Creative Media & Community Trust Corporation (CMCT) 2024 Q2 法說會逐字稿

Good day and welcome to the creative Media and Community Trust second quarter 2024 earnings call. (Operator Instructions). Please note this event is being recorded.

美好的一天，歡迎參加創意媒體和社區信託基金 2024 年第二季財報電話會議。（操作員說明）。請注意此事件正在被記錄。

I would now like to turn the conference over to Steve Altebrando portfolio oversight.

我現在想將會議轉交給史蒂夫·阿爾特布蘭多 (Steve Altebrando) 投資組合監督。

Hello, everyone, and thank you for joining us. My name is Steve Altebrando, I'm the portfolio oversight for CMCT. Also on the call today are David Thompson, our Chief Executive Officer; and Barry Berlin, our Chief Financial Officer. This call is being webcast and will be temporarily archived on the Investor Relations section of our website, where you can also find our earnings release.

大家好，感謝您加入我們。我叫 Steve Altebrando，是 CMCT 的投資組合主管。今天參加電話會議的還有我們的執行長 David Thompson；以及我們的財務長巴里·柏林。本次電話會議正在網路上直播，並將暫時存檔在我們網站的投資者關係部分，您也可以在其中找到我們的收益發布。

Our earnings release includes a reconciliation of non-GAAP financial measures discussed during today's call. During this call, we will make forward-looking statements. These forward-looking statements are based on the beliefs of, assumptions made by and information currently available to us.

我們的收益發布包括今天電話會議中討論的非公認會計準則財務指標的調節表。在本次電話會議中，我們將做出前瞻性陳述。這些前瞻性陳述是基於我們的信念、假設和目前可獲得的資訊。

Our actual results will be affected by known and unknown risks, trends, uncertainties and other factors that are beyond our control or ability to predict. Although we believe that our assumptions are reasonable, they are not guarantees of future performance and some will prove to be incorrect.

我們的實際結果將受到已知和未知的風險、趨勢、不確定性以及其他超出我們控製或預測能力的因素的影響。儘管我們相信我們的假設是合理的，但它們並不能保證未來的業績，而且有些假設會被證明是不正確的。

Therefore, our actual future results can be expected to differ from our expectations, and those differences may be material. For a more detailed description of potential risks, please refer to our SEC filings, which can be found in the Investor Relations section of our website.

因此，我們未來的實際結果可能與我們的預期有所不同，而這些差異可能是重大的。有關潛在風險的更詳細描述，請參閱我們向 SEC 提交的文件，該文件可在我們網站的投資者關係部分找到。

With that, I'll turn the call over to David Thompson.

這樣，我會將電話轉給大衛湯普森。

Thanks, Steve, and thank you, everyone, for joining our call today. This morning, we released our second quarter 2021 results. Net operating income improved from the first quarter across all our real estate operating segments, office, multifamily and hotel.

謝謝史蒂夫，也謝謝大家今天加入我們的電話會議。今天早上，我們發布了 2021 年第二季業績。我們所有房地產營運部門、辦公大樓、多戶住宅和飯店的淨營業收入較第一季有所改善。

While we are pleased with this improvement from last quarter, our cash flow continues to be impacted by elevated short-term interest rates, the widely known challenges in the office market and continued soft rental rates at our Bay Area multifamily assets.

雖然我們對上季度的這種改善感到滿意，但我們的現金流繼續受到短期利率上升、辦公市場眾所周知的挑戰以及灣區多戶型資產持續疲軟的租金率的影響。

We are focused on strengthening our balance sheet and improving our cash flow. As such, we continue to evaluate asset sales and other ways to reduce both our recourse debt and overall debt. We also expect to eventually benefit from lower SOFR on our floating rate debt and lower preferred dividends as the Fed funds rate is expected to come down over time.

我們專注於加強資產負債表和改善現金流。因此，我們繼續評估資產出售和其他方式來減少我們的追索債務和整體債務。我們也預計最終將從浮動利率債務的 SOFR 降低和優先股股息降低中受益，因為聯邦基金利率預計會隨著時間的推移而下降。

As a reminder, our Series A1 Preferred Dividend is a greater of 6% or Fed funds plus 2.5%. We continue to make progress on our development and redevelopment pipeline, and we are ahead of schedule at two of our three active projects.

