Creative Media & Community Trust Corporation Reports 2024 Fourth Quarter Results

Creative Media & Community Trust Corporation (NASDAQ and TASE: CMCT) ("we", "our", "CMCT", or the "Company") today reported operating results for the three months ended December 31, 2024.

On January 6, 2025, the previously announced one-for-ten reverse stock split of our Common Stock became effective. All of the share and per share amounts in this release have been adjusted to give retroactive effect to the reverse stock split.

Fourth Quarter 2024 Highlights

Real Estate Portfolio

• Same-store office portfolio⁽²⁾ was 71.0% leased.
• Executed 175,654 square feet of leases with terms longer than 12 months.
• Closed a variable-rate mortgage loan on our hotel property, with an initial advance of $84.3 million and a future advance component of up to $7.9 million, and closed a $105.0 million fixed-rate mortgage on three of our Los Angeles office properties. Following such refinancings, we repaid $154.3 million on our 2022 Credit Facility.

Financial Results

• Net loss attributable to common stockholders of $16.6 million, or $1.78 per diluted share.
• Funds from operations attributable to common stockholders ("