CMCT - Earnings call transcript Q4 2021 | Creative Media & Community Trust Corporation

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Operator

Good day and welcome to the Creative Media & Community Trust Corporation Fourth Quarter 2021 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Steve Altebrando, Portfolio Oversight. Please go ahead.

Steve Altebrando

you us. thank and everyone for joining Hello My CMCT. Steve Altebrando, Oversight for The Portfolio name is the today Group on Financial Shaul member; Also call Nate Officer. Kuba, Executive our and Co-Founder Officer; Chief of our CIM DeBacker, and Board is CMCT Chief David Thompson, Relations also presentation. This Investor find release latest webcast investor our on being website our is will be earnings of call archived where temporarily and the section you can and

discussed Our earnings of reconciliations today's release non-GAAP financial during call. measures includes

this of forward-looking on beliefs and course During will These of, us. we by, the forward-looking statements. to call, statements make made available are the information based currently assumptions

Our actual are known that beyond unknown results our control risks, to by and trends, or uncertainties, factors be will and ability affected predict.

are future guarantees assumptions expectations to from are Although and results will actual prove differ differences that reasonable, performance material. incorrect. some be may we of Therefore, our can our those be future our not and to they expected believe be

with please SEC the any your call our of with with Investor our to outline fourth Then and happy developments Shaul up future start will description We'll office detailed found business of can quarter who the XXXX multi-family be for strategy. will will results. David? website. we'll take market, David some Relations to our vision our section to our Nate our the finish then will the updates filings and refer Then potential discuss I and off more in be questions. exciting portfolio, and which of For risks, discuss our today

David Thompson

quarter strong and one performance in morning were today. by our lending we for our you thank XXXX joining results Steve Thanks call our at asset. marked This announced which fourth earnings hotel segment improving our and

to live office reduction and work committing and annual secular. believe to from the Community cater highlight over spaces that but to and first discuss manager $X.XX strategy traditional industries quarter Trust. XXXX in bright, in and locations some thoughtfully This structures and fee Shaul CIM go-forward on management as belief, creativity, fast in into to To to in operating we this high many cost will savings. of media, the in and office We but In distinguish like quarter flexibility, performance more I'd we're to fee activity reduced that turn multi-family collaboration. developing leasing that Kuba business it declined creative CMCT, value-add entertainment. tech, focus office detail. to that designed, on benefit properties this share about office investing like to encourage growing and net and XXXX. X, I comfortable creative and get premier our we're a with in and seeing approximately name agreed as on in our later continue in-person a time sharpen our amounts January many the our detail of wanted our underlying to And Creative was Media and This employees some to a growth call, and trends change seeing January in the Group, we hybrid walkable culture-oriented, communities. work-from-home vibrant week reflect changed making lifestyle last these we updates We'll speak and the made our are We companies of embracing progress & first further income to increase to see significant exciting strategy. you know take assets. started in year-over-year, Our early the for shift the start per open,

Shaul Kuba

work office considerable before seeing pandemic, trend the we change a towards and has hybrid There David. were the multi-family already Years Thanks in been the landscape. lifestyle.

in creative positioned participant on As Los early David company In we the an we The modern what nationally. accelerated to office described, multi-family, long-term. over is trend response, especially Angeles. think have the in and very opportunity institutional significant the capitalize pandemic CIM was a

will focus on CMCT two Going things. primarily forward,

in to be developing in moderate. from in asset leader a creative we is like and First, and demanding industries Tenant vibrant media, industry are market, fast-growing investing range space entertainment. of office office will comfortable a and technology, that catering

great strong very If is product, you a have there demand. a great tenant market,

want back to to dynamic. Second, Since and develop a tool time want comfortable, well as from is dining, those great creative entertainment, back retain top while same market, a spending benefit more to attract as it inspire intensive, proximity a those to X% The level office office. professionals changes multi-family product location. secondary. we They plus and premium. used U.S. in office and the office up and tenant and capital but is market is creative come Traditional on see invest space to challenging to office, market. in XX% bifurcation for aesthetic be working home, office asset professionals motivate continue about pricing to amenities a for commanded are in a of Potential to will there for that that which from for and as the creative the are demand office be location, makes premium is can employees. and and seen based talent a It significant have competitive demand space and is we we modern, space office cool only is rate that Back focused culture. pre-pandemic have nearly strong to business on creative prime-earned Listing product class.

invest dynamic will in We exist. where those markets

pipeline U.S., ground. in attractive of Angeles, and we a the assemble where And to we owner market other in relationship open and where real this Area. the working And see are major Los look to market on Group investing will those in been hard CIM grow Austin, opportunity. resources, place, has new across long dynamic. Bay we standing estate and already markets the to We developer boots as With knowledge, dynamic we've

