City Office 'Sun Belt' REIT Drops To New Yearly Low

City Office 'Sun Belt' REIT Drops To New Yearly Low

City Office REIT Inc. CIO is a real estate investment trust (REIT) with a group of properties in the Sun Belt region of America, which generally refers to the South and Southwest areas of the country. The company owns and operates facilities in Dallas; Denver; Phoenix; Seattle; Orlando, Florida; Portland, Oregon; and several other locations.

Market capitalization is $363 million, making City Office one of the smaller REITs traded on the New York Stock Exchange. With a price-earnings ratio of just 1 and now trading at about half of book value, it might be showing up on “value” screens. Funds from operations (FFO) this year are -95%. The past five-year FFO is 143.9%.

The REIT is lightly traded with an average daily volume of just 277,000 shares.

The amount of the company’s long-term debt is about the same as the amount of its shareholder equity. 

City Office pays a relatively steep dividend of 8.66% – its preferred shares are paying a 9% dividend. These factors make it vulnerable to analysts’ concerns about interest rate hikes and whether the pace of such hikes will slow or remain elevated.

Here’s how the daily price chart looks for City Office REIT:

Aside from a two-month rally from mid-June through the end of July, the price has trended steadily downward from April to the present. It’s not bullish that the REIT continues to trade below the 50-day moving average (the blue line) and below the 200-day moving average (the red line), both of which are trending lower.

The City Office monthly price chart is here:

The price peaked in early January 2022 at just above $20 and can now be purchased for $9.24. That’s a 53% loss in value in a bit less than 12 months. The 50-week moving average is now trending downward, and the price remains below the 200-week moving average.

What Federal Reserve Chairman Jerome Powell decides about the future of rate hikes is likely to affect this REIT and others that are similar.

Weekly REIT Report: REITs are one of the most misunderstood investment options, making it difficult for investors to spot incredible opportunities until it’s too late. Benzinga’s in-house real estate research team has been working hard to identify the greatest opportunities in today’s market, which you can gain access to for free by signing up for Benzinga’s Weekly REIT Report.

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