City Office REIT (NYSE:CIO) - Share price, News & Analysis

Q: What is the Fair Price of CIO when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

CIO ($13.03) is trading below our estimate of [[fair value]] ($26.64)

CIO fundamental analysis
Snowflake Score
Valuation	6/6
Future Growth	0/6
Past Performance	5/6
Financial Health	2/6
Dividends	4/6

CIO Stock Overview

City 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.

Rewards

Trading at 51.1% below our estimate of its fair value

Earnings grew by 880% over the past year

Risk Analysis

Earnings are forecast to decline by an average of 63.8% per year for the next 3 years

Interest payments are not well covered by earnings

High level of non-cash earnings

Unstable dividend track record

City Office REIT Competitors

Franklin Street Properties

NYSEAM:FSP

US$343.8m

Piedmont Office Realty Trust

NYSE:PDM

US$1.6b

Brandywine Realty Trust

NYSE:BDN

US$1.5b

Easterly Government Properties

NYSE:DEA

US$1.9b

Price History & Performance

Summary of all time highs, changes and price drops for City Office REIT
Historical stock prices
Current Share Price	US$13.03
52 Week High	US$21.70
52 Week Low	US$11.05
Beta	1.51
1 Month Change	2.12%
3 Month Change	-2.54%
1 Year Change	-1.14%
3 Year Change	0%
5 Year Change	3.00%
Change since IPO	5.08%

Recent News & Updates

Aug 03

City Office REIT Q2 2022 Earnings Preview

City Office REIT (NYSE:CIO) is scheduled to announce Q2 earnings results on Thursday, August 4th, before market open. The consensus FFO Estimate is $0.04 (-88.6% Y/Y) and the consensus Revenue Estimate is $44.45M (+11.2% Y/Y). Over the last 3 months, FFO estimates have seen 0 upward revisions and 2 downward. Revenue estimates have seen 3 upward revisions and 2 downward.

Shareholder Returns

	CIO	US REITs	US Market
7D	-7.3%	-0.3%	1.1%
1Y	-1.1%	-6.7%	-13.0%

Return vs Industry: CIO exceeded the US REITs industry which returned -8% over the past year.

Return vs Market: CIO exceeded the US Market which returned -12.9% over the past year.

Price Volatility

Is CIO's price volatile compared to industry and market?
CIO volatility
CIO Average Weekly Movement	5.4%
REITs Industry Average Movement	4.4%
Market Average Movement	7.9%
10% most volatile stocks in US Market	17.1%
10% least volatile stocks in US Market	3.2%

Stable Share Price: CIO is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: CIO's weekly volatility (5%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
2013	19	Jamie Farrar	https://www.cityofficereit.com

City 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”).

City Office REIT Fundamentals Summary

How do City Office REIT's earnings and revenue compare to its market cap?
CIO fundamental statistics
Market Cap	US$541.69m
Earnings (TTM)	US$453.92m
Revenue (TTM)	US$174.91m

1.2x

P/E Ratio

3.1x

P/S Ratio

Is CIO overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
CIO income statement (TTM)
Revenue	US$174.91m
Cost of Revenue	US$63.03m
Gross Profit	US$111.88m
Other Expenses	-US$342.04m
Earnings	US$453.92m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	10.92
Gross Margin	63.96%
Net Profit Margin	259.51%
Debt/Equity Ratio	74.7%

How did CIO perform over the long term?

See historical performance and comparison

Dividends

6.1%

Current Dividend Yield

34%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is CIO undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

6/6

Valuation Score 6/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for CIO?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for CIO. This is calculated by dividing CIO's market cap by their current preferred multiple.
What is CIO's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$541.69m

CIO key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	7.4x
Enterprise Value/EBITDA	13.1x
PEG Ratio	-0.02x

Price to Earnings Ratio vs Peers

How does CIO's PE Ratio compare to its peers?

CIO PE Ratio vs Peers

The above table shows the PE ratio for CIO vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	47.6x
FSP Franklin Street Properties	4.9x	-58.1%	US$343.8m
PDM Piedmont Office Realty Trust	33.9x	-11.1%	US$1.6b
BDN Brandywine Realty Trust	92.4x	7.9%	US$1.5b
DEA Easterly Government Properties	59.3x	16.8%	US$1.9b
CIO City Office REIT	1.2x	-63.8%	US$541.7m

Price-To-Earnings vs Peers: CIO is good value based on its Price-To-Earnings Ratio (1.2x) compared to the peer average (47.6x).

Price to Earnings Ratio vs Industry

How does CIO's PE Ratio compare vs other companies in the US REITs Industry?

