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City Office REIT, Inc. (CIO)

NYSE - NYSE Delayed Price. Currency in USD
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10.99-0.06 (-0.54%)
At close: 4:00PM EDT
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  • R
    RetiredCEO
    $HR-UN.TO conversation
    Pfizer alone is being ramped up to 1M doses every week to Canada. We have sped up our timeline, and I expect these ramp ups to continue. Manufacturers need to dump as many vaccines as possible before they are no longer wanted by nations. The best part is, vaccines work. COVID will soon be over.

    https://globalnews.ca/news/7692884/covid-canada-pfizer-vaccine-spring/amp/

    $VNQ $SPG $BXP $CIO $BPY
  • R
    RetiredCEO
    $D-UN.TO conversation
    Here is a recap of key highlights from the 2020 annual report, and Q4 earnings call for Dream Office. I focus on the 2021 Outlook.

    - Rezoning of 2200 Eglinton will recognize around $4 in NAV in 2021 once approved. Around 2.5M sq feet of future density is expected to be recognized in this rezoning. This property is a massive 15 acres of prime development land in the "Golden Mile"
    - About $10 in NAV should be recognised from Eglinton and Dream Industrial REIT alone. Dream Industrial accounts for around 1/3rd of Dream Office’s market cap today. Leaving less than $10 in NAV for the office buildings. Incredibly undervalued.
    - Current IFRS NAV is $28.69 without Eglinton rezoning. This is up $1.99 year over year.
    - Adding the $4/unit for Eglinton would drive NAV up to $32.68, plus FFO retention, increased occupancy and rent Increases. I could foresee we hit $33-34 NAV by the end of 2021.
    - IFRS at NAV of $28.69 implies a building value of $600/foot downtown. However, lower quality buildings have been selling at $650-$1000/foot during COVID. As units trading under $20/unit, these buildings are being incredibly undervalued.
    - 97.2% cash collection in Q4 and the rest is expected to be collected.
    - the Trust has already secured commitments for approximately 70%, or just over 600,000 square feet, of 2021 total portfolio lease expiries.
    - 2020 Toronto leasing spreads were a positive 37.8%. These spreads will continue as the in place rents ($25.85) are well below market rates($31.28). This provides organic same property NOI and NAV growth for years to come. There is a large legacy lease that renews at below market in 2021 for $19.50/foot for 248,000 sq feet and a 2nd 72,000 sq feet at $23.28 that escalates to $40 by 2023 that will skew these numbers for 2021. Excluding the effects of these two tenants, Toronto downtown net rents on commencements are $33.17 per square foot for 2021. In Toronto downtown, the committed net rents on commencements for 2022 are $32.42 per square foot.
    - Buybacks are going to be aggressive in August, when the NCIB is expected to be renewed. 2020 buybacks were fully utilized in 6 months. Almost 10% of units were purchased and cancelled in 2021. Funds used for buybacks will be offset with NAV increases resulting in no risk to debt ratios.
    - $1.60 FFO forecasted for 2021. Total NOI up in 2021. Occupancy up in 2nd half of 2021.
    - $110M in debt expiring in 2022 at 4.88% is expected to be refinanced at around 3.15-3.38%.
    - Some buildings have purposely been reduced occupancy. Dream sees more demand and higher rent for single floor tenants. Removing tenants which occupy 1/2 a floor and releasing the entire floor to a single tenant is more desirable and commands higher rent. This is especially focused on smaller office buildings with single floor space under 5000sq feet.
    - The demand for tenants so far in 2021 has been skewed towards taking more space, than reducing space, as reported in the conference call.

    Take a deep dive into Dream Office. This is not your average Office REIT.

    $CIO $BXP $BPY $SLG $HPP $HIW $CLI
    Bullish
  • R
    RetiredCEO
    $HR-UN.TO conversation
    Everyone in the USA who wants a vaccine will likely be able to have one by May or June. This will exponentially speed up delivery to Canada and other countries, as production will likely keep producing and filling demand to other countries while they still can. It's a rush to make bank on vaccine investments before they are no longer needed.

