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Real Estate Investments
12 Months Ended
Dec. 31, 2014
Real Estate [Abstract]  
Real Estate Investments

4. Real Estate Investments

Acquisitions

During the years ended December 31, 2014, 2013 and 2012, the Company acquired the following properties:

 

Property

   Date Acquired      Percentage Owned  

Central Fairwinds

     May 2012         90 %(1) 

Corporate Parkway

     May 2013         100

Washington Group Plaza

     June 2013         100 %(1) 

Cherry Creek

     January 2014         100

Plaza 25

     June 2014         100

Lake Vista Pointe

     July 2014         100

Florida Research Park

     Nov 2014         100

 

(1) At acquisition of Washington Group Plaza in June 2013 and Central Fairwinds in May 2012, the Company held a 90% interest in each of the properties. Upon the IPO and Formation Transactions, the Company increased its ownership share in the Washington Group Plaza property to 100%.

The above acquisitions have been accounted for as business combinations.

On January 2, 2014, the Predecessor acquired the remaining 57.7% interest it did not already own in ROC-SCCP Cherry Creek I, LP (“Cherry Creek”) for approximately $12.0 million. The acquisition was financed through a new $50 million mortgage loan, the proceeds of which were used to repay $36 million of existing debt of Cherry Creek, fund the payment of $12.0 million to the seller, pay $1.2 million of deferred financing costs and $0.8 million in transactions costs.

 

The following table summarizes the Company’s allocation of the purchase price of assets acquired and liabilities assumed during the year ended December, 2014 (in thousands):

 

     Cherry Creek  

Land

   $ 25,745   

Buildings and improvements

     15,771   

Tenant improvements

     4,372   

Acquired intangible assets

     12,009   

Accounts payable and other liabilities

     (815

Lease intangible liability

     (249
  

 

 

 

Fair value of assets and liabilities at acquisition

$ 56,833   
  

 

 

 

The Company recognized expenses relating to the Cherry Creek acquisition of $806,344 for the year ended December 31, 2014. A gain of $4.5 million was recognized from the fair value adjustment associated with the Predecessor’s original ownership due to a change in control, calculated as follows (in thousands):

 

Fair value of assets and liabilities acquired

$ 56,833   

Less existing mortgage in Cherry Creek

  (36,000
  

 

 

 
  20,833   

Less cash paid to seller

  (12,021
  

 

 

 

Fair value of 42.3% equity interest

  8,812   

Carrying value of investment in Cherry Creek

  (4,337
  

 

 

 

Gain on existing 42.3% equity interest

$ 4,475   
  

 

 

 

On June 4, 2014, the Company, through the Operating Partnership, acquired 100% of CIO Plaza 25 Limited Partnership, a property in Denver, Colorado for $24.3 million. The following table summarizes the Company’s allocation of the purchase price of assets acquired and liabilities assumed during the year ended December, 2014 (in thousands):

 

     Plaza 25  

Land

   $ 1,764   

Buildings and improvements

     18,487   

Tenant improvements

     2,076   

Acquired intangible assets

     2,924   

Prepaid expenses and other assets

     2   

Accounts payable and other liabilities

     (641

Lease intangible liability

     (328
  

 

 

 

Total consideration

$ 24,284   
  

 

 

 

On July 18, 2014, the Company, through the Operating Partnership, acquired 100% of CIO Lake Vista Pointe Limited Partnership, a property in Dallas, Texas for $26.7 million. The following table summarizes the Company’s allocation of the purchase price of assets acquired and liabilities assumed during the year ended December 31, 2014 (in thousands):

 

     Lake Vista Pointe  

Land

   $ 4,115   

Buildings and improvements

     17,562   

Tenant Improvements

     3,038   

Acquired intangible assets

     3,685   

Prepaid expenses and other assets

     30   

Accounts payable and other liabilities

     (1,733
  

 

 

 

Total consideration

$ 26,697   
  

 

 

 

 

