Creative Media & Community Trust Corporation (NASDAQ and
TASE: CMCT) (“we”, “our”, “CMCT”, or the “Company”), today reported
operating results for the three months ended September 30,
2024.
Third Quarter 2024 Highlights
Real Estate Portfolio
- Same-store office portfolio(2) was 72.9% leased.
- Executed 4,850 square feet of leases with terms longer than 12
months.
Financial Results
- Net loss attributable to common stockholders of $34.8 million,
or $1.22 per diluted share.
- Funds from operations attributable to common stockholders
(“FFO”)(3)1 was $(28.4) million, or $(1.00) per diluted share.
- Core FFO attributable to common stockholders(4)1 was $(11.5)
million, or $(0.40) per diluted share.
- In September 2024, the Company suspended its offering of Series
A1 Preferred Stock and redeemed a total of 2,589,606 and 2,167,156
shares of Series A1 Preferred Stock and Series A Preferred stock,
respectively, which were paid in shares of the Company’s Common
Stock, resulting in the total issuance of 60,526,804 shares of
Common Stock.
Management Commentary
“We continue to make progress on our previously announced
actions to accelerate our focus towards premier multifamily assets,
strengthen our balance sheet and improve our liquidity,” said David
Thompson, Chief Executive Officer of Creative Media & Community
Trust Corporation. “We are in the advanced stages of refinancing
several of our assets. We intend to use part of the proceeds from
these property-level refinancings to fully repay and retire our
recourse corporate-level credit facility. We plan to invest any
remaining proceeds, along with proceeds from any future potential
asset sales, principally in premier multifamily properties.”
“We also continued to make progress on our multifamily
development pipeline and hotel renovation. We finalized our partial
conversion of office to multifamily at our 4750 Wilshire / 701 S
Hudson property in the quarter and commenced the lease up of the 68
luxury units. We continue to expect our 36-unit multifamily
development in Echo Park Los Angeles to be completed in the third
quarter of 2025. At our hotel property, we completed the renovation
of nearly 300 rooms. While the construction related to the
renovations impacted our third quarter results, we anticipate
finalizing all 503 rooms around 2024 year-end.”
Third Quarter 2024 Results
Real Estate Portfolio
As of September 30, 2024, our real estate portfolio consisted of
27 assets, all of which were fee-simple properties and five of
which we own through investments in unconsolidated joint ventures
(the “Unconsolidated Joint Ventures”). The Unconsolidated Joint
Ventures own two office properties (one of which has been partially
converted into multifamily units), one multifamily site currently
under development, one multifamily property and one commercial
development site. The portfolio includes 13 office properties,
totaling approximately 1.3 million rentable square feet, three
multifamily properties totaling 696 units, nine development sites
(three of which are being used as parking lots) and one 503-room
hotel with an ancillary parking garage.
Financial Results
Net loss attributable to common stockholders was $34.8 million,
or $1.22 per diluted share of Common Stock, for the three months
ended September 30, 2024, compared to a net loss attributable to
common stockholders of $22.9 million, or $0.94 per diluted share of
Common Stock, for the same period in 2023. The increase in net loss
attributable to common stockholders was driven by a decrease in
FFO2 of $20.9 million (described below), partially offset by a
decrease in depreciation and amortization expense, adjusted for the
impact of non controlling interests, of $9.1 million.
FFO2 attributable to common stockholders(3) was $(28.4) million,
or $(1.00) per diluted share of Common Stock for the three months
ended September 30, 2024 compared to $(7.5) million, or $(0.31) per
diluted share of Common Stock, for the same period in 2023. The
decrease in FFO2 was primarily attributable to an increase in
redeemable preferred stock redemptions of $15.7 million, a decrease
of $3.6 million in segment net operating income and an increase in
redeemable preferred stock dividends of $1.2 million.
Core FFO2 attributable to common stockholders(4) was $(11.5)
million, or $(0.40) per diluted share of Common Stock for the three
months ended September 30, 2024 compared to $(7.1) million, or
$(0.29) per diluted share of Common Stock, for the same period in
2023. The decrease in Core FFO2 is attributable to the
aforementioned changes in FFO2, while not impacted by the increase
in redeemable preferred stock redemptions or transaction-related
costs, as these are excluded from our Core FFO2 calculation.
Segment Information
Our reportable segments during the three months ended September
30, 2024 and 2023 consisted of three types of commercial real
estate properties, namely, office, hotel and multifamily, as well
as a segment for our lending business. Total segment net operating
income (“NOI”)(5) was $7.6 million for the three months ended
September 30, 2024, compared to $11.2 million for the same period
in 2023.