We value-add are assets, development and at opportunities. core looking

of in area. creative entertainment fashion it will to directions. dining property and plan Park tall Our Sunset in option. square W. that ceiling area appeal Boulevard, the all CMCT in in emerging great building in focus. example window, the located office an story is dozen of to Echo in walkable space trendy Echo XX,XXX recent property in new Echo Last business LA. An neighborhood Park floor tenants a the is in a acquired has sub-market We the sector already also and that to reposition into office a acquisition XXXX eight entertainment is Park a tallest our property The in with month views with feet

development XXX in We also approximately Angeles in Jefferson about to develop Los Also on units of We sub-market we of lot plan closed second XX Park site the intend to total back. we develop have site contract. a multi-family parking a units. February, and on a under in surface

and For creation as look income. Echo certain advantage significant we as in diversification, believe of which acquisition opportunities, fund. we development partner We with benefit and those for instances, wealth fee some CMCT get to value-add this sovereign at well with a co-investor bring co-investment the value of will we level. the the as gave the Park did asset type We

back on more the deals able to be in on to call. I'll pipeline the additional David future details share to expect call We turn

David Thompson

Shaul. Thanks

focused goals year. division As to our Shaul on we're we a few strategic this described, shipped business

continue to over or will to described. non-core that creative the assets the First, Shaul seek not we office. asset are plan to proceeds premier assets in of divest time; We multi-family redeploy type

sharpening worth of billion recall, dollars' multi-family. may $X a sold focus our was office which XXXX, traditional step creative approximately in we and you first toward As in assets office premier big

we're financial create monitoring the actively greater Second, are working and financial to and debt preferred markets. flexibility

structure. on to our reducing continue we cost Third, focus

we're earlier, benefits Group, management manager, in quarter the starting per amounts annual reduction in cost agreed XXXX. in As to our savings, approximately mentioned CIM to see the I first a share fee of of that $X.XX to our which

We to value-add portfolio. also progress costs. G&A to in on an make reduce assets there's fourth, the believe continue opportunity our we And further

I For will an it Steve. update, to back turn

Steve Altebrando

David. Thanks

primarily the simultaneously first Starting Wilshire entitlements with space luxury with conversion an Los prestigious anticipated convert retail. increase as design one Beverly end end Beverly XXXX timeline which of We Beverly the in one The in continue in progress the for half In market year XX Angeles, in Rodeo the approval. it's our while The for anticipate XXXX LA We Drive. we're rents value-add the the the for Hills, approximately Golden February, of quarter approval, unleased we Wilshire Wilshire return on at our Wilshire start XXXX XXXX. the to continuing Boulevard second conversion months. market of XX% block Seasons, the from the been next of is at on review received increase. just located to multi-family prominent having step user, percentage vacancy about Four immediately of to pursuing Hills. to XXXX buildings multi-family. required make remaining in profile rent option actively has lease located XX% from The significant improving most was Triangle office to and to of locations the space an At in to the most construction the portfolio.

last were the over are location two and that Given the backfilling we in the tenants prime of leases patient term seeking, retail the extended expired years.

the lease Fiber another One Penn lease Google uptick we about on interest in feet. Google we the XX,XXX with that square an square foot stabilized update our Fiber to and an Field our option portfolio Field an We rates. our taking signed percentage Penn this quarter, to at campus are creative pleased XX%. in are take at proven year, approximately Earlier X,XXX seeing exercised Austin, fourth in office space in

these Nate leases the I'll seeing over financials. turn an the start the it that, for quarter to benefit expect With We to second XXXX. of update of in on

Nathan DeBacker

Steve. you, Thank

was compared $X.XX diluted in share For a period. per FFO year quarter the $X.XX core of prior loss to

million the from segment increased segment lending million in NOI Occupancy hotel the to $XXX,XXX. XX.X% loss Our a the XX.X%, increase segment improved in ADR $XXX,XXX. to to increased in from Lending was $X.X from $X.X million NOI $XXX.XX increase division from up year income an while by of from $X.X quarter, $XX.X segment. driven The $XXX.XX. improved to prior period. net total Hotel the primarily and increased operating million

on reverted portion This in loans SBA support XX% income SBA leading has XX% the increase During guaranteed premium back XXXX, guaranteed a to the to from originated to XX%. increase the X(a) lending of to volume The now sale prolonged. loans the benefited allowed portion our increase an maximum from segment of the temporary from guarantee in loans.

