Hold Rating for City Office REIT Amid Sector Uncertainty and Debt Concerns

Barry Oxford, an analyst from Colliers Securities, maintained the Hold rating on City Office REIT (CIO – Research Report). The associated price target was lowered to $5.25.

Barry Oxford has given his Hold rating due to a combination of factors affecting City Office REIT. Despite the company’s strong performance in leasing, with a higher-than-expected Core FFO per share and an increase in occupancy rates, there is ongoing uncertainty in the office sector. This uncertainty is compounded by banks’ reluctance to issue new loans in this sector, which affects investor confidence.
Additionally, City Office REIT has a high level of debt, with a significant portion maturing soon, which poses a risk. The company’s valuation, while compelling in the long term, is influenced by these sector-wide challenges. The price target set reflects a modest expected return, aligning with the general market outlook and contributing to the Hold rating.