Office
Same-Store
Same-store(2) office segment NOI(5) decreased to $5.4 million
for the three months ended September 30, 2024, compared to $9.4
million in the same period in 2023, while same-store(1) office Cash
NOI(6)2 decreased to $6.4 million for the three months ended
September 30, 2024, compared to $9.9 million in the same period in
2023. The decreases in same-store(2) office segment NOI(5) and
same-store(2) office cash NOI(6)2 were primarily attributable to
our same store unconsolidated office entities, which collectively
experienced a net unrealized loss on their investments in real
estate, compared to net a unrealized gain recognized in the prior
year-period. In addition, our consolidated same-store office
properties saw an increase in operating expenses, primarily
attributable to higher repairs and maintenance, utilities, and
administrative expenses at an office property in Oakland,
California and higher repairs and maintenance expenses and real
estate tax expense at an office property in Austin, Texas.
At September 30, 2024, the Company’s same-store(2) office
portfolio was 72.2% occupied, a decrease of 990 basis points
year-over-year on a same-store(2) basis, and 72.9% leased, a
decrease of 1,100 basis points year-over-year on a same-store(2)
basis. The annualized rent per occupied square foot(7) on a
same-store(2) basis was $60.31 at September 30, 2024, compared to
$57.04 at September 30, 2023. During three months ended September
30, 2024, the Company executed 4,850 square feet of leases with
terms longer than 12 months at our same-store(2) office
portfolio.
Total
Office Segment NOI(5) decreased to $5.4 million for the three
months ended September 30, 2024, from $9.3 million for the same
period in 2023. The decrease was due to the decrease in
same-store(2) office segment NOI(5) discussed above.
Hotel
Hotel Segment NOI(5) was $973,000 for the three months ended
September 30, 2024, a decrease from $1.9 million for the same
period in 2023, primarily due to a decrease in occupancy, which was
negatively impacted by ongoing construction related to hotel
renovations, beginning during the three months ended September 30,
2024. The following table sets forth the occupancy, average daily
rate and revenue per available room for our hotel in Sacramento,
California for the specified periods:
Three Months Ended September
30,
2024
2023
Occupancy
55.5
%
68.9
%
Average daily rate(a)
$
184.69
$
175.91
Revenue per available room(b)
$
102.55
$
121.14
______________________
(a)
Calculated as trailing 3-month
room revenue divided by the number of rooms occupied.
(b)
Calculated as trailing 3-month
room revenue divided by the number of available rooms.
Multifamily
Our Multifamily Segment consists of two multifamily buildings
located in Oakland, California as well as an investment in a
multifamily building in the Echo Park neighborhood of Los Angeles,
California through one of the Unconsolidated Joint Ventures, all of
which were acquired during the first quarter of 2023. Our
multifamily segment NOI(5) was $508,000 for the three months ended
September 30, 2024, compared to $(391,000) for the same period in
2023. The increase in our multifamily segment NOI(5) was primarily
due to higher occupancy and higher net monthly rent per occupied
unit(9) at our multifamily properties in Oakland, California during
the three months ended September 30, 2024, compared to the three
months ended September 30, 2023. As of September 30, 2024, our
Multifamily Segment was 92.0% occupied, monthly rent per occupied
unit(8) was $2,555 and net monthly rent per occupied unit(9) was
$2,444, compared to 84.1%, $2,869, and $2,100, respectively, as of
September 30, 2023.
Lending
Our lending segment primarily consists of our SBA 7(a) lending
platform, which is a national lender that primarily originates
loans to small businesses in the hospitality industry. Lending
segment NOI(5) was $688,000 for the three months ended September
30, 2024, compared to $366,000 for the same period in 2023. The
increase was primarily due to a decrease in interest expense
resulting from the amount of principal repayments on our SBA 7(a)
loan-backed notes.
______________________
1
Non-GAAP financial measure. Refer to the
explanations and reconciliations elsewhere in this release.
2
Non-GAAP financial measure. Refer to the
explanations and reconciliations elsewhere in this release.
Debt and Equity
During the three months ended September 30, 2024, we issued
548,876 shares of Series A1 Preferred Stock for aggregate net
proceeds of $12.2 million. Net proceeds represent gross proceeds
offset by costs specifically identifiable to the offering, such as
commissions, dealer manager fees and other offering fees and
expenses as well as allocated indirect offering costs.
