• Core FFO Improvement: Increased by approximately $4.5 million from the prior quarter.
• Net Operating Income (NOI): Increased by $1.6 million from the third quarter, with the Hotel segment contributing $1.1 million.
• Credit Facility Balance: Reduced to $15 million from $169 million at the end of the third quarter.
• Segment NOI: $9.2 million for Q4 2024, compared to $10.8 million in the prior year period.
• Office Segment NOI: $5.2 million for Q4 2024, down from $5.4 million in Q4 2023.
• Multifamily Segment NOI: $855,000 for Q4 2024, down from $1.1 million in the prior year period.
• Hotel Segment NOI: $2.1 million for Q4 2024, down from $2.9 million in the prior year period.
• Lending Division NOI: $980,000 for Q4 2024, down from $1.3 million in the prior year period.
• FFO: Negative $8.7 million or negative $0.93 per diluted share, compared to negative $9.9 million or negative $4.07 per diluted share in the prior year period.
• Core FFO: Negative $7 million or negative $0.75 per diluted share, compared to negative $8.4 million or negative $3.46 per diluted share in the prior year period.
• Occupancy Decline: Multifamily total occupancy declined about 220 basis points from the prior quarter.
• Office Lease Percentage: 71% at the end of the fourth quarter; 82% excluding one office building in Oakland.

• Warning! GuruFocus has detected 8 Warning Signs with CMCT.

Release Date: March 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Creative Media & Community Trust Corp (NASDAQ:CMCT) made significant progress in reducing its recourse credit facility from $169 million to $15 million, with plans to fully retire it soon.
• The company successfully closed three mortgages since November, using proceeds to pay down debt and fund renovations, such as the $21 million room renovation at the Sheraton Grand Hotel in Sacramento.
• Core FFO improved by approximately $4.5 million from the prior quarter, driven by higher NOI, lower interest expense, and reduced preferred dividends.
• The multifamily segment showed a modest increase in NOI, with occupancy increasing 240 basis points year-over-year.
• CMCT is actively working on a development pipeline, including a joint venture project in Echo Park, Los Angeles, expected to deliver midyear.

Negative Points

• The company's segment NOI decreased to $9.2 million for Q4 2024, down from $10.8 million in the prior year, with declines across office, multifamily, hotel, and lending segments.
• Office segment NOI dropped due to decreased rental revenue in Oakland, California, following a tenant's partial lease termination.
• Multifamily segment NOI decreased due to an unrealized loss on investment in real estate within an unconsolidated joint venture.
• Hotel operations experienced a $828,000 drop in NOI due to decreased occupancy from ongoing renovations.
• FFO and core FFO remained negative, with FFO at negative $8.7 million and core FFO at negative $7 million for the quarter.

Q & A Highlights

Q: Can you provide an update on the progress of your strategic initiatives, particularly regarding the balance sheet and liquidity improvements? A: David Thompson, CEO, explained that CMCT is focused on improving its balance sheet and liquidity by growing its multifamily portfolio and reducing traditional office assets. The company has made significant progress by closing three mortgages since November, reducing the credit facility balance from $169 million to $15 million. They expect to complete one more financing to fully retire the recourse credit facility.

Q: What are the details of the recent refinancing activities? A: Stephen Altebrando, Portfolio Oversight, detailed that CMCT closed a $92.2 million mortgage on the Sheraton Grand Hotel in Sacramento, a $105 million mortgage on the Wilshire portfolio in Los Angeles, and a $5 million mortgage on a creative office building in Culver City. These proceeds were used to pay down the credit facility and fund renovations and tenant improvements.

Q: How did the multifamily segment perform in the fourth quarter? A: Stephen Altebrando noted that the multifamily segment saw a modest increase in NOI from the prior quarter, despite a 220 basis point decline in occupancy. However, occupancy increased 240 basis points year-over-year. The company is progressing on leasing up 701 South Hudson in Los Angeles and converting office space to residential units at 4750 Wilshire.

Q: Can you discuss the financial highlights for the fourth quarter of 2024? A: Barry Berlin, CFO, reported that segment NOI was $9.2 million, down from $10.8 million in the prior year. The decrease was driven by declines in the office, multifamily, hotel, and lending segments. FFO was negative $8.7 million, an improvement from negative $9.9 million in the prior year, primarily due to a decrease in preferred stock dividends.

Q: What is the rationale behind the proposed 1 for 25 reverse stock split? A: Barry Berlin explained that the reverse stock split is intended to address the increased number of common shares outstanding, which has contributed to a lower stock price. The recent preferred common redemptions have improved cash flow, liquidity, and the balance sheet, but the split aims to further stabilize the stock price.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.