Executive Summary

Rental and other revenues were $44.5M; GAAP net loss was $(2.4)M or $(0.06) per diluted share; Core FFO was $13.5M ($0.33/share); AFFO was $9.1M ($0.22/share) .
Guidance was lowered on Core FFO per share to $1.14–$1.18 (from $1.18–$1.22) and NOI to $101.5–$103.5M (from $103.5–$105.5M), primarily reflecting expected WeWork downsizing impact of ~$1.8M or $0.04/share (with ~$0.02 non-cash straight-line rent write-off) .
In-place occupancy ended at 83.0% (86.0% including signed not yet commenced); leasing momentum was solid with 191k sq ft executed and notable long-term deals at Bloc 83 (Raleigh) and FRP Ingenuity Drive (Orlando) .
Management expects occupancy to trend higher through year-end as 172k–184k sq ft of signed leases commence in later quarters; catalysts include WeWork resolution and Q4 starts for major leases, plus progress on property renovations .

What Went Well and What Went Wrong

What Went Well

Executed ~191k sq ft of leasing, including 110k sq ft new leases with 9.1-year WALT at $33.33/sq ft; renewals averaged 4.2 years at $32.50/sq ft .
Key wins: “29,000 sq ft 11-year lease with a financial tenant at Bloc 83 in Raleigh” and “43,000 sq ft 10.5-year lease with a healthcare tenant at FRP Ingenuity Drive in Orlando,” eliminating full-floor vacancy at Bloc 83 and bringing FRP Ingenuity to 100% .
CEO tone constructive on demand: “we continue to see the return of larger tenant prospects,” and sector “trending more towards equilibrium,” citing rising tenant requirements and declining sublease additions; renovations underway to elevate assets and support leasing .

What Went Wrong

Same Store Cash NOI decreased 1.0% YoY; NOI benefitted from ~$0.9M termination fee income, indicating some reliance on non-recurring items in the quarter .
Guidance reduced due to expected partial WeWork space take-backs at premium assets (Terraces, Dallas; Bloc 83, Raleigh), lowering Core FFO by ~$1.8M ($0.04/share) in 2024, with ~$0.02 non-cash straight-line rent write-off .
Debt market liquidity remains challenged; several 2024 maturities require lender cooperation; Portland market flagged as “most challenged,” with asset-level risks (Cascade Station deed-in-lieu expected in Q2; AmberGlen vacancy risk in 2025) .

Financial Results

Metric	Q3 2023	Q4 2023	Q1 2024
Rental and Other Revenues ($USD Millions)	$44.2	$44.3	$44.5
GAAP Diluted EPS ($)	$(0.05)	$(0.11)	$(0.06)
Core FFO per Share ($)	$0.34	$0.33	$0.33
AFFO per Share ($)	$0.15	$0.23	$0.22
Net Operating Income (NOI) ($USD Millions)	$26.6	$26.9	$26.7
Same Store Cash NOI Change YoY (%)	+2.2%	(0.5%)	(1.0%)
In-Place Occupancy (%)	85.4%	84.5%	83.0% (86.0% incl. signed)

Notes: Wall Street S&P Global consensus estimates were unavailable for Q1 2024; comparison to estimates cannot be shown. Values retrieved from company documents.

Segment breakdown: Not applicable; company reports as a single portfolio .

