City Office REIT, Inc.

First-quarter NOI was $26.0 million, up $500,000 versus the fourth quarter. Core FFO was $12.3 million, or $0.30 per share, up $600,000 sequentially. AFFO was $6.5 million, or $0.16 per share. Same-store cash NOI increased 4.4%, or $1.1 million, versus Q1 2024. Portfolio occupancy ended Q1 at 84.9%. Total debt at March 31 was $646 million, net debt including restricted cash to EBITDA was 6.7x, cash and restricted cash were $37 million, and the credit facility had about $42 million undrawn. Management said it remains on track with the guidance ranges given at the end of February, including year-end occupancy in the 85% to 87% range.

Jamie Farrar framed the quarter around two themes: a new value-creation opportunity at City Center and improving office fundamentals in the Sun Belt. He said the St. Petersburg project was developed over about two years and is intended to be a premium, long-duration opportunity, with presales about to start and full project timing likely around four years if things go as planned. On the operating side, he emphasized Phoenix and other Sun Belt markets as the places where the company is investing capital and seeing the strongest leasing momentum.

Tony Maretic said higher revenue, supported by strong same-store results, and lower operating expenses drove the sequential increase in NOI and core FFO. He noted same-store cash NOI grew 4.4% year over year, occupancy was 84.9% at quarter-end, and 143,000 square feet of signed leases had not yet commenced, which should support recovery later in the year even as Q2 occupancy dips. He also highlighted balance sheet liquidity with $37 million of cash and restricted cash, $42 million available under the credit facility, $646 million of total debt, and two 2025 property debt maturities that are in active extension discussions.

Analysts focused on the new City Center development, asking how the project originated, how long it will take, and whether it disrupts the existing office property. Management said it was internally sourced after about two years of evaluating options, presales are about to begin, the project may take about a year of presales plus three years of construction, and parking alternatives like valet will be used during the transition. Questions also centered on occupancy and Phoenix leasing; management said most of the 143,000 square feet of signed-but-not-yet-occupied leases should commence over the next two quarters, and that Phoenix accounted for a significant portion of the quarter’s 144,000 square feet of leasing.