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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-36409

CITY OFFICE REIT, INC.

(Exact name of registrant as specified in its charter)


Maryland		98-1141883
(State or other jurisdiction		(IRS Employer
of incorporation or organization)		Identification No.)

666 Burrard Street

Suite 3210

Vancouver, BC

V6C 2X8

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (604) 806-3366

Securities registered pursuant to Section 12(b) of the Act:

      Title of Each Class

      Trading Symbol(s)

      Name of each Exchange on Which Registered

      Common Stock, $0.01 par value
6.625% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share

      “CIO”
“CIO.PrA”

      New York Stock Exchange
New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of Common Stock, $0.01 par value, of the registrant outstanding at November 4, 2025 was 40,363,640.

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City Office REIT, Inc.

Quarterly Report on Form 10-Q

For the Quarter Ended September 30, 2025

Table of Contents


		Page

PART I.	FINANCIAL INFORMATION	1

Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024	1
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024	2
	Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2025 and 2024	3
	Condensed Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2025 and 2024	4
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024	6
	Notes to the Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	27

PART II.	OTHER INFORMATION	27

Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.	Defaults Upon Senior Securities	29
Item 4.	Mine Safety Disclosures	29
Item 5.	Other Information	29
Item 6.	Exhibits	30
Signatures		31

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

City Office REIT, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except par value and share data)


	September 30, 2025			December 31, 2024
Assets
Real estate properties
Land	$	146,309		$	190,372
Building and improvement		839,998			1,169,793
Tenant improvement		121,483			163,569
Furniture, fixtures and equipment		236			1,368
		1,108,026			1,525,102
Accumulated depreciation		(207,015	)		(251,956	)
		901,011			1,273,146
Cash and cash equivalents		21,347			18,886
Restricted cash		17,935			15,073
Rents receivable, net		40,904			52,311
Deferred leasing costs, net		22,154			25,291
Acquired lease intangible assets, net		23,873			34,631
Other assets		4,225			23,744
Assets held for sale		35,784			12,588
Total Assets	$	1,067,233		$	1,455,670
Liabilities and Equity
Liabilities:
Debt	$	398,359		$	646,972
Accounts payable and accrued liabilities		29,008			34,535
Deferred rent		6,896			7,010
Tenant rent deposits		5,143			7,257
Acquired lease intangible liabilities, net		3,844			6,301
Other liabilities		5,396			16,879
Liabilities related to assets held for sale		8,134			2,176
Total Liabilities		456,780			721,130
Commitments and Contingencies (Note 9)
Equity:
6.625% Series A Preferred stock, $0.01 par value per share, 5,600,000 shares authorized, 4,480,000 issued and outstanding as of September 30, 2025 and December 31, 2024		112,000			112,000
Common stock, $0.01 par value, 100,000,000 shares authorized, 40,363,640 and 40,154,055 shares issued and outstanding as of September 30, 2025 and December 31, 2024		403			401
Additional paid-in capital		444,355			442,329
Retained earnings		55,172			179,838
Accumulated other comprehensive loss		(1,880	)		(713	)
Total Stockholders’ Equity		610,050			733,855
Non-controlling interests in properties		403			685
Total Equity		610,453			734,540
Total Liabilities and Equity	$	1,067,233		$	1,455,670

The accompanying notes are an integral part of these condensed consolidated financial statements.