KPIs

KPI	Q3 2023	Q4 2023	Q1 2024
Total Leasing Activity (sq ft)	119,000	134,000	191,000
New Leasing (sq ft)	33,000	109,000	110,000
Renewal Leasing (sq ft)	86,000	25,000	81,000
New Leasing WALT (years)	6.8	8.0	9.1
New Leasing Rent ($/sq ft/yr)	$32.10	$38.04	$33.33
New Leasing Cost ($/sq ft/yr)	$8.82	$10.83	$9.86
Renewal WALT (years)	4.1	2.5	4.2
Renewal Rent ($/sq ft/yr)	$36.51	$33.46	$32.50
Signed, Not Yet Occupied (sq ft)	73,000 (signed that commence post-Q3)	112,000 (signed that commence post-Q4)	~184,000 (signed within Q1 commence post-Q1)
Adjusted Cash NOI (CIO share) ($M)	n/a	n/a	~$26.0
Termination Fee Income ($M)	$0.37 (9M 2023)	$0.02	$0.93
Total Principal Outstanding Debt ($M)	$674.3	$672.7	$671.2
% Fixed or Effectively Fixed	91.1%	91.1%	91.1%
Wtd Avg Interest Rate (%)	4.8%	4.8%	4.8%
Wtd Avg Maturity (years)	2.8	2.6	2.3
Cash and Restricted Cash ($M)	$52.3	$43.4	$43.4 (cash $29.5; restricted $13.8)
Undrawn Credit Facility ($M)	n/a	n/a	~$97
Net Debt to EBITDA (x)	n/a	n/a	6.6x

Guidance Changes

Metric	Period	Previous Guidance (Q4 2023 release)	Current Guidance (Q1 2024 update)	Change
Dispositions ($M)	FY2024	$21.0	$21.0	Maintained
Net Operating Income ($M)	FY2024	$103.5–$105.5	$101.5–$103.5	Lowered
G&A Expenses ($M)	FY2024	$14.5–$15.5	$14.5–$15.5	Maintained
Interest Expense ($M)	FY2024	$34.5–$35.5	$34.5–$35.5	Maintained
Core FFO per Diluted Share ($)	FY2024	$1.18–$1.22	$1.14–$1.18	Lowered
Net Recurring Straight-Line Rent Adj. ($M)	FY2024	$2.0–$3.0	$1.0–$2.0	Lowered
Same Store Cash NOI Change (%)	FY2024	(1.0%)–1.0%	(2.0%)–0.0%	Lowered
Occupancy at 12/31/2024 (%)	FY2024	84.5%–86.5%	83.5%–85.5%	Lowered
Dividend (common) ($/share)	Q1 2024	n/a	$0.10 (declared/paid Apr 24)	Informational

Context: WeWork downsizing expected to reduce 2024 Core FFO by ~$1.8M ($0.04/share), with ~$0.02 non-cash straight-line rent write-off .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2023)	Previous Mentions (Q4 2023)	Current Period (Q1 2024)	Trend
Leasing Momentum & WALT	119k sq ft; WALT 6.8 yrs; SSS Cash NOI +2.2% YoY	New leasing most of any quarter; pipeline >200k sq ft; WALT 8.0 yrs	191k sq ft; WALT 9.1 yrs; two sizable new leases; signed not commenced ~184k sq ft	Improving duration and volume
WeWork Exposure	Not highlighted at Terraces/Bloc 83; portfolio commentary	Block 23 Phoenix write-off; lease terminated Feb 2024	Expected downsizing: take back one floor at Terraces (Dallas, Q3 timing) and one at Bloc 83 (Q4 timing); ~$1.8M Core FFO impact	Managing exposure; diversifying rent roll
Debt & Liquidity	Extended $40.8M property loans; fixed at 7.05% via swaps	Debt $672.7M; 91.1% fixed/effectively fixed	2024 maturities $102M; Central Fairwinds 5-yr extension (expected), Cascade Station deed-in-lieu, FRP Ingenuity aided by lease, $50M term loan discussions ongoing	Active refinancing; market challenged
Dispositions	2023 outlook reiterated	2024 guidance assumes mid-2024 Cascade Station disposition	Cascade Station transfer to lender expected Q2 → reduce debt by $21M	Executing planned de-risking
Renovations/Spec Suites	Noted strong assets; no specific renovation program	SSS Cash NOI +3.0% FY; spec suite spend $7M in 2023	~$9M program across 4 assets; $2M spent; spec suites inventory ~100k sq ft targeting >$2M NOI	Investing for 2025 leasing uplift
Macro Office	n/a	n/a	CEO cites JLL: 70% markets ↑tenant demand QoQ; active requirements +28% YoY; sublease vacancy declining; new construction at record lows	Gradual improvement backdrop
Portland Market	n/a	n/a	“Most challenged market”; AmberGlen 72k sq ft expected vacate Q1 2025	Elevated risk; prudence

