City Office REIT announces Tampa mixed-use tower project

City Office REIT, Inc. (NYSE:CIO), a real estate investment trust currently trading at $4.51 with a market capitalization of $183 million, has entered into a contribution agreement through its subsidiary City Center STF, LP ("CCSTF") with 150 2ND AVE S JV, LLC, a developer entity, to construct a mixed-use tower in Tampa, Florida. According to InvestingPro analysis, the company appears undervalued based on its Fair Value metrics, while maintaining an attractive 9.26% dividend yield. The agreement, dated today, outlines the terms under which CCSTF will contribute a parcel of land to the developer in exchange for a 50% membership interest.

The planned project is an approximately 49-story tower featuring 70,000 square feet of office space, 15,000 square feet of retail space, and 432,000 square feet of luxury residential condominium units. The land contribution from CCSTF includes a standalone parking garage that currently serves the City Center property.

The developer must meet certain conditions within 30 months from today, including securing financing, achieving presales of residential units, and reaching a minimum return-on-cost threshold. These conditions must be met before CCSTF is obliged to transfer the land. The costs associated with meeting these conditions are the responsibility of the developer.

Once the transaction is finalized, the members of the Developer are expected to sign an amended and restated operating agreement. This agreement will establish the management structure and outline the rights of CCSTF, including approval rights over major decisions and the option to market and sell portions of the project at specific times.

The agreement values the land and CCSTF’s capital contribution at the lesser of $20 million or $60 per square foot of the saleable/leasable area of the residential and retail components, with any excess considered a profit interest for CCSTF. The developer will also contribute $17 million in cash and retain a 50% interest. InvestingPro data shows the company trading at a notably low Price/Book ratio of 0.28, suggesting potential value in its asset base. Discover more insights about CIO’s valuation and 8 additional key ProTips with an InvestingPro subscription.

If the project proceeds, the existing parking garage will be demolished, temporary parking will be arranged for City Center tenants, and the new project is expected to take around three years to complete. The Developer must also construct and convey 300 parking spaces to CCSTF at no cost.

The company’s indirect membership interest in the Developer will be held through a newly-formed taxable REIT subsidiary. The details provided in this press release are summaries and subject to the satisfaction of the conditions in the Contribution Agreement. There is no assurance that the project will proceed as planned or at all. This report contains forward-looking statements and investors are cautioned that actual results may vary from expectations. For comprehensive analysis of CIO’s financial health (currently rated as FAIR with a score of 2.07) and detailed valuation metrics, access the full Pro Research Report, available exclusively on InvestingPro, along with reports for 1,400+ other US stocks.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.