate Management, Inc [Member] | Stock Purchase Agreement [Member] | |||
Business Description And Basis Of Presentation [Line Items] | |||
Common stock acquired, shares issued | 297,321 | ||
Common stock, fair market value | $ 3,500 | ||
Additional cash payment for business acquisition | 3,500 | $ 3,500 | |
Second City Funds [Member] | Administrative Services Agreement [Member] | |||
Business Description And Basis Of Presentation [Line Items] | |||
Annual payment receivable for services | $ 3,275 | ||
Administrative service agreement, term | 3 years | ||
Second City Funds [Member] | Administrative Services Agreement [Member] | First 12 months [Member] | |||
Business Description And Basis Of Presentation [Line Items] | |||
Annual payment receivable for services | $ 1,500 | ||
Second City Funds [Member] | Administrative Services Agreement [Member] | Second 12 months [Member] | |||
Business Description And Basis Of Presentation [Line Items] | |||
Annual payment receivable for services | 1,150 | ||
Second City Funds [Member] | Administrative Services Agreement [Member] | Third 12 months [Member] | |||
Business Description And Basis Of Presentation [Line Items] | |||
Annual payment receivable for services | $ 625 |
Summary of Significant Accoun24
Summary of Significant Accounting Policies - Additional Information (Detail) $ in Millions | Dec. 31, 2015USD ($) |
ASU 2015-3 [Member] | |
Summary Of Significant Accounting Policies [Line Items] | |
Retrospective reclassification of debt issuance costs from deferred financing costs, net | $ 3.4 |
Real Estate Investments - Sched
Real Estate Investments - Schedule of Acquired Properties through Operating Partnership (Detail) - Logan Tower [Member] | 3 Months Ended | |
Mar. 31, 2015 | Feb. 04, 2015 | |
Business Acquisition [Line Items] | ||
Real estate property, date acquired | 2015-02 | |
Real estate property, percentage owned | 100.00% | 100.00% |
Real Estate Investments - Addit
Real Estate Investments - Additional Information (Detail) - Logan Tower [Member] - USD ($) $ in Millions | Feb. 04, 2015 | Mar. 31, 2015 |
Business Acquisition [Line Items] | ||
Percent of ownership interest acquired in properties | 100.00% | 100.00% |
Purchase consideration, cash paid | $ 10.4 |
Real Estate Investments - Sch27
Real Estate Investments - Schedule of Allocation of Purchase Price of Assets Acquired and Liabilities Assumed (Detail) - Logan Tower [Member] $ in Thousands | Mar. 31, 2016USD ($) |
Business Acquisition [Line Items] | |
Land | $ 1,306 |
Buildings and improvements | 7,844 |
Tenant improvements | 353 |
Acquired intangible assets | 1,274 |
Accounts payable and other/accrued liabilities | (48) |
Lease intangible liabilities | (306) |
Total consideration | $ 10,423 |
Real Estate Investments - Sch28
Real Estate Investments - Schedule of Business Acquisition Pro Forma Results of Operations (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Business Acquisition [Line Items] | ||
Total revenues as reported by City Office REIT, Inc. | $ 16,274 | $ 11,259 |
Pro forma total revenues | 16,274 | 11,407 |
Total operating income as reported by the City Office REIT, Inc. | (4,828) | 1,379 |
Proforma operating income/(loss) | $ (4,828) | 1,273 |
Logan Tower [Member] | ||
Business Acquisition [Line Items] | ||
Pro forma total revenues | 148 | |
Proforma operating income/(loss) | $ (106) |
Lease Intangibles - Schedule of
Lease Intangibles - Schedule of Lease Intangibles and Value of Assumed Lease Obligations (Detail) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 67,624 | $ 67,624 |
Cost, Below Market Leases | (2,928) | (2,928) |
Cost, Below Market Ground Lease | (138) | (138) |
Cost | (3,066) | (3,066) |
Accumulated amortization | (29,744) | (26,634) |