In September 2024, the Company suspended its offering of Series
A1 Preferred Stock. In addition, in September 2024, the Company
redeemed a total of 2,589,606 and 2,167,156 shares of Series A1
Preferred Stock and Series A Preferred stock, respectively, which
were paid in shares of the Company’s Common Stock (including the
payment of accrued and unpaid dividends on the redeemed shares),
resulting in the total issuance of 60,526,804 shares of Common
Stock.
In addition, during the three months ended September 30, 2024 we
made incremental paydowns of $4.0 million on our revolving credit
facility.
Dividends
On September 16, 2024, we declared a stock dividend of $0.04 (or
0.0202 shares of Common Stock) per share of Common Stock, payable
in shares of Common Stock on October 8, 2024, using a price of
$1.985 per share, resulting in the issuance of 1,684,634 shares of
Common Stock.
About the Data
Descriptions of certain performance measures, including Segment
NOI, Cash NOI, FFO attributable to common stockholders, and Core
FFO attributable to common stockholders are provided below. Certain
of these performance measures—Cash NOI, FFO attributable to common
stockholders and Core FFO attributable to common stockholders —are
non-GAAP financial measures. Refer to the subsequent tables for
reconciliation of these non-GAAP financial measures to the most
directly comparable GAAP financial measure.
(1)
Stabilized office portfolio: represents office
properties where occupancy was not impacted by a redevelopment or
repositioning during the period.
(2)
Same-store properties: are properties that we
have owned and operated in a consistent manner and reported in our
consolidated results during the entire span of the periods being
reported. We excluded from our same-store property set this quarter
any properties (i) acquired on or after July 1, 2023; (ii) sold or
otherwise removed from our consolidated financial statements on or
before September 30, 2024; or (iii) that underwent a major
repositioning project we believed significantly affected its
results at any point during the period commencing on July 1, 2023
and ending on September 30, 2024. When determining our same-store
office properties as of September 30, 2024, one office property was
excluded pursuant to (i) and (iii) above and one office property as
excluded pursuant to (ii) above.
(3)
FFO
attributable to common stockholders (“FFO”): represents
net income (loss) attributable to common stockholders, computed in
accordance with GAAP, which reflects the deduction of redeemable
preferred stock dividends accumulated, excluding gain (or loss)
from sales of real estate, impairment of real estate, and real
estate depreciation and amortization. We calculate FFO in
accordance with the standards established by the National
Association of Real Estate Investment Trusts (the “NAREIT”). See
‘Core FFO’ definition below for discussion of the benefits and
limitations of FFO as a supplemental measure of operating
performance.
(4)
Core FFO
attributable to common stockholders (“Core FFO”):
represents FFO attributable to common stockholders (computed as
described above), excluding gain (loss) on early extinguishment of
debt, redeemable preferred stock deemed dividends, redeemable
preferred stock redemptions, gain (loss) on termination of interest
rate swaps, and transaction costs.
We believe that FFO is a widely
recognized and appropriate measure of the performance of a REIT and
that it is frequently used by securities analysts, investors and
other interested parties in the evaluation of REITs, many of which
present FFO when reporting their results. In addition, we believe
that Core FFO is a useful metric for securities analysts, investors
and other interested parties in the evaluation of our Company as it
excludes from FFO the effect of certain amounts that we believe are
non-recurring, are non-operating in nature as they relate to the
manner in which we finance our operations, or transactions outside
of the ordinary course of business.
Like any metric, FFO and Core FFO
should not be used as the only measure of our performance because
it excludes depreciation and amortization and captures neither the
changes in the value of our real estate properties that result from
use or market conditions nor the level of capital expenditures and
leasing commissions necessary to maintain the operating performance
of our properties, and Core FFO excludes amounts incurred in
connection with non-recurring special projects, prepaying or
defeasing our debt, repurchasing our preferred stock, and adjusting
the carrying value of our preferred stock classified in temporary
equity to its redemption value, all of which have real economic
effect and could materially impact our operating results. Other
REITs may not calculate FFO and Core FFO in the same manner as we
do, or at all; accordingly, our FFO and Core FFO may not be
comparable to the FFOs and Core FFOs of other REITs. Therefore, FFO
and Core FFO should be considered only as a supplement to net
income (loss) as a measure of our performance and should not be
used as a supplement to or substitute measure for cash flows from
operating activities computed in accordance with GAAP. FFO and Core
FFO should not be used as a measure of our liquidity, nor is it
indicative of funds available to fund our cash needs, including our
ability to pay dividends. FFO and Core FFO per share for the
year-to-date period may differ from the sum of quarterly FFO and
Core FFO per share amounts due to the required method for computing
per share amounts for the respective periods. In addition, FFO and
Core FFO per share is calculated independently for each component
and may not be additive due to rounding.
