City Office REIT, Inc.

Good morning, and welcome to the City Office REIT Incorporated 3rd Quarter 22-1 Earnings Conference Call. At this time, all participants are in 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're 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 Maretic, the company's chief financial officer, treasurer, and corporate secretary. Thank you, Mr. Maretic. 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 third 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 third 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 we 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. Since our last earnings call, we've announced transactions that have completely repositioned our company. Year to date through the end of the third quarter, the market value of our common stock has nearly doubled and shareholders have experienced a 91% total return. This makes City Office a top five performer among all property REITs year to date. These results are largely attributable to the tremendous value creation at our Sorrento Mesa property in San Diego. As we announced, we are under contract to sell all of our life science assets in San Diego for a gross sale price of $576 million. The sale translates to a staggering gain on sale of approximately $430 million, or almost $10 a share. The sale was structured pursuant to two transactions, a $395 million first closing scheduled for December 2021, and a $181 million second closing scheduled for early 2023 with an acceleration option. Based on our confidence in redeploying the sale proceeds, we've accelerated the second closing date to December 2021 as well. Our belief is that the best place to reinvest this capital is in the top sub-markets of high-growth cities across the South and West. When we entered into the Sorrento Mesa sale, we set a goal to use these proceeds to strategically enhance our portfolio across exceptional locations. As we consider acquisition prospects, we've been targeting newly built properties with vibrant amenities and superior tenant build-outs. While the cap rates for this asset profile are lower than our historical average. Buying these types of properties will enhance our company's future cash flow stability and add long in-place leases and quality tenants. We believe premier properties like these are positioned for continued healthy rental rate growth and will thrive over the long term. I'm pleased to report that we've made great progress building our pipeline with exactly this sort of transaction. We've been very busy since August and have underwritten over $2 billion of potential acquisitions. We are focused on all of our existing cities, as well as markets with similar growth and demographic characteristics in the South and West. Today, we are advancing just over $600 million of potential acquisitions that fit our criteria perfectly. These acquisitions are still in the due diligence phase, but we are very excited about their prospects. If we choose to proceed after completing our due diligence, we will provide further details in the months ahead. Turning to the operating environment, executing new and renewal lease transactions continues to be impacted by low tenant space utilization across the industry. The good news is that our properties are located in exciting and growing cities that are positioned well for a strong pickup and demand over time. Across our portfolio, leasing tour activity continues to improve. This is translated into more lease inquiries and discussions with prospective tenants. However, it continues to take longer to finalize leases in today's environment. This applies to both new leases as well as renewal discussions. The overriding comment we continue to hear from tenants is that they want employees back to the office, but likely this will be, at least initially, on a hybrid basis for many companies. With potentially changing needs in mind, tenants have been challenged determining how their offices should be configured. Many real estate decision makers have therefore been hesitant to commit long-term with this uncertainty remaining. We believe this dynamic will continue to improve as we head into 2022 and more people return to the office. At the same time, we continue to hear how tenants want modern dynamic space and highly amenitized locations. Employers view this type of high quality office space as a draw to help accelerate a return to the office. This is why we're targeting premier properties in our acquisition pipeline. And it's also shaping our own strategy to accelerate leasing across our portfolio. In our experience, we've found very strong demand for modern pre-built and move-in ready spec suites. This strategy speeds up the decision-making process and allows us to better control costs. Learning from this, over the next year we plan to invest in our existing properties through our spec suite program, common area upgrades and repositioning select buildings. We achieved tremendous leasing success with this approach in the past and believe now is the time to position our portfolio to win greater market share. This will differentiate our properties from many of our local competitors who are not actively reinvesting. We will discuss this further in the future as we execute these plans. Tony will provide further details on our recent leasing activity in a moment, but I want to conclude by saying that driving leasing success is one of our top priorities as we enter 2022. We believe our quality portfolio along with some strategic enhancements, will position us favorably and for cash flow growth. We expect a very busy and exciting remainder of the year, and I look forward to providing you further updates on our progress. With that, I'll turn the call over to Tony.