提醒一下，我們的 A1 系列優先股息是 6% 或聯邦基金加 2.5% 中的較高者。我們的開發和再開發項目繼續取得進展，三個活躍項目中的兩個項目提前完成。

We have two multifamily projects underway, and we commenced the room renovation at our one hotel in July. Steve will provide more details in a moment.

我們正在進行兩個多戶住宅項目，並於 7 月開始對我們的一家酒店進行房間翻修。史蒂夫稍後將提供更多詳細資訊。

As for our results in the quarter, our same-store office segment NOI increased 9% year-over-year to $7.6 million. The increase was primarily driven by an increase in our JV income. We had an unrealized gain in the second quarter of 2024, whereas in the second quarter of 2023, we had an unrealized loss.

至於我們本季的業績，我們的同店辦公部門 NOI 年增 9% 至 760 萬美元。這一增長主要是由於我們合資企業收入的成長所致。我們在 2024 年第二季度有未實現的收益，而在 2023 年第二季度，我們有未實現的虧損。

This was primarily driven by a price values. Overall, our office lease percentage remained stable in the quarter at 83.5%, and we executed approximately 52,000 square feet of office leases in the quarter.

這主要是由價格驅動的。總體而言，本季度我們的辦公室租賃百分比保持穩定在 83.5%，本季度我們執行了約 52,000 平方英尺的辦公室租賃。

However, we do expect our occupancy to decline in the third quarter. As previously disclosed, we have a large tenant that gave back approximately 130,000 square feet at the end of July at our 1 Kaiser Plaza office building in Oakland. Our hotel segment NOI increased 5% from the prior year to $4.3 million, primarily due to improving average daily room rate.

然而，我們預計第三季的入住率將會下降。如同先前所揭露的，我們有一個大租戶於 7 月底歸還了我們位於奧克蘭的 1 Kaiser Plaza 辦公大樓約 130,000 平方英尺的面積。我們的酒店部門 NOI 較上年增長 5%，達到 430 萬美元，這主要是由於平均每日房價的提高。

Our multifamily segment generated $2.3 million of NOI in the quarter compared to $900,000 of NOI in the first quarter of 2024. The increase was driven by occupancy gain, which improved to 92.5% at the end of the second quarter from 79.3% at the end of 2023. However, the rental rate at our 2 largest properties, Channel House and 1150 Clay located in Oakland continues to be below our expectations.

我們的多戶住宅部門在本季產生了 230 萬美元的 NOI，而 2024 年第一季的 NOI 為 90 萬美元。這一成長是由入住率成長推動的，入住率從 2023 年底的 79.3% 升至第二季末的 92.5%。然而，我們位於奧克蘭的 2 個最大物業 Channel House 和 1150 Clay 的租金率仍然低於我們的預期。

Our lending segment NOI increased 42% year-over-year to $743,000. 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. With that, I will turn it over to Steve to provide a further update on our development pipeline and the portfolio.

我們的貸款部門 NOI 年增 42% 至 743,000 美元。這一增長主要是由於我們的 SBA 7(a) 貸款支持票據本金償還額導致利息費用減少。這樣，我將把它交給史蒂夫，以提供有關我們的開發管道和產品組合的進一步更新。

Thanks, David. Starting with our development pipeline, we have three projects underway, two multifamily projects in L.A. and the hotel room renovation in Sacramento. Starting with multifamily, our office to residential project at 4750 Wilshire is nearing completion. 4750 Wilshire is located in Hancock Park and affluent residential submarket of L.A. where housing is supply constrained.

謝謝，大衛。從我們的開發項目開始，我們正在進行三個項目，其中兩個位於洛杉磯的多戶住宅項目以及薩克拉門託的酒店客房翻新項目。從多戶住宅開始，我們位於 4750 Wilshire 的辦公大樓到住宅項目已接近完工。4750 Wilshire位於漢考克公園和洛杉磯的富裕住宅子市場，住房供應緊張。

This property was previously a three-story office building. We preserved the ground floor creative office space, which is 100% leased, and we have been converting the top secomd floors to 68 high-end for rent residential units.