(5)
Segment
NOI: for our real estate segments represents rental and
other property income and expense reimbursements less property
related expenses and excludes non-property income and expenses,
interest expense, depreciation and amortization, corporate related
general and administrative expenses, gain (loss) on sale of real
estate, gain (loss) on early extinguishment of debt, impairment of
real estate, transaction costs, and benefit (provision) for income
taxes. For our lending segment, Segment NOI represents interest
income net of interest expense and general overhead expenses. See
‘Cash NOI’ definition below for discussion of the benefits and
limitations of Segment NOI as a supplemental measure of operating
performance.
(6)
Cash
NOI: for our real estate segments, represents Segment
NOI adjusted to exclude the effect of the straight lining of rents,
acquired above/below market lease amortization and other
adjustments required by generally accepted accounting principles
(“GAAP”). For our lending segment, there is no distinction between
Cash NOI and Segment NOI. We also evaluate the operating
performance and financial results of our operating segments using
cash basis NOI excluding lease termination income, or “Cash NOI
excluding lease termination income”.
Segment NOI and Cash NOI are not
measures of operating results or cash flows from operating
activities as measured by GAAP and should not be considered
alternatives to income from continuing operations, or to cash flows
as a measure of liquidity, or as an indication of our performance
or of our ability to pay dividends. Companies may not calculate
Segment NOI or Cash NOI in the same manner. We consider Segment NOI
and Cash NOI to be useful performance measures to investors and
management because, when compared across periods, they reflect the
revenues and expenses directly associated with owning and operating
our properties and the impact to operations from trends in
occupancy rates, rental rates and operating costs, providing a
perspective not immediately apparent from income from continuing
operations. Additionally, we believe that Cash NOI is helpful to
investors because it eliminates straight line rent and other
non-cash adjustments to revenue and expenses.
(7)
Annualized rent per occupied square foot:
represents gross monthly base rent under leases commenced as of the
specified periods, multiplied by twelve. This amount reflects total
cash rent before abatements. Where applicable, annualized rent has
been grossed up by adding annualized expense reimbursements to base
rent. Annualized rent for certain office properties includes rent
attributable to retail.
(8)
Monthly
rent per occupied unit: Represents gross monthly base
rent under leases commenced as of the specified period, divided by
occupied units. This amount reflects total cash rent before
concessions.
(9)
Net
monthly rent per occupied unit: Represents gross monthly
base rent under leases commenced as of the specified period less
rent concessions granted during the specified period, divided by
occupied units.
FORWARD-LOOKING STATEMENTS
This press release contains certain “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), which are intended to be covered by
the safe harbors created thereby. These statements include the
plans and objectives of management for future operations, including
plans and objectives relating to future growth of CMCT’s business
and availability of funds. Such forward-looking statements can be
identified by the use of forward-looking terminology such as “may,”
“will,” “project,” “target,” “expect,” “intend,” “might,”
“believe,” “anticipate,” “estimate,” “could,” “would,” “continue,”
“pursue,” “potential,” “forecast,” “seek,” “plan,” or “should,” or
“goal” or the negative thereof or other variations or similar words
or phrases. Such forward-looking statements also include, among
others, statements about CMCT’s plans and objectives relating to
future growth and outlook. Such forward-looking statements are
based on particular assumptions that management of CMCT has made in
light of its experience, as well as its perception of expected
future developments and other factors that it believes are
appropriate under the circumstances. Forward-looking statements are
necessarily estimates reflecting the judgment of CMCT’s management
and involve a number of risks and uncertainties that could cause
actual results to differ materially from those suggested by the
forward-looking statements. These risks and uncertainties include
those associated with (i) the timing, form, and operational effects
of CMCT’s development activities, (ii) the ability of CMCT to raise
in place rents to existing market rents and to maintain or increase
occupancy levels, (iii) fluctuations in market rents, (iv) the
effects of inflation and continuing higher interest rates on the
operations and profitability of CMCT and (v) general economic,
market and other conditions. Additional important factors that
could cause CMCT’s actual results to differ materially from CMCT’s
expectations are discussed in “Item 1A—Risk Factors” in CMCT’s
Annual Report on Form 10-K for the year ended December 31, 2023 and
in Part II, Item 1A of CMCT’s Quarterly Reports on Form 10-Q filed
with the Securities and Exchange Commission from time to time. The
forward-looking statements included herein are based on current
expectations and there can be no assurance that these expectations
will be attained. Assumptions relating to the foregoing involve
judgments with respect to, among other things, future economic,
competitive and market conditions and future business decisions,
all of which are difficult or impossible to predict accurately and
many of which are beyond CMCT’s control. Although we believe that
the assumptions underlying the forward-looking statements are
reasonable, any of the assumptions could be inaccurate and,
therefore, there can be no assurance that the forward-looking
statements expressed or implied will prove to be accurate. In light
of the significant uncertainties inherent in the forward-looking
statements expressed or implied herein, the inclusion of such
information should not be regarded as a representation by CMCT or
any other person that CMCT’s objectives and plans will be achieved.