offset declined by Brentwood, due revenues all Oakland, partially the lower property compared to to million, office decreases in properties office office and Our in occupancy from $X Hills, to in an an million primarily at to year. Austin, segment in occupancy. revenues due as in to NOI an increase due This $X.X prior at Beverly was increase

XX,XXX up. our and Austin as mentioned, including leasing with months approximately leases activity at fourth we're Google However, the foot Steve We pick square XXXX, quarter and in square of Fiber the feet first David of XX,XXX seeing property. lease a two signed

asset from the to fourth Starting expense fourth Our reimbursements management Xst, million the structure effect into expect we the decrease fee quarter, the in quarter management in XXXX. due $X.X new fee XX% fee were to the first that quarter. went January and over

to our revolver December the as $XXX.X XX, approximately of million we approximately end on XXXX. We had year. Turning availability we the estimate of our drawn of liquidity, million have $XX at

one as a to year call year, now some closing the revolver remarks. reminder, XXXX. we I for Our David this extension With will a that, option XXst, extend have maturity over which the turn but to October matures would later

David Thompson

the sharpen office we're creative on wrap-up, our excited about To focus Nate. and we opportunity us ahead as Thanks multi-family. of

as and have Culver desirable pickup sub-markets We Hollywood, Austin. activity. assets We're in great highly our City, by encouraged in such leasing the Beverly Hills,

pipeline We sharing have and future calls. details more a forward on to growth attractive very look

and we Operator, significantly returns may structure. call at times you for and development co-invest diversification finally, value-add have cost the increase For reduced look by And open questions. now to assets, our supplement we will generating our to income. fee

Operator

[Operator session. ahead. go from The [ph] Foundation. question-and-answer first Please Eric question will comes with First Instructions] We the now begin Sloane

Unidentified Analyst

for and given Appreciate have you question. the Thanks guys. appreciate call, Hi that taking you having Board the on this -- David. especially I Steve,

you the Steve, David thanks My as I So in, but if think weigh attendance to for Kuba, best question well. for or please. Mr. want is

they assets your in on sharper of is We base. are or we guys smart. your sharpen your R&D you existing speculate release, think My at focus So, that have that's focus asset that the question open-up applaud idea press could be. you evolving least monetizes, if that the you outside

would discount to material considering material deserving reinvested trading a as tender? good kind So, Board portion such net head is With shares something the nature provided the carving at Steve and capital four business a that's Board's of the the -- Board given asset the the shares given capital the a looks in a the value, which updates, isn't consider, given trajectory, where's the reinvestment? at the on especially of of

David Thompson

Yes, can comments. guess This he I'm the But Thompson color. question. question. first, happy Eric, appreciate the address any wants David appreciate to Shaul is I to if in the jump and add

shares Now, with respect think certainly we the is our proceeds value always with to evaluate will below have stock it's from the toolkit. I'm in we and sales, to trading are one asset that today. something buyback a that tools the well intrinsic of going agreed that We

were shares -- now in I more grow our mean, financial portfolio. late selectively had we our focus in the assets is now, that purchasing flexibility, in right improve flow really, market probably to the it's on and cash In the fact, reinvesting to creating continue affiliates But XXXX. were

So, the when that's proceeds again, to we of the the always one in being have deploy tools primary always toolkit. it's said, are to focus. going something looking and and evaluate we That be will

Unidentified Analyst

Yes.

Shaul Kuba

Eric, is Kuba. Shaul this Yes,

us So, said. business, are the large share, amount hard some yes, divesting a now David going it's on aspect the to but -- is whether including it's table of back assets. right everything Thompson just of buying are I'm obviously, very we the echo what on amount, very, And small every looking or as for we

Unidentified Analyst

guys are that hope But it I'd a see in real I the value-add assets, core were to and especially, -- well, the especially, buyback behalf where we'd Yes, have on been company's able something and that and or hearing got out involve. increasing I for And makes our something been because you own like the investing us -- the guys. in to that you a that exciting would us don't you I us, hand do while -- have are Sacramento would to returned have of so to to be be Oakland love at given be it mean sense. something more and love as think the be would levels shares point been guys I development great or Thanks, you comes I it participation, an Sacramento, think you do, or of I stuff -- the and buying to would with and estate, owners of tender view up we if for in that see Oakland, would a be -- future some and kicked accretive that the rustle if say, would need our outcome. smaller but to happen up we think that what

David Thompson

Eric. Thanks comments. the appreciate Great. We

Unidentified Analyst

guys. Thanks

Operator

from with Securities. Craig ahead. comes Riley next question The Kucera Please go B.