On November 18, 2014, the Company, through the Operating Partnership, acquired 100% of CIO Florida Research Park Limited Partnership, a property in Orlando, Florida for $26.6 million. The following table summarizes the Company’s allocation of the purchase price of assets acquired and liabilities assumed during the year ended December 31, 2014 (in thousands):

 

     Florida
Research Park
 

Land

   $ 4,415   

Buildings and improvements

     16,376   

Tenant Improvements

     1,399   

Acquired intangible assets

     4,309   

Prepaid expenses and other assets

     104   

Accounts payable and other liabilities

     (41
  

 

 

 

Total consideration

$ 26,562   
  

 

 

 

The operating results of the acquired properties, during the year ended December 31, 2014, since the date of acquisition have been included in the Company’s consolidated and combined financial statements. The following table represents the results of the properties’ operations since the date of acquisition on a stand-alone basis (in thousands).

 

     Year ended
December 31, 2014
     Year ended
December 31, 2013
 

Operating revenues

   $ 11,282       $ 7,155   

Operating expenses

     (10,007      (7,570

Interest

     (3,987      (1,754
  

 

 

    

 

 

 
$ (2,712 $ (2,169
  

 

 

    

 

 

 

The following table summarizes the Company’s allocations of the purchase price of assets acquired and liabilities assumed during the year ended December 31, 2013 (in thousands):

 

     Washington
Group Plaza
     Corporate
Parkway
     Total
December 31, 2013
 

Land

   $ 12,748       $ 3,756       $ 16,504   

Buildings and improvements

     18,000         18,580         36,580   

Tenant improvements

     2,717         1,909         4,626   

Prepaid expenses and other assets

     219         6         225   

Deferred leasing costs

     12         —           12   

Acquired intangible assets

     10,470         4,149         14,619   

Accounts payable and accrued liabilities

     (1,234      —           (1,234

Acquired intangible liabilities

     (18      —           (18
  

 

 

    

 

 

    

 

 

 

Total Consideration

$ 42,914    $ 28,400    $ 71,314   
  

 

 

    

 

 

    

 

 

 

 

The following table summarizes the Company’s allocations of the purchase price of assets acquired and liabilities assumed during the year ended December 31, 2012 (in thousands):

 

     Central Fairwinds
December 31, 2012
 

Land

   $ 1,747   

Buildings and improvements

     9,073   

Tenant improvements

     678   

Prepaid expenses and other assets

     57   

Acquired intangible assets

     2,645   

Accounts payable and accrued liabilities

     (312
  

 

 

 

Total Consideration

$ 13,888   
  

 

 

 

The following table presents the unaudited revenues and income from continuing operations for Corporate Parkway, Washington Group Plaza, Cherry Creek, Plaza 25, Lake Vista Pointe and Florida Research Park on a pro forma basis as if the Company had completed the acquisition of the properties as of January 1, 2013 (in thousands):

 

    Year ended
December 31, 2014
    Year ended
December 31, 2013
 

Total revenues as reported by City Office REIT, Inc. and Predecessor

  $ 36,896      $ 20,491   

Plus: Corporate Parkway

    —          1,131   

Washington Group Plaza

    —          3,856   

Cherry Creek

    —          7,039   

Plaza 25

    1,650        3,911   

Lake Vista Pointe

    1,967        3,626   

Florida Research Park

    2,352        2,674   
 

 

 

   

 

 

 

Proforma total revenues

$ 42,865    $ 42,728   
 

 

 

   

 

 

 

Total operating income as reported by the City Office REIT, Inc. and Predecessor

$ 2,615    $ 2,771   

Property acquisition costs

  2,133      (2,133

Plus: Corporate Parkway

  —        211   

Washington Group Plaza

  —        842   

Cherry Creek

  —        1,942   

Plaza 25

  (67   (111

Lake Vista Pointe

  397      801   

Florida Research Park

  (758   (625
 

 

 

   

 

 

 

Proforma operating income

$ 4,320    $ 3,698