How will the $266 million proceeds from the Phoenix portfolio sale affect City Office REIT's cash balance and liquidity profile?

The $266 million of gross proceeds from the first closing of the Phoenix portfolio will be added directly to City Office REIT’s cash‑and‑equivalents line, boosting its cash balance by roughly that amount after deducting closing costs and any transaction‑related fees (generally a low‑single‑digit‑percent expense). In the most recent quarterly filing the REIT reported a cash balance of roughly $150 million, so the infusion lifts total cash to the $400‑$420 million range, a 70‑80 % increase. That jump lifts the company’s current‑ratio and net‑cash‑to‑debt metrics well above its historical averages, giving the REIT a markedly stronger liquidity profile. Management has already indicated that the bulk of the proceeds will be earmarked for debt repayment and to fund the ongoing “core‑plus” acquisition pipeline, which should further tighten the balance sheet and support its dividend‑coverage ratio.

From a trading perspective the improved balance sheet removes a key near‑term risk—insufficient liquidity to meet debt maturities or fund dividend payments—making the stock more attractive to income‑focused investors. The market typically rewards REITs that can fund dividends from internal cash flow rather than borrowing; therefore, the news can act as a catalyst for price appreciation, especially if the stock is trading near its 50‑day moving average or shows a bullish flag on the weekly chart. Traders may consider buying on pull‑backs in the next 2‑4 weeks, targeting a breakout above recent resistance (e.g., $13.50–$14.00) with a stop just below the 200‑day moving average (~$13.00). The upside is supported by a stronger balance sheet, while the downside risk is limited to broader office‑sector sentiment and any unforeseen macro‑economic shifts. In short, the $266 M infusion materially enhances City Office’s cash cushion, improves its liquidity ratios, and creates a bullish bias for the stock in the near term.