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City Office REIT, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
Rental and other revenues	$	37,275		$	42,371		$	121,876		$	129,207
Operating expenses:
Property operating expenses		15,615			17,783			48,201			53,020
General and administrative		3,780			3,790			11,835			11,321
Depreciation and amortization		10,573			14,642			41,762			44,440
Impairment of real estate		—			—			102,229			—
Merger and transaction-related costs		3,093			—			3,093			—
Total operating expenses		33,061			36,215			207,120			108,781
Operating income/(loss)		4,214			6,156			(85,244	)		20,426
Interest expense:
Contractual interest expense		(6,836	)		(8,274	)		(23,452	)		(24,502	)
Amortization of deferred financing costs and debt fair value		(776	)		(369	)		(1,510	)		(1,030	)
		(7,612	)		(8,643	)		(24,962	)		(25,532	)
Net loss on disposition of real estate property		(378	)		—			(378	)		(1,462	)
Net loss		(3,776	)		(2,487	)		(110,584	)		(6,568	)
Less:
Net income attributable to non-controlling interests in properties		(38	)		(152	)		(266	)		(412	)
Net loss attributable to the Company		(3,814	)		(2,639	)		(110,850	)		(6,980	)
Preferred stock distributions		(1,855	)		(1,855	)		(5,565	)		(5,565	)
Net loss attributable to common stockholders	$	(5,669	)	$	(4,494	)	$	(116,415	)	$	(12,545	)
Net loss per common share:
Basic	$	(0.14	)	$	(0.11	)	$	(2.89	)	$	(0.31	)
Diluted	$	(0.14	)	$	(0.11	)	$	(2.89	)	$	(0.31	)
Weighted average common shares outstanding:
Basic		40,363			40,154			40,343			40,135
Diluted		40,363			40,154			40,343			40,135
Dividend distributions declared per common share	$	—		$	0.10		$	0.20		$	0.30

The accompanying notes are an integral part of these condensed consolidated financial statements.

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City Office REIT, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

(In thousands)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
Net loss	$	(3,776	)	$	(2,487	)	$	(110,584	)	$	(6,568	)
Other comprehensive loss:
Unrealized cash flow hedge gain/(loss)		49			(3,087	)		(958	)		470
Amounts reclassified to interest expense		(81	)		(1,000	)		(239	)		(3,249	)
Other comprehensive loss		(32	)		(4,087	)		(1,197	)		(2,779	)
Comprehensive loss		(3,808	)		(6,574	)		(111,781	)		(9,347	)
Less:
Comprehensive income attributable to non-controlling interests in properties		(39	)		(99	)		(236	)		(382	)
Comprehensive loss attributable to the Company	$	(3,847	)	$	(6,673	)	$	(112,017	)	$	(9,729	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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City Office REIT, Inc.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

(In thousands)


	Number of shares of preferred stock		Preferred stock		Number of shares of common stock		Common stock		Additional paid-in capital		Retained earnings			Accumulated other comprehensive loss			Total stockholders’ equity			Non- controlling interests in properties			Total equity
Balance —December 31, 2024		4,480	$	112,000		40,154	$	401	$	442,329	$	179,838		$	(713	)	$	733,855		$	685		$	734,540
Restricted stock award grants and vesting		—		—		204		2		249		(59	)		—			192			—			192
Common stock dividend distribution declared		—		—		—		—		—		(4,036	)		—			(4,036	)		—			(4,036	)
Preferred stock dividend distribution declared		—		—		—		—		—		(1,855	)		—			(1,855	)		—			(1,855	)
Contributions		—		—		—		—		—		—			—			—			24			24
Distributions		—		—		—		—		—		—			—			—			(161	)		(161	)
Net (loss)/income		—		—		—		—		—		(1,670	)		—			(1,670	)		171			(1,499	)
Other comprehensive loss		—		—		—		—		—		—			(646	)		(646	)		(19	)		(665	)
Balance —March 31, 2025		4,480	$	112,000		40,358	$	403	$	442,578	$	172,218		$	(1,359	)	$	725,840		$	700		$	726,540
Restricted stock award grants and vesting		—		—		—		—		903		(60	)		—			843			—			843
Common stock dividend distribution declared		—		—		—		—		—		(4,036	)		—			(4,036	)		—			(4,036	)
Preferred stock dividend distribution declared		—		—		—		—		—		(1,855	)		—			(1,855	)		—			(1,855	)
Contributions		—		—		—		—		—		—			—			—			35			35
Distributions		—		—		—		—		—		—			—			—			(290	)		(290	)
Net (loss)/income		—		—		—		—		—		(105,366	)		—			(105,366	)		57			(105,309	)
Other comprehensive loss		—		—		—		—		—		—			(488	)		(488	)		(12	)		(500	)
Balance —June 30, 2025		4,480	$	112,000		40,358	$	403	$	443,481	$	60,901		$	(1,847	)	$	614,938		$	490		$	615,428
Restricted stock award grants and vesting		—		—		5		—		874		(60	)		—			814			—			814
Common stock dividend distribution declared		—		—		—		—		—		—			—			—			—			—
Preferred stock dividend distribution declared		—		—		—		—		—		(1,855	)		—			(1,855	)		—			(1,855	)
Contributions		—		—		—		—		—		—			—			—			14			14
Distributions		—		—		—		—		—		—			—			—			(140	)		(140	)
Net (loss)/income		—		—		—		—		—		(3,814	)		—			(3,814	)		38			(3,776	)
Other comprehensive loss		—		—		—		—		—		—			(33	)		(33	)		1			(32	)
Balance — September 30, 2025		4,480	$	112,000		40,363	$	403	$	444,355	$	55,172		$	(1,880	)	$	610,050		$	403		$	610,453