Readers are cautioned not to place undue reliance on
forward-looking statements. Forward-looking statements speak only
as of the date they are made. CMCT does not undertake to update
them to reflect changes that occur after the date they are made,
except as may be required by applicable laws.
CREATIVE MEDIA & COMMUNITY
TRUST CORPORATION AND SUBSIDIARIES
Consolidated Balance
Sheets
(Unaudited and in thousands,
except share and per share amounts)
September 30, 2024
December 31, 2023
ASSETS
Investments in real estate, net
$
702,845
$
704,762
Investments in unconsolidated entities
34,196
33,505
Cash and cash equivalents
18,454
19,290
Restricted cash
17,521
24,938
Loans receivable, net
55,742
57,005
Accounts receivable, net
4,198
5,347
Deferred rent receivable and charges,
net
21,087
28,222
Other intangible assets, net
3,663
3,948
Other assets
10,343
14,183
TOTAL ASSETS
$
868,049
$
891,200
LIABILITIES, REDEEMABLE PREFERRED
STOCK, AND EQUITY
LIABILITIES:
Debt, net
$
478,339
$
471,561
Accounts payable and accrued expenses
26,582
26,426
Due to related parties
8,864
3,463
Other liabilities
10,604
12,981
Total liabilities
524,389
514,431
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED STOCK: Series A1
cumulative redeemable preferred stock, $0.001 par value; 25,226,343
and 27,904,974 shares authorized as of September 30, 2024 and
December 31, 2023, respectively; 913,630 shares issued and
outstanding as of September 30, 2024 and no shares issued or
outstanding as of December 31, 2023; liquidation preference of
$25.00 per share, subject to adjustment
20,799
—
EQUITY:
Series A cumulative redeemable preferred
stock, $0.001 par value; 31,519,738 and 34,611,501 shares
authorized as of September 30, 2024 and December 31, 2023,
respectively; 8,820,338 and 4,340,076 shares issued and
outstanding, respectively, as of September 30, 2024 and 8,820,338
and 7,431,839 shares issued and outstanding, respectively, as of
December 31, 2023; liquidation preference of $25.00 per share,
subject to adjustment
108,703
185,704
Series A1 cumulative redeemable preferred
stock, $0.001 par value; 25,226,343 and 27,904,974 shares
authorized as of September 30, 2024 and December 31, 2023,
respectively; 11,327,248 and 8,553,591 shares issued and
outstanding, respectively, as of September 30, 2024 and 10,473,369
and 10,378,343 shares issued and outstanding, respectively, as of
December 31, 2023; liquidation preference of $25.00 per share,
subject to adjustment
211,877
256,935
Series D cumulative redeemable preferred
stock, $0.001 par value; 26,991,590 shares authorized as of
September 30, 2024 and December 31, 2023; 56,857 and 48,447 shares
issued and outstanding, respectively, as of September 30, 2024 and
56,857 and 48,447 shares issued and outstanding, respectively, as
of December 31, 2023; liquidation preference of $25.00 per share,
subject to adjustment
1,190
1,190
Common stock, $0.001 par value;
900,000,000 shares authorized; 83,447,280 shares issued and
outstanding as of September 30, 2024 and 22,786,741 shares issued
and outstanding as of December 31, 2023
87
23
Additional paid-in capital
984,978
852,476
Distributions in excess of earnings
(985,874
)
(921,925
)
Total stockholders’ equity
320,961
374,403
Non-controlling interests
1,900
2,366
Total equity
322,861
376,769
TOTAL LIABILITIES, REDEEMABLE PREFERRED
STOCK, AND EQUITY
$
868,049
$
891,200
CREATIVE MEDIA & COMMUNITY
TRUST CORPORATION AND SUBSIDIARIES
Consolidated Statements of
Operations
(Unaudited and in thousands,
except per share amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
REVENUES:
Rental and other property income
$
18,150
$
17,061
$
56,172
$
49,999
Hotel income
6,808
7,485
29,768
29,590
Interest and other income
3,658
3,572
11,113
10,201
Total Revenues
28,616
28,118
97,053
89,790