Accumulated amortization, Below Market Leases | 898 | 750 |
Accumulated amortization, Below Market Ground lease | 25 | 24 |
Accumulated amortization | 923 | 774 |
Total | 37,880 | 40,990 |
Total, Below Market Leases | (2,030) | (2,178) |
Total, Below Market Ground lease | (113) | (114) |
Total | (2,143) | (2,292) |
Above Market Leases [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 5,616 | 5,616 |
Accumulated amortization | (3,040) | (2,830) |
Total | 2,576 | 2,786 |
In Place Leases [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 44,478 | 44,478 |
Accumulated amortization | (19,882) | (17,641) |
Total | 24,596 | 26,837 |
Leasing Commissions [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 17,530 | 17,530 |
Accumulated amortization | (6,822) | (6,163) |
Total | $ 10,708 | $ 11,367 |
Lease Intangibles - Estimated A
Lease Intangibles - Estimated Aggregate Amortization Expense for Lease Intangibles (Detail) $ in Thousands | Mar. 31, 2016USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2,016 | $ 8,234 |
2,017 | 8,473 |
2,018 | 5,469 |
2,019 | 4,041 |
2,020 | 3,218 |
Thereafter | 6,302 |
Total | $ 35,737 |
Debt - Summary of Secured Indeb
Debt - Summary of Secured Indebtedness (Detail) - USD ($) $ in Thousands | Mar. 31, 2016 | Mar. 31, 2016 | Dec. 31, 2015 |
Debt Instrument [Line Items] | |||
Secured indebtedness | $ 348,392 | $ 348,392 | $ 344,671 |
Deferred financing costs, net | (3,275) | (3,275) | (3,393) |
Total | 345,117 | 345,117 | 341,278 |
Term Loan [Member] | |||
Debt Instrument [Line Items] | |||
Secured indebtedness | 14,000 | $ 14,000 | 14,000 |
Maturity | 2016-09 | ||
Washington Group Plaza [Member] | |||
Debt Instrument [Line Items] | |||
Secured indebtedness | $ 33,502 | $ 33,502 | 33,669 |
Interest Rate | 3.85% | 3.85% | |
Maturity | 2018-07 | ||
AmberGlen Mortgage Loan [Member] | |||
Debt Instrument [Line Items] | |||
Secured indebtedness | $ 24,618 | $ 24,618 | 24,729 |
Interest Rate | 4.38% | 4.38% | |
Maturity | 2019-05 | ||
Midland Life Insurance [Member] | |||
Debt Instrument [Line Items] | |||
Secured indebtedness | $ 95,000 | $ 95,000 | 95,000 |
Interest Rate | 4.34% | 4.34% | |
Maturity | 2021-05 | ||
Lake Vista Pointe [Member] | |||
Debt Instrument [Line Items] | |||
Secured indebtedness | $ 18,460 | $ 18,460 | 18,460 |
Interest Rate | 4.28% | 4.28% | |
Maturity | 2024-08 | ||
Florida Research Park [Member] | |||
Debt Instrument [Line Items] | |||
Secured indebtedness | $ 17,000 | $ 17,000 | 17,000 |
Interest Rate | 4.44% | 4.44% | |
Maturity | 2024-12 | ||
Plaza 25 [Member] | |||
Debt Instrument [Line Items] | |||
Secured indebtedness | $ 17,000 | $ 17,000 | 17,000 |
Interest Rate | 4.10% | 4.10% | |
Maturity | 2025-07 | ||
190 Office Center [Member] | |||
Debt Instrument [Line Items] | |||
Secured indebtedness | $ 41,250 | $ 41,250 | 41,250 |
Interest Rate | 4.79% | 4.79% | |
Maturity | 2025-10 | ||
Intellicenter [Member] | |||
Debt Instrument [Line Items] | |||
Secured indebtedness | $ 33,562 | $ 33,562 | 33,563 |
Interest Rate | 4.65% | 4.65% | |
Maturity | 2025-10 | ||
London Interbank Offered Rate (LIBOR) [Member] | Term Loan [Member] | |||
Debt Instrument [Line Items] | |||
Interest Rate, Description | 6.00% | ||
Secured Credit Facility [Member] | |||
Debt Instrument [Line Items] | |||
Secured indebtedness | $ 54,000 | $ 54,000 | $ 50,000 |
Maturity | 2018-06 | ||
Secured Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||
Debt Instrument [Line Items] | |||
Interest Rate, Description | 2.75% |
Debt - Summary of Secured Ind32
Debt - Summary of Secured Indebtedness (Parenthetical) (Detail) | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Term Loan [Member] | |
Debt Instrument [Line Items] | |