    $VNQ $BPY $CIO $BXP $WPC $SPG
    Bullish
  • R
    RetiredCEO
    $D-UN.TO conversation
    Dream Office Q4 / 2020 Year Ended highlights - Amazing Results

    Waiting for the full SEDAR filing report, but I am very pleased with what I am seeing so far:

    70%, or just over 600,000 square feet, of 2021 total portfolio lease expiries (That just removed most of Dream Office's 2021 risks)
    NAV 28.69 vs 26.70 December 31 2019. $1.99 Increase in NAV during the pandemic
    FFO 0.40 vs 0.40 the prior year
    32.6% higher rent on new leases over 500,000 sq feet. This should continue in 2021. This includes their properties outside of Toronto.
    Toronto downtown comparative properties NOI for the year ended December 31, 2020 would have increased by 1.8%, primarily driven by renewals and new leasing totaling 104,000 square feet taking occupancy during the year, with rental spreads 43.0% over expiring rates. Not a typo. 43%.
    97.2% Rent Collection. Remainder is expected to be collected

    Repurchased the maximum allowed REIT A units under their NCIB at average $19.08/unit. Waiting for full report, but it looks like repurchases will continue in 2021.
    88% committed occupancy vs 90.8% December 31 2019

    A material area for future FFO will be parking revenue. Surprisingly, this is around $3M per quarter. This will come back as Toronto reopens.

    Dream Office is not your typical office REIT. There is a lot to like here. Units are trading around $300-$350 per square foot for their Downtown Properties, when they are likely valued around $750-$1000/foot, Dream Office is a SOLID steal here IMO.

    Watch this Sandpiper BNN interview if you are wondering how they are getting away with these rental increases, and why it'll continue.

    https://www.bnnbloomberg.ca/real-estate/video/activist-investor-bullish-on-dream-office-reit-and-toronto-office-market~1905613

    $CIO $BXP $BPY $SLG $HPP $HIW $CLI
    Bullish
  • R
    RetiredCEO
    $HR-UN.TO conversation
    Goldman is pushing with other CEOs for a quick return to office. Does not like the WFH mentality.
    “It’s an aberration that we are going to correct as quickly as possible,”
    “This is not ideal for us, and it’s not a new normal,”

    https://www.forbes.com/sites/carlieporterfield/2021/02/24/its-not-a-new-normal-these-ceos-are-pushing-for-a-return-to-the-office/?sh=118e96f041f7

    $MAC $SPG $BXP $STOR $BPY $AMT $CCI $PLD $CIO $SPG
    Bullish
  • R
    RetiredCEO
    $D-UN.TO conversation
    Good REIT Update and 2021 Outlook:
    https://www.reit.com/data-research/research/nareit-research/2021-reit-outlook-economy-commercial-real-estate

    $CIO $BXP $BPY $SLG $HPP $HIW $CLI $SPG $AMT $CCI $PLD $PSA $EQIX $WELL
  • R
    RetiredCEO
    $D-UN.TO conversation
    Link Below. How a rapid testing consortium led by 12 Canadian companies could accelerate our return to the office.

    https://financialpost.com/executive/executive-summary/posthaste-how-a-rapid-screening-testing-consortium-led-by-12-companies-could-accelerate-our-return-to-the-office

    $SLG $BXP $BPY $CIO
    Bullish
  • R
    RetiredCEO
    $HR-UN.TO conversation
    "The great REIT-Opening" is upon us. Employees preparing to send workers back to the office to reduce "Shirking" and increase productivity. More space is needed to spread workers out after years of cramming more people into the same space.

    H&R REIT, and many others, remain highly undervalued and present a massive opportunity for the restarting of the economy. Many REITs, such as H&R have not skipped a beat as the Canadian Government has paid up to 90% of business rent and related expenses.