該物業以前是一棟三層辦公大樓。我們保留了底層創意辦公空間，100%出租，並將頂層二層改造成68個高端出租住宅單元。

We are on track to complete the project in the third quarter ahead of the previously announced time line of the fourth quarter. The residential component has been renamed 701 South Hudson, and we have launched the properties website and expect to start marketing units for lease in the coming weeks.

我們預計在第三季提前完成該項目，早於先前宣布的第四季度的時間表。住宅部分已更名為 701 South Hudson，我們已推出房產網站，並預計在未來幾週內開始行銷出租單位。

We are excited about this project, which we believe reflects CMCT's strategy to invest in and develop premier multifamily and creative office assets and high barrier to entry markets.

我們對這個計畫感到非常興奮，我們相信該計畫反映了 CMCT 投資和開發優質多戶型和創意辦公資產以及進入市場的高障礙的策略。

Our second development is 1915 Park in the Echo Park section of Los Angeles with an expected mid-2025 delivery. Upon completion, the new seven-story building will feature 36 units. Echo Park is a highly desirable walkable neighborhood with dozens of dine-in and entertainment options.

我們的第二個開發案是位於洛杉磯 Echo Park 地區的 1915 Park，預計將於 2025 年中期交付。竣工後，新的七層樓建築將擁有 36 個單位。Echo Park 是一個非常理想的步行街區，擁有數十個餐飲和娛樂場所。

Turning to the hotel. In July, we began an approximately $21 million room renovation at the Sheraton Grand in Sacramento. The renovation includes a refresh of all 503 rooms. We expect to complete the project around the end of 2024 and believe this renovation will generate a solid return on investment. The hotel is one of just two hotels located directly across the street from Sacramento's Convention Center, which itself completed a major renovation and expansion in 2021.

轉身往酒店走去。7 月，我們開始耗資約 2,100 萬美元對薩克拉門托喜來登大酒店進行房間翻修。翻修工程包括對所有 503 間客房進行翻新。我們預計該專案將於 2024 年底左右完成，並相信此次改造將產生可觀的投資回報。該酒店是薩克拉門托會議中心街對面僅有的兩家酒店之一，該會議中心本身於 2021 年完成了重大翻新和擴建。

Now turning to our operating portfolio. On a consolidated basis at quarter end, our multifamily segment was 92.5% occupied, up from 86.2% in the first quarter and 79.3% at the end of the fourth quarter. In Echo Park Los Angeles our multifamily asset at 1902 Park, occupancy increased to 93.3% at the end of the quarter, up 40 basis points from 2023 year-end. We've been executing new leases for new tenants at substantially higher rates than our in-place rents.

現在轉向我們的營運投資組合。截至季末，我們的多戶住宅市場的入住率達到 92.5%，高於第一季的 86.2% 和第四季末的 79.3%。在洛杉磯 Echo Park 1902 Park 的多戶型資產中，截至本季末，入住率增至 93.3%，比 2023 年年底成長了 40 個基點。我們一直以遠高於現有租金的價格為新租戶執行新租約。

Monthly rent per occupied unit was $1,806 as of the end of the second quarter. This represents a 4% increase from a year ago, and our rate for new tenants generally exceeds $2,200 per month, a more than 20% increase from our in-place rents. In Oakland, we continue to make progress, improving occupancy and we had an increase in NOI this quarter.

截至第二季末，每個佔用單位的月租金為 1,806 美元。這比一年前增加了 4%，我們對新租戶的租金通常每月超過 2,200 美元，比我們現有的租金增加了 20% 以上。在奧克蘭，我們繼續取得進展，提高了入住率，本季的 NOI 有所增加。

However, as David referenced, our rental rate at Channel House and 1150 Clay have been below expectations as the market absorbs the high level of supply added in Oakland in 2018 through 2022.