Craig Kucera

and here us But achieved Congrats when Appreciate that on color Yes, you quarter? sense quarter leases. the tenants this the hey, Google typically in that signed can a quarter you as well. of also on year? the give in Or further Fiber along that guys. leasing that morning, good take maybe other maybe are leases economic to occupancy, the going is the second first is

Steve Altebrando

one. Hey, and I Craig, second can is primarily It take the is third that quarter. Steve, this

Craig Kucera

give your of renewal you think office a are I point? to of what Can of leases And expire about expectations XX% this great. us any scheduled this year. at are? Okay, your moveouts you aware And are sense

Steve Altebrando

Sure.

XX% in expirations of we number would back-waited or expiring. expectation good the would the those at year. our that them least of of renew So, are A be

other the generally really even lease thing point XX. little would one doing one substantially average. are one, -- a below I that The thing in rent In explorations in it's average And north one that the of out market. is Field property below bit is lease market XX, we're Penn particular is at on particular -- our is Austin, that So, early. of and property around leases place but

Craig Kucera

occupied too Okay, in back about And be a great. potentially in market back operations perspective? quarter. the much I asset to an gears, Kind enough candidate for that Has that here you the XXXX? the come enough were XX% changing of think frankly, not from disposition hotel, here guys come on has commentary fourth

Steve Altebrando

bit. asset So, quite we are seeing a the rebound

like speaking, January for markets the I the right think pretty after And robust nicely. little probably most was generally soft is a with hotels asset that, to spike But we're pretty Omicron. continuing of the now. capital rebound see

David Thompson

I would it's candidate at come was is a it now, for the that even to and add to property before certainly had now levels that achieving back disposition. the

Craig Kucera

development? when you on from the current that throwing assets a recycling of larger are flow, and as cash cash based of Or earnings company's to stabilized And new it. sort flow sounds are thinking increasingly, run you strategy some are it capital, tilting dividend like you to Got about the relates standpoint these of off rate? thinking as your about your kind -- well think and and of

David Thompson

is to Yes, well, office got in combination strong the a and to and want portfolio, stabilized a got a see really both the where in the of grow portion it's that's we and value-add multi-family, more development. that's and creative we've to company portfolio we've premier I going be where of the right think you're really going a of

focused and on associated portfolio, development position again, them that. income toward multi-family, the paradigm benefit So, of the the of And move the have assets structured have benefit I we we with can some is on you've more reposition kind as got the we're a stabilized assets work -- office, that think creative we today, we while again. to to get complete the much value-add those as the of the in and new

Craig Kucera

pretty than office? conversion? more know lease much at not to are I been multi-family in a ultimately have it you're kind regardless? through at just the your And the value fair point an that more working for likely Is XXXX, out you potential of for it. approvals while say you you still that with commentary you're sort of also Or to based a Or Got but asset to that's move it. been where forward do trying on holding see

David Thompson

think I still both options open. Yes, we're keeping

be through for the would where the we to that move I we move option, think keeping -- of the we'd first the move least some forward some process going through -- take term specialty in in the the to to near-term, where -- of get for long-term if while move multi-family us, would at ideal. over near-term, again, value as we of the your can while approvals be of stuff ideally, could back in getting the And we think more kind created the we it. be like cash point flow up

Craig Kucera

-- that, million, XXXX land think we kind have which And here about to the about was think what W. about you of be venture we XXXX? purchased think we investment you expecting when your you you're talk got two joint and but XXXX what got parcels XX% this of I total a just you about budget you've $XX other these entered there? from of as should the you're And budgeting great. think under quarter initial that perspective into Okay, contract how expecting can Sunset, some acquire, or about there?

Steve Altebrando

take this could I Steve, It's one.

fairly off land that dollars. to his small be mean, figures haven't Western than Shaul I respect script developments parcels dollars to would it's on to but a yet, small the $XX respect on also seek I also we disclosed well. it's the side, we the And the redevelopment, think with total the -- So, would fairly to on that Sunset, co-investors and two generate they're W. in development development. are less as office mentioned parcels, million. With the -- we look fee these bring

the pretty substantially amenity that We -- but is. basically the potentially talking really that asset also figure, about particular adding provided that you're rents lobby, market redoing have not but below space, in are place what some

newer roof things. really it's a deck, not more little those bit better amenities, of lobby, So, a more -- potentially sorts of a it's value-add heavy redevelopment,

Craig Kucera

to that offering your little the of the you cash expecting more side, expectation I currently assets the think fall, this thinking flowing. do capital vast that I to developments or year? guys on you we you of into on line be And it. Or might the some sort structured ventures? any doing anticipate possibly go Got want capital of bit that time a to plus say joint were the more at still the rights as are and on maybe core back and buying have for Is these that majority -- of availability this

Steve Altebrando

we're core I Really mean, and development. value-add well as really both as looking at both.

