Creative Media & Community Trust Corp. Announces Q4 2024 Results
Creative Media & Community Trust Corporation has released its operating results for the fourth quarter ended December 31, 2024.
Strategic Progress and Financial Overview
David Thompson, Chief Executive Officer of CMCT, commented on the company’s strategic direction:
“We made additional progress on our plan to accelerate our focus on premier multifamily assets, strengthen our balance sheet, and improve liquidity. We completed multiple property-level financings and significantly reduced our recourse credit facility balance. Looking ahead, we aim to finalize another refinancing to fully repay and retire the credit facility. Additionally, we continue to evaluate asset sales and plan to reinvest proceeds into high-quality multifamily properties.”
Key Developments in Q4 2024
- Reverse Stock Split: Effective January 6, 2025, CMCT implemented a one-for-ten reverse stock split, adjusting all share and per-share amounts accordingly.
- Real Estate Portfolio Performance:
- The same-store office portfolio was 71.0% leased.
- Signed 175,654 square feet of leases with terms exceeding 12 months.
- Secured financing, including an $84.3 million initial advance on a variable-rate mortgage for a hotel property (with an additional $7.9 million available) and a $105.0 million fixed-rate mortgage on three Los Angeles office properties. Proceeds were used to repay $154.3 million of the 2022 Credit Facility.
Financial Results
- Net Loss: $16.6 million, or $1.78 per diluted share.
- Funds from Operations (FFO): $(8,656), or $(0.93) per diluted share.
- Core FFO: $(6,953), or $(0.75) per diluted share.
Portfolio Updates and Future Plans
- Multifamily Growth:
- The occupancy rate at 4750 Wilshire / 701 S Hudson, a recently converted office-to-residential property, increased from 2% at the end of Q3 to 37% currently.
- The company’s 36-unit multifamily development in Echo Park, Los Angeles, remains on track for completion in Q3 2025.
- Office Leasing:
- Nearly 176,000 square feet of leases were executed in Q4.
- Hospitality Enhancements:
- All 505 rooms at CMCT’s hotel property have been renovated, with public space upgrades planned for later this year.
CMCT remains focused on optimizing its portfolio and executing its strategy to enhance shareholder value through strategic asset repositioning and financial discipline.
Fourth Quarter 2024 Financial Results
Real Estate Portfolio Overview
As of December 31, 2024, our real estate portfolio comprised 27 fee-simple assets, including five properties held through investments in unconsolidated joint ventures. These joint ventures encompass one office property, one multifamily development site, two multifamily properties (including one recently converted from office space), and a commercial development site. The portfolio includes 12 office properties totaling approximately 1.3 million rentable square feet, four multifamily properties with 696 units, nine development sites (three utilized as parking lots), and a 505-room hotel with an ancillary parking garage.
Financial Performance
Net loss attributable to common stockholders for Q4 2024 was $16.6 million ($1.78 per diluted share), compared to a net loss of $16.3 million ($6.66 per diluted share) in Q4 2023. The increase in net loss was primarily driven by a $1.6 million rise in depreciation and amortization, offset by a $1.3 million increase in Funds from Operations (FFO).
FFO attributable to common stockholders stood at $(8.7) million ($0.93 per diluted share), an improvement from $(9.9) million ($4.07 per diluted share) in Q4 2023. This improvement was due to lower redeemable preferred stock dividends ($1.3 million), reduced interest expenses ($1.1 million), lower transaction-related costs ($992,000), and decreased general and administrative expenses ($768,000). These gains were partially offset by a $1.6 million decline in segment net operating income (NOI) and a $1.4 million loss from early debt extinguishment.
Core FFO attributable to common stockholders was $(7.0) million ($0.75 per diluted share) compared to $(8.4) million ($3.46 per diluted share) in Q4 2023, reflecting similar trends in FFO, adjusted for transaction-related costs, preferred stock redemptions, and debt extinguishment losses.
Segment Performance
Total segment NOI for Q4 2024 was $9.2 million, down from $10.8 million in Q4 2023.
- Office Segment:
- Same-store NOI increased slightly to $5.2 million (from $5.1 million in 2023), while same-store cash NOI declined to $6.2 million (from $6.5 million), primarily due to reduced rental revenue in an Oakland property following a major tenant’s partial lease termination.
- As of December 31, 2024, same-store office occupancy was 70.6%, down 1,280 basis points year-over-year, and lease rates were 71.0%, down 1,300 basis points. Annualized rent per occupied square foot increased to $60.48 (from $57.28 in 2023).
- The office segment’s total NOI declined to $5.2 million from $5.4 million, influenced by reduced gains in unconsolidated joint ventures.
- Hotel Segment:
- NOI decreased to $2.1 million (from $2.9 million) due to reduced occupancy from ongoing renovation activities.
- Occupancy fell to 54.5% (from 69.9%), while the average daily rate remained stable at $195.55.
- Revenue per available room declined to $106.59 (from $136.27).