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	Number of shares of preferred stock		Preferred stock		Number of shares of common stock		Common stock		Additional paid-in capital		Retained earnings			Accumulated other comprehensive (loss)/income			Total stockholders’ equity			Non- controlling interests in properties			Total equity
Balance —December 31, 2023		4,480	$	112,000		39,938	$	399	$	438,867	$	221,213		$	(248	)	$	772,231		$	402		$	772,633
Restricted stock award grants and vesting		—		—		216		2		42		(45	)		—			(1	)		—			(1	)
Common stock dividend distribution declared		—		—		—		—		—		(4,015	)		—			(4,015	)		—			(4,015	)
Preferred stock dividend distribution declared		—		—		—		—		—		(1,855	)		—			(1,855	)		—			(1,855	)
Distributions		—		—		—		—		—		—			—			—			(444	)		(444	)
Net (loss)/income		—		—		—		—		—		(589	)		—			(589	)		135			(454	)
Other comprehensive income		—		—		—		—		—		—			1,763			1,763			26			1,789
Balance —March 31, 2024		4,480	$	112,000		40,154	$	401	$	438,909	$	214,709		$	1,515		$	767,534		$	119		$	767,653
Restricted stock award grants and vesting		—		—		—		—		1,139		(56	)		—			1,083			—			1,083
Common stock dividend distribution declared		—		—		—		—		—		(4,015	)		—			(4,015	)		—			(4,015	)
Preferred stock dividend distribution declared		—		—		—		—		—		(1,855	)		—			(1,855	)		—			(1,855	)
Contributions		—		—		—		—		—		—			—			—			442			442
Distributions		—		—		—		—		—		—			—			—			(104	)		(104	)
Net (loss)/income		—		—		—		—		—		(3,752	)		—			(3,752	)		125			(3,627	)
Other comprehensive loss		—		—		—		—		—		—			(478	)		(478	)		(3	)		(481	)
Balance —June 30, 2024		4,480	$	112,000		40,154	$	401	$	440,048	$	205,031		$	1,037		$	758,517		$	579		$	759,096
Restricted stock award grants and vesting		—		—		—		—		1,140		(56	)		—			1,084			—			1,084
Common stock dividend distribution declared		—		—		—		—		—		(4,015	)		—			(4,015	)		—			(4,015	)
Preferred stock dividend distribution declared		—		—		—		—		—		(1,855	)		—			(1,855	)		—			(1,855	)
Contributions		—		—		—		—		—		—			—			—			80			80
Distributions		—		—		—		—		—		—			—			—			(247	)		(247	)
Net (loss)/income		—		—		—		—		—		(2,639	)		—			(2,639	)		152			(2,487	)
Other comprehensive loss		—		—		—		—		—		—			(4,034	)		(4,034	)		(53	)		(4,087	)
Balance — September 30, 2024		4,480	$	112,000		40,154	$	401	$	441,188	$	196,466		$	(2,997	)	$	747,058		$	511		$	747,569

The accompanying notes are an integral part of these condensed consolidated financial statements.

