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City Office REIT (CIO)
NYSE:CIO
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City Office REIT
(NYSE:CIO)
61Neutral
Positive Factors
Earnings
The company reported Core FFO per share of $0.30, which was two cents higher than consensus estimates and four cents higher than analyst numbers.
Market Position
The portfolio is in better than average markets in the Southwest and Southeast with highly amenitized buildings.
Operational Performance
During the quarter, the company executed approximately 144K sqft of new and renewal leases, which included 101K sqft of new leasing and 43K sqft of renewals.
Negative Factors
Asset Impairment
The company incurred an impairment of $8.5 million on the sale of a property in Denver, CO.
Debt Level
The company has an above average debt level at approximately 79% debt-to-total market capitalization including preferred.
Investor Sentiment
Persistence of general investor uncertainty in the office sector and banks unwillingness to do new loans in the sector.
City Office REIT (CIO) vs. S&P 500 (SPY)
Market Cap
$199.37M
Dividend Yield8.1%
Average Volume (3M)215.51K
Price to Earnings (P/E)―
Beta (1Y)0.96
Revenue Growth-4.92%
EPS Growth-128.59%
CountryUS
Employees20
SectorReal Estate
Sector Strength67
IndustryREIT - Office
Share Statistics
EPS (TTM)-0.09
Shares Outstanding40,358,240
10 Day Avg. Volume136,368
30 Day Avg. Volume215,513
Financial Highlights & Ratios
PEG Ratio0.80
Price to Book (P/B)0.27
Price to Sales (P/S)0.00
P/FCF Ratio3.88
Enterprise Value/Market Cap0.89
Enterprise Value/Revenue0.26
Enterprise Value/Gross Profit1.76
Enterprise Value/Ebitda0.55
Forecast
1Y Price Target
$6.13Price Target Upside24.09% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
City Office REIT Business Overview & Revenue Model
Company DescriptionCity Office REIT, Inc. (CIO) is a real estate investment trust focused on acquiring, owning, and operating high-quality office properties located in some of the strongest office markets in the United States. The company primarily invests in metropolitan areas in the Southern and Western United States, emphasizing markets with strong economic fundamentals and growth potential. CIO aims to provide value to its shareholders through strategic property acquisitions and active asset management.
How the Company Makes MoneyCity Office REIT makes money primarily through the rental income generated from leasing its office properties to a diverse range of tenants. The company's revenue model is built on acquiring and managing a portfolio of office buildings in economically vibrant markets where demand for office space is strong. CIO generates income through long-term lease agreements, which provide a stable and predictable cash flow. Additionally, the company seeks to increase property value through strategic upgrades and active management, which can lead to higher occupancy rates and rental rates. The REIT structure also allows City Office to benefit from tax advantages, as it must distribute at least 90% of its taxable income to shareholders in the form of dividends, providing an attractive yield to investors.
City Office REIT Financial Statement Overview
Summary
City Office REIT faces profitability challenges as reflected in negative net margins and return on equity. The company maintains a strong EBITDA margin and a reasonable debt-to-equity ratio, demonstrating operational efficiency and moderate leverage. Cash flow generation remains a relative strength, providing some support despite the net income losses. The firm should focus on improving revenue growth and profitability to enhance financial performance.Income Statement
City Office REIT's TTM (Trailing-Twelve-Months) income statement shows a gross profit margin of 59.76% and an EBIT margin of 10.57%. However, the TTM net profit margin is negative at -11.11%, indicating challenges in profitability. Revenue growth has been declining, with a decrease from the previous year. The EBITDA margin remains relatively strong at 44.06%, highlighting operational efficiency despite net losses.55
Neutral
Balance Sheet
The company's balance sheet reveals a debt-to-equity ratio of 0.89, suggesting a moderate level of leverage. The equity ratio stands at 50.53%, indicating a healthy cushion of equity. However, the return on equity is negative due to the net loss, reflecting current profitability challenges. Overall, the balance sheet position is stable but not without risks due to leverage.60
Neutral
Cash Flow
City Office REIT's cash flow statement shows a stable operating cash flow to net income ratio of -2.91, which is positive given the net income loss. Free cash flow has decreased in the TTM period, but the company maintains positive free cash flow, indicating resilience in cash generation capabilities. The free cash flow to net income ratio is also negative, echoing the net income challenges.65
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 168.89M | 171.13M | 179.10M | 180.49M | 164.04M | 160.84M | Gross Profit |
| 100.90M | 101.67M | 109.10M | 112.75M | 106.04M | 102.53M | EBIT |
| 17.85M | 18.68M | 31.27M | 35.25M | 33.23M | 31.47M | EBITDA |
| 74.40M | 75.16M | 94.26M | 97.75M | 90.55M | 91.84M | Net Income Common Stockholders |
| -18.76M | -17.68M | -2.68M | 25.20M | 484.39M | -21.84M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 22.00M | 18.89M | 30.08M | 28.19M | 21.32M | 25.30M | Total Assets |
| 1.44B | 1.46B | 1.51B | 1.57B | 1.60B | 1.16B | Total Debt |
| 645.88M | 646.97M | 669.51M | 890.60M | 653.65M | 677.24M | Net Debt |
| 623.88M | 628.09M | 639.43M | 862.41M | 632.33M | 651.94M | Total Liabilities |
| 709.99M | 721.13M | 738.74M | 771.26M | 730.92M | 739.42M | Stockholders Equity |
| 725.84M | 733.86M | 772.23M | 802.83M | 869.62M | 416.93M |
| Cash Flow | Free Cash Flow | ||||
| 54.56M | 58.86M | 57.22M | 97.11M | 65.03M | 52.13M | Operating Cash Flow |
| 54.56M | 58.86M | 57.22M | 106.68M | 73.22M | 59.92M | Investing Cash Flow |
| -34.06M | -40.29M | -41.34M | -47.05M | -17.38M | -27.80M | Financing Cash Flow |
| -27.24M | -28.01M | -16.75M | -57.63M | -59.53M | -73.69M |
City Office REIT Technical Analysis
Positive
4.94
Price Trends
4.89
Positive
4.97
Negative
5.15
Negative
Market Momentum
0.01
Positive
51.27
Neutral
48.94
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CIO, the sentiment is Positive. The current price of 4.94 is below the 20-day moving average (MA) of 4.97, above the 50-day MA of 4.89, and below the 200-day MA of 5.15, indicating a neutral trend. The MACD of 0.01 indicates Positive momentum. The RSI at 51.27 is Neutral, neither overbought nor oversold. The STOCH value of 48.94 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CIO.