- Multifamily Segment:
- NOI decreased to $855,000 (from $1.1 million) due to an unrealized loss on real estate investments.
- Occupancy improved to 81.7% (from 79.3%).
- Monthly rent per occupied unit was $2,468, while net rent per occupied unit was $2,319, compared to $2,805 and $2,074, respectively, in 2023.
- Lending Segment:
- NOI declined to $980,000 (from $1.3 million) due to lower premium and interest income amid reduced loan origination and sales.
Debt and Equity Activity
During Q4 2024, the Company redeemed 180,942 shares of Series A1 Preferred Stock and 214,713 shares of Series A Preferred Stock, leading to the issuance of 3,141,315 shares of Common Stock.
Additionally, the Company refinanced debt with an $84.3 million variable-rate mortgage on its hotel property and a $105.0 million fixed-rate mortgage on three Los Angeles office properties. This allowed the repayment of $154.3 million in debt under the 2022 Credit Facility.
Dividends
The Company declared a quarterly dividend of $0.10 per share for common stockholders, payable on February 15, 2025, to shareholders of record as of January 31, 2025.
This report reflects our continued focus on optimizing portfolio performance amid ongoing market challenges.
Dividends Declared for Q4 2024
We have declared preferred stock dividends for the fourth quarter of 2024 on our Series A, Series A1, and Series D Preferred Stock. These dividends were payable on January 15, 2025, to shareholders of record as of the close of business on January 5, 2025.
Quarterly Dividend Amounts
- Series A Preferred Stock: $0.34375 per share
- Series A1 Preferred Stock: $0.489375 per share*
- Series D Preferred Stock: $0.353125 per share
*The quarterly dividend of $0.489375 per share for Series A1 Preferred Stock corresponds to an annualized rate of 7.83%, calculated as 2.5% plus the federal funds rate of 5.33% on the applicable determination date. The Series A1 Preferred Stock terms provide for cumulative cash dividends at a quarterly rate of the greater of:
- (i) 6.00% of the Series A1 Stated Value, divided by four (4), or
- (ii) The Federal Funds (Effective) Rate on the applicable determination date plus 2.50% of the Series A1 Stated Value, divided by four (4), capped at 2.50% per quarter.
Performance Measures and Financial Definitions
To provide additional transparency, we have outlined key performance measures, including non-GAAP metrics, below. Please refer to subsequent tables for reconciliations to the most comparable GAAP financial measures.
(1) Stabilized Office Portfolio
Represents office properties that were not impacted by redevelopment or repositioning during the period.
(2) Same-Store Properties
Properties consistently owned and operated during the full reporting period. The same-store set excludes properties:
- Acquired on or after October 1, 2023.
- Sold or removed from consolidated financials before December 31, 2024.
- Undergoing major repositioning projects significantly affecting performance during the period.
For Q4 2024, one office property was excluded due to acquisition/repositioning, and another due to sale.
(3) Funds From Operations (FFO)
Represents net income (loss) attributable to common stockholders, adjusted for redeemable preferred stock dividends, excluding:
- Gains/losses from real estate sales
- Impairments
- Depreciation and amortization of real estate assets
Our FFO calculations align with standards set by the National Association of Real Estate Investment Trusts (NAREIT).
(4) Core Funds From Operations (Core FFO)
Core FFO adjusts FFO by excluding:
- Early debt extinguishment gains/losses
- Redeemable preferred stock redemptions and deemed dividends
- Interest rate swap terminations
- Transaction costs
Why FFO and Core FFO Matter
FFO is a widely recognized metric used by REIT analysts and investors to evaluate financial performance. Core FFO refines this by removing non-operating and non-recurring items. However, FFO and Core FFO do not reflect:
- Real estate value changes due to market conditions or usage
- Capital expenditures and leasing costs necessary for property upkeep
While useful for comparative purposes, these measures should not be viewed as substitutes for GAAP net income, liquidity assessments, or cash flow analysis.
(5) Segment Net Operating Income (Segment NOI)
For real estate segments, Segment NOI includes rental/property income and expense reimbursements, less property-related expenses. It excludes:
- Non-property income/expenses
- Interest expense
- Depreciation and amortization
- Corporate G&A expenses
- Real estate gains/losses, impairments, and transaction costs
For the lending segment, Segment NOI equals net interest income minus general overhead expenses.
(6) Cash Net Operating Income (Cash NOI)
Cash NOI adjusts Segment NOI by removing non-cash accounting impacts such as:
- Straight-line rent adjustments
- Amortization of acquired above/below market leases
For lending, Cash NOI equals Segment NOI. This metric is valuable for tracking property operating performance trends.
(7) Annualized Rent per Occupied Square Foot
Calculated as gross monthly base rent (at period end) multiplied by twelve, before abatements. For some office properties, annualized rent includes attributable retail rent.
(8) Monthly Rent per Occupied Unit
Determined by dividing gross monthly base rent by occupied units, before concessions.
(9) Net Monthly Rent per Occupied Unit
Reflects gross monthly base rent minus rent concessions, divided by occupied units.
