City Office REIT: 9.9% Yield And Plenty Of Upside

Jan. 10, 2023 12:36 PM ETCity Office REIT, Inc. (CIO)26 Comments
Weighing Machine profile picture
Weighing Machine


  • City Office REIT shares have declined 60% over the past year and now yield nearly 10%.
  • Following a series of transformational transactions in late 2021, the company has a portfolio of high quality, Class A sunbelt office real estate.
  • City Office has a strong balance sheet with net debt to EBITDA of 6.3x (50% loan-to-value). Most debt is fixed rate with limited near-term maturities.
  • Following its share price plunge, City Office trades at an implied cap rate above 10%, an implied price per share foot of $180, and a P/FFO below 6x.
  • City Office is an attractive contrarian investment opportunity for yield seeking investors with a long-term time horizon. I see the potential for 85% upside.

Eco-friendly open plan office in 3D

alvarez/E+ via Getty Images

Having declined 60%, City Office REIT (NYSE:CIO) shares have massively underperformed the broader office REIT market (which declined 36% in 2022). Fundamentally, I see no reason for this underperformance. Following a series of transformational


City Office Portfolio

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Balance Sheet (City Office Investor Presentation)


City Office REIT Valuation (Company Filings; Author Estimates)

This article was written by

Weighing Machine profile picture
Former global buyside analyst/PM doing fundamental research for over a decade (2001-2012). Long term (5 year) time horizon when investing.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of CIO either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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