City Office REIT Reports 5% Revenue Decline and Increased Net Loss in Q1 2025

City Office REIT, Inc. reported a decline in financial performance for the first quarter of 2025, with rental and other revenues decreasing by 5% to $42.3 million compared to $44.5 million in the same period last year. The decrease in revenue was attributed to property dispositions, including the sale of the Superior Pointe property in January 2025, which reduced revenue by approximately $0.8 million. Additionally, lower occupancy rates at several properties, including 2525 McKinnon and Intellicenter, contributed to the decline. Operating income also fell to $7.1 million from $8.0 million year-over-year, while the company reported a net loss attributable to common stockholders of $3.5 million, compared to a loss of $2.4 million in the prior year.

In terms of operational metrics, City Office REIT's properties were approximately 84.9% leased as of March 31, 2025, a slight improvement from 86.0% in the previous year. The company experienced a decrease in property operating expenses, which fell by 8% to $16.3 million, primarily due to the aforementioned property sales. General and administrative expenses remained stable at $3.7 million, while depreciation and amortization expenses were consistent at $15.1 million. The company’s interest expense increased slightly to $8.6 million, reflecting higher borrowing costs.

Strategically, City Office REIT continues to focus on its core business of owning and operating office properties in growth markets, particularly in the Sun Belt region. The company is actively evaluating opportunities to maximize shareholder value, including a potential joint venture for a condominium development in St. Petersburg, Florida. The company’s management emphasized the importance of maintaining occupancy rates and rental income, which are critical for future revenue generation.

Looking ahead, City Office REIT faces challenges from evolving work-from-home trends and economic uncertainties that may impact demand for office space. The company noted that while some businesses are increasing in-person work policies, the long-term effects of remote work on office space demand remain uncertain. The management expressed cautious optimism about the potential for improved occupancy and rental rates, contingent on broader economic conditions and tenant demand. The company plans to continue monitoring market trends and adjusting its strategies accordingly to navigate these challenges effectively.