City Office to Sell Life Science Portfolio for $576M; Shares Jump 30.2%

Shares of acquirer, owner and operator of high-quality office properties City Office REIT, Inc. (CIO) jumped 30.2% in Friday’s extended trade to close at $16.80 after the company announced that it has entered into definitive agreements to sell its holdings in San Diego’s Sorrento Mesa submarket for $576 million.

The company will carry out the sale through two agreements. While the northern part of the portfolio is scheduled to be sold in December 2021 for $395 million, the southern portion will be sold for $181 million in February 2023.

The CEO of City Office, James Farrar, said, “This is an exciting, transformational transaction for the Company. The sale and redeployment position us to complement and elevate the quality of our office portfolio through acquisitions across some of the highest employment and population growth cities in the south and west. Executing this strategy will create a pathway to enhance our earnings per share, expand our net asset value and strengthen our balance sheet.” (See City Office stock chart on TipRanks)

Recently, RBC Capital analyst Michael Carroll reiterated a Buy rating on the stock with a price target of $16, which implies upside potential of 24% from current levels.

Consensus among analysts is a Strong Buy based on 3 Buys and 1 Hold. The average City Office price target of $14.50 implies 12.4% upside potential.

City Office scores a 7 out of 10 from TipRanks’ Smart Score rating system, indicating that the stock is likely to perform in line with market expectations. Shares have gained 56% over the past year.

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