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City Office REIT, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Nine Months Ended September 30,
	2025			2024
Cash Flows from Operating Activities:
Net loss	$	(110,584	)	$	(6,568	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		41,762			44,440
Amortization of deferred financing costs and debt fair value		1,510			1,030
Amortization of above and below market leases		75			(97	)
Straight-line rent/expense		(513	)		(40	)
Non-cash stock compensation		2,601			3,238
Net loss on disposition of real estate property		378			1,462
Impairment of real estate		102,229			—
Changes in non-cash working capital:
Rents receivable, net		(601	)		471
Other assets		899			178
Accounts payable and accrued liabilities		2,535			5,966
Deferred rent		16			(449	)
Tenant rent deposits		(1,598	)		349
Net Cash Provided By Operating Activities		38,709			49,980
Cash Flows from/(to) Investing Activities:
Additions to real estate properties		(24,681	)		(21,300	)
Net proceeds from sale of real estate property		267,977			—
Reduction of cash on disposition of real estate property		—			(2,477	)
Deferred leasing costs		(7,537	)		(5,980	)
Net Cash Provided By/(Used In) Investing Activities		235,759			(29,757	)
Cash Flows to Financing Activities:
Debt issuance and extinguishment costs		(678	)		(576	)
Proceeds from borrowings		8,500			59,000
Repayment of borrowings		(258,044	)		(60,075	)
Dividend distributions paid to stockholders		(17,652	)		(17,590	)
Distributions to non-controlling interests in properties		(591	)		(795	)
Shares withheld for payment of taxes on restricted stock unit vesting		(753	)		(1,072	)
Contributions from non-controlling interests in properties		73			522
Net Cash Used In Financing Activities		(269,145	)		(20,586	)
Net Increase/(Decrease) in Cash, Cash Equivalents and Restricted Cash		5,323			(363	)
Cash, Cash Equivalents and Restricted Cash, Beginning of Period		33,959			43,392
Cash, Cash Equivalents and Restricted Cash, End of Period	$	39,282		$	43,029
Reconciliation of Cash, Cash Equivalents and Restricted Cash:
Cash and Cash Equivalents, End of Period		21,347			25,911
Restricted Cash, End of Period		17,935			17,118
Cash, Cash Equivalents and Restricted Cash, End of Period	$	39,282		$	43,029
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	25,600		$	25,642
Purchase of additions in real estate properties included in accounts payable	$	4,074		$	11,237
Purchase of deferred leasing costs included in accounts payable	$	1,671		$	1,998

The accompanying notes are an integral part of these condensed consolidated financial statements.

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City Office REIT, Inc.

Notes to the Condensed Consolidated Financial Statements

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 of limited partnership interest in the Operating Partnership (“common units”).

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 Operating Partnership’s 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 expects to continue to operate in a manner that will allow it to continue to qualify as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”). 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, for years prior to 2018, any applicable alternative minimum tax.

On July 23, 2025, the Company entered into a definitive merger agreement (the “Merger Agreement”) with MCME Carell Holdings, LP and MCME Carell Merger Sub, LLC (collectively, “MCME Carell” or the “Buyer”) under which, subject to the satisfaction of the conditions set forth in the Merger Agreement, MCME Carell will acquire (other than shares owned by the Buyer, the Company or their respective affiliates) all of the issued and outstanding shares of the Company for $7.00 per share of common stock in cash (the “Merger”). The Merger is subject to the satisfaction of a number of customary closing conditions more thoroughly described in the Merger Agreement, including the approval of the Company's common stockholders. On October 16, 2025, the Company’s common stockholders approved the Merger.

