City Office REIT, Inc.

Good morning and welcome to the City Office REIT, Inc. Second 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 to you Tony Marotek, the company's Chief Financial Officer, Treasurer and Corporate Secretary. Thank you, Mr. Marotek. 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 second 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 forward-looking statements within the meaning of the federal securities laws. While 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 forelooking statements disclaimer in our second quarter earnings press release and the company's filings with the SEC for factors that could cause material differences between forelooking statements and actual results. The company undertakes no obligation to update any forelooking statements that will be made in the course of this call. after Jamie Farrar, our Chief Executive Officer, discusses some of the quarter's operational highlights. I will now turn the call over to Jamie. Good morning.

Thanks for joining today. Our quarterly results continue to be strong and consistent. In the second quarter, we achieved healthy dividend coverage, positive same-store cash NOI growth, and strong leasing activity. Major highlights for the second quarter include completing a large backfill of leased but unoccupied space at our Park Tower property in Tampa and advancing opportunities to unlock value with our life science assets in San Diego. I will cover both of these items in more detail momentarily. Before going into our results, I'll briefly touch upon what we are seeing across the office industry. After Labor Day, we continue to expect a significant increase in tenant utilization of office space that should accelerate as we approach the end of 2021. To date, we have seen many smaller tenants embrace a return to the office. Larger tenants have generally been slower to return, but are expressing intentions to ramp up their utilization in the fall. In terms of our operating results during the quarter, we completed a healthy 249,000 square feet of new and renewal leasing. We also continued with our strong rent collection at nearly 100% and have now collected virtually all of the deferred rent granted during the pandemic. While occupancy dipped slightly at quarter end, our second quarter same store cash NOI growth was a solid 2.7%. Of note, we achieved a 4% increase in cash renewal rents versus the expiring rent. As I mentioned, One of the most significant transactions in the quarter involved backfilling dark space at our Park Tower property. BB&T Bank is a major tenant, but they consolidated into SunTrust location last year after the merger. This left us with 51,000 square feet of dark space leased through February of 2025. Despite paying rent, having unused space like this is a drag on property value as it creates a known future vacancy. During the second quarter, we secured a new tenant that will occupy the full 51,000 square feet plus an additional 15,000 square feet. At the same time, we negotiated a lease termination with BB&T with a termination fee of approximately $5.4 million. BB&T will continue to pay their rent obligations through November 30th, 2021. The termination fee represents approximately 85% of the future base rent and estimated reimbursement obligation that BB&T would have otherwise paid through 2025. The new tenant is a fast-growing fintech company, and they executed an eight-year lease that starts in May of 2022. When factoring in signage rent, the new tenant will be paying approximately 5% higher rent per square foot than the departing tenant. As part of the deal, we intend to complete significant upgrades to their space, which will be accretive for future leasing. The other significant transaction that occurred during the quarter was the acquisition of two properties adjacent to our Sorrento Mesa portfolio, which we announced on our last call. These properties are an important key to unlock greater development potential and value in those life science assets. Rent in San Diego's life science market continues to be at a record high with vacancy below 5%. Tenant demand for life science properties is strong and growing, fueled by record levels of venture capital funding. CBRE estimated that there is approximately 2.8 million square feet of laboratory tenant demand with only 900,000 square feet of availability. San Diego's limited vacancy and development sites have left tenants with few options for expanding their operations. Given these market dynamics, we completed the purchase at an ideal time. Since our last call, we've made substantial progress exploring options for our full Sorrento Mesa portfolio. We executed a process that evaluated developing our land holdings in partnership with an experienced operator, selling the entire Sorrento Mesa portfolio, or some combination thereof. This process confirmed that the value of these assets has grown to impressive levels. Whichever option we select will have a transformative impact to our company. Today, all alternatives remain on the table and we're giving significant consideration to a possible sale of the entire Sorrento Mesa portfolio. Given where we are in our process, we are unable to provide further details at this time. Should a transaction come to fruition, We anticipate providing further information at that point. To conclude, as we move forward into the second half of the year, our focus remains on advancing our Sorrento Mesa process, achieving leasing success through both renewals and the leasing of vacancy, and building our acquisition pipeline at a time when tenants are returning to the office environment. We believe that we are well positioned on all of these fronts. With that, I'll turn the call over to Tony to provide further detail on our financial results.