然而，正如 David 所提到的，隨著市場吸收奧克蘭 2018 年至 2022 年增加的高供應量，我們 Channel House 和 1150 Clay 的租金率一直低於預期。

We believe the local rents would need to increase dramatically before it's economical to see new multifamily construction. So we expect minimal new supply for the foreseeable future. The pipeline for development in the East Bay for multifamily remains well below the average for the top 25 US markets.

我們認為，在看到新的多戶住宅建設變得經濟之前，當地租金需要大幅上漲。因此，我們預計在可預見的未來新增供應量將很少。東灣的多戶住宅開發案仍遠低於美國前 25 個市場的平均值。

With that, I'll turn it over to Barry.

有了這個，我會把它交給巴里。

Thank you, Steve. Good morning. I will be going over some of our financial highlights for the second quarter. Starting with segment NOI, which was $16.2 million for the second quarter of 2024 compared to $12 million in the prior year comparable period.

謝謝你，史蒂夫。早安.我將回顧第二季度的一些財務亮點。從分部 NOI 開始，2024 年第二季的 NOI 為 1,620 萬美元，而去年同期為 1,200 萬美元。

This increase of $4.2 million was driven by segment increases of $2.1 million in our office segment, $1.7 million in our multifamily segment and $200,000 in both our hotel and lending segments. Our office segment NOI increased by $2.1 million to $8.9 million from $6.8 million in the prior year comparable period.

這一 420 萬美元的增長是由我們的辦公部門部門增長 210 萬美元、多戶型部門部門增長 170 萬美元以及酒店和貸款部門部門增長 20 萬美元推動的。我們的辦公部門 NOI 從去年同期的 680 萬美元增加到 890 萬美元，增加了 210 萬美元。

As mentioned by David, this was primarily driven by an unrealized gain on the value of real estate at one of our unconsolidated office entities compared to aggregate unrealized losses at our unconsolidated office entities in the prior year comparable period.

正如大衛所提到的，這主要是由於我們的一個未合併辦公實體的房地產價值未實現收益與上一年可比期間我們未合併辦公實體的未實現總損失相比所致。

Our hotel segment NOI increased $200,000 to $4.3 million for the second quarter of 2024 compared to $4.1 million in the prior year comparable period, which was attributed to an increase in revenue per available room driven by increased ADR.

2024 年第二季度，我們的飯店部門 NOI 增加了 20 萬美元，達到 430 萬美元，而去年同期為 410 萬美元，這是由於 ADR 增加推動了每間可用客房收入的增加。

Our lending division NOI increased to $743,000 from $524,000 in the prior year comparable period, primarily due to the decreased interest expense resulting from the amount of principal repayments on our SBA 7(a) loan-backed notes. And our multifamily segment, which commenced with asset acquisitions during the first quarter of 2023, reported NOI of approximately $2.3 million compared to approximately $522,000 for the prior year comparable period.

我們的貸款部門 NOI 從去年同期的 524,000 美元增加到 743,000 美元，這主要是由於我們的 SBA 7(a) 貸款支持票據的本金償還額導致利息支出減少。我們的多戶住宅部門在 2023 年第一季開始進行資產收購，報告的 NOI 約為 230 萬美元，而去年同期約為 522,000 美元。

The increase is primarily due to higher rental revenues at our multifamily properties in Oakland, California from increased occupancy and from an increase in monthly rent per occupied unit as adjusted by rent concessions.

這一增長主要是由於我們位於加州奧克蘭的多戶住宅的租金收入增加，原因是入住率增加以及根據租金優惠調整後的每個入住單元月租金的增加。

Our non-segment expenses had a significant decrease in depreciation and amortization by $14 million, which was driven by the full amortization during 2023 of the acquired in-place lease intangible assets for our Oakland assets.

我們的非分部費用的折舊和攤銷大幅減少了 1,400 萬美元，這是由於我們奧克蘭資產所收購的就地租賃無形資產在 2023 年全額攤銷所致。

There was no amortization for acquired in-place lease intangible assets during 2024. Partially offsetting the non-segment expense decrease was a $1 million increase in non-segment allocated interest expense, which was primarily due to market interest rate rises and higher average outstanding principal balances on our revolver.