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 (“SEC”) 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 condensed 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, 2024.

3. Real Estate Investments

Assets Held for Sale

On June 18, 2025, the Company entered into a purchase and sale agreement (the “Phoenix Sale Agreement”) to sell Block 23, Pima Center, 5090 N 40th St, SanTan, Papago Tech, The Quad, and Camelback Square (the “Phoenix Portfolio”) for $296.0 million, which excludes closing costs and credits. Upon classification as held for sale during the second quarter of 2025, the Company recognized an impairment of $102.2 million to lower the carrying amount of the Phoenix Portfolio to its estimated fair value less cost to sell. Refer to “Impairment of Real Estate” below. On August 15, 2025, the Company completed the sale of six of the seven office properties in the Phoenix Portfolio (the “First Phoenix Closing”). These six properties included Block 23; 5090 N 40th St; SanTan; Papago Tech; The Quad; and Camelback Square. The Company’s Pima Center property continues to be under contract at a $30.0 million gross sales price, and meets the criteria for classification as held for sale as of September 30, 2025. The sale of the Pima Center property is expected to close at a later date, subject to the Company (or its successor in interest) obtaining certain approvals related to the property’s ground lease.

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The property was classified as held for sale as of September 30, 2025 (in thousands):


Pima Center	September 30, 2025
Real estate properties, net	$	27,572
Deferred leasing costs, net		1,038
Rents receivable, prepaid expenses and other assets		7,174
Assets held for sale	$	35,784
Accounts payable, accrued liabilities, deferred rent, tenant rent deposits, and other liabilities		8,134
Liabilities related to assets held for sale	$	8,134

On November 1, 2024, the Company entered into a purchase and sale agreement to sell the Superior Pointe property for
$12.0 million, which excludes closing costs and credits. The Company determined that the property met the criteria for classification
as held for sale as of December 31, 2024. Upon classification as held for sale, the Company recognized an impairment of $8.5 million
to lower the carrying amount of the property to its estimated fair value less cost to sell. Refer to “Impairment of Real Estate” below.
As of December 31, 2024, the Company had received a deposit of $0.3 million, which was recorded in restricted cash along with a
corresponding liability in other liabilities on the Company’s condensed consolidated balance sheets. On January 14, 2025, the Company completed the sale of the Superior Pointe property.

The property was classified as held for sale as of December 31, 2024 (in thousands):


Superior Pointe	December 31, 2024
Real estate properties, net	$	10,637
Deferred leasing costs, net		382
Rents receivable, prepaid expenses and other assets		1,569
Assets held for sale	$	12,588
Accounts payable, accrued liabilities, deferred rent, tenant rent deposits, and other liabilities		2,176
Liabilities related to assets held for sale	$	2,176

Disposition of Real Estate Property

First Phoenix Closing

As described above, on August 15, 2025, the Company closed on the sale of six of the Company’s office properties located in Phoenix, Arizona for an aggregate sales price of $266.0 million. Upon closing of the sale, the Company recognized an aggregate loss of $0.4 million net of disposal-related costs, which has been classified as net loss on disposition of real estate property in the condensed consolidated statement of operations.

Superior Pointe

On January 14, 2025, the Company sold the Superior Pointe property in Denver, Colorado for a gross sales price of $12.0 million. No gain or loss was recognized on the sale as the property was carried at fair value less cost to sell on the date of disposition.

Cascade Station

On June 27, 2024, the Company entered into an assignment in lieu of foreclosure agreement to transfer possession and control of the Cascade Station property to the lender as a result of an event of default as defined in the property’s non-recourse loan agreement. Given the terms of the assignment in lieu of foreclosure agreement, the Company assessed whether the entity holding the property should be reassessed for consolidation as a Variable Interest Entity (“VIE”) in accordance with ASC 810 – Consolidation.

