• Net Operating Income (NOI): $26.0 million, an increase of $500,000 from the previous quarter.
• Cash Available for Distribution (COFO): $12.3 million or $0.30 per share, $600,000 higher than the previous quarter.
• Adjusted Funds from Operations (AFO): $6.5 million or $0.16 per share.
• Same Store Cash NOI Growth: Increased by 4.4% compared to the previous year.
• Portfolio Occupancy: Ended the quarter at 84.9%.
• Total Debt: $646 million as of March 30th.
• Net Debt to EBITDA: 6.7 times.
• Credit Facility Availability: $42 million undrawn and authorized.
• Cash and Restricted Cash: $37 million as of quarter-end.

• Warning! GuruFocus has detected 7 Warning Signs with CIO.

Release Date: May 02, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• City Office REIT Inc (NYSE:CIO) announced a partnership with Property Markets Group to redevelop a property in downtown St. Petersburg, Florida, into a luxury residential and mixed-use tower.
• The company completed 144,000 square feet of new and renewal leasing in the first quarter, including a significant 34,000 square foot lease at Papagotech property in Phoenix.
• City Office REIT Inc (NYSE:CIO) achieved an 8.5% positive cash releasing spread on renewals over the last 12 months, indicating strong rent growth.
• The company's same store cash NOI increased by 4.4% in the first quarter compared to the previous year, driven by strong performance in Raleigh.
• City Office REIT Inc (NYSE:CIO) is on track to meet its earnings and occupancy guidance for the year, with expectations of year-end occupancy between 85% to 87%.

Negative Points

• Portfolio occupancy ended the quarter at 84.9%, slightly lower than the previous quarter, with expectations of further decreases in the second quarter.
• The company anticipates a temporary dip in occupancy due to tenant transitions at Greenwood Boulevard and a vacate at the Amber property in Portland.
• City Office REIT Inc (NYSE:CIO) has two property debt maturities in 2025, requiring extensions and discussions with lenders.
• The company's net debt to EBITDA ratio is relatively high at 6.7 times, indicating significant leverage.
• There are concerns about potential disruptions to existing properties during the redevelopment of the parking structure in St. Petersburg.

Q & A Highlights

Q: How did the new development project in downtown St. Petersburg come about? A: James Farrar, CEO, explained that the project was initiated about two years ago due to the strong development market in downtown St. Petersburg. They conducted a thorough analysis to determine the best execution strategy, resulting in a partnership with Property Markets Group to generate significant value over time.

Q: Can you provide more details on the timeline and process for the new development project? A: James Farrar, CEO, mentioned that pre-sales are about to commence, with a sales center nearly complete. They anticipate approximately one year for pre-sales and three years for construction, totaling around four years for the full project.

Q: Will there be any disruption to existing properties due to the new development? A: James Farrar, CEO, stated that alternative parking arrangements, including valet services, are being planned for tenants during construction. Once completed, the new structure will replace the existing parking for the office building.

Q: What is the expected pace of occupancy for the year to reach the midpoint of 86%? A: Anthony Maretic, CFO, noted that 143,000 square feet of leases signed by March 31st have yet to take occupancy, representing about 2.7% of the portfolio. These will move in over the next two quarters, with additional activity at Greenwood Boulevard expected to bring occupancy back within the guidance range by year-end.

Q: Regarding the Greenwood Boulevard transaction, will there be any vacancy, and how does it affect the rent? A: Anthony Maretic, CFO, confirmed that the property will dip in occupancy temporarily but will return to 100% by year-end. The new tenant's rent will step up over time, eventually exceeding the current rate, while the existing tenant extends their lease on favorable terms.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.