City Office REIT Risk Analysis
City Office REIT disclosed 60 risk factors in its most recent earnings report. City Office REIT reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
City Office REIT Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
61 Neutral | $199.37M | ― | -2.51% | 8.10% | -4.92% | -128.59% | |
60 Neutral | $2.82B | 10.29 | 0.39% | 8508.26% | 5.90% | -17.41% | |
56 Neutral | $183.31M | ― | -9.96% | 2.26% | -18.97% | -14.57% | |
50 Neutral | $304.65M | ― | -12.23% | 4.81% | -9.39% | -72.30% | |
49 Neutral | $109.58M | ― | -10.71% | 16.41% | -18.92% | -15.81% | |
42 Neutral | $16.57M | ― | -15.03% | 17.11% | -11.91% | -80.43% |
* Real Estate Sector Average
Performance Comparison
CIO
City Office REIT
4.94
0.30
6.47%
FSP
Franklin Street Properties
1.77
-0.09
-4.84%
HPP
Hudson Pacific Properties
2.08
-3.08
-59.69%
OPI
Office Properties Income
0.23
-1.97
-89.55%
ONL
Orion Office REIT
1.86
-1.51
-44.81%
City Office REIT Earnings Call Summary
Earnings Call Date:May 02, 2025
(Q1-2025)
| % Change Since: -5.90%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Positive
The earnings call highlighted significant achievements in redevelopment projects, positive leasing trends, and strong financial performance. Although there are expected short-term occupancy dips and potential disruptions due to redevelopment, the long-term outlook and strategic initiatives indicate a positive trajectory.Q1-2025 Updates
Positive Updates
Redevelopment of City Center Property
Entered into an agreement with Property Markets Group to lead the development of a 49-story residential condominium and mixed-use tower. The project is expected to be sold under the luxury Waldorf Astoria Residences brand and has tremendous long-term value creation potential.
Positive Trends in Office Real Estate
National office leasing volume was 15% higher than a year ago, with higher-quality office spaces in Sunbelt markets continuing to outperform. Company achieved significant leasing activity, including a 34,000 square foot lease at Papago Tech in Phoenix.
Successful Leasing Transactions
Negotiated a transaction to bring a new 66,000 square foot tenant into the Greenwood Boulevard property in Orlando with a 10-year lease, and extended the existing tenant's lease on 58,000 square feet to 2033.
Positive Financial Performance
First quarter net operating income was $26.0 million, $500,000 higher than the fourth quarter. Core FFO was $12.3 million, $600,000 higher than the previous quarter.
Strong Rent Growth
Realized an 8.5% positive cash releasing spread on renewals over the last 12 months. Same-store cash NOI increased 4.4% in the first quarter compared to the prior year.
Negative Updates
Expected Decrease in Occupancy
Portfolio occupancy ended the quarter at 84.9%, slightly lower than the prior quarter. Expected occupancy will decrease in the second quarter due to known vacancies and tenant movements.
Potential Short-term Disruptions
Redevelopment of City Center's parking structure may lead to temporary parking disruptions for existing tenants, although alternative arrangements are being made.
Company Guidance
During the City Office REIT First Quarter 2025 Earnings Conference Call, the company provided guidance on several key metrics. They reported a net operating income of $26.0 million for the first quarter, which marked an increase of $500,000 from the previous quarter. Core FFO was $12.3 million, or $0.30 per share, up by $600,000 quarter-over-quarter. Additionally, the company's same-store cash NOI rose by 4.4% compared to the prior year, driven primarily by strong performance in Raleigh. Portfolio occupancy was reported at 84.9%, with expectations to end the year within the 85% to 87% range. The company has $646 million in total debt, with a net debt-to-EBITDA ratio of 6.7 times. They have $42 million undrawn on their credit facility and $37 million in cash and restricted cash as of quarter-end. The company is also working on strategic extensions for property debt maturities in 2025 and exploring financing options for unencumbered properties to enhance liquidity.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.