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City Office REIT (CIO)
NYSE:CIO

City Office REIT (CIO) AI Stock Analysis

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City Office REIT

(NYSE:CIO)

55Neutral
City Office REIT's overall stock score reflects a balance of challenges and opportunities. Strengths include a strong balance sheet and strategic market focus, but declining revenues and profitability, along with technical indicators pointing to a bearish trend, weigh down the score. Valuation concerns due to negative earnings and sustainability of high dividend yield also impact the outlook.
Positive Factors
Financial Performance
Same-store cash NOI increased 3.3% year-over-year, as a result of strong leasing.
Guidance Expectations
The company increased their guidance expectations for year-end occupancy and Same-Store cash NOI change.
Market Position
The portfolio is in better than average markets in the Southwest and Southeast with highly amenitized buildings.
Negative Factors
Debt Level
The company has an above average debt level at approximately 79% debt-to-total market capitalization including preferred.
Investor Uncertainty
General investor uncertainty in the office sector remains and banks unwillingness to do new loans in the sector.
Property Sale Impairment
The company incurred an impairment of $8.5 million on the sale of a property in Denver, CO.

City Office REIT (CIO) vs. S&P 500 (SPY)

City Office REIT Business Overview & Revenue Model

Company DescriptionCity Office REIT, Inc. (NYSE: CIO) invests in high-quality office properties in 18-hour cities with strong economic fundamentals, primarily in the Southern and Western United States. At September 30, 2020, CIO owned office complexes comprising 5.8 million square feet of net rentable area (NRA).
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 challenges with declining revenues and profitability, but it maintains a solid balance sheet with no debt and strong equity positions. While cash flow generation is stable, the company must address revenue issues to ensure long-term financial health.
Income Statement
45
Neutral
City Office REIT shows a declining revenue trend, with revenue dropping to zero in the latest period. The company has experienced significant fluctuations in net income, moving from a profit to a loss. The EBIT and EBITDA margins were strong historically but cannot be assessed for the latest period due to the lack of revenue.
Balance Sheet
65
Positive
City Office REIT maintains a strong equity position, with a debt-to-equity ratio improving significantly as total debt was eliminated. The equity ratio remains robust, indicating financial stability. However, the return on equity has been volatile, reflecting inconsistent net income performance.
Cash Flow
70
Positive
The company demonstrates stable operating cash flow, with a positive free cash flow indicating good cash generation. However, the inability to grow free cash flow significantly and the reliance on past performance for stability may pose risks if revenue does not recover.
Breakdown
Dec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
171.13M179.10M180.49M164.04M160.84M
Gross Profit
101.67M109.10M112.75M106.04M102.53M
EBIT
18.68M31.27M35.25M33.23M31.47M
EBITDA
75.16M94.26M97.75M90.55M91.84M
Net Income Common Stockholders
-25.10M-2.68M25.20M484.39M-21.84M
Balance SheetCash, Cash Equivalents and Short-Term Investments
18.89M30.08M28.19M21.32M25.30M
Total Assets
1.46B1.51B1.57B1.60B1.16B
Total Debt
646.97M669.51M890.60M653.65M677.24M
Net Debt
628.09M639.43M862.41M632.33M651.94M
Total Liabilities
721.13M738.74M771.26M730.92M739.42M
Stockholders Equity
733.86M772.23M802.83M869.62M416.93M
Cash FlowFree Cash Flow
58.86M57.22M97.11M65.03M52.13M
Operating Cash Flow
58.86M57.22M106.68M73.22M59.92M
Investing Cash Flow
-40.29M-41.34M-47.05M-17.38M-27.80M
Financing Cash Flow
-28.01M-16.75M-57.63M-59.53M-73.69M