    $SPG $BPY $CIO $VNQ $WPC $MAC $BAM

    #D.UN #SRU.UN #SOT.UN #REI.UN #MR.UN

    https://www.theage.com.au/national/victoria/it-s-quite-exciting-trickle-of-office-workers-return-to-cbd-20210117-p56uro.html
    Bullish
  • R
    RetiredCEO
    $HR-UN.TO conversation
    HR Q4 Estimate Updated:
    Rent Collections 95-97% (inc CERS)
    FFO $0.41
    FFO Payout Ratio 40%
    AFFO $0.36
    AFFO Payout Ratio 48.5%
    Bad Debts $6.5M (12M Q3)
    Distribution Increase Announced to 8 cents/month
    Debt to Assets - 46.8%
    NAV per unit $22.41

    Full Year FFO 1.66 - Trailing Price to FFO 7.66
    Full Year AFFO 1.40 - Trailing Price to AFFO 9.01
    This is during a pandemic. Many new developments coming online, a restarting of the economy, and lower borrowing is going to drive up forward earnings pretty quick.

    Distributions Increase to 8 cents/unit resulting in FFO payout ratio of 58% or AFFO Payout Ratio 66%. I expect this to be in Q2 2020. Hopefully buybacks are announced first and start soon.

    Liquidity:
    200M Cash
    1B Unsecured LOC
    3.5B Unencumbered Asset Pool

    Bad Debts will be lower due to elimination of CECRA write offs as well as fewer tenant bankruptcies.

    There are a lot of unknowns. Converting construction developments to a finished product, such as River Landing could materially improve Q4 result estimates regarding FFO & NAV. River Landing is the largest project completing. HR has stated that leasing was ahead of expectations in residential, and retail started to occupy space in November. However, it is likely they have a few months free rent and won't add much to FFO until Q1/Q2 of 2021. The board will likely take this new FFO and use it as additional tailwinds to support a vote on a distribution increase. If not, buying back units would be a good use of funds until the unit price recovers, then increase distributions in Q2 2021. I believe with 2020 write downs behind us, distribution increases are not only warranted, but also needed to ensure the trust pays out enough distributions to avoid any income tax obligations as a REIT. The focus in 2021 should be recovery of the unit pricing.

    $SPG $MAC $BPY $BXP $ARE $FRT $KIM $ALX $CIO $VNQ $WPC $BAM

    #D.UN #SRU.UN #SOT.UN #REI.UN #MR.UN
  • Y
    Yahoo Finance Insights
    City Office REIT is up 5.66% to 10.83
  • V
    Victor
    The 6 analysts covering CIO have price targets ranging from $9 per share to $13.00; the current price as I write is $6.60. The yield is now 9.1%. I added to my shares today at prices ranging between $6.64 and $6.67.
    Bullish
  • R
    RetiredCEO
    $HR-UN.TO conversation
    Canadian researchers find COVID-19 antibodies last for months, likely years. Link Below.

    " “We know several people that were infected back in February and they still have quite a bit of antibodies,” said Anne-Claude Gingras, a biochemist and senior investigator at the LTRI, who developed one of the earliest COVID-19 antibodies tests."

    https://globalnews.ca/news/7589668/canadian-researchers-coronavirus-antibodies/

    $CIO $BPY $SPG $VNQ
  • Y
    Yahoo Finance Insights
    City Office REIT is up 5.08% to 11.16
  • R
    RetiredCEO
    $HR-UN.TO conversation
    Q3 Earnings FFO for HR.UN:

    "FFO per Unit in Q3 2020 was $0.41 compared to $0.38 in Q2 2020 and $0.43 in Q3 2019. Excluding the Q3 2020 provision for bad debts of $13.4 million,
    Q3 2020 FFO would have been $0.46 per Unit, an increase of $0.03 per Unit compared to Q3 2019. AFFO per Unit was $0.35 in Q3 2020 compared to $0.29 in Q2 2020 and $0.35 in Q3 2019. Distributions paid as a percentage of AFFO was 49.0% in Q3 2020, resulting in significant retained cash flow. "

    Let's take the 41 cent number, which I believe is low. 41 cents x 4 quarters = 1.64

    Price to FFO is around 7.7. That is ridiculous.

    Now remove bad debts (CECRA replaced by CERS, so bad debts will drop), factor in rising contractual rents, higher new leases, improvements in rentals from Jackson Park, and FFO from all their just launched developments such as River Landing, and likely have FFO around .46 to .50. At the mid end .48, price to FFO is around 6.6.

