CMCT - Earnings call transcript Q2 2022 | Creative Media & Community Trust Corporation

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Operator

Good day, and welcome to Creative Media & Community Trust Second Quarter 2022 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded.

Now, I'd like to turn the conference over to Mr. Steve Altebrando, Portfolio Oversight for CMCT. sir. ahead, go Please

Steve Altebrando

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

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

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

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

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

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

David Thompson

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

a year-over-year to pipeline. assets, leasing development that generated value-add add our in accelerated we FFO a basis, pleased with earnings. our are on made increase Starting to We continue on significant large activity, we and our progress our

The year-over-year by the quarter our cost share the improvement prior was per in at in reduction as year one improving significant FFO hotel our results second core driven owned compared as a to Our structure. $X.XX primarily $X.XX in significant well period. was

in feet leases reimbursements our the the driven and prior the cost reduction fees, asset announced quarter, we earlier by This year management second We period. was corporate XX% executed expense side, lease overhead, of year of is our the includes in by XX,XXX the this for half declined year. the square the G&A which pipeline management On fees from approximately strong. and

to continue leased, just XX,XXX at this Beverly most with building feet and where a long-term entire we XX% our an building, Hills the value-add more our executed leased. notably progress assets, occupied. just Entering the We is square ground retail The XX% than billing Rolls-Royce on XXX% now make approximately was is now lease level year, dealership.

majority which In Finally, we've site, second assembled a of multifamily. develop closed pipeline, focused. the are quarter, plan multifamily on a our where we very growth attractive Park we to Jefferson

so capital or a deals, portion will We can to of these structure reduce on our the investments, risk profile promote. will which for raise seek third-party will we CMCT of returns and improve earn the CMCT

So turn over earnings, leasing the overall, progress the like to now value-add very of to activity, would pleased compelling we're direction growth. increased made with Kuba. of Company, assets I pipeline the given our a and Shaul call improving on

Shaul Kuba

David. Thanks,

to are media take office industries encourage space modern, like moment focused investing and investment asset and office demand leader Before designed to and thoughtfully primarily CMCT that I comfortable strategy. a First, in bright a catering and is markets continue a flexibility creative collaboration. things: I'd to fast-growing technology, seeking space creative is creativity, like in Tenants that our two entertainment. for open, The grow. development reiterate on get vibrant to updates being activities, developing into CMCT on

creative continue is believe capital-intensive traditional We opportunity than less less and compelling to office competitive more market the and office.

as dining continue well working is there from of professional of to locations. place, opportunities. and there those new more the market, creative is pipeline spending investing where on employee With focused working developing Next, build estate office in With and same we time to a multifamily in this culture. we in flux home, attractive entertainment, proximity greater real in an premium as demand amenity dynamic for are

and co-investor opportunities, value-add at we to certain David level. As in asset bring look the for mentioned, development

is more more can has this our return project management. its to has group So on advantage. promote. in capability, of developed planning, urban professionals over billion in provide supplement where State will United than CMCT model the is global $XX CMCT institutional across for significant business very development CIM with distribution than strong and engineering design, a investor. It believe experience XXX development We provide return a model assets capital, that competitive Group compelling and XXX construction, CIM architectural, and

Now few on our a an opportunities. of update development

the Park quarter both of Jefferson those closed on second about plan one closing our in during first develop following second quarter. across of XXX multifamily plan, the We the we the site units to initial the For sites.

on We progress in the first have site to ground receiving and XXXX. necessary made expect towards break still the entitlement

to the and sites about of City Angeles California. miles as the Southern We located University X.X is and growth of are in close the Park those just in Jefferson excited proximity Culver it of submarket in strategically Los path from

the of West In to that the property XXXX development. also background Xth option. This entertainment Street allowing with acquired a that expect to partner of trendy Park eight Sunset venture months. in earlier The Boulevard early asset in July expect Echo application on our we to our the continue submarket year. neighborhood of in our Xth We in Austin, Angeles entitlement in and our dozen located and the property Los XXXX walkable XXXX We middle July. East process planned property, at adjacent about joint East to in to take is has East Street a multifamily XX-unit the filed is this increase dining size of XXXX acquire us area

additional to and Also given allow Austin, even CBD We add campus. that our the site. creative to option. We office creative the more proximity to for of numerous change evaluate in desirable agreed density Penfield XX-acre multifamily than continue June, evaluating its to dining adding density both we initially sit and location city are us planned. in we one the currently In that council office a zoning in to and most may Austin, entertainment

are property campus. redevelopment leased. Washington our We early XXX% is currently this about tremendous we at of a the The asset Culver XX% is to that excited XXXX. towards potential City, In leased through opportunity continue work Boulevard

centrally and demand hard standards the go vertical neighboring on the include Apple currently are in very community in office projects a work. to Microsoft. to necessary HBO, for design. asset now, Sony, by Right entertainment position ourselves located city and where We The completing there are companies, Amazon, put submarket all is is and the with strong a those design the getting the and on we technology working working approval