City Office REIT Technical Analysis

Technical Analysis Sentiment
Positive
Last Price5.04
Price Trends
50DMA
4.89
Positive
100DMA
5.05
Negative
200DMA
5.18
Negative
Market Momentum
MACD
<0.01
Negative
RSI
58.20
Neutral
STOCH
89.82
Negative
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 5.04 is above the 20-day moving average (MA) of 4.79, above the 50-day MA of 4.89, and below the 200-day MA of 5.18, indicating a neutral trend. The MACD of <0.01 indicates Negative momentum. The RSI at 58.20 is Neutral, neither overbought nor oversold. The STOCH value of 89.82 is Negative, 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 (59)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
59
Neutral
$2.72B11.590.11%8770.69%5.44%-16.52%
EQEQC
56
Neutral
$169.73M4.102.10%-4.47%-44.64%
CICIO
55
Neutral
$203.41M-2.35%8.03%-4.45%-147.11%
FSFSP
51
Neutral
$159.49M-7.70%2.60%-19.86%-9.50%
ONONL
50
Neutral
$98.30M-12.49%18.29%-15.46%-81.31%
HPHPP
48
Neutral
$322.32M-11.53%4.50%-11.47%-89.12%
OPOPI
46
Neutral
$26.94M-11.33%10.37%-5.92%-54.08%
* Real Estate Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
CIO
City Office REIT
5.04
0.75
17.48%
FSP
Franklin Street Properties
1.54
-0.36
-18.95%
HPP
Hudson Pacific Properties
2.22
-3.65
-62.18%
OPI
Office Properties Income
0.38
-1.61
-80.90%
EQC
Equity Commonwealth
1.58
-17.19
-91.58%
ONL
Orion Office REIT
1.75
-1.24
-41.47%

City Office REIT Earnings Call Summary

Earnings Call Date: Feb 20, 2025 | % Change Since: 1.20% | Next Earnings Date: May 2, 2025
Earnings Call Sentiment Neutral
City Office REIT showed strong leasing momentum, property upgrades, and strategic market focus, particularly in Sunbelt regions. However, financials were impacted by non-cash impairment charges and higher interest expenses. The sentiment is cautiously optimistic, with a focus on growth in favorable markets.
Highlights
Leasing Volume and Rent Growth
Overall leasing volume in Q4 2024 was over 90% of pre-pandemic volumes, with the Sunbelt markets at 95%. City Office REIT saw a 35% increase in new and renewal leases over 2023, and a 5.9% cash rent roll-up upon renewal.
Property Upgrades and Occupancy
Completed significant property upgrades at nine properties and constructed 231,000 square feet of modern spec suites, with over 75% leased. Portfolio occupancy increased to 85.4%, a two percentage point increase from the prior quarter.
Financial Performance
Net operating income in Q4 was $25.5 million, $900,000 higher than Q3, and core FFO increased by $600,000 to $11.7 million. Same-store cash NOI increased by 3.3% compared to Q4 2023.
Disposition of Superior Point
Sold Superior Point in Denver for $12 million, a strategic decision to exit a challenging submarket and focus on value creation in stronger markets.
Redevelopment Plans in Saint Petersburg
Received unanimous approval for a redevelopment site plan in downtown Saint Petersburg, including 164 residential condos and 78,000 square feet of retail and office.
Lowlights
Non-Cash Impairment Charge
Recorded an $8.5 million non-cash impairment charge related to the sale of Superior Point.
Interest Expense Impact
Higher interest expense marginally offset the NOI increase in Q4 2024.
AFFO Impacted by Leasing Costs
AFFO was $4.3 million, impacted by $2.3 million in lease commissions and $1.3 million in property renovation costs.
Vacancies in Non-Sunbelt Markets
Two known vacates totaling 102,000 square feet in non-Sunbelt properties expected in the first half of 2025.
Company Guidance
During the City Office REIT, Inc. fourth-quarter 2024 earnings call, the company provided guidance for 2025, focusing on driving long-term cash flow growth. They reported a fourth-quarter net operating income (NOI) of $25.5 million, up $900,000 from the third quarter, with core funds from operations (FFO) at $11.7 million or $0.28 per share. Despite two known vacates in non-Sunbelt properties totaling 102,000 square feet, they anticipate an increase in overall portfolio occupancy driven largely by leasing momentum in Sunbelt markets. The company expects a 2.5% to 4.5% increase in same-store cash NOI compared to the previous year. As of December 31, 2024, their portfolio occupancy was 85.4%, with signed leases yet to commence potentially increasing it to 87.6%. The call also highlighted a significant lease expansion in Dallas with a 17% higher rental rate and the sale of a property in Denver for $12 million. Looking ahead, City Office REIT intends to focus on leasing, active asset management, and value creation opportunities, with core FFO per share growth expected over time.
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.