Based on its analysis, the Company concluded that it was not the primary beneficiary of the VIE and therefore deconsolidated the property as of June 27, 2024. The Company deconsolidated the net carrying value of real estate assets of $17.9 million, the mortgage loan of $20.6 million, cash and restricted cash of $2.5 million and net current assets of $1.7 million. For the three months ended June 30, 2024, the Company recognized a loss on deconsolidation of $1.5 million, which has been included within net loss on disposition of real estate property on the Company’s condensed consolidated statement of operations and statement of cash flows.

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Impairment of Real Estate

During the three and nine months ended September 30, 2025, the Company recognized an impairment of real estate of nil and $102.2 million, respectively, to lower the carrying amount of the Phoenix Portfolio to its estimated fair value less cost to sell.

There was no impairment of real estate during the nine months ended September 30, 2024.

4. Lease Intangibles

Lease intangibles and the value of assumed lease obligations as of September 30, 2025 and December 31, 2024 were comprised of the following (in thousands):


	Lease Intangible Assets												Lease Intangible Liabilities
September 30, 2025	Above Market Leases			In Place Leases			Leasing Commissions			Total			Below Market Leases			Below Market Ground Lease			Total
Cost	$	14,507		$	51,716		$	23,017		$	89,240		$	(9,924	)	$	(138	)	$	(10,062	)
Accumulated amortization		(9,929	)		(39,777	)		(15,661	)		(65,367	)		6,155			63			6,218
	$	4,578		$	11,939		$	7,356		$	23,873		$	(3,769	)	$	(75	)	$	(3,844	)

	Lease Intangible Assets												Lease Intangible Liabilities
December 31, 2024	Above Market Leases			In Place Leases			Leasing Commissions			Total			Below Market Leases			Below Market Ground Lease			Total
Cost	$	16,596		$	69,760		$	30,987		$	117,343		$	(14,294	)	$	(138	)	$	(14,432	)
Accumulated amortization		(10,584	)		(51,893	)		(20,235	)		(82,712	)		8,071			60			8,131
	$	6,012		$	17,867		$	10,752		$	34,631		$	(6,223	)	$	(78	)	$	(6,301	)

The estimated aggregate amortization expense for lease intangibles for the next five years and in the aggregate are as follows (in thousands):


2025	$	1,324
2026		4,986
2027		4,018
2028		3,468
2029		2,624
Thereafter		3,609
	$	20,029

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5. Debt

The following table summarizes the indebtedness as of September 30, 2025 and December 31, 2024 (dollars in thousands), including the impact of the effective interest rate swaps described in Note 6:


Property		September 30, 2025		December 31, 2024	Interest Rate as of September 30, 2025 (1)		Maturity
Credit Facility (2)	$	115,000	$	255,000	SOFR + 1.40%	(1)(2)(3)	January 2026	(2)
Mission City		44,399		45,095	3.78%		November 2027
Circle Point		37,638		38,109	4.49%		September 2028
Canyon Park (4)		37,558		38,159	4.30%		March 2027	(4)
Intellicenter (5)		29,540		30,042	4.65%		October 2025	(5)
2525 McKinnon		27,000		27,000	4.24%		April 2027
FRP Collection		25,416		25,736	7.05%	(6)	August 2028
AmberGlen		20,000		20,000	3.69%		May 2027
Greenwood Blvd (7)		19,982		20,299	6.34%	(7)	May 2028
Central Fairwinds		15,321		15,497	7.68%	(8)	June 2029
FRP Ingenuity Drive (9)		14,096		14,096	4.44%		December 2026
Carillon Point		14,020		14,196	7.05%	(6)	August 2028
Term Loan (10)		-		25,000	-		-
SanTan (11)		-		30,773	-		-
The Quad (11)		-		30,600	-		-
5090 N 40th St (11)		-		19,912	-		-
Total Principal		399,970		649,514
Deferred financing costs, net		(1,611)		(2,542)
Total	$	398,359	$	646,972

(1)

As of September 30, 2025, the daily-simple Secured Overnight Financing Rate (“SOFR”) was 4.24%.

