Oksenholt Capital Slams City Office REIT’s “Lowball” Elliott Capital Offer, Calls for New Leadership and Strategic Restructuring

 

SCOTTSDALE, Ariz.--(BUSINESS WIRE)-- Oksenholt Capital Management LLC (“Oksenholt Capital”) today announced that its Chief Executive Officer, Jon Oksenholt, has sent a formal letter to the Chairman of the Board of City Office REIT, Inc. (NYSE: CIO), outlining serious concerns about the company’s leadership, performance, and opposition to the proposed merger with affiliates of Elliott Capital.

• The letter identified several issues related to City Office REIT, Inc.’s (“CIO”) current management and voiced opposition to the pending proposed acquisition/merger with affiliates of Elliott Capital.
• Affiliates of Oksenholt Capital Management LLC have Acquired Several Hundred Thousand Shares of City Office REIT, Inc., Comprising More than the Individual Ownership of the CEO of City Office REIT, Inc.
• They have lost confidence in City's Present Leadership
• They believe the company is Significantly Undervalued and Proposes Restructuring Plan & Recommends Voting “NO” on Proposed Acquisition/Merger with MCME Carell
• Cautions Against Sale of City’s Business to Private Equity on Unfavorable Terms to Shareholders
• Identifies Strategic Plan to Unlock City’s Intrinsic Value, Improve Efficiencies, and Maximize Value for Shareholders

On the Current State of City Office REIT, Inc. and its Executive Leadership:

"City's stock price has fallen from its 2022 high of $21.24 to $5.57 as of July 23, 2025, (the closing price prior to the merger announcement), reflecting a loss of approximately $626,800,000 in market capitalization. While the shareholders have suffered significant loss due to the drastic decline in stock price, the CEO based in Canada, James Farrar, has continued to receive millions of dollars in salary, bonuses & stock awards notwithstanding the significant underperformance of City. For example, in 2024, James Farrar received $2,326,635 in total compensation. Of this total $525,000 was salary, $656,250 was received as a bonus, $1,054,368 was awarded as stock and $91,017 came from other types of compensation according to issued 2024 proxy statements.

And, despite the significant benefit personally received by James Farrar, the CEO has failed to take accountability or provide meaningful solutions for the continued decline of City. For example, while the stock cratered in 2022, City’s CEO wrote a very long preamble to the 35-page ESG report but only wrote a very short letter for the annual report which was long on excuses & short on solutions to course correct City’s continued decline. That would be the last annual letter written by CEO James Farrar as the stock continued to crater.”

On the Proposed Merger/Acquisition with MCME Carell, affiliates of MCME Capital:

"Despite the horrid performance of the stock over the years, we are convinced that there is a significant opportunity at hand for City to unlock its intrinsic value for the benefit of all its shareholders (which we believe may be closer to City’s recent book value of ~$15.00 per share than the current offer). As such, we object to the proposed merger with affiliates of Elliott Capital, which offer was done in the dead of night behind closed doors, effectively is a liquidation sale, and is not in the best interests of City or its shareholders.

In particular, throughout 2025, City kept shareholders in the dark as it negotiated a sale behind closed doors rather than as part of an open & competitive bid process. We believe that certain key elements of a typical take private investment have the potential to be highly beneficial to shareholders, particularly where the transaction entails the addition of new independent directors & the appointment of a new senior management team. However, we view the current offer as too low & believe that it fails to maximize shareholder value. As such, if our affiliates remain shareholders, we will oppose any sale with price or terms that are disadvantageous to current shareholders or limit the options for a new senior management team to maximize long-term shareholder value. Given the Company's market position & current liquidity, we fail to see how selling the company at or around the current stock price maximizes long-term value for shareholders.”

On Oksenholt Capital Management's Plan for Restoring and Enhancing Value at City:

". . . to realize City's value potential & restore its enviable Sun Belt market position & its financial performance, rather than entering into what for all intents and purposes is a quick liquidation sale, we believe City must promptly implement restructuring, strategic visioning & cost savings plans, including some or all the following:

• Eliminate wasteful & unproductive expenses, resulting in annual savings of $2 to $7 million.
• Achieve $0.90 of earnings per share based solely on the initial impact of cost cutting and stabilizing revenues.
• Restore City’s strategic Sun Belt market position through reinvestment of a portion of these savings into operational & physical improvements.
• Add ability to lease in-house to supplement paid third party broker leasing.
• Grow revenue & occupancy by reducing churn with aggressive tenant retention programs.
• Enable City to maintain & grow its current dividend.
• Set City on a path to recovering its position as a leading Sun Belt office REIT.
• Solicit additional bids for potential acquisitions in an open & competitive format to ensure competitive pricing and valuation, as the current deal was done behind closed doors & the best price is never achieved in a non-competitive bid process.”

On the Need for New Independent Directors & New Leadership at the Senior Management Level without Potential Conflicts of Interest:

"We also believe that in order to be successful, City's senior management must:

1. Be actively involved in operations, visit the assets regularly & be US based (all assets are in the US with none in Canada).
2. Not have conflicts of interest such as administrative services agreements that benefit the company’s top executives, including CEO, James Farrar.
3. Cancel all leases for Canadian office space. This is a US based company with a heavy presence in Sun Belt Markets & it is wasteful & inefficient to be operating out of foreign office space not owned by City.
4. Stop hiring staff in Canada – recent LinkedIn posts for an analyst job were shown as being in Canada. As noted, given all assets are within the US, City needs staff that are familiar with and physically close to City’s assets in order to generate the most value.
5. Stop all executive bonuses when the stock price is declining. The CEO & the other top executives should not be rewarded when the shareholders are suffering year after year.
6. Ensure that the company’s vacant space is properly marketed & accessible to prospective tenants.
7. Reduce reliance on third party vendors such as property managers (JLL) & leasing brokers.
8. Initiate a review to further unlock the value of City’s land, including parking lots (such as in the Tampa deal).
9. Initiate a comprehensive review of each buildings highest & best use along with a long-term capital improvement plan. One of the company’s best located assets has leaky windows (an easy fix) which are unappealing to tenants & lead to tenant churn.”

On the Value Potential at City:

"With the right leadership in place to execute Oksenholt Capital Management’s plan, we are confident that City will once again be able to harness the strength of its Sun Belt real estate portfolio, thus creating significant value for shareholders. We also believe it is critical that City promptly add new independent directors who are focused on improving long-term shareholder value, ensuring that shareholder interests are protected and recruiting a new senior management team that is US based (and in particular, operating out of one of the company’s offices) & capable of executing a strategy to improve City's performance & maximize shareholder value.

Oksenholt Capital Management LLC's Conclusion:

“We strongly believe in City's long-term prospects and are confident that with the right leadership and independent directors in place, City can recover its position as a leading Sun Belt office REIT and unlock City's value potential for all shareholders.”

Oksenholt Capital Management LLC and its affiliates are significant shareholders and are committed to helping City Office REIT, Inc. improve its long-term financial and share price performance. Oksenholt Capital Management LLC informed the Chairman that it welcomes the opportunity to meet and present its recommendations in person.

*Information contained herein is deemed reliable but not guaranteed*

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cio@oksenholtgroup.com

Source: Oksenholt Capital Management LLC