Minimum liquidity requirements | $ 3,000,000 |
Washington Group Plaza [Member] | |
Debt Instrument [Line Items] | |
Amortization period | 360 months |
Effective interest rate of loan | 3.85% |
AmberGlen Mortgage Loan [Member] | |
Debt Instrument [Line Items] | |
Minimum liquidity requirements | $ 2,000,000 |
Minimum net worth required | $ 25,000,000 |
Effective interest rate of loan | 4.38% |
Midland Life Insurance [Member] | |
Debt Instrument [Line Items] | |
Loan maturity date | May 6, 2021 |
Amortization period | 360 months |
Effective interest rate of loan | 4.34% |
Lake Vista Pointe [Member] | |
Debt Instrument [Line Items] | |
Amortization period | 360 months |
Effective interest rate of loan | 4.28% |
Florida Research Park [Member] | |
Debt Instrument [Line Items] | |
Minimum liquidity requirements | $ 1,700,000 |
Amortization period | 360 months |
Minimum net worth required | $ 17,000,000 |
Effective interest rate of loan | 4.44% |
Plaza 25 [Member] | |
Debt Instrument [Line Items] | |
Amortization period | 360 months |
Effective interest rate of loan | 4.10% |
190 Office Center [Member] | |
Debt Instrument [Line Items] | |
Minimum liquidity requirements | $ 1,700,000 |
Minimum net worth required | $ 17,000,000 |
Effective interest rate of loan | 4.79% |
Intellicenter [Member] | |
Debt Instrument [Line Items] | |
Effective interest rate of loan | 4.65% |
London Interbank Offered Rate (LIBOR) [Member] | Term Loan [Member] | |
Debt Instrument [Line Items] | |
One month LIBOR rate | 0.40% |
Maximum [Member] | Term Loan [Member] | |
Debt Instrument [Line Items] | |
Leverage ratio | 65.00% |
Minimum [Member] | Term Loan [Member] | |
Debt Instrument [Line Items] | |
Fixed charge coverage ratio | 160.00% |
Minimum [Member] | Florida Research Park [Member] | |
Debt Instrument [Line Items] | |
Fixed charge coverage ratio | 115.00% |
Minimum [Member] | Plaza 25 [Member] | |
Debt Instrument [Line Items] | |
Fixed charge coverage ratio | 145.00% |
Minimum [Member] | 190 Office Center [Member] | |
Debt Instrument [Line Items] | |
Fixed charge coverage ratio | 115.00% |
Minimum [Member] | Intellicenter [Member] | |
Debt Instrument [Line Items] | |
Fixed charge coverage ratio | 120.00% |
Secured Credit Facility [Member] | |
Debt Instrument [Line Items] | |
Secured Credit Facility, authorized amount | $ 75,000,000 |
Secured Credit Facility, outstanding amount | $ 54,000,000 |
Loan maturity date | Jun. 26, 2018 |
Loan expected extended maturity date | Jun. 26, 2019 |
Secured Credit Facility, accordion feature | $ 150,000,000 |
Secured Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | |
Debt Instrument [Line Items] | |
One month LIBOR rate | 0.40% |
Secured Credit Facility [Member] | Minimum [Member] | |
Debt Instrument [Line Items] | |
Fixed charge coverage ratio | 160.00% |
Debt - Schedule of Principal Re
Debt - Schedule of Principal Repayments of Debt (Detail) $ in Thousands | Mar. 31, 2016USD ($) |
Debt Disclosure [Abstract] | |
2,016 | $ 15,756 |
2,017 | 3,036 |
2,018 | 89,160 |
2,019 | 26,629 |
2,020 | 3,917 |
Thereafter | 209,894 |
Total | $ 348,392 |
Fair Value of Financial Instr34
Fair Value of Financial Instruments - Additional Information (Detail) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Jul. 31, 2016 | Mar. 31, 2016USD ($)ft² | Mar. 31, 2016USD ($)ft²$ / ft² | Dec. 31, 2015USD ($) | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Fair value, discount rate | 8.00% | |||
Approximate square feet of additional lease space | ft² | 1,500 | 1,500 | ||
Percentage of lease space occupancy | 88.00% | |||
Net effective rent per square foot | $ / ft² | 14 | |||
Incremental operating costs per square foot | $ / ft² | 3 | |||
Estimated fair value of earn-out liability | $ 1,900 | $ 1,900 | $ 5,678 | |