(2)

Borrowings under our credit facility (the “Credit Facility”) bear interest at a rate equal to the daily-simple SOFR rate plus a margin of between 135 to 235 basis points depending upon the Company’s consolidated leverage ratio. As of September 30, 2025, the Credit Facility had $115.0 million drawn and a $2.5 million letter of credit to satisfy escrow requirements for a mortgage lender. On August 15, 2025, the Company entered into a third amendment to the Amended and Restated Credit Agreement, dated November 16, 2021, for the Credit Facility (the “Amended and Restated Credit Agreement”), to, among other things, decrease the total authorized borrowing from $325 million to $150 million, and provide for the pledge of certain of the Company's assets as security. Subsequent to quarter-end, on October 3, 2025, the Company entered into a fourth amendment to the Amended and Restated Credit Agreement to extend the maturity date from November 2025 to January 2026. There is an option for further extension to November 2026, provided the Company’s option is delivered no later than 30 days prior to the January 2026 maturity, there is no event of default, the Company affirms the representations and warranties set forth in the Amended and Restated Credit Agreement, and the Company pays the extension fee. The Credit Facility requires the Company to maintain a fixed charge coverage ratio of no less than 1.50x.

(3)

On February 9, 2023, the Company entered into an interest rate swap for a notional amount of $140 million, effective March 8, 2023 through November 16, 2025, to effectively fix the SOFR component of the borrowing rate for $140 million of the Credit Facility at 4.19%. During the period ended September 30, 2025, the Company discontinued the hedging relationship of the interest rate swap as the hedged future cash flows were no longer highly probable to occur. Refer to Note 6 for further details.

(4)

The mortgage loan anticipated repayment date (“ARD”) is March 1, 2027. The final scheduled maturity date can be extended up to 5 years beyond the ARD. If the loan is not paid off at ARD, the loan’s interest rate shall be adjusted to the greater of (i) the initial interest rate plus 200 basis points or (ii) the yield on the five year “on the run” treasury reported by Bloomberg market data service plus 450 basis points.

(5)

In April 2025, a ‘cash-sweep period’ began at the Intellicenter property following the DSCR covenant not being met. As of September 30, 2025, total restricted cash for the property was $1.8 million. On October 1, 2025, the non-recourse property loan at the Intellicenter property matured, and an event of default occurred under the terms of the Intellicenter loan, following non-payment of the principal amount outstanding at loan maturity. The Company is in discussions with the lender to extend the maturity of the loan.

(6)

The FRP Collection and Carillon Point loans bear interest at a rate equal to the daily-simple SOFR rate plus a margin of 275 basis points. The SOFR component of the borrowing rate is effectively fixed for the remainder of the five-year term via interest rate swaps at 4.30%.

(7)

On May 28, 2025, the Company entered into an amended and restated loan agreement for Greenwood Blvd, extending the term for an additional three years and amending the interest rate from fixed to floating. The loan bears interest at a rate equal to the daily-simple SOFR rate plus a margin of 250 basis points. The Company also entered into a three-year interest rate swap agreement, effectively fixing the SOFR component of the borrowing rate of the loan at 3.84%.

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(8)

The Central Fairwinds loan bears interest at a rate equal to the daily-simple SOFR rate plus a margin of 325 basis points. The SOFR component of the borrowing rate is effectively fixed for the remainder of the five-year term via an interest rate swap at 4.43%.

(9)

Under the terms of the FRP Ingenuity Drive loan modification and extension agreement signed in the second quarter of 2024, the property will be in a ‘cash-sweep period’ which will continue through the maturity of the loan. As of September 30, 2025 and December 31, 2024, total restricted cash for the property was $2.0 million and $3.6 million, respectively.