EXPENSES:
Rental and other property operating
17,373
15,509
52,550
47,713
Asset management and other fees to related
parties
515
724
1,334
2,071
Expense reimbursements to related
parties—corporate
592
524
1,809
1,729
Expense reimbursements to related
parties—lending segment
672
648
1,908
2,166
Interest
9,616
9,733
27,819
24,678
General and administrative
2,221
2,142
5,243
5,751
Transaction-related costs
526
38
1,351
3,398
Depreciation and amortization
6,423
16,082
19,357
46,056
Total Expenses
37,938
45,400
111,371
133,562
(Loss) income from unconsolidated
entities
(1,239
)
1,189
(442
)
1,053
Gain on sale of real estate (Note 3)
—
—
—
1,104
LOSS BEFORE PROVISION FOR INCOME TAXES
(10,561
)
(16,093
)
(14,760
)
(41,615
)
Provision for income taxes
15
554
573
969
NET LOSS
(10,576
)
(16,647
)
(15,333
)
(42,584
)
Net loss attributable to non-controlling
interests
192
874
423
2,501
NET LOSS ATTRIBUTABLE TO THE COMPANY
(10,384
)
(15,773
)
(14,910
)
(40,083
)
Redeemable preferred stock dividends
declared or accumulated (Note 11)
(7,966
)
(6,809
)
(23,601
)
(18,341
)
Redeemable preferred stock deemed
dividends (Note 11)
(327
)
—
(755
)
—
Redeemable preferred stock redemptions
(Note 11)
(16,098
)
(352
)
(17,471
)
(1,040
)
NET LOSS ATTRIBUTABLE TO COMMON
STOCKHOLDERS
$
(34,775
)
$
(22,934
)
$
(56,737
)
$
(59,464
)
NET LOSS ATTRIBUTABLE TO COMMON
STOCKHOLDERS PER SHARE:
Basic
$
(1.22
)
$
(0.94
)
$
(2.20
)
$
(2.44
)
Diluted
$
(1.22
)
$
(0.94
)
$
(2.20
)
$
(2.44
)
WEIGHTED AVERAGE SHARES OF COMMON STOCK
OUTSTANDING:
Basic
28,493
24,422
25,789
24,402
Diluted
28,493
24,422
25,789
24,402
CREATIVE MEDIA & COMMUNITY TRUST
CORPORATION AND SUBSIDIARIES Funds from Operations
Attributable to Common Stockholders (Unaudited and in
thousands, except per share amounts)
We believe that FFO is a widely recognized and appropriate
measure of the performance of a REIT and that it is frequently used
by securities analysts, investors and other interested parties in
the evaluation of REITs, many of which present FFO when reporting
their results. FFO represents net income (loss) attributable to
common stockholders, computed in accordance with generally accepted
accounting principles ("GAAP"), which reflects the deduction of
redeemable preferred stock dividends accumulated, excluding gains
(or losses) from sales of real estate, impairment of real estate,
and real estate depreciation and amortization. We calculate FFO in
accordance with the standards established by the National
Association of Real Estate Investment Trusts (the "NAREIT").
Like any metric, FFO should not be used as the only measure of
our performance because it excludes depreciation and amortization
and captures neither the changes in the value of our real estate
properties that result from use or market conditions nor the level
of capital expenditures and leasing commissions necessary to
maintain the operating performance of our properties, all of which
have real economic effect and could materially impact our operating
results. Other REITs may not calculate FFO in accordance with the
standards established by the NAREIT; accordingly, our FFO may not
be comparable to the FFO of other REITs. Therefore, FFO should be
considered only as a supplement to net income (loss) as a measure
of our performance and should not be used as a supplement to or
substitute measure for cash flows from operating activities
computed in accordance with GAAP. FFO should not be used as a
measure of our liquidity, nor is it indicative of funds available
to fund our cash needs, including our ability to pay dividends. The
following table sets forth a reconciliation of net income (loss)
attributable to common stockholders to FFO attributable to common
stockholders for the three and nine months ended September 30, 2024
and 2023.