Earn-out payment | 3,800 | $ 3,778 | ||
Percentage of increase or decrease in potential gain or loss by varying the significant unobservable inputs | 10.00% | |||
Potential loss by varying the significant unobservable inputs | $ 100 | |||
Potential gain by varying the significant unobservable inputs | 100 | |||
Mortgage loans payable, fair value | $ 293,200 | $ 293,200 | $ 285,900 | |
Scenario, Forecast [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Percentage of lease space occupancy | 89.00% |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Detail) $ in Thousands | Mar. 03, 2016USD ($) | Aug. 06, 2015USD ($) | Mar. 31, 2016USD ($)Property | Mar. 31, 2016USD ($)Property | Mar. 31, 2015USD ($) | Dec. 31, 2015USD ($) |
Related Party Transaction [Line Items] | ||||||
Earn-out payment | $ 3,800 | $ 3,778 | ||||
Estimated fair value of earn-out liability | 1,900 | $ 1,900 | $ 5,678 | |||
Central Fairwinds [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Earn-out payment | $ 3,800 | |||||
Central Fairwinds [Member] | Range 1 [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Percentage of Earn-Out Threshold | 70.00% | 70.00% | ||||
Central Fairwinds [Member] | Range 2 [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Percentage of Earn-Out Threshold | 80.00% | 80.00% | ||||
External Advisor, City Office Real Estate Management, Inc [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Advisory fees payable | $ 100 | $ 100 | ||||
External Advisor, City Office Real Estate Management, Inc [Member] | Stock Purchase Agreement [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Business acquisition effective date | Feb. 1, 2016 | |||||
Property Management Firm [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Property management fee, Description | Fee ranging from 3.0% to 3.5% of gross revenue | |||||
Number of real estate properties | Property | 3 | 3 | ||||
Management fees paid | $ 100 | $ 100 | ||||
Property Management Firm [Member] | Minimum [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Property management fee, percentage | 3.00% | |||||
Property Management Firm [Member] | Maximum [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Property management fee, percentage | 3.50% | |||||
Second City Funds [Member] | Central Fairwinds [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Earn-out payment | $ 3,200 |
Future Minimum Rent Schedule -
Future Minimum Rent Schedule - Schedule of Future Minimum Lease Payments under Noncancellable Operating Leases (Detail) $ in Thousands | Mar. 31, 2016USD ($) |
Leases [Abstract] | |
2,016 | $ 40,375 |
2,017 | 52,508 |
2,018 | 45,086 |
2,019 | 38,941 |
2,020 | 35,295 |
Thereafter | 132,990 |
Total future minimum lease payments to be received | $ 345,195 |
Future Minimum Rent Schedule 37
Future Minimum Rent Schedule - Additional Information (Detail) | Mar. 31, 2016 |
Sales Revenue, Services, Net [Member] | Government Contracts Concentration Risk [Member] | |
Schedule Of Operating Leases Future Minimum Payments Receivable [Line Items] | |
Percentage of total future minimum lease payments | 19.60% |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) - Central Fairwinds [Member] | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Dec. 31, 2015 | |
Other Commitments [Line Items] | ||
Stabilized capitalization rate | 7.75% | |
Earn-Out Payment, Description | The Company will make any additional Earn-Out Payment within 30 days of the end of the earn-out term based on new qualified leases entered into since the achievement of the last Earn-Out Threshold. | |
Range 1 [Member] | ||
Other Commitments [Line Items] | ||
Percentage of Earn-Out Threshold | 70.00% | 70.00% |
Range 2 [Member] | ||
