CMCT - Earnings call transcript Q1 2022 | Creative Media & Community Trust Corporation

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Operator

Good day and welcome to the Creative Media & Community Trust Corporation First Quarter 20212 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

thank joining and everyone, morning you us. for Good the for CMCT. name is Oversight Altebrando, Steve My Portfolio Also call Group Officer; Financial Shaul member; on Chief Nate Officer. Kuba, our the and Co-Founder today is of our CIM DeBacker, and Board Thompson, CMCT Chief David Executive 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

risks, our that I description the the of With detailed website. more be which over to our call Investor Relations refer in SEC please of will a found can filings section For potential David. to turn

David Thompson

thank and morning announced joining first our you call we earnings. today. quarter This XXXX for our Steve Thanks,

a improving FFO by to results share first was at period. reduction year core hotel $X.XX our significant in in prior in driven quarter $X.XX our a as the Our per of compared the of cost improvement as well loss The primarily structure. asset, significant

XX% then our XX% variant January, by in impacted March. XX% to hotel. April and in quarter year. is early stable This remains income strong particularly in total the hotel into at increased at February Our that which prior segment Omicron the despite operating approximately and Occupancy was Occupancy month. last XX% the XX% increased in from net from disruption that

partly driven year management to includes our that We was that by believe and announced an fees year. by declined in the FFO there side, the the from prior which continue cost overhead, share. reduction corporate period. is fees, management XX% grow On per asset G&A, we our this to This reimbursements, expense earlier the opportunity

We leasing value-add hotel progress in making increase encouraging see continue activity we’re and our assets. trends on to an and

very we addition, We the XX% pipeline. a quarter. have dividend attractive increased growth In in our first by

As noted like management that call in our announced board recommended reward over management to dividend CMCT the substantially the lower we to to fee growth we detail through over all the use to time when cost and turn the more the strategy our opportunities. reduction common to of achieved stockholders now Shaul I’d fee, Kuba by management increases. on savings has provide

Shaul Kuba

primarily I’d take to to reiterate on David. two CMCT strategy. focused like few our Thanks, moments a is things.

fast media market to being First, in developing creative growing investing in and leader a vibrant office industries catering like entertainment. technology, assets and

competitive than We to open collaboration. comfortable creativity, office style new for is of intensive. reasons. traditional bright, are designed encourage office is seeking office creative are Two, two less a flexibility and market that creative capital modern. committed They’re market and that the demanding and One, spaces less space office thoughtfully tenants

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

include dynamic and new core real professional and those for home, creative in also culture. opportunities. estate assets, and With spending time development amenity focused in which more locations. a pipeline working is in in dining, well as is have proximity there working greater an same premium been value-add attracting working this multifamily investing attractive are to we place, employees entertainment, to Next hard as where assemble and of those demand growing fast that we general from influx on are are markets, an industries office developing Since there

bringing core development believe of an a instance the well business promoting of distribution value-add for opportunities, where supplement diversification. and a joint asset CMCT development the core We design, or developed site advantage. bring billion $XX closing On where United highlight has straight level. plus Los XXX last certain experience very the call, States management. architecture, Jefferson investors. development as few For is more Angeles. investors will as investor, our creation venture, and in benefit we joint CMCT and group the at the construction, competitive than venture value significant development institutional a we In to engineering, urban sub gets has On may want in of planning, I model this assets professional model to over provide either feed across project CIM global CMCT, Park, its a opportunities. development in through of and compelling of CIM cases. described some It return I a our XXX Group of with capability look market has income our

Angeles door. on is that to located expense University very also attractive just the Southern land this our miles there City south $XX,XXX intend development close expected In half We strategically The second units of later a California, less in is and XXX We one about the new both this a total of Culver Development. develop per of have Los growth, Park as across from to month. at under is area base contract than near of path XX several a freeway, sides. it site Jefferson is

XX,XXX in in also a the Boulevard, break rent in end fashion tenant the reposition Angeles, expect XXXX an neighborhood office space We first in grow appeal office into $XX.XX has that trendy rent entertainment The sub-market as in in opportunity Sunset square investor at were of is and I CMCT significantly entertainment quarter. a described institutional property West Park, dining on dozens completed area we feet ground partner of options. closing was emerging in-place will acquire to with also the an the Los in We an a to Echo first believe there walkable the per quarter. the which already sector property XXXX. the site the foot that of area. square to creative to

surface develop back of to unit multifamily parking XX on the a Additionally, pursuing approximately in we entitlement the property. lot are

also ground in expect to break this on XXXX. We

entertainment In our addition, value fully Sony, include a the develop create opportunity we existing significant Washington Neighboring and are in portfolio. for In strong is Lindblade a own and are demand in asset that opportunity Apple City, today Amazon, there assets to There leased. to tenants HBO, and very centrally technology are exploring located on is market company. where Culver our Microsoft.