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Numerator:
Net loss attributable to common
stockholders
$
(34,775
)
$
(22,934
)
$
(56,737
)
$
(59,464
)
Depreciation and amortization
6,423
16,082
19,357
46,056
Noncontrolling interests’ proportionate
share of depreciation and amortization
(68
)
(626
)
(240
)
(1,986
)
Gain on sale of real estate
—
—
—
(1,104
)
FFO attributable to common
stockholders
(28,420
)
(7,478
)
$
(37,620
)
$
(16,498
)
Redeemable preferred stock dividends
declared on dilutive shares (a)
—
—
—
—
Diluted FFO attributable to common
stockholders
$
(28,420
)
$
(7,478
)
$
(37,620
)
$
(16,498
)
Denominator:
Basic weighted average shares of common
stock outstanding
28,493
24,422
25,789
24,402
Effect of dilutive securities—contingently
issuable shares (a)
—
—
—
3
Diluted weighted average shares and common
stock equivalents outstanding
28,493
24,422
25,789
24,405
FFO attributable to common stockholders
per share:
Basic
$
(1.00
)
$
(0.31
)
$
(1.46
)
$
(0.68
)
Diluted
$
(1.00
)
$
(0.31
)
$
(1.46
)
$
(0.68
)
______________________
(a)
For the three months ended September 30, 2024 and 2023, the effect
of certain shares of redeemable preferred stock were excluded from
the computation of diluted FFO attributable to common stockholders
and the diluted weighted average shares and common stock
equivalents outstanding as such inclusion would be anti-dilutive.
CREATIVE MEDIA & COMMUNITY TRUST
CORPORATION AND SUBSIDIARIES Core Funds from Operations
Attributable to Common Stockholders (Unaudited and in
thousands, except per share amounts)
In addition to calculating FFO in accordance with the standards
established by NAREIT, we also calculate a supplemental FFO metric
we call Core FFO attributable to common stockholders. Core FFO
attributable to common stockholders represents FFO attributable to
common stockholders, computed in accordance with NAREIT's
standards, excluding losses (or gains) on early extinguishment of
debt, redeemable preferred stock redemptions, gains (or losses) on
termination of interest rate swaps, and transaction costs. We
believe that Core FFO is a useful metric for securities analysts,
investors and other interested parties in the evaluation of our
Company as it excludes from FFO the effect of certain amounts that
we believe are non-recurring, are non-operating in nature as they
relate to the manner in which we finance our operations, or
transactions outside of the ordinary course of business.
Like any metric, Core FFO should not be used as the only measure
of our performance because, in addition to excluding those items
prescribed by NAREIT when calculating FFO, it excludes amounts
incurred in connection with non-recurring special projects,
prepaying or defeasing our debt and repurchasing our preferred
stock, all of which have real economic effect and could materially
impact our operating results. Other REITs may not calculate Core
FFO in the same manner as we do, or at all; accordingly, our Core
FFO may not be comparable to the Core FFO of other REITs who
calculate such a metric. Therefore, Core FFO should be considered
only as a supplement to net income (loss) as a measure of our
performance and should not be used as a supplement to or substitute
measure for cash flows from operating activities computed in
accordance with GAAP. Core FFO should not be used as a measure of
our liquidity, nor is it indicative of funds available to fund our
cash needs, including our ability to pay dividends. The following
table sets forth a reconciliation of net income (loss) attributable
to common stockholders to Core FFO attributable to common
stockholders for the three and nine months ended September 30, 2024
and 2023.
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Numerator:
Net loss attributable to common
stockholders
$
(34,775
)
$
(22,934
)
$
(56,737
)
$
(59,464
)
Depreciation and amortization
6,423
16,082
19,357
46,056
Noncontrolling interests’ proportionate
share of depreciation and amortization
(68
)
(626
)
(240
)
(1,986
)
Gain on sale of real estate
—
—
—
(1,104
)
FFO attributable to common
stockholders
$
(28,420
)
$
(7,478
)
$
(37,620
)
$
(16,498
)
Redeemable preferred stock redemptions
16,098
352
17,471
1,040
Redeemable preferred stock deemed
dividends
327
—
755
—
Transaction-related costs
526
38
1,351
3,398
Noncontrolling interests’ proportionate
share of transaction-related costs
—
—
—
(194
)
Core FFO attributable to common
stockholders
$
(11,469
)
$
(7,088
)
$
(18,043
)
$
(12,254
)
Redeemable preferred stock dividends
declared on dilutive shares (a)
—
—
—
—
Diluted Core FFO attributable to common
stockholders
$
(11,469
)
$
(7,088
)
$
(18,043
)
$
(12,254
)
Denominator:
Basic weighted average shares of common
stock outstanding
28,493
24,422
25,789
24,402
Effect of dilutive securities-contingently
issuable shares (a)
—
—
—
4
Diluted weighted average shares and common
stock equivalents outstanding
28,493
24,422
25,789
24,406
Core FFO attributable to common
stockholders per share:
Basic
$
(0.40
)
$
(0.29
)
$
(0.70
)
$
(0.50
)
Diluted
$
(0.40
)
$
(0.29
)
$
(0.70
)
$
(0.50
)
______________________
(a)
For the three months ended September 30, 2024 and 2023, the
effect of certain shares of redeemable preferred stock were
excluded from the computation of diluted Core FFO attributable to
common stockholders and the diluted weighted average shares and
common stock equivalents outstanding as such inclusion would be
anti-dilutive.