Other Commitments [Line Items] | ||
Percentage of Earn-Out Threshold | 80.00% | 80.00% |
Range 3 [Member] | ||
Other Commitments [Line Items] | ||
Percentage of Earn-Out Threshold | 90.00% | |
Maximum [Member] | ||
Other Commitments [Line Items] | ||
Earn-Out payment period | 5 years |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Detail) $ / shares in Units, $ in Thousands | Apr. 19, 2016USD ($) | Mar. 31, 2016shares | Mar. 15, 2016$ / shares | Feb. 01, 2016USD ($)shares | Mar. 31, 2016USD ($)Installment$ / sharesshares | Mar. 31, 2015$ / shares |
Class of Stock [Line Items] | ||||||
Operating Partnership common units | shares | 3,226,085 | |||||
Percentage of interest in Operating Partnership | 19.60% | 19.60% | ||||
Partnership unit, description | Beginning on or after the date which is 12 months after the date on which a person first became a holder of common units, each limited partner and assignees of limited partners will have the right, subject to the terms and conditions set forth in the partnership agreement, to require the Operating Partnership to redeem all or a portion of the common units held by such limited partner or assignee in exchange for a cash amount per common unit equal to the value of one share of common stock, determined in accordance with and subject to adjustment under the partnership agreement. The Company has the sole option at its discretion to redeem the common units by issuing common stock on a one-for-one basis. | |||||
Common units converted to common stock | shares | 20,000 | |||||
Declared cash dividend distribution per share | $ / shares | $ 0.235 | $ 0.235 | $ 0.235 | |||
Dividends paid, declared date | Mar. 15, 2016 | |||||
Dividends paid date | Apr. 19, 2016 | |||||
Dividends paid, date of record | Apr. 5, 2016 | |||||
Dividends | $ 5,701 | |||||
Maximum number of shares issued under Equity Incentive Plan | shares | 1,263,580 | |||||
Subsequent Event [Member] | ||||||
Class of Stock [Line Items] | ||||||
Dividends | $ 5,700 | |||||
Restricted Stock Units (RSUs) [Member] | ||||||
Class of Stock [Line Items] | ||||||
Net compensation expense | $ 500 | |||||
Number of annual installments for award vesting | Installment | 3 | |||||
Restricted Stock Units (RSUs) [Member] | Directors and Non-Executive Employees [Member] | ||||||
Class of Stock [Line Items] | ||||||
Restricted stock units granted to executive officers, directors and non-executive employees of the Advisor | shares | 76,750 | |||||
Restricted stock units grant date fair value | $ 900 | |||||
External Advisor, City Office Real Estate Management, Inc [Member] | Stock Purchase Agreement [Member] | ||||||
Class of Stock [Line Items] | ||||||
Business acquisition effective date | Feb. 1, 2016 | |||||
Common stock acquired, shares issued | shares | 297,321 | |||||
Additional cash payment for business acquisition | $ 3,500 | $ 3,500 | ||||
Common Stock [Member] | Subsequent Event [Member] | ||||||
Class of Stock [Line Items] | ||||||
Dividends | 4,900 | |||||
Common Units [Member] | Subsequent Event [Member] | ||||||
Class of Stock [Line Items] | ||||||
Dividends | $ 800 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions | Apr. 05, 2016 | Mar. 31, 2016 | Dec. 31, 2015 |
Subsequent Event [Line Items] | |||
Common stock, shares issued | 12,982,290 | 12,517,777 | |
Common stock price per share | $ 0.01 | $ 0.01 | |
Subsequent Event [Member] | Secondary Public Offering Total [Member] | |||
Subsequent Event [Line Items] | |||
Common stock, shares issued | 8,050,000 | ||
Common stock price per share | $ 11.40 | ||
Gross proceeds from issuance of public offering | $ 91.8 | ||
Net proceeds from issuance of public offering | 86.7 | ||
Underwriting discounts and other expenses | $ 5.1 |