    Worst case, bad debts get worse, leasing of new properties falls apart, CERS support is stopped, and we are looking at FFO around .38/quarter. That works out to a price to FFO around 8.3. I find this highly unlikely, and still incredibly cheap.

    No matter how you cut it, fire sale is happening on this highly diversified REIT designed to weather a storm like this.

    "As at September 30, 2020, H&R had $1.0 billion of unused borrowing capacity available under its lines of credit, $54.4
    million of cash on hand and an unencumbered asset pool of approximately $3.5 billion. "

    Additionally, 250M unsecured debenture at 2.906% was completed in December, adding even more liquidity in Q4. This low interest rate on unsecured debt shows the quality of H&Rs credit rating.

    $SPG $BPY $WPC $BXP $ARE $SLG $AMT $CIO

    It would be irresponsible to not put that cash to work in Q2 through buybacks and/or a payout increase.
  • V
    Victor
    City Office REIT focuses on buying office buildings under $100 million in US cities where both population and economic activity are growing faster than the national average. Avoiding "gateway" cities like New York, Boston, Chicago and San Francisco, it has holdings in cities like Denver, Tampa Bay, Phoenix and San Diego, where prices are more reasonable. By improving the properties it buys, it establishes the basis for higher rents going forward. At the current price of $8.11 per share (as I write), the yield on the stock is 11.6%; I added to my holdings 2 days ago.
  • V
    Victor
    Re-established a position today (had sold after the dividend cut). CIO has largely suburban office buildings in the South and West like Phoenix, Tampa, Denver and San Diego. Between 2020 and 2025, employment growth is expected to average 7.5% in its markets (vs. 2.6% in gateway markets and a national average 4.1%); population growth is expected to average 6.7% in CIO markets vs. 2.0% in gateway markets and a 3.4% national average. The covid pandemic has punished CIO's stock price unduly; the company has been collecting more that 98% of its rental payments. The yield is now about 8.5% and the new 60 cent annual dividend rate is well covered by the core funds from operations. The adjusted funds from operations appear to show a shortfall in recent quarters only because tenant improvements at the start of leases are lumpy, and a few major leases have involved major ones; this will be resolved over the next quarter or two, with the adjusted EPS rising above $0.25 per quarter (vs. the quarterly dividend of $0.15). The most recent net asset value is $13.18 per share, and the company has suspended new property purchases for this year, using the funds made available to repurchase its own stock at an average price of $8.80 per share. The analysts covering it have an average price target of $11; three of the six have a strong buy rating.
  • R
    RetiredCEO
    $D-UN.TO conversation
    Dream Office NAV will increase ~81 Cents to date over last quarter, from Dream Industrial Investment Alone. Details Below:
    Dream Office Owns ~26,604,300 Units of Dream Industrial REIT.
    @ 13.27 Closing Price Today = ~$353,000,000 (Closed 13.15 on December 31st)
    @ 11.81 Closing Price Last Quarter End = ~$314,728,869
    NAV of REIT increased ~$38,270,000 just from the increase in Dream Industrial Units Owned. Not including Distributions received since last quarter from DIR Investment of $6,697,000, for a total of around $45,000,000 increase in NAV just from DIR Investment. Or around 2.87%. Which works out to about 81 cents per unit in NAV increase JUST from Dream Industrial Investment. NAV October 30th = $28.17 . NAV today = ~$28.98, and this does not include anything else, like FFO retention, Fair Value Property Increases (Contractual Rent Increases and Renewals), Buybacks, etc.

    Do your own research. I do not know if Dream Office Sold any units of DIR last quarter, but I doubt it was much, if any.

    $BPY $SPG $CIO $DLR $ARE $O $BXP $DRE $VNO $KRC $CUZ $HPP
    Bullish
  • R
    Ryan
    Where is the dividend
  • S
    SLO Doug
    Apprapo to some previous comments and particularly to SteveK: First To qualify as a REIT, a company must distribute at least 90 percent of its taxable income as dividends. Historically, most of the return from REIT's has originated from these dividends, although many have delivered attractive price returns as well. And don't ignore that some it not most REIT's can and will return an investors capital to support a specific dividend level.
  • D
    Dr.Savant
    Why the big drop? I must be missing something.