Management Commentary

“The first quarter’s results tracked our expectations and we progressed renovations at several of our properties to drive incremental value” — James Farrar, CEO .
On leasing: “we continue to see the return of larger tenant prospects... [completion] resulted in all full-floor availabilities at Bloc 83 now being leased and 100% occupancy at FRP Ingenuity Drive” .
On WeWork adjustments: “updated our expectations to reflect taking back one floor at... Terraces... and at Bloc 83... We believe this outcome will position us to further diversify... and ultimately enhance value” .
Macro tone: “office sector is trending more towards equilibrium… active office requirements have increased 28% nationally year-over-year” .
Strategy: ~$9M renovation program across Scottsdale, Phoenix, St. Petersburg, Dallas to “positioned for long-term leasing success and cash flow maximization… setting ourselves up for a strong 2025 and beyond” .

Q&A Highlights

WeWork negotiation rationale: management prefers partial take-back to diversify rent roll while keeping buildings largely full; Dallas Terraces commands top rents; tenant prospects already evaluating space .
Asset sales: near-term market illiquidity limits dispositions; focus on positioning best assets to win leasing, prudent management of challenged assets, potential pruning when markets improve .
Occupancy trajectory: signed leases expected to commence by year-end; WeWork floors return mid-year (Dallas) and year-end (Raleigh) without assumed lease-up in 2024; management views 2Q as occupancy floor .
Spec suites: 2024 spend about half of 2023 ($7M last year); inventory ~100k sq ft expected to generate >$2M NOI; rents holding; pacing spend to lease current inventory .
Market risk: Portland singled out as most challenged; AmberGlen 72k sq ft vacate expected Q1 2025; cautious approach .

Estimates Context

Wall Street consensus estimates via S&P Global for Q1 2024 revenue and EPS were unavailable; therefore, beat/miss versus estimates cannot be determined. Values retrieved from S&P Global were unavailable due to access limits; consensus context is not shown.
Given the guidance reduction (Core FFO $1.14–$1.18; NOI $101.5–$103.5M), sell-side models may need to adjust downward for 2024, especially for WeWork-related impacts and timing of lease commencements skewed to late 2024/Q4 .

Key Takeaways for Investors

Q1 fundamentals were steady: Core FFO/share held at $0.33; AFFO/share $0.22 covered the $0.10 dividend; leasing momentum improved with longer WALT and key full-floor wins, supporting 2H occupancy lift as commencements occur .
Guidance trimmed on WeWork downsizing; near-term occupancy/NOI dampened, but premium assets (Dallas Terraces, Bloc 83) likely to backfill favorably, implying positive medium-term value creation .
Balance sheet: 91.1% fixed/effectively fixed debt; multiple 2024 maturities require lender engagement; Central Fairwinds extension in process; Cascade Station transfer to lender expected Q2 reduces debt by ~$21M .
Renovation program (~$9M) targets leasing and NOI growth across select assets; spec suites inventory (~100k sq ft) intended to add >$2M NOI, providing self-help catalysts into 2025 .
Watch Portland exposure: management flags market as most challenged; AmberGlen 2025 vacate risk and limited near-term liquidity warrant caution on that submarket .
Trading implications near term: clarity on WeWork amendments, debt extension milestones, and visible lease commencements in Q4 are potential catalysts; non-recurring termination fees boosted Q1 NOI, so underlying trend should be assessed ex one-offs .
Medium-term: diversified rent rolls at top-tier assets and reduced WeWork exposure should de-risk cash flows; late-2024/2025 commencements and renovations support improving NOI/occupancy trajectory .

City Office REIT, Inc. (CIO)·Q1 2024 Earnings Summary