Price-To-Earnings vs Industry: CIO is good value based on its Price-To-Earnings Ratio (1.2x) compared to the US REITs industry average (31.2x)

Price to Earnings Ratio vs Fair Ratio

What is CIO's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

CIO PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	1.2x
Fair PE Ratio	9x

Price-To-Earnings vs Fair Ratio: CIO is good value based on its Price-To-Earnings Ratio (1.2x) compared to the estimated Fair Price-To-Earnings Ratio (9x).

Share Price vs Fair Value

What is the Fair Price of CIO when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: CIO ($13.03) is trading below our estimate of fair value ($26.64)

Significantly Below Fair Value: CIO is trading below fair value by more than 20%.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.

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Future Growth

How is City Office REIT forecast to perform in the next 1 to 3 years based on estimates from 6 analysts?

Future Growth Score

0/6

Future Growth Score 0/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

-63.8%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: CIO's earnings are forecast to decline over the next 3 years (-63.8% per year).

Earnings vs Market: CIO's earnings are forecast to decline over the next 3 years (-63.8% per year).

High Growth Earnings: CIO's earnings are forecast to decline over the next 3 years.

Revenue vs Market: CIO's revenue (4.1% per year) is forecast to grow slower than the US market (8% per year).

High Growth Revenue: CIO's revenue (4.1% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: Insufficient data to determine if CIO's Return on Equity is forecast to be high in 3 years time

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Past Performance

How has City Office REIT performed over the past 5 years?

Past Performance Score

5/6

Past Performance Score 5/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

78.5%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: CIO has a high level of non-cash earnings.

Growing Profit Margin: CIO's current net profit margins are higher than last year (28.8%).

Past Earnings Growth Analysis

Earnings Trend: CIO has become profitable over the past 5 years, growing earnings by 78.5% per year.

Accelerating Growth: CIO's earnings growth over the past year (880%) exceeds its 5-year average (78.5% per year).

Earnings vs Industry: CIO earnings growth over the past year (880%) exceeded the REITs industry 45.8%.

Return on Equity

High ROE: CIO's Return on Equity (52.8%) is considered outstanding.

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Financial Health

How is City Office REIT's financial position?

Financial Health Score

2/6

Financial Health Score 2/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: CIO's short term assets ($108.8M) exceed its short term liabilities ($33.4M).

Long Term Liabilities: CIO's short term assets ($108.8M) do not cover its long term liabilities ($701.9M).

Debt to Equity History and Analysis

Debt Level: CIO's net debt to equity ratio (71.5%) is considered high.

Reducing Debt: CIO's debt to equity ratio has reduced from 131.9% to 74.7% over the past 5 years.

Debt Coverage: CIO's debt is not well covered by operating cash flow (17.2%).

Interest Coverage: CIO's interest payments on its debt are not well covered by EBIT (1.6x coverage).

Balance Sheet

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Dividend

What is City Office REIT current dividend yield, its reliability and sustainability?

Dividend Score

4/6

Dividend Score 4/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

6.14%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: CIO's dividend (6.14%) is higher than the bottom 25% of dividend payers in the US market (1.52%).

High Dividend: CIO's dividend (6.14%) is in the top 25% of dividend payers in the US market (4.1%)

Stability and Growth of Payments

Stable Dividend: CIO has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: CIO has only been paying a dividend for 8 years, and since then payments have fallen.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonably low payout ratio (33.7%), CIO's dividend payments are well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its reasonably low cash payout ratio (29.6%), CIO's dividend payments are well covered by cash flows.

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Management

How experienced are the management team and are they aligned to shareholders interests?

6.5yrs

Average management tenure

CEO

Jamie Farrar (46 yo)

8.33yrs

Tenure

US$3,494,683

Compensation

Mr. James Thomas Farrar, also known as Jamie, serves as Chief Executive Officer and Director at City Office REIT Inc. since April 2014. He serves as a Co-Managing Partner at Clarity Real Estate. He has exp...

CEO Compensation Analysis

Compensation vs Market: Jamie's total compensation ($USD3.49M) is about average for companies of similar size in the US market ($USD2.70M).

Compensation vs Earnings: Jamie's compensation has increased by more than 20% in the past year.

Leadership Team

Experienced Management: CIO's management team is seasoned and experienced (6.5 years average tenure).

Board Members

Experienced Board: CIO's board of directors are considered experienced (8.3 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/08/08 00:00
End of Day Share Price	2022/08/08 00:00
Earnings	2022/06/30
Annual Earnings	2021/12/31