On November 9, 2023, City Office REIT Inc (CIO, Financial) released its earnings report for the third quarter ended September 30, 2023. The company's performance demonstrated resilience in a challenging market, with a focus on high-quality, well-located properties driving leasing demand and value creation.
Operational Highlights and Financial Performance
City Office REIT's CEO, James Farrar, highlighted the strength of the portfolio, stating,
The vast majority of our portfolio value is concentrated in either newly constructed trophy assets or high-quality, renovated buildings with fantastic locations."This strategic positioning has allowed the company to capitalize on tenant leasing demand, resulting in a 2.2% increase in Same Store Cash NOI for the quarter compared to the prior year, and a 4.2% increase for the first nine months of 2023.
The company's leasing activity was strong, with approximately 119,000 square feet completed during the quarter. This included 33,000 square feet of new leases and 86,000 square feet of renewals, indicating a healthy leasing environment and the company's effective asset management.
Capital Structure and Dividends
City Office REIT's capital structure remained solid, with total principal outstanding debt of approximately $674.3 million, of which 91.1% was fixed rate or effectively fixed rate due to interest rate swaps. The company's proactive management of its debt profile was evident as it extended $40.8 million of maturing property loans by five years at an effective 7.05% fixed interest rate.
Reflecting the company's stable cash flows, dividends were declared for both common and preferred stockholders. Common stockholders received a dividend of $0.10 per share, while preferred stockholders received $0.4140625 per share for the quarter ended September 30, 2023.
Financial Statements and Outlook
City Office REIT's balance sheet as of September 30, 2023, showed total assets of $1.532 billion, with real estate properties accounting for the majority. The company maintained a healthy liquidity position with cash and cash equivalents of $36.738 million.
The income statement for the three months ended September 30, 2023, revealed rental and other revenues of $44.214 million, with net income attributable to common stockholders showing a loss of $1.898 million, primarily due to preferred stock distributions and interest expenses.
Reconciliation of net income to FFO, Core FFO, and AFFO showed FFO attributable to common stockholders at $12.666 million, Core FFO at $13.690 million, and AFFO at $6.313 million. The FFO per common share stood at $0.31, Core FFO per common share at $0.34, and AFFO per common share at $0.15.
The company reiterated its full-year 2023 guidance, maintaining expectations based on current plans and market conditions. However, it acknowledged the ongoing uncertainties, including those related to the COVID-19 pandemic and inflation.
For detailed financial information and to listen to the webcast, investors are encouraged to visit the "Investor Relations" section of City Office REIT's website at www.cioreit.com.
City Office REIT Inc (CIO, Financial) continues to navigate the market effectively, leveraging its portfolio strength to maintain solid operational performance. The company's strategic focus on high-quality assets and prudent financial management positions it well for sustained value creation for its stockholders.
Explore the complete 8-K earnings release (here) from City Office REIT Inc for further details.
