City Office REIT (CIO) AI Stock Analysis

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City Office REIT

(NYSE:CIO)

Rating:57Neutral

Price Target:

$5.00

▼(-1.77%Downside)

City Office REIT's overall stock score is primarily influenced by its financial performance and earnings call insights. While the company faces profitability challenges and valuation concerns, its operational efficiency, strong cash flow, and positive strategic initiatives present potential for long-term growth. The technical outlook remains neutral, reflecting a stable but stagnant trend.

Positive Factors

Financial Performance

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.

Geographical Advantage

The portfolio is in better than average markets in the Southwest and Southeast with highly amenitized buildings.

Leasing Activity

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

Debt Level

The company has an above average debt level at approximately 79% debt-to-total market capitalization including preferred.

Impairment Loss

The company incurred an impairment of $8.5 million on the sale of a property in Denver, CO.

Investor Uncertainty

Persistence of general investor uncertainty in the office sector and banks unwillingness to do new loans in the sector.

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

Market Cap

$200.18M

Dividend Yield8.03%

Average Volume (3M)143.66K

Price to Earnings (P/E)―

Beta (1Y)0.95

Revenue Growth-4.92%

EPS Growth-128.59%

CountryUS

Employees20

SectorReal Estate

Sector Strength63

IndustryREIT - Office

Share Statistics

EPS (TTM)-0.09

Shares Outstanding40,358,240

10 Day Avg. Volume109,703

30 Day Avg. Volume143,656

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

$5.25

Price Target Upside3.14% Upside

Rating ConsensusHold

Number of Analyst Covering1

City Office REIT Business Overview & Revenue Model

Company DescriptionCity Office REIT, Inc. (CIO) is a real estate investment trust that focuses on acquiring, owning, and operating high-quality office properties in major metropolitan areas throughout the United States. The company primarily targets properties in cities with strong economic fundamentals and favorable business environments, providing modern office spaces to various tenants across different industries.

How the Company Makes MoneyCity Office REIT generates revenue primarily through leasing office space to tenants. The company earns rental income from its portfolio of office properties, which is its main revenue stream. These lease agreements typically include base rent and may also incorporate additional charges for property-related expenses such as maintenance, insurance, and taxes. The company's ability to generate revenue is influenced by factors such as occupancy rates, lease terms, and prevailing market rental rates. Additionally, City Office REIT may engage in strategic acquisitions and dispositions of properties to optimize its portfolio and enhance returns.

City Office REIT Earnings Call Summary

Earnings Call Date:May 02, 2025

(Q1-2025)

% Change Since: -3.05%|

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.

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

Neutral

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.

Balance Sheet

Neutral

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.

Cash Flow

Positive

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.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
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

Technical Analysis Sentiment

Positive

Last Price5.09

Price Trends

50DMA

4.88

Positive

100DMA

4.93

Positive

200DMA

5.14

Negative

Market Momentum

MACD

<0.01

Negative

RSI

54.78

Neutral

STOCH

87.71

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 5.09 is above the 20-day moving average (MA) of 4.88, above the 50-day MA of 4.88, and below the 200-day MA of 5.14, indicating a neutral trend. The MACD of <0.01 indicates Negative momentum. The RSI at 54.78 is Neutral, neither overbought nor oversold. The STOCH value of 87.71 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 (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	61 Neutral	$2.82B	10.89	0.42%	8438.96%	5.74%	-20.95%
CIO	57 Neutral	$200.18M	―	-2.51%	8.03%	-4.92%	-128.59%
FSP	56 Neutral	$185.38M	―	-9.96%	2.23%	-18.97%	-14.57%
HPP	51 Neutral	$311.97M	―	-12.23%	4.69%	-9.39%	-72.30%
ONL	49 Neutral	$113.51M	―	-10.71%	15.84%	-18.92%	-15.81%
OPI	44 Neutral	$13.74M	―	-15.03%	20.00%	-11.91%	-80.43%

* Real Estate Sector Average

Performance Comparison

CIO

City Office REIT

5.09

0.46

9.94%

FSP

Franklin Street Properties

1.74

-0.05

-2.79%

HPP

Hudson Pacific Properties

2.13

-2.67

-55.63%

OPI

Office Properties Income

0.20

-1.89

-90.43%

ONL

Orion Office REIT

2.03

-1.22

-37.54%

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.