City Office REIT Reports 4% Revenue Decline to $171.1 Million for Fiscal Year 2024

City Office REIT, Inc. reported a decrease in rental and other revenues for the fiscal year ending December 31, 2024, totaling $171.1 million, down 4% from $179.1 million in 2023. This decline was attributed to property dispositions, including the Cascade Station and 190 Office Center, which collectively reduced revenue by approximately $5.1 million. Additionally, lower occupancy rates at several properties contributed to the revenue drop. Despite these challenges, the company managed to increase its overall portfolio occupancy to 85.4%, up from 84.5% in the previous year, indicating a slight improvement in leasing activity.

The company's total operating expenses rose by 3% to $152.4 million, primarily due to an $8.5 million impairment charge related to the Superior Pointe property. This increase was partially offset by reduced expenses from the aforementioned property sales. The company also reported a net loss on the deconsolidation of Cascade Station amounting to $1.5 million, reflecting the impact of the assignment in lieu of foreclosure agreement executed in June 2024. Interest expenses increased by 4% to $34.3 million, driven by higher interest rates affecting the company's debt obligations.

In terms of strategic developments, City Office REIT focused on enhancing its portfolio through leasing activities, completing approximately 806,000 square feet of new and renewal leases during the year. The company also continued to invest in property improvements and renovations to attract tenants and increase occupancy rates. As of December 31, 2024, the company owned 56 office buildings across key metropolitan areas, including Dallas, Denver, and Orlando, with a total net rentable area of approximately 5.6 million square feet.

Looking ahead, City Office REIT aims to navigate the evolving office space market, particularly in light of ongoing work-from-home trends and economic uncertainties. The company plans to leverage its management team's extensive industry relationships to identify acquisition opportunities in its target markets, predominantly in the Sun Belt region. The management remains cautious about the potential impacts of inflation and interest rate fluctuations on its operations and financial performance, emphasizing the importance of maintaining a strong occupancy rate and rental income growth.

Overall, City Office REIT's financial performance in 2024 reflects a combination of challenges and strategic initiatives aimed at enhancing its portfolio and positioning for future growth. The company remains committed to providing attractive risk-adjusted returns to its investors while adapting to the changing dynamics of the office real estate market.