City Office REIT, Inc.

Good morning and welcome to the City Office REIT Inc 4th Quarter 2024 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 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 CIOREIT.com where you can view our fourth 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. 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 forelooking statement disclaimer in our fourth quarter earnings press release and the company's findings of 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 may be made in the course of this call. I will review our financial results after Jamie Farrar Our chief executive officer discussed some of the quarters operational highlights. I'll now turn the call over to Jamie.

Good morning. After a challenging macro environment over the last few years, 2024 marked a clear turning point for the office sector. Supply demand dynamics for office leasing have turned increasingly favorable for high quality buildings in great locations. Across the country, the fourth quarter of 2024 reflected positive net absorption of office space. Overall leasing volume in the fourth quarter was over 90% of pre-pandemic volume levels. Sunbelt markets have performed particularly well and led the way at 95% of pre-pandemic volume. In addition, JLL estimates that since the onset of COVID, companies have collectively shrunk their office footprint by 8%, while their office using headcount has actually grown by 5%. T. Is the return to office continues demand dynamics at desirable properties should steadily strengthen. T. As we've discussed throughout 2024 new office construction is the lowest it has been in the last 50 years. T. This, combined with a record number of conversions demolitions and redevelopments translates to decreasing inventory, the net effect of these industry trends is increasingly solid footing. for office properties. However, not all markets and office properties will benefit from these improving fundamentals. You may note in our investor materials, we have split out our Sunbelt and non-Sunbelt markets in our portfolio tables. Our properties are predominantly located in Sunbelt markets, and we believe these will continue to outperform due to their favorable demographic and employment trends. We also believe that amenitized and modern spaces will draw the greatest share of leasing going forward. As discussed on prior calls, we've spent the last few years making impactful upgrades to our properties, enhancing amenities, and investing in ready to lease spec suites. These efforts are clearly working. Since 2021, we have completed significant property upgrades at nine of our properties. Our most recently completed large projects are at Pima Center in 5090 in Phoenix, 2525 in Dallas, and City Center in downtown St. Petersburg. We also have one additional amenity enhancement project planned at Block 23 in Phoenix. The goal of these improvements is to drive occupancy as well as to capture growing rents. Also, over this period, we've constructed 231,000 square feet of modern spec suites which are over 75% leased today. These proactive efforts have resulted in strong leasing results in 2024. The 806,000 square feet of new and renewal leases signed during the year represented a 35% increase over 2023. Over the course of the full year 2024, we also realized a robust 5.9% cash rent roll-up upon renewal. Turning to specific highlights from the fourth quarter, we signed a 60,000 square foot lease at our Terraces property in Dallas. The lease extended the tenants existing 44,000 square foot space until 2036 and expanded the tenant space by 16,000 square feet also through 2036. The negotiated rental rate for the new expansion space is 17% higher than what the tenant's existing space is currently paying. This demonstrates how rental rates have increased for premium assets and aligns well with our thesis that rents are poised to grow for quality properties. Moving to a disposition transaction, subsequent to year end, we sold Superior Point, a smaller 152,000 square foot property in the northwest submarket of Denver. The sale decision was largely driven by our view that we would achieve more value by selling the property as compared to investing considerable amounts to try to win leasing in a challenging sub market. We elected to sell Superior Point for a gross sale price of $12 million. The property was unencumbered by debt. Moving to our potential redevelopment plans at City Center in downtown St. Petersburg, Florida, we continue to track our expectations. The redevelopment site plan application has now received unanimous approval from the City of St Petersburg and all appeal periods have expired. The approval was for the demolition of the standalone parking garage to allow for a new multi-use water facing development. The site plan includes approximately 164 residential condos and 78,000 square feet of retail and office. We continue to advance agreements and development plans with a very experienced developer who would be responsible for leading the project's execution. However, any redevelopment of City Centre remains subject to a number of conditions, some of which are beyond our control. We'll provide further updates on our progress on future calls. And last for me, in our earnings press release, we introduced guidance for 2025. Our focus in 2025 remains on driving long-term cash flow growth through leasing, active asset management, and value creation opportunities. Our core FFO per share guidance range is effectively in line with our fourth quarter results on an annualized basis. Our expectation is that as signed leases take occupancy and we continue future leasing momentum, we will have improvements in occupancy and same store results. We expect this will drive core FFO per shared growth over time. While we are guiding that overall occupancy will increase during 2025, that growth is expected to occur primarily across our Sunbelt markets. As discussed earlier, these markets have the strongest leasing dynamics and value creation potential. With that, I'll turn the call over to Tony to discuss our financial results in more detail.