City Office REIT, Inc.

Good morning and welcome to the City Office REIT Incorporated First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. As a reminder, this conference call is being recorded. If you require operator assistance, please press star, then zero. It is now my pleasure to introduce you to Tony Meredick, the company's Chief Financial Officer, Treasurer, and Corporate Secretary. Thank you, Mr. Meredick. You may begin.

Good morning. Before we begin, I would like to direct you to our website at cioreet.com, where you can view our first quarter earnings press release and supplemental information package. The earnings release and supplemental package both include a reconciliation of non-GAAP measures that will be discussed today to their most directly comparable GAAP financial measures. Certain statements made today that discuss the company's beliefs or expectations or that are not based on historical fact may constitute forelooking statements within the meaning of the federal securities laws. Although the company believes that these expectations reflected in such forelooking statements are based upon reasonable assumptions, we can give no assurance that these expectations will be achieved. Please see the forward-looking statements disclaimer in our first quarter earnings press release and the company's filings with the SEC for factors that could cause material differences between forward-looking statements and actual results. The company undertakes no obligation to update any forward-looking statements that may be made in the course of this call. I'll review our financial results after Jamie Farrar, our Chief Executive Officer, discusses some of the quarter's operational highlights I'll now turn the call over to Jamie. Good morning.

Thanks for joining today. I'm pleased to report that our results for the first quarter and our expectations for the balance of 2021 are trending positively. For the first quarter, we reported strong core FFO and AFFO growth. Our dividend was well covered by these metrics, and we continue to expect to generate cash in excess of our dividend over the long term. Our rent collections were solid once again with almost 100% collection. We've exceeded 99% collection of contractual base rent in every quarter since the start of the pandemic. Further, of the $331,000 of rent deferrals that we granted in 2020, we have been repaid 84% to date and expect to receive the balance before the end of the third quarter. Bottom line, The health of our tenancy is strong and collections continue to be excellent. We also achieved 5% same-store cash NOI growth compared to the first quarter last year. This was driven primarily by prior leasing at our Denver Tech property and the substantial mark-to-market renewal at one of our life science properties in San Diego. Other highlights of the quarter include the sale of our Cherry Creek property in Denver and the 93,000 square foot renewal and expansion at our Carolyn Point property in Tampa. We announced both of these events on our last earnings call, but the execution is worth noting again. The 95 million sale of Cherry Creek represented a 5.8% cap rate and generated a $47 million gain, the largest gain on sale in our company's history. The lease at Carolyn Point was with Paychex, our largest tenant at the property, We secured an eight-year renewal on 78,000 square feet and a 15,000 square foot expansion commencing early in 2022. To touch on some other leasing metrics, over the last 12 months, we have achieved a healthy lease renewal rate of 77%. Of note, the first quarter of 2021 was also our strongest quarter for new leasing since the start of the pandemic. We signed 72,000 square feet of new leases, including five expansions and three leases of over 10,000 square feet. We see this as a great start to the recovery. Overall, we are feeling increasingly more optimistic about the timing of a major return to the office. Based on our tenant discussions, the combination of vaccination levels and a full return to school for kids is giving us confidence that we will see higher utilization levels post-Labor Day. We anticipate this will further stimulate new leasing activity. Further, we continue to believe that the strength of our Sunbelt cities will position us well over the long term. However, we do expect an element of tenant turnover as some companies will elect to reduce their space needs. As detailed in our press release, Toyota Motor Credit Corporation who lease a 133,000-square-foot building at our Santan property in Phoenix, accelerated their lease maturity by two years to August 31, 2022. Toyota will continue to pay full rent until then and have paid a $3.8 million termination fee representing approximately half of the rent that would have been due over the accelerated two-year period. While we had, of course, hoped that Toyota would remain a tenant long-term, we are well-positioned with over 16 months of lead time to secure a replacement tenant in a great city. Chandler is one of the most desirable sub-markets of Phoenix for large corporate and technology tenants due to the abundance of professionals that live there, the strong demographics, and the high quality of life. Turning to acquisitions, transaction volumes in our markets continues to be slow. However, core and stabilized buildings are still trading at strong valuations with a lot of private capital looking for investment opportunities. We are actively searching for potential acquisitions, but the options for attractive entry points have been limited. However, we secured an off-market acquisition opportunity to purchase two properties adjacent to our existing Sorrento Mesa Holdings in San Diego for $43 million. We've waived our due diligence conditions on this transaction and expect it to close later this month. We're very excited about the incremental value that this purchase creates for our portfolio. To provide investors with a better perspective, we've included a slide in our May investor presentation on our website that includes a map of our holdings. Effectively, we're buying two smaller office buildings, located on highly valuable infill development land contiguous with our own properties. The combination with our properties produce two solid development sites that generate holding income as we progress strategic options. In total, these two sites, including our own land, are zoned for over 1 million square feet of life science development. Of note, When you look at the map in our presentation, you will see that both of these development sites have a fantastic location directly across the street from Qualcomm's World Headquarters campus. As we've mentioned in the past, the life science sector continues to be very attractive. San Diego is one of the top three life science markets across the United States, and vacancy hit a record low 4.3% at the end of the first quarter. At the same time, rents continue to grow to new highs. CBRE's 2020 data showed that San Diego's life science rental rates grew by 7% in 2020 and an impressive 96% over the last 10 years. Upon closing this purchase, we intend to operate the existing buildings to maximize cash flow and our holding income. We're considering all of our options, including participating in a phased development with an experienced partner. In the meantime, we're excited to further build one of the dominant holdings in Sorrento Mesa. And lastly for me, as we head into a busy spring and summer, management is focused on driving cash flow growth and completing strategic leasing across our portfolio. We have a number of exciting opportunities that we're working on, and we look forward to providing updates in the future. I'll now turn the call over to Tony to provide further detail on our financial results.