2024 年，沒有對購買的就地租賃無形資產進行攤銷。非分部分配利息支出增加了 100 萬美元，部分抵消了非分部費用的減少，這主要是由於市場利率上升和我們的左輪手槍平均未償本金餘額增加所致。

The bottom line is that our FFO was a negative $0.14 per diluted share compared to negative $0.19 in the prior year comparable period and our core FFO was a negative $0.09 per diluted share compared to a negative $0.17 in the prior year comparable period.

底線是，我們的 FFO 攤薄後每股收益為負 0.14 美元，而去年同期為負 0.19 美元；我們的核心 FFO 稀釋後每股收益為負 0.09 美元，而去年同期為負 0.17 美元。

These increases were primarily driven by the increase of $4.2 million in our segment NOI, partially offset by an increase in interest expense of $1 million and an increase in our redeemable preferred stock dividends of approximately $1.7 million. I also wanted to note that during the second quarter of 2024, we recommenced the issuance of our Series A1 Preferred Stock and raised an additional $8.3 million in net proceeds from the sale of securities during June.

這些成長主要是由我們部門 NOI 增加 420 萬美元推動的，部分被利息支出增加 100 萬美元和可贖回優先股股息增加約 170 萬美元所抵消。我還想指出，在 2024 年第二季度，我們重新開始發行 A1 系列優先股，並透過 6 月出售證券額外籌集了 830 萬美元的淨收益。

We can now open the line for questions.

我們現在可以開通提問專線。

(Operator Instructions).

（操作員說明）。

John Massocca from B. Riley Securities.

B. Riley 證券公司的 John Massocca。

So can you maybe go provide a little more color on the leasing situation at like merit and just how give back space is going to impact things in 3Q?

那麼，您能否就類似情況下的租賃情況提供更多信息，以及回饋空間將如何影響第三季度的情況？

Sure. So we're currently in the process of lease negotiations with the largest tenant in the building, Kaiser, which is about today, they lease about two-third of the building. So those negotiations are ongoing. They did give back and this is something that we previously disclosed that they gave back about 130,000 square feet at the end of July.

當然。因此，我們目前正在與大樓最大的租戶 Kaiser 進行租賃談判，大約在今天，他們租賃了大樓約三分之二的面積。因此，這些談判正在進行中。他們確實回饋了，這是我們之前透露的，他們在 7 月底回饋了約 13 萬平方英尺。

That will not be -- that square footage is not part of the negotiation for future lease. So we're but we are in the process of negotiating an extension on their space that expires part of it in 2025 and part of it in 2027.

那不會是——面積不是未來租賃談判的一部分。所以我們正在就他們的空間延期進行談判，部分空間將於 2025 年到期，部分空間將於 2027 年到期。

And then maybe on the Oakland multifamily side of things. Obviously, it seems like in the current market, supply shouldn't be much of an issue. But what are you seeing on the demand side in terms of multifamily in that market?

然後也許是奧克蘭多戶家庭方面的事情。顯然，在目前的市場上，供應應該不是什麼大問題。但您對該市場多戶住宅的需求有何看法？

We actually -- I mean, as you could see by the numbers, we had a pretty good first half in terms of picking up occupancy, which was very encouraging. So we I would say we have seen a pickup in demand. Having said that, the market is still, I think, market-wide vacancy is roughly 10% still, which is much better than the trough, which was 17%, 18% or so a couple of years ago.

實際上，我的意思是，正如您從數字中看到的那樣，我們上半年在入住率方面表現相當不錯，這非常令人鼓舞。所以我想說我們已經看到需求的回升。話雖如此，市場仍然存在，我認為整個市場的空置率仍然在 10% 左右，這比幾年前 17%、18% 左右的低谷要好得多。

So we've seen a lot of absorption, but we -- what we really haven't seen yet is a pickup in rate. That continues to be a challenge and it continues to be a market where the -- it's a very high concessions market at the moment. But we have seen, I would say, a pickup in just overall lease velocity. And we were able to get our occupancy into the low 90s, which was encouraging.