(10)

On August 15, 2025, the $25 million term loan was repaid with proceeds from the First Phoenix Closing. The $25 million interest rate swap entered into on January 5, 2023 was terminated concurrently with the repayment of the term loan. Refer to Note 6 for further details.

(11)

On August 15, 2025, the mortgage loans associated with the 5090 N 40th St, SanTan and The Quad properties were repaid in full, following the First Phoenix Closing.

The scheduled principal repayments of indebtedness as of September 30, 2025, without consideration of extension options, are as follows (in thousands):


2025	$	145,422
2026		17,975
2027		128,950
2028		93,133
2029		14,490
Thereafter		—
	$	399,970

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

In January 2023, the Company entered into an interest rate swap for a notional amount of $25.0 million. The interest rate swap effectively fixed the SOFR component of the corresponding loan at approximately 3.90% for the three-year term. In August 2025, the $25.0 million interest rate swap was terminated, following the repayment of the corresponding $25.0 million loan. Upon termination, the Company reclassified a nominal amount from other comprehensive loss to interest expense within the condensed consolidated statement of operations.

In February 2023, the Company entered into an interest rate swap for a notional amount of $140.0 million. The interest rate swap effectively fixes the SOFR component of the corresponding loan at approximately 4.19% until November 16, 2025. During the period ended September 30, 2025, the Company discontinued the hedging relationship of the interest rate swap for a notional amount of $140.0 million, as the hedged future cash flows were no longer highly probable to occur. Upon discontinuation, the Company reclassified a nominal amount from other comprehensive loss to interest expense within the condensed consolidated statement of operations. This derivative continues to be recognized on the condensed consolidated balance sheet at fair value, presented within other liabilities.

In August 2023, the Company entered into an interest rate swap at FRP Collection for an initial notional amount of $26.3 million. The interest rate swap effectively fixes the SOFR component of the corresponding loan at approximately 4.30% for the five-year term. The notional amount of the interest rate swap amortizes over the term consistent with the balance of the corresponding loan.

In August 2023, the Company entered into an interest rate swap at Carillon Point for an initial notional amount of $14.5 million. The interest rate swap effectively fixes the SOFR component of the corresponding loan at approximately 4.30% for the five-year term. The notional amount of the interest rate swap amortizes over the term consistent with the balance of the corresponding loan.

In May 2024, the Company entered into an interest rate swap at Central Fairwinds for an initial notional amount of $15.6 million. The interest rate swap effectively fixes the SOFR component of the corresponding loan at approximately 4.43% for the five-year term. The notional amount of the interest rate swap amortizes over the term consistent with the balance of the corresponding loan.

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In May 2025, the Company entered into an interest rate swap at Greenwood Blvd for an initial notional amount of $20.1 million. The interest rate swap effectively fixes the SOFR component of the corresponding loan at approximately 3.84% for the three-year term. The notional amount of the interest rate swap amortizes over the term consistent with the balance of the corresponding loan.

The fair value of the interest rate swaps have been classified as Level 2 fair value measurements.

The interest rate swaps for FRP Collection, Carillon Point, Central Fairwinds and Greenwood Blvd have been designated and qualify as cash flow hedges and have been recognized on the condensed consolidated balance sheets at fair value, presented within other assets and other liabilities. Gains and losses resulting from changes in the fair value of derivatives that have been designated and qualify as cash flow hedges are reported as a component of other comprehensive income/(loss) and reclassified into earnings in the periods during which the hedged forecasted transaction affects earnings.

The following table summarizes the Company’s derivative financial instruments as of September 30, 2025 and December 31, 2024 (in thousands):


					Fair Value Assets/(Liabilities)
	Notional Value September 30, 2025		Effective Date	Maturity Date	September 30, 2025			December 31, 2024
Interest Rate Swap	$	140,000	March 2023	November 2025	$	(15	)	$	(75	)
Interest Rate Swap		25,416

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City Office REIT, Inc. 10-Q