CREATIVE MEDIA & COMMUNITY TRUST
CORPORATION AND SUBSIDIARIES Reconciliation of Net Operating
Income (Unaudited and in thousands)
We internally evaluate the operating performance and financial
results of our real estate segments based on segment NOI, which is
defined as rental and other property income and expense
reimbursements less property related expenses and excludes
non-property income and expenses, interest expense, depreciation
and amortization, corporate related general and administrative
expenses, gain (loss) on sale of real estate, gain (loss) on early
extinguishment of debt, impairment of real estate, transaction
costs, and provision for income taxes. For our lending segment, we
define segment NOI as interest income net of interest expense and
general overhead expenses. We also evaluate the operating
performance and financial results of our operating segments using
cash basis NOI, or "cash NOI". For our real estate segments, we
define cash NOI as segment NOI adjusted to exclude the effect of
the straight lining of rents, acquired above/below market lease
amortization and other adjustments required by GAAP.
Cash NOI is not a measure of operating results or cash flows
from operating activities as measured by GAAP and should not be
considered an alternative to income from continuing operations, or
to cash flows as a measure of liquidity, or as an indication of our
performance or of our ability to pay dividends. Companies may not
calculate cash NOI in the same manner. We consider cash NOI to be a
useful performance measure to investors and management because,
when compared across periods, it reflects the revenues and expenses
directly associated with owning and operating our properties and
the impact to operations from trends in occupancy rates, rental
rates and operating costs, providing a perspective not immediately
apparent from income from continuing operations. Additionally, we
believe that cash NOI is helpful to investors because it eliminates
straight line rent and other non-cash adjustments to revenue and
expenses.
Below is a reconciliation of cash NOI to segment NOI and net
income (loss) attributable to the Company for the three months
ended September 30, 2024 and 2023.
Three Months Ended September
30, 2024
Same-Store
Office
Non-Same-Store Office
Total Office
Hotel
Multi-family
Lending
Total
Cash net operating income
$
6,415
$
—
$
6,415
$
973
$
508
$
688
$
8,584
Deferred rent and amortization of
intangible assets, liabilities, and lease inducements
(996
)
—
(996
)
—
—
—
(996
)
Segment net operating income
$
5,419
$
—
$
5,419
$
973
$
508
$
688
$
7,588
Interest and other income
158
Asset management and other fees to related
parties
(515
)
Expense reimbursements to related
parties—corporate
(592
)
Interest expense
(8,830
)
General and administrative
(1,421
)
Transaction-related costs
(526
)
Depreciation and amortization
(6,423
)
Loss before benefit for income taxes
(10,561
)
Provision for income taxes
(15
)
Net loss
(10,576
)
Net loss attributable to noncontrolling
interests
192
Net loss attributable to the Company
$
(10,384
)
Three Months Ended September
30, 2023
Same-Store
Office
Non-Same-Store Office
Total Office
Hotel
Multi-family
Lending
Total
Cash net operating income (loss)
$
9,938
$
(49
)
$
9,889
$
1,922
$
90
$
366
$
12,267
Deferred rent and amortization of
intangible assets, liabilities, and lease inducements
(571
)
—
(571
)
(1
)
(481
)
—
(1,053
)
Segment net operating income (loss)
$
9,367
$
(49
)
$
9,318
$
1,921
$
(391
)
$
366
$
11,214
Interest and other income
220
Asset management and other fees to related
parties
(724
)
Expense reimbursements to related
parties—corporate
(524
)
Interest expense
(8,556
)
General and administrative
(1,603
)
Transaction-related costs
(38
)
Depreciation and amortization
(16,082
)
Loss before benefit for income taxes
(16,093
)
Provision for income taxes
(554
)
Net loss
(16,647
)
Net loss attributable to noncontrolling
interests
874
Net loss attributable to the Company
$
(15,773
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241108879514/en/
For Creative Media & Community Trust Corporation
Media Relations: Bill Mendel, 212-397-1030
bill@mendelcommunications.com
or
Shareholder Relations: Steve Altebrando, 646-652-8473
shareholders@creativemediacommunity.com
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