about which are We redevelop have currently XX,XXX space. of feet alternative exploring assets, rentable those square to

the Austin, built desirable attractive very In located corridor [inaudible]. project control East the of CBD. office a dining to location the most We We and suite. Texas, are its Austin, given we just starting is a option proximity the to market creative development in that numerous one as to believe among under

more those to get we construction. detail on We as closer projects share will

in deals pipeline additional look forward have fruition. to are also they We the we discussing once to that closer

stabilized For opportunity, an Steve. update to portfolio our call turn and the value-add I’ll on

Steve Altebrando

Thanks, square feet the released first Shaul. approximately leased. portfolio We quarter in XX,XXX stabilized and was our XX%

in last square creative Fiber noted late an Google office campus lease approximately Austin, foot quarter signed we we in at with Penn XXXX. XX,XXX our Field As

our percentage exercised Fiber pushing at an During quarter, Field. XX% today feet, to second up XXXX Google option Penn take lease the square another to

to expect second recognizing We start revenue the quarter. in

approval. portion Los rent our convert XXXX on Wilshire luxury to the unleased Angeles, review progress we’re to improving design weeks as We continue in approval portfolio. has make We ago received was most The noted return in the At planning which increase been a to call multifamily the that rents value-add significant the in profile we building conversion required few multifamily. of market for LA. on on step also for our February,

get capitalization start closer quarter later of The At timeline the Wilshire Hills, able year. XX% about of provide XX% year Boulevard anticipate this a working primarily from We the to obtaining is the Beverly approximately as conversion to a of in starting. now the and percentage on expect months, XXXX retail. our the necessary XX are more remaining conversion, we information and lease timeline permits end construction the all on and We will at increased ago. be budget to vacancy we to

space Beverly continue of and The locations actively Wilshire Seasons, Rodeo one that, to call in Golden It With retail Los is Four all the from the turn to prestigious of most to Beverly located the just this in block next for market over immediately Drive. Triangle lease. prominent one Angeles. Nate. the is Hills, We building of I’ll

Nathan DeBacker

you, Thank Steve.

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

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

$X.X million Our lending division from million. $X.X segment NOI decreased to

the During XXXX, premium lower XX% increase the quarter of to due XX% has loans which to XX%, has from support per first from guaranteed benefited to loan. as XXXX. reverted to income a on volume led in decrease the The now maximum loan segment back compared SBA lending sales temporary portion a in guarantee origination to and

have office joint Echo through which NOI February from primarily XX% income was $XXX,XXX Park increase in new ownership in segment to million. office approximately purchased a an The in Our interest. due by property increased incremental we X our to XXXX venture

were asset which fee reimbursements asset in expense asset primarily calculation $X.X compared the result fee of The of the XXXX, to of in management in was January management to first reduction changed decrease million to agreement, fees net the of corporate of XXXX, XXXX. X.XX% a the and fee quarterly effective a value. million X, as management asset quarter first a X.X $X.X Our quarter waiver fee million due

availability March liquidity, XXXX. revolver estimate end to $XXX approximately at of we quarter. the in drawn the Turning our million $XX our as of we of We million have had XX,

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

David Thompson

Thanks, Nate.

first focus our to call goals continue mid-March. that few in strategic We on we on a described

of in First, divesting markets assets We time; over we evaluate in are creative the strong multi-family earlier office. to and plan high-growth type assets not call. redeploy assets that multifamily office creative non-core described or or will proceeds the we the premier in to continue

approach that shareholders. to values and CMCT this be believe look in will sell very we or at only are prudent attractive We

core the asset For our hotel while at view we profitability improving. rapidly as instance, don’t a is asset,

CMCT one number for value that’s is priority the what Our will drive maximizing and timing.

Second, we’re financial greater create flexibility. working to

late As credit when basis. Nate for to facility extension option. a matures refinance on We the accounting mentioned, intend long-term XXXX facility in our our

annual to in year, to that we believe is this excited share we reduction us, amounts sharpen first there continue G&A Group structure. an fourth, ahead see agreed in cost wrap We management Third, continue benefits approximately started which office our our growing opportunity and that up, And assets focus quarter creative of reduce to to Earlier CIM make value-add to savings, fee multifamily. our on the XXXX. continue progress our to as cost a costs. and $X.XX we’re development further focus opportunity the on pipeline. To we our to on the reducing about of in per of we

We have Culver in highly Austin. such Hills, sub great and as Hollywood, markets City, assets Beverly desirable

We leasing and are pickup encouraged by the activity.