Craig Kucera

Do don't have is you under moving contract acquisitions But TBD? or it. sense still pipeline there of core Got currently -- that you any a have any acquisitions names? or

Steve Altebrando

to TBD. Nothing but imminent, is continuing look. we're

Craig Kucera

Okay. All I right. Thanks. time. appreciate your

David Thompson

it. Appreciate Craig. Thanks

Operator

moment. one from a question we have And & Company. Just John Robotti ahead. go Please with Moran

John Moran

or I guys questions. an published another this to we be those in this couple deck of slide your purposes, of form deals NAV is are One when of Yes. question, going that X-K what you in there -- then embedded just do this might deals? a something two an fees, just Or management is -- in terms And terms is -- the had have to going et cetera. look that filing, can Hi, of year? that? my illustrative or for you're And is for is Shaul some business sort you see either by the going of, forward? And normally now like Steve. would CMCT on that's terms in just a participation, what asset feature are your

please. can, you If

Steve Altebrando

I -- go Shaul. ahead

Shaul Kuba

it. to ahead ahead, Go Go add Steve. I'll

Steve Altebrando

Yes. Okay.

question. NAV on So, the

the the was off the So, stock We because some of preferred was pricing NAV published had that that have were longer priced off no and offering had we struck you the NAV. based that may reason recall warrants component.

And with well Shaul respect is to continue publicly value, see answer strategic of we're generally it planning below co-investments. but believe obviously, on to we're So, the in to context not update planning the we stock promoter net asset the the mentioned, I'll terms the generally not pricing, of to the the publish structure trading really varies let is the We it's but co-investments, have commitments value. in the we of that as plus -- a then David question, not X% intrinsic NAV.

Shaul Kuba

think I idea in deal of all co-investors, and asset basically channel going they Yes, little be going the competition fees the and our a and up bringing and to to to among all is best distribution the flowing promoter of create CMCT. co-investors to pick small our co-investors through promote for to CMCT, the

So, to going higher space. We're generate I hard demand think sites, fee CMCT going Multi-family of behalf for to CMCT, it's asset-by-asset. going higher to the and promote be probably than office negotiate for really creative CMCT. and on

deal tenant generate asset. can for that has has can a that nice promote we that generate and up we credit, we're see a very if probably a -- Now, good to line going a

build the and the participate opportunity in creating of we're the I mean, they need on very to assets, looking up we'll attractive and compete that beginning can so actually want to see, just we're pipeline, we stages So, co-invest opportunity. for

John Moran

deals those a the something is And you ventures I side--? -- promote is a your a one-off and there CIM? promote? a there's is follow-up where at just like guess upper words, do other splitting is In preferred you're what return joint do that But look

Shaul Kuba

the depend on class. all The to Promote promote. XX% it's and can asset asset go Again, from promote XX%

have to think co-invest not going asset. be it's -- I very going we're each have memo, not going to standard I'm more a So, tailored to to

be some the in promote we So, -- that of it may just in demanding XX% cases, cases promote, XX%. be might some be might

Steve Altebrando

-- it, fee John, mean, about if incentive right. a some then achieved hurdle. an generally base there you've and is there's thinking fee I predetermined you are secondly

John Moran

I things you yes. what of just about -- if say trying there's know like. look to the was Okay, don’t these structure I anything

So, only like projects at large position. those both on Brea looks pretty in Park Echo La certainly your projects, current they're based liquidity of large not

are those like? would much debt you What the those And what might a both from partner? projects that of would looks capital It how -- do make Does sense? you partner the mean, So, What's be look $XXX -- capitalized? I -- projects? billion -- like How hypothetical can joint like? be contributions know, ventures? I each don't put plus say look that those debt in

Steve Altebrando

respect with on mean, closed Brea, to the La Well, yet. I haven't that we

mean, this in But So, are a XX% about generally, with so investment thinking CMCT is bit or way it's some a little the and these we minority of deals, too I having on it call, early. you XX% and income. little you're mentioned, the much as co-invest bit about then talked return with your we a project. -- yes, Sunset fee other you that's supplementing earlier the that's call smaller

John Moran

thank Okay, you.

David Thompson

John. Thanks

Operator

This concludes attending & Media the call. for Community earnings Creative quarter fourth and session our XXXX question-and-answer you today's presentation. Corporation Thank Trust

may You now disconnect.

Creative Media & Community Trust (CMCT) 16 Mar 222021 Q4 Earnings call transcript