We to construction will continue monitor costs.

and the cap Given will widening rates, the increase slow credit borrowing and expect in costs lower costs potentially availability we come development and down. may development of

For an call stabilized opportunities, the to our on update portfolio I'll Steve. and value-add return

Steve Altebrando

Shaul. renewed with our of the a dealership. square Thanks, at we XXXX Beverly acquisition This made our approximately remaining progress Wilshire our off long-term Hills. for percentage or will We portfolio, current Boulevard leases to Since the all have feet lease originated retail XXXX tenants. XX,XXX XX%. over in significant Wilshire at a signed lease office bring we with XXXX, with Rolls-Royce value-add Starting building in

firm. retail Seasons additional that well and building floor Wilshire to of located We At of attracted is as acquisition, continuing unleased Beverly The the tenant building the block Beverly the the value it Four and of rentals. brokerage space Hills portion from and the repositioned of ground the a brings Los just luxury a real the was estate one in the multifamily Rodeo into XXXX have Golden was a in leased Drive. adviser high-end Angeles, retail to next asset. we're very underutilized converting prestigious to Wilshire our time path the Triangle down financial immediately

We all on development the necessary and obtaining permits finalize expect budget to the are shortly. working very now

later We months. about time to construction able line a to this anticipate year expect and conversion this of be XX start

stabilized second quarter, leased was and our feet leased. In XX% terms stabilized XX,XXX square approximately we of in portfolio, the portfolio the

Our lease in half approximately the XXXX. X.X% spreads first increased by of

lease the We expirations have for year. XX,XXX the square feet of approximately balance of

of a have leasing pipeline second for the we half. activity strong However,

leases We signed represent either the progress. renew. LOI the expirations still with we feet five of With expect in-place in XX,XXX further year XX% that have to will tenants to in were about QX turn left that, it in that square Nate. months This of about represents I'll make to approximately

Nate DeBacker

Thank Steve. you,

prior share to compared was quarter the in period. $X.XX core Second year per $X.XX diluted FFO

in the up NOI Our to net operating from The in while segments. $XXX.XX total ago Hotel in increases XX.X% Occupancy million million million period. to the increased was prior the by improved from $X.X the $XX.X quarter, to driven the office from segment increased breakeven period. $XXX.XX. income in year approximately to from hotel and increase $XX.X XX.X% improved year segment ADR

segment multifamily NOI Los to which XXX,XXX square site office $X.X unconsolidated income office primarily million we million in due Our increased from which development during from owns and invested entity, XXXX, venture Angeles, our foot joint to and February property $X.X a California. in

Additionally, in feet quarter. we're of continuing second square the to see leases signed We improving leasing approximately activity. XX,XXX

market NOI as and primarily in lower year prior sale received. segment The volume to a from to income period. of decreased Lending Our we lower result premium million reduction was division the premium million $X.X in the decrease due loan $X a

in XX% SBA the of lower percentages a temporarily second for second to compared XXXX half origination originations because XXXX, when from increased to half XX%. when expect the volume of revenue We to to lending loan lower the of SBA be loan compared guaranteed X(a) XXXX year

January fee due into in period. new management prior decrease asset expense $X.X the XXXX. $XXX,XXX effect from structure was the went fee X, that year The Our decreased to to million

June approximately we on submitted of the July line October facility working of XXXX. also availability had approximately We in million We the We're to extension drawn basis. have extend revolver liquidity. at We end as quarter. until on XX. a estimate the longer-term recast our to of notice the Turning $XXX.X an to $XX our million

from quarter. issued in $XX.X the generated Finally, proceeds million preferred we stock second of

$XX.X in turn us generated closing the call additional I'll remarks. over And so that, now flexibility. proceeds far for financial the quarter, some we've of to giving third With David million,

David Thompson

In closing, Nate. Thanks, the our goals reiterate I'd key to Company. for strategic like

capital. to make pipeline. asset-light strong development returns on to believe assets approach value-add on invested and our our progress continue opportunity very We First, provides an generate our

Second, flexibility. create financial greater

As option. credit late facility Nate extension in matures XXXX accounting for when mentioned, our our

approximately Series actively AX term. in far to And in We are quarter. third million so extend the stock we longer working raised preferred $XX

management started which the in this keep first to this annual Group see amounts savings, Earlier cost in our Third, to of agreed cost to share in reduction in that per fee of we approximately benefits our $X.XX quarter structure a check. the year, year. CIM

and assets Austin. multifamily We're We classes. focused recurring ahead on on Hills, to G&A wrap keeping us Hollywood the we opportunity of these our two are towards about balance office Fourth, we our in compelling over have as such focus level. great as creative submarkets City, and time. more Beverly up, desirable asset our Culver highly also portfolio continue To sharpen excited

We activity. by pickup leasing are our in encouraged the

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

value-add and thank will to oversees we assets, Nate to for our that now assume want increase questions. the week, of to responsibilities is Operator, the Chief will at This Barry I CMCT. reduced generating Group. change role allow to to and Vice growing for been our finally, service on diversification Officer structure. to to and cost Financial development division. And him fee of open call Barry since co-invest CMCT look note For within CIM focus XXXX this Berlin I and starting we has the by Executive will dedication times have want significantly the may President his lending returns you income. CMCT. supplement

Operator

[Operator Craig comes B. Instructions] Riley of Kucera First Securities. question from

Craig Kucera

Yes.

in you to acquisitions? ramping does have? some the to make amount various think equity Are using proceeds Or just you making anticipating developments started your preferred significantly those You here of you about start that that issuance fund the quarter. up maybe third capital,

Steve Altebrando

call preferred stock So mean there's really, on. there we going can is One, about this of later that year. I roughly some couple $XXX million it's a things both.

a potentially on pipeline. of it pipeline, some have used bring looking we in But development in for outlined are that, good the we -- to So co-investors as we addition could be that. that although we to in call,

for the should committed So really of new also to the the capital well portion portfolio are to looking smaller the on add multifamily specifically But as side. we acquisitions. be

Craig Kucera

how is leeway situation go on Or constant problematic Okay. sort Great. ultimately that to going to And some have that of offering the you a you do you take? much preferred be it's to when somewhat stop?

Steve Altebrando

of terms in leeway how some actively is we marketing There on preferred. are the working

of the call now, amount towards given right can end So that the significant year. of preferred we a

we are where then want much any we we to as we can side as hard push time, find possible change and on multifamily on grow capital where particularly have pull situation, looking in it. how ourselves a we to to on At the the much the we as of We gears preferred want always raise preferred, could If business. are back too of we kind that.

David Thompson

Yes, make is our want near just Craig, some add various term. tweaks we have some L desires ability Steve the something we the I we But portfolio. we in Series as to Steve's in down if near have to term, don't needs with pull this slow the future. and want the do across the I'd growing think Thompson. -- to it's to ability and David worried certainly noted, that, in that levers to about the point, call the we're the or

Craig Kucera

Yes.

the enough. as property Rolls-Royce, Beverly is far Okay. relative to can what on lease comment lease rent tenant? Fair with Hills And your as at new the prior the you new

Steve Altebrando

Sure.

prior it up what basis, exceed than above paying. the So more was would tenant on a grossed XX%

Craig Kucera

mentioned as think for those. range. you and as backfilled you to X% you you in year, far think to of commentary, Are opening rest the half the similar I X% achieved what XX% of discussed year? expirations lease the of first Great. in your the -- leasing And close seeing to in spreads you your somewhere I the

Steve Altebrando

yes. be should That's similar in the range. It correct,

Craig Kucera

Great. three any been this positive. And It's prior straight-line onetime Or pretty There's significant rent me. there? there variance more lot item. adjustments in quarters color a a Is one for housekeeping of leasing, just Without your there? think a any quarter. had the I

Steve Altebrando

no unusual. of activity be was online the leasing unusual -- by some midway that nothing quarter, some the there may came through the quarter, starting in No, adjustments larger driven but

Operator

John next Company. Moran, will question from be Our Instructions] [Operator Robotti &

John Moran

sort give Can that's spend the just pipeline what development idea a idea. gross general of you Just on place? roughly any this is in

Steve Altebrando

So by I project mean, it is project. really

a mentioned, as So lot on would bring now. work certainly we projects, and what design as doing an embarking would a And the I of spend closer be would asset-by-asset portion because individual the of we disclose then predevelopment will Shaul And of think work CMCT any right on spend as the basis outlined, the co-investors. get we we're these expected would we only be. in to

So we're lining up several opportunities.

not of north and through have today ready spend the the still in working design we're We development five portfolio right to the because We're budget. really now. exact give the

John Moran

Okay. a to fair. there or would separate account CMCT inside co-investment program, any is that to With be doing partners? one-off all of respect fund thought That's this

Steve Altebrando

an one-off would Yes. most we We've but now looked both it a that at be run likely co-investment would on right basis. processes asset-by-asset

John Moran

And then just more. one

do put to -- inclined would strategy. guess, a noncore of you your, your what If with I'd are one that an into with use investors, existing partnership these to of venture properties I call joint you were asset any

to seem Brentwood, for So creative mind they like or properties? assets, but comes consider office. not like Would maybe guess, those I co-investors great you Oakland

Steve Altebrando

mean we I short answer consider the would is it. yes,

if to But in I is be joint opposed opposed in of stabilize. we made opportunistic not, of there any on add think assets returns would any to more what we to see stabilized it interest as co-investments, generally way, sense. generally our we terms value is venturing thought

Operator

you. you Thank concludes attending conference. presentation. for question-and-answer our session. also concludes That our today's It Thank

You may now disconnect.

Creative Media & Community Trust (CMCT) 13 Aug 222022 Q2 Earnings call transcript