因此，我們看到了很多吸收，但我們真正還沒有看到的是吸收率的回升。這仍然是一個挑戰，而且目前仍然是一個非常高的優惠市場。但我想說，我們已經看到整體租賃速度的上升。我們的入住率降到了 90 多歲，令人鼓舞。

Okay. Where would you think, as you need trend in those assets before you could start pushing back a little bit on concessions and maybe pushing more aggressively on rate?

好的。您會怎麼想，因為您需要這些資產的趨勢，然後才能開始稍微推遲一些讓步，並可能更積極地推動利率？

Probably in the mid-90 range. And overall, the markets, as I mentioned, somewhere around 90% occupied.

大概在90左右。總體而言，正如我所提到的，市場的佔有率約為 90%。

And then on the balance sheet side of things given the moves you've seen in interest rates, maybe excluding today, but the moves you've seen in interest rate in the last couple of weeks. How does that impact your outlook for refinancing? Anything maybe on the balance sheet you could pull forward or fix out if rates continue to trend downward, particularly long-term rates?

然後在資產負債表方面，考慮到你所看到的利率變動，也許不包括今天，但你在過去幾週看到的利率變動。這對您的再融資前景有何影響？如果利率持續下降，尤其是長期利率，資產負債表上有什麼可以提前或解決的問題嗎？

Yes. So it's certainly been good to see from our perspective. We have a good amount of floating rate debt, which those rates come down. Short-term rates, there's pretty significant savings for us. But in addition to that, I think what you're more referencing is the potential to potentially fix some of our rate on some longer-term financing.

是的。所以從我們的角度來看，這當然是件好事。我們有大量浮動利率債務，這些債務的利率會下降。就短期利率而言，我們可以節省相當可觀的費用。但除此之外，我認為您更多提到的是我們有可能修復一些長期融資的利率。

And so that's something we will take a look at as well as we've seen kind of the five-year come down quite a bit. So there is a potential opportunity for us to swap from floating into some potentially, we're looking at that right now into some a little bit longer-term fixed rate debt.

因此，這是我們將要考慮的事情，我們已經看到五年來的下降幅度很大。因此，我們有一個潛在的機會從浮動利率債務轉變為一些潛在的債務，我們現在正在考慮將其轉變為一些長期固定利率債務。

And then last one, I mean, in the past calls, you've talked about some assets maybe being noncore and some disposition opportunities that might be out there, especially as financing has gotten cheaper for your counterparties in any deals? Have negotiations or talks there picked up? Or is it still kind of a little bit early innings on capital recycling and dispositions?

最後一個，我的意思是，在過去的電話會議中，您談到了一些資產可能是非核心的，以及可能存在的一些處置機會，特別是在任何交易中，融資對於您的交易對手來說都變得更便宜了？那裡的談判或會談有進展嗎？或者資本回收和處置仍處於早期階段？

We're still, I would say, more in the evaluation phase. What we would like to -- we would like to reduce both our recourse and overall debt. So we are really evaluating and doing some work on an asset-by-asset level to see where we can basically generate the most value. And I think some of the noncore assets that we've discussed in the past, I would also include them in that mix as well, particularly the hotel and lending division.

我想說，我們仍處於評估階段。我們希望減少我們的追索權和整體債務。因此，我們確實在逐個資產層面進行評估和做一些工作，看看我們基本上可以在哪裡產生最大的價值。我認為我們過去討論過的一些非核心資產，我也將它們納入其中，特別是酒店和貸款部門。

Was the primary use of proceeds be on the multifamily side still in the same markets you're in today?

收益的主要用途是否仍然在您今天所處的同一市場中？

I think the primary use of proceeds today really would just be to pay down debt. That's really our focus at this moment. And then I think as the market settles a little bit, look to potentially be back as an acquirer. But for now, we really want to get the debt balance down a bit.

我認為今天收益的主要用途實際上只是償還債務。這確實是我們目前的重點。然後我認為，隨著市場稍微穩定下來，我們有可能重新成為收購者。但就目前而言，我們確實希望稍微降低債務餘額。

This concludes the question-and-answer session, and the conference has now concluded also. Thank you for attending today's presentation. You may now disconnect.

問答環節到此結束，會議也結束了。感謝您參加今天的演講。您現在可以斷開連線。