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

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

Operator

[Operator Please . ahead. B. come Securities. will question from Riley with Kucera Instructions] the And go first Craig

Craig Kucera

guys. morning, When about office your good talking Hey, leasing Yeah. --

David Thompson

morning. Good

Craig Kucera

as any April your in in I’d bit sense pullback there a quarter, was and us quarter-to-quarter to maybe executed first but thoughts a on of like what the curious leasing a your give looks far get maybe It of sort of was as outlook. be traffic trends

Steve Altebrando

Sure.

So this is Steve.

and say, what basically think pretty we’re of it market would is seeing I improvement in lot steady consistent I dependent. is, traffic. A

seeing even the vacancies the say, property space is office prior XX% at, up, leased assets, Austin to we’re and to our look the backfill activity coming you with about entire the vacate. in If there

bit LA traffic. we’re So been assets, that had a is In, of I looking specifically the as We speaking, leasing have it’s generally slower. has seeing Bay don’t it a robust tremendous is across or is a drawing but say, available that we a attention. Beverly amount little office we activity of in of in of gravitate coincidence generally you’re that a campus think Area, some are activity San that where towards it’s I asset creative one that very Area, we still. not we’ve and would -- Hills, type the and asset the our of would assets Bay type and only Brentwood bit in space board, steadily have little to don’t And assets, a type steady improvement say, Francisco small whether the improving, softer seeing

Craig Kucera

any somewhat not levels, Great. this And still would you’re of on We’ve in certainly trends been can physical you to thoughts pre-pandemic regard comment hearing appreciated. of be to but earnings season recovery occupancy? any a seeing

Steve Altebrando

obviously front, say have I’d interesting. because bit Bay quite office couple tenants been pretty medical pickup where generally -- tracks of in we’ve market in seen Area it’s speaking, Austin it’s closely that back a I back buildings of has to LA, a seen been answer focus gave track we we’ve But, and so back the on those difficult in has us It kind been time. but some seeing with some definitely a for building, a precisely from have just are more anecdotally slower LA LA. we time, for coming seeing folks or quite for our little

Craig Kucera

you closing still David, are to that NOI on great. with TBD? currently know, it some the non-core But, assets. pandemic, kind potentially you prior comments selling this was or regarding back you in to hotel that getting Okay, is where of the your marketing of kind touched

David Thompson

the our point, the improving throughout the strong creative number to shareholders. and is mean, certainly as to is the look I that premier, non-core to one the hotel maximizing outlook value likely for improve will priority office, for I say, Yeah, assets your is and opportunistically continue to that multifamily very in noted, and year. will asset you said, bucket. fits look I the we that to as exit the we think would performance And believe and we continue reinvest

It a few newly capital. the a renovated I great convention So, located, is across well mean, extremely the blocks from it’s center. property, from street the just

So, it monitor. is something to that continue we will

right to goes. improving performance, continue take the the sell price that Given for see where it monitor and to it we’ll really would that and us

I or we’re ago, the right than given we’re that inclined spoke make Again, for months we achieving probably improved think when we so we sure eventually on last that more in near were three the the shareholders value to probably certainly and to more hang performance. term, when exit.

Craig Kucera

reduce did comment, on, further. Got front? maybe being a Can it. this bit G&A a And to little you bit you quarter that able little again, elaborate more on

David Thompson

reduction, the biggest we’re working opportunity where and can Yeah, structure fee where largest that obviously, payroll really piece to our waiver both and first and providers. to cost fee was and things and and something across to costs external we’re we the with place more be the more probably for the so is the keep part board, just costs efficient, to is in do every eye efficiently service And look continue of it’s internally the allocated we looking to put our on quarter. the relating management reduce in at

look just those as trying to So kind a side the of business continue costs at see can to really of where the help everything margins, taking improves. improve we reduce to and revenue

Craig Kucera

Okay own? you currently me. into developing ventures, and acquisitions but would you’ve through any I for just one you evaluating know are wholly pivoted joint more

Steve Altebrando

We are.

in the we a we calls. script more are able would the that yes, mentioned have Shaul as share future think be active deals details we to pipeline pipeline, pretty on have and I currently. do that to in But there expect

Craig Kucera

thanks. Okay,

David Thompson

well. that’s us still do be to would to I capital generate again, continue us is of the we look continue more certain diversification opportunity fee where something instances our going to and, to will going us, portfolio the allows limited JV as to something to it be attractive add, and in given to just think I at. structure the give That’s income

Operator

Thank conference our question as call our for you concludes today’s today. well attending This presentation. for answer as session and

disconnect. You may now

David Thompson

Thank you, everyone.

Creative Media & Community Trust (CMCT) 15 May 222022 Q1 Earnings call transcript