City Office REIT Soars 23.92%—Is This the Dawn of a New Era for Office REITs?

Summary
• City Office REIT (CIO) surges 23.92% intraday, trading at $6.89 amid a $7.00/share all-cash acquisition offer.
• Deal values CIO at $1.1B, offering a 26% premium to its last closing price of $5.56.
• Intraday range of $6.88–$6.93 caps near 52-week high of $6.93, signaling immediate liquidity for shareholders.
• The acquisition by MCME Carell Holdings, backed by Elliott and Morning Calm, marks a pivotal shift in the office REIT sector amid persistent market challenges.

All-Cash Takeout Ignites Shareholder Optimism
City Office REIT’s 23.92% surge is directly tied to its definitive merger agreement with MCME Carell Holdings, which will acquire all outstanding shares at $7.00 per share in an all-cash transaction. The $1.1 billion deal, including debt assumption and preferred stock redemption, offers a 26% premium to CIO’s last closing price and a 39% premium to its 90-day volume-weighted average price. The Board’s unanimous approval and the absence of financing conditions underscore the transaction’s certainty, with the Q4 2025 closing timeline providing clarity amid a historically challenging office sector. Shareholders will receive immediate liquidity, eliminating uncertainty around the REIT’s long-term viability in a market where vacancy rates and remote work trends have pressured fundamentals.

Office REITs Rally on CIO Catalyst, BXP Dips 0.77%
While City Office REIT’s acquisition drives sector-specific optimism, broader office REITs remain mixed. Boston Properties (BXP), a sector leader, dipped 0.77% intraday, reflecting ongoing concerns over Manhattan’s office demand and high vacancy rates. CIO’s all-cash takeout contrasts with peers like Vornado and SL Green, which face prolonged leasing challenges. The transaction highlights a shift toward private ownership and strategic consolidation in the office sector, where liquidity and asset quality are increasingly critical. However, CIO’s premium valuation—despite its 5.4M-square-foot Sun Belt portfolio—suggests a buyer’s premium for stabilized, high-quality assets in growth markets.

Options Playbook: Leverage CIO’s Bullish Momentum with High-Gamma Calls
• Technical Indicators:
- 52W High: $6.93 (Current price at $6.89, nearly breaching key level)
- RSI: 52.46 (Neutral, no overbought/sold signals)
- MACD: 0.062 (Bullish divergence from signal line at 0.095)
- 200D MA: $5.238 (Price 33% above, strong support)
- Bollinger Bands: Price at $6.89 vs. Upper Band $5.79 (Bullish breakout potential)
- K-line pattern: Short-term bearish but long-term ranging (Buy on pullbacks to $5.2875 lower band)
• Trading Setup: CIO’s price action suggests a short-term breakout trade as it tests its 52-week high. With the acquisition price at $7.00, the stock is primed to close near $7.00 by Q4 2025. Investors should monitor the $6.93 intraday high and $6.88 low as pivot points. A pullback to the 5.2875 Bollinger Band could trigger a rebound trade, though the 200D MA at $5.238 remains critical support.
• Top Options Picks:
- CIO20250815C7.5 (Call):
- Strike Price: $7.50
- Expiration: 2025-08-15
- IV Ratio: 33.88% (Moderate)
- Delta: 0.166 (Moderate)
- Theta: -0.0018 (Low time decay)
- Gamma: 0.425 (High sensitivity to price moves)
- Turnover: 2063 (High liquidity)
- Lverage Ratio: 137.90% (High)
- Why this contract? The CIO20250815C7.5 offers aggressive leverage for a short-term trade, with high gamma amplifying gains if the stock breaks above $7.50. The moderate IV and low theta make it ideal for a bullish breakout scenario. A 5% upside from $6.89 (to $7.23) would yield a 15.1% return on the call option.
- CIO20260116C7.5 (Call):
- Strike Price: $7.50
- Expiration: 2026-01-16
- IV Ratio: 13.31% (Low)
- Delta: 0.1549 (Moderate)
- Theta: -0.00026 (Minimal time decay)
- Gamma: 0.368 (Moderate sensitivity)
- Turnover: 561 (Moderate liquidity)
- Lverage Ratio: 137.90% (High)
- Why this contract? The CIO20260116C7.5 provides extended time to capitalize on the acquisition’s execution timeline. Low IV and minimal theta decay make it a conservative long-term play, with leverage amplifying returns if the stock closes near $7.00 by Q4 2025. A 5% upside to $7.23 would generate a 12.4% return on this call.
• Hook: Aggressive bulls should consider CIO20250815C7.5 for a short-term breakout above $7.00, while long-term holders may favor CIO20260116C7.5 to hedge against volatility.

Backtest City Office Reit Stock Performance
The CIO experienced a 24% intraday surge on July 24, 2025, which was followed by a brief period of volatility. The backtest reveals a mixed short-to-medium-term performance, with the 3-day win rate at 49.82%, the 10-day win rate at 49.09%, and the 30-day win rate at 49.28%. The maximum return during the backtest period was 0.39%, which occurred on day 55, indicating that while there was some positive movement, it was relatively modest compared to the initial surge.

CIO’s 52-Week High Within Reach—Act Now to Lock in Acquisition Premium
City Office REIT’s 23.92% intraday surge underscores the immediate liquidity provided by its $7.00/share all-cash acquisition. With the stock trading at $6.89—just $0.11 below the offer price—investors must act swiftly to secure the 26% premium before the Q4 2025 closing. Technicals suggest a bullish breakout as the 52-week high of $6.93 is tested, with the 200D MA at $5.238 acting as a critical support level. Meanwhile, sector leader Boston Properties (BXP) dipped 0.77% intraday, highlighting divergent momentum within office REITs. For those seeking leverage, the CIO20250815C7.5 call option offers a high-gamma trade to capitalize on the imminent price action. Watch for a $7.00 close by Q4 2025 and consider short-term calls for a final push.