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City Office REIT Unveils Quarterly and Annual Results for 2024

City Office REIT, Inc. (NYSE: CIO) has recently disclosed its financial results for the fourth quarter and full year ending December 31, 2024, showcasing both achievements and challenges in its operational performance.

Fourth Quarter Highlights

During the last quarter of 2024, City Office REIT reported total revenues of approximately $41.9 million. However, the company faced a GAAP net loss attributable to common stockholders, amounting to roughly $12.6 million, which translates to a loss of $0.31 per diluted share.

In terms of funds from operations (FFO), the core FFO reached about $11.7 million, equating to $0.28 per diluted share, with an adjusted FFO (AFFO) of $4.3 million, or $0.10 per diluted share. The company's in-place occupancy stood at 85.4% at the end of the quarter, slightly improving to 87.6% when accounting for signed leases that had yet to take occupancy.

A notable achievement during this time was the execution of approximately 205,000 square feet of new and renewal leases, which indicates a robust leasing activity that has contributed to a 3.3% improvement in Same Store Cash NOI compared to the same quarter of the previous year. Additionally, City Office declared a dividend of $0.10 per common share which was paid on January 23, 2025.

Key Transactions Post Quarter-End

Shortly after the quarter concluded, City Office successfully completed the sale of the Superior Pointe property in Denver, Colorado, for a gross price of $12 million, further optimizing its real estate portfolio.

Management Insights

CEO James Farrar expressed optimism about the developments in 2024, highlighting a significant shift within the office sector and noting the continuous strong leasing momentum that characterized the quarter. He emphasized that the portfolio's occupancy saw a 2.0% increase over the previous quarter. Furthermore, he noted facilitating leasing activities that resulted in a cash re-leasing spread of 12.3% during Q4.

As the company transitions into 2025, it anticipates that the extensive renovation efforts from past years will yield substantial benefits, reinforcing its portfolio of strategically located assets in desirable markets.

Portfolio Operations

As of December 31, 2024, City Office's total portfolio spans approximately 5.6 million net rentable square feet with a reported occupancy of 85.4%. The Same Store Cash NOI witnessed a 3.3% increase for Q4 compared to the same period in 2023, highlighting operational resilience amidst challenging market conditions. When considering the total leasing activity for the year, City Office achieved about 806,000 square feet leased, marking a 35% increase from the previous year.

Leasing Metrics

New leases signed in Q4 came with an average lease term of 6.1 years, priced at an effective annual rent of $32.88 per square foot, while renewal leases had a slightly higher average effective rent of $46.25 per square foot, underscoring the value retention in its portfolio. In total, the new and renewal leases reflected strong demand and adaptability to market conditions.

Financial Outlook

Looking ahead to 2025, City Office expects the Core FFO per diluted share to range between $1.10 and $1.14, in line with its prior quarter's performance. The company anticipates maintaining an upward trajectory in portfolio occupancy and positive Same Store Cash NOI growth.

The prescribed guidance assumes no additional acquisitions or dispositions beyond the sale of the Superior Pointe property and incorporates fixed generalized administrative expense estimates.

Conference Call Details

City Office’s management is scheduled to discuss these results in detail during a conference call on February 20, 2025, at 11:00 AM ET, providing an opportunity for stakeholders to gain further insights into the company’s strategies and future directions. A replay of the call will also be accessible for those unable to attend live.

Conclusion

As City Office REIT navigates the evolving landscape of commercial real estate, its performance metrics for 2024 reflect a balance of challenges and strategic growth initiatives. The emphasis on occupancy, consistent lease agreements, and reinvestment in its portfolio underscores City Office's commitment to enhancing shareholder value in the coming years.