- Earnings call transcript Q3 2022

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Operator

Hello, and welcome to the Creative Media & Community Trust Third Quarter 2022 Earnings Conference Call. [Operator Instructions].

Stephen Altebrando

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

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

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

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

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

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

David Thompson

everyone, joining call Thanks, Steve, XXXX third for our we and today. announced earnings. quarter our you, thank Yesterday,

through third, our improve common the expect the rate capital First, extremely on is year; environment took we we which strong activity, and balance future fourth, and for where leasing preferred repurchases. acquisition important well development liquidity both and current us this to deployed is accretively we positioning we highlights quarter: and sheet, pipeline; value-add made steps share in significant second, Some our had progress continued rising from we interest opportunities; next and

share per $X.XX quarter. core the was in negative FFO third Our

the the bookings. Trends at our and Hotel Beverly August in a Rolls-Royce our group pipeline, notably, and of we strong the this One to lease at next XXXX. generating year. which includes in lease year-over-year Most have property, improve basis, strong a signed for based full start completed amount until on significant outlook XXXX pickup year, we leases the in benefit While on will with dealership not see continued this will revenue looks our Hills a new

quarter in real market-wide. seasonally business, to, third commercial the hotel. slowdown volume typically reduced a of transactions And in the quarter originations our lending slower is things, the estate for The quarter due we other among had a in

We costs property to in our some in also onetime had Echo G&A. some Park, JV items in our nonrecurring addition in

Finally, the result amount payment a of increasing in of stock raised amount our of we preferred dividend the significant as third preferred the is quarter.

full picks some fourth the FFO on quarter third up of though in not even we capital Our for declared quarter, quarter, the did benefit Barry we these and will the have the items. provide detail dividends more

achieve on both to discussed creative balancing we balance. focused order we've multifamily of on assets. growing our to now, side portfolio between are portfolio in As our Right committed we're multifamily and office calls, the previous that

development of We have land on opportunities already but a pipeline significant they are multifamily owned.

previously increase and value-add generating for co-invest we'll As and income development assets, we have mentioned, by returns our to diversification fee advantageous. supplement or look to

significant us, front the of value capital. access we opportunity Shaul Kuba. resources over and for now we believe an lot have call We create to to shareholders turn a have to our in to would of work using like our by do I but to

Shaul Kuba

in I the highlight Thank significant wanted X you. updates to quarter.

in First, from the increase the we XX,XXX quarter. XX,XXX was leased about approximately an in This feet quarter. third square second feet square

retail. We Beverly lease Wilshire of XX,XXX lease approximately building, a Hills Our for Boulevard. Rolls-Royce remaining signed with XXXX square the our at most being notable feet XX-year dealership

to recognize this We lease to in start revenue on XXXX. expect

update or X Based that develop to we more Field This adding for evaluating already we Council us create land on our an allow office XX-acre multifamily changes shareholder. density City an where In to believe are more is we we on review, Second, CBD. the south own. property, approved Creative of June, this can zoning extensive can the Austin, we on each units value. did Penn multifamily the just review we is X,XXX exciting to located of evaluate add over portfolio based CMCT, additional and campus. building In which this

excited potential very numerous We are walking distance entitlement and submitted application development property entertainment towards campus, dining at we Those option opportunity CBD, this within to well quarter. Central our transformative East are We tremendous this at Business and about X close this with Seventh in Austin, are XXXX Austin. In working adjacent and Street. which third District. to Austin section properties within located of XXXX proximity this multifamily was East of

We result working garage a submitted entitling are Oakland land, currently we exciting asset it in for Oakland work of our recently in and for Those Sacramento. a multifamily potential already extensive for term. own. predevelopment request We time the are the office. will on as create opportunity build near And are for is believe asset incremental over also multifamily multifamily value of review this this entitle Sacramento, portfolio. entitled development evaluating We parking to large we development

of conversion to cost Now and timeline XXXX. multifamily we is a on. to about on of construction Los have anticipate the months. the working The early in unleased for of approximately conversion million. portion start XXXX luxury We of At quick total opportunity the rental of construction expect a expected we been Angeles, be the $XX building in the into update XX value-add development Wilshire on some

take loan, management coinvestors, fee proceeds co-investor a in to committed on this generate also transaction institutional CMCT transaction. have CMCT a are meaningful to earn opportunity and discussion an a and earn we several expect close equity, several the We from seek to over will next with we bring to Since months. construction expecting active promote. and are

our submarket, discussed of of joint have we area XXXX earlier workable in X and where ground XXX venture also trendy made neighborhood options. on in Los the property Jefferson of break develop which of in progress we dozen property plan the this that Boulevard, on XXXX we year. acquired a is middle with dining multifamily Angeles, Echo asset West As XX-unit on our Angeles, partner part located to call, entertainment a and our expect about we last Park, across Los at units Sunset multifamily has of development Park we both there, of In the sides. a to section The

working towards the are still We to ground and expect and in XXXX. XXXX the necessary first site receiving the site in approval on second break

getting about from those the as X.X proximity growth of excited strategically are miles University the move as well path go to necessary on design and will approval completing we work. construction the now, monitor located projects we close by all they are hard just We to the cost Culver Right those vertical Southern we City, in forward. in continue of working as the developments as are to California. Obviously,

expect slow. widening to Given recent increased rate, on activity. development credit the result, I will call of for detail we more as lower that borrowing that, overall potentially will and cap Steve development With over market turn capital costs, a costs and may And the the availability come down. portfolio

Stephen Altebrando

XX.X% our third Thanks, end Shaul. stabilized the of quarter. leased portfolio the at off Starting the was with portfolio,

least XX,XXX next and year. the square about these and begin touched generate will feet pipeline on in in starting Shaul quarter revenue to mentioned, approximately the leases our on, David we As leases at as year-to-date. XXX,XXX we And several leased square feet third of

XX Our decreased than months vacant to excludes first lease was retail the X.X% the Hills cash of months. space for our Beverly lease This recurring slightly our more leases XXXX. for all negative lease spread through spreads recent since at X property

We continue to have leasing a of activity. strong pipeline

in in square We We entered square that of executed which expirations. in or In or expiring feet have of that about represent LOI now to we or QX exceed are nearly expected was this in to or this with XX% expect LOI total, leases legal, feet signed our XXX,XXX about amount. XX,XXX of renew in-place either year legal leases tenants XXXX, leases our renew.

Our lease in XXXX. decline XX.X% to expirations will in at XXXX, X.X% just

Turning in XXXX. quarter million common program a the repurchase We announced share $XX to markets capital second our of activity.

price value. at turn are quarter at over common stock, discount $X.XX transactions in L Series an it average quarter, in share. preferred We per have million $X.X million including the common $XX X repurchased stated approximately repurchased the these of $X.X believe of of accretive we With third shareholders. I'll our Barry. third million that, stock for to We highly a Also, X.X%

Barry Berlin

Steve. Thanks,

take CFO CFO. and I upon to our worked like work through transition the us Nate together, I'd moment and for closely to as and a be Nate DeBacker to guiding closely First, me continue your for with CMCT. Nate few to will I years thank the assisting past

Moving on financial to highlights.

third quarter follows. high-level results are as Our

change distributions a diluted was positive core in issuances. reduced FFO to third segment preferred negative for compared comparable period. driven stock year and the This the our the a $X.XX share by in our prior NOI, $X.XX to reduction During quarter, primarily per a

to million Our segment the operations compared prior year $XX.X $XX.X comparable period. NOI million was reduced to in

This quarter-over-quarter million million. reduction the business by by is our trend NOI, office our $X.X Drilling in out change hotel into deeper a segment $X in partially broken reduction offset as NOI, segment NOI lending positive segment being segments. million our our in $X.X

up $X.X $X.X million to originations around SBA government was loan This had more important which a increased XXXX, a product significant million support last First, $X.X loan the additional XXXX. months year support in premiums. our X(a) due to decreased normalized market note significant government X that NOI XX, in and lending division to in ended loan NOI of to end for bump million QX drove sales in did XXXX. our That that had September by XXXX. COVID-driven we It's

decreased $X.X NOI period. prior from segment $X.X office in our year Second, the to million million

loss at the mortgage properties to the for a in third in While the a attributable upfront office million reduction Also properties loss the year remain to year of XXXX. office around same-store prior had in non-same-store did the debt quarter quarterly investment reduction our million of JV our of $X.X origination. this included to JV $XXX,XXX. around period, $XXX,XXX onetime a $X.X of is February constant from cost that compared The note the our relatively JV's NOI NOI segment related include acquired

segment improved of square see during office leases continue activity, to Our we signed the feet XX,XXX and to approximately quarter.

improved XX% segment the which around period. was saw This improved driven our NOI comparable to ADR, to $XXX XX%, increased to prior went and up in $X.X $XXX,XXX from from by year which occupancy, Third, we $XXX. around hotel increased from million

For impact XXXX. management from below the the prior X, fee reduced reduction our went fees, which the period to due the comparable $XXX,XXX in million year into is in asset that to January was largest effect $X.X overhead, waiver

a repurchased impacting our of to and of QX of we in record 'XX XXXX. XXXX, before we preferred line, issued a loss income million our in line from a income our bottom loss L net in was $X.X result, $XX,XXX the $X.XXX portion upfront versus Below net deemed of we the loss shares million costs activity. activity of of equity As securities. for QX company our expensing profit those dividends preferred stock In September had when due the company

declared Series This preferred quarter in securities. declared impact Series in includes our $X.X fourth million had relating $X.X to for new the approximately or of around the also and the XXXX. increase quarter period. prior of AX A of We during preferred $X.X the the to This quarter is dividends compared relating stock to preferred issuances comparable accumulated issuance third the of dividends of million million year forward

for through noted, our were also $X.X billion David paid dividends common net approximately were $X.X million, available runs than cash less our about shareholders. income preferred what our As

Turning had as the estimated strong quarter million the to with revolver million $XX of at September $XXX end liquidity. an availability our of We XX. of on our approximately

matures has XXXX. in facility extended credit late Our

facility extension the which We expect close recast facility of X we'll plus have options. another extend the for X the to X-year shortly, should years, on a option

which million over now fourth the call to closing generated into of quarter for quarterly flexibility. With Finally, largest turn stock million issued since A will proceeds with prefers remarks. Series David amount I proceeds October, quarter, the is third have been the offered, from cash we of giving $XX financial $XX in continuing preferred some momentum the in that, us and the around additional

David Thompson

reiterate Barry. Thanks, our I'd key goals. strategic like closing, to In

will First, continue on enable on our pipeline. well to make strong stabilized We generate development and tangible asset-light to capital. approach value-add us returns believe invested as as our progress assets our

financial Second, we greater creating on focused are flexibility.

$XX.X recast to to We new facility, seen million expect and we fourth credit which approximately in mentioned, from Barry are late facility matures net As the proceeds XXXX, close our in quarter. a working the in of raised preferred our stock capital opportunities of like so have markets This our Series in quarter, allows the far we late. further in AX to us take flexibility. fourth opportunities potential or enhancing acquisition advantage

approximately fee keep That of cost our share check, management reduction Third, the announced this we're savings. cost benefits per in continued amounts reduced our to working to earlier structure annual year. including in $X.XX

recurring we're time. We creative multifamily Fourth, are expenses of our towards down. more balance G&A also on portfolio focused keeping shifting office the and the over

Austin. submarkets of CMCT, Taken significant in expertise construction, Beverly To capital together, model and in as than assets priorities a great competitive into desirable It for our have than such these Culver across architecture, Hills, wrap the urban Group's more provide where up, United and billion design, we $XX a capabilities and development which professionals believe over City, has planning, model XXX development assets with States, project investors. on group we and highly has engineering CIM XXX in and will Hollywood management. developed more compelling has business strong combined returns advantage. provide global CIM institutional a distribution

the in expirations We we into and are XXXX. activity encouraged leasing head declines our and by pickup as XXXX in

where in tangible very a sharing updates are attractive have We on calls. and growth activities. look development we forward more construction We pipeline future making progress to

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

Operator

Instructions]. question Today's Mehta from with EF comes Hunton. [Operator Gaurav first

Gaurav Mehta

yields your And you're compare you is opportunities are and your maybe multifamily. on getting you're acquisition the that that I about your to that the how viewing us on Can wanted understand ask development capital given pipeline does development expanding help pipeline? expanding? to CapEx how you comments for

Stephen Altebrando

This is sure. Yes, Steve.

expectations rates, development So with growth I build to that has hurdle to the the cap the rent we're come clearly, well. the respect looking given but -- as could and cost yields move that pipeline our development think seen market also continued that increased, seeing to and we've you're in down that in

we're whereas generally about a depends pretty meaningful multifamily, the little trying value-add are. to year not and But return only for stabilized given generally rates, look that's for And creating development think spread deals get value multifamily cap moving with I'm as multifamily speaking, cost that where the it looking for still we're still -- but those were more but So side. to in just stabilized increase same and continuing and ago, bit you're in to to at through we're the rates, more to on the opportunities enough now we're and X% -- a cap stabilized given well, see some bit on given time, sorry, rates difficult the we find, market a deals cap a development. market very going a wide also little on

Gaurav Mehta

plan stock in that? You guys cash cash raising, On towards can uses sheet you as to acquisitions? capital maybe balance that generating use or deploy the to preferred about you Okay. preferred the think talk of stock the plan of release, that you're do carry you $XX million on earnings XQ. XQ? raise How your I that in said

David Thompson

that I a Yes, bit. about talk little can

have under our So the we outstanding -- some facility. revolving I credit mean amounts

pay So immediately we use can down. to the that cash

our that. As we be you know, for to the use we've That's roughly L $XX decided late Series which million quarter. redeemed preferred got extent cash in of about fourth the use to can

share the to that As where is option unlikely. given shares redeem you in we know, the would that have be highly today trading

can to again, a we of for the to use that we'll have extent then the to strengthen there's Series quarter. spoke cash us, again, of again, where we and liquidity. So to pay we the redemption think opportunities the this of help will a continue cash also our we number cash and -- revolver later generate for other we And some down use L to, preferred decided as

other spoke all and has the Shaul that this again, the to quarter. the that that position The have volume continue it for taking our place we've expect far I Again, built fourth is be of expect some preferred looking going in got we're to pipeline co-invest growth We as new into at the of in renegotiating advantage opportunities. us again, facility about. strong been helps our quarter. facility, think And to

Operator

Speron comes Eric question next with The from Foundation. First

Eric Speron

hear Guys, manufacturer? can you

David Thompson

Yes.

Eric Speron

Great.

specifically question pretty XX storey, XXX There's exciting, is Oakland. filed, things multifamily, that they're my on the So you units.

chunk like multifamily a of So it's huge XX%. your something opportunity,

amount it of for but is, give to -- can maybe capital color? multifamily. the just target talk maybe is you you just I you if some guys I question of So right the contribute. about outside, in bringing don't what address bit a us one. near more amount little And see from don't capital would it's Oakland opportunity I zones. know it's what

Shaul Kuba

Yes.

This at in Let The office Shaul. entitlement Oakland is say, The answer. is I in own saturated pretty, is for would we with land moment, Oakland for the vacancy. multifamily. me that market prime

the at them going converting decided about any for that So existing we're debt. to we to evaluate take We of that process own clear, to point, the And have months. in We're months to XX XX with co-invest we done advantage we to that going be project. don't so to raise much entitlement land multifamily. have probably and free how that

to low, co-invest very to the is we're it raise present [indiscernible] it. intent when ready for Our is and

Eric Speron

it the to clarification. is zone a just see Or opportunity there? hard Is fallout And maps. it in on side? quick the It's

Shaul Kuba

fact. I you don't Steve, an I know I don't know. Maybe, know? think don't But for it's opportunity a zone.

Eric Speron

Yes.

see Some the cross. is I can [indiscernible] but

Stephen Altebrando

would benefit believe not have Yes, much either for I way, of it's don't a in, but us.

Operator

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

now may You disconnect.

Creative Media & Community Trust (CMCT) 15 Nov 222022 Q3 Earnings call transcript