MCME Carell Takes City Office REIT Private in Bold Office Sector Bet

NEW YORK, NY – January 09, 2026 – In a decisive move that signals a strong vote of confidence in the embattled U.S. office market, MCME Carell, a joint venture between activist investor Elliott Investment Management L.P. and real estate specialist Morning Calm Management, LLC, has completed its acquisition of City Office REIT, Inc. (NYSE: CIO). The all-cash transaction, valued at approximately $290 million, takes the publicly traded company private at $7.00 per share and delists its stock from the New York Stock Exchange.

The deal, which received overwhelming support with over 98% of voting stockholders in favor, marks a significant moment for the commercial real estate sector. While many investors remain wary of office properties amid high vacancy rates and the persistence of hybrid work, MCME Carell is making a calculated, contrarian bet that high-quality assets in growing markets are poised for a robust recovery.

A Contrarian Bet on Recovery

The acquisition comes as the U.S. office market sends mixed signals. While national vacancy rates remain near historic highs and are only expected to peak in the coming year, a distinct “flight to quality” has emerged. Data shows that demand for modern, well-located Class A properties with top-tier amenities is gaining momentum, with net absorption for this asset class turning positive for the first time since early 2020. MCME Carell’s move appears laser-focused on this trend.

“We are pleased to have completed this transaction and are excited to have commenced our work to create value within this portfolio,” commented Mukang Cho, Chief Executive Officer of Morning Calm Management. “This investment… underscores our partnership’s continued belief in the recovery of the office sector. We expect to continue to invest in high-quality commercial real estate assets where we see value resulting from the dislocation of the broader sector.”

This belief is not without foundation. The pipeline for new office construction has thinned considerably, which is expected to constrain new supply and rebalance the market over the next few years. Furthermore, with office attendance hitting post-pandemic highs and sublease inventory declining, some analysts project a broader stabilization and recovery beginning in late 2025 and into 2026. By taking City Office REIT private, the joint venture can weather any remaining short-term turbulence without the pressures of public market scrutiny, positioning itself for long-term upside.

From Public Listing to Private Hands

For City Office REIT, the acquisition marks the end of its journey as a public company. The REIT had curated a portfolio of approximately 4.2 million square feet of office space concentrated in high-growth Sun Belt markets, including Dallas, Denver, Phoenix, and Tampa. Its strategy focused on desirable properties like Bloc 83 in Raleigh and Park Tower in Tampa, which fit the profile of assets currently in demand.

Despite its appealing portfolio, the company faced significant financial headwinds. In 2024, it reported a 4.45% decline in revenue and a staggering 148.5% increase in losses, which had been growing annually for five years. Its stock, which peaked at nearly $16 per share in early 2022, had struggled since, reflecting the broader market downturn and investor skepticism.

The $7.00 per share acquisition price, while a substantial discount from its all-time high, represented a premium over its recent trading values and was near its 52-week high. The near-unanimous shareholder approval suggests investors saw the deal as a favorable exit in a challenging environment.

James Farrar, City Office REIT’s now-former Chief Executive Officer, framed the transaction as a success for shareholders. “Today’s closing concludes the delivery of immediate and significant value to CIO’s shareholders as a result of the acquisition,” he stated, reinforcing the board's rationale for accepting the offer.

The Powerhouse Playbook

The strategic logic behind the acquisition becomes clearer when examining the partners in the MCME Carell joint venture. The deal combines the financial might and distressed-investing acumen of Elliott with the specialized, hands-on operational expertise of Morning Calm Management.

Elliott, one of the world's oldest and largest activist hedge funds with approximately $76.1 billion in assets under management, is renowned for its opportunistic and often aggressive approach. The firm has a long history of identifying undervalued assets and complex situations, applying a process-driven philosophy to unlock value where others see only risk. Its real estate strategy is not that of a traditional landlord but of a sophisticated capital provider adept at navigating distressed markets.

Complementing Elliott’s financial prowess is Morning Calm Management, a vertically integrated real estate firm that owns and manages around 11 million square feet of commercial property. Morning Calm specializes in “special situation” investing and takes a hands-on approach to asset management, from acquisition and development to leasing and disposition. Its recent initiatives, including the formation of dedicated credit vehicles to finance office properties, demonstrate a deep and active engagement with the sector’s current capital dislocation.

Together, this partnership is uniquely equipped to execute a value-add strategy. Elliott provides the capital and strategic oversight to acquire the portfolio at an attractive valuation, while Morning Calm provides the operational platform to enhance property performance, improve occupancy, and ultimately drive capital appreciation across the former CIO assets.

A New Chapter for Sun Belt Offices

With the transaction complete, the former City Office REIT portfolio enters a new phase under private ownership. For tenants in properties across cities like Phoenix and Dallas, the change could herald a period of significant investment. Morning Calm's hands-on management style, combined with the joint venture's goal to “create value,” will likely translate into property upgrades, enhanced amenities, and a renewed focus on tenant experience to compete at the top of the market.

For former employees of City Office REIT, the future is less certain. As is common in such take-private mergers, the consolidation of corporate functions can lead to redundancies, a risk noted in filings related to the deal. The company’s previous leadership has stepped down as the corporate entity was merged into a subsidiary of MCME Carell.

Ultimately, the acquisition is a powerful testament to a core investment thesis: that amid the widespread pain in the office sector, there are high-quality assets in strong locations that have been unfairly punished by the market. By acquiring City Office REIT, MCME Carell is not just buying buildings; it is buying an opportunity to capitalize on that dislocation, leveraging its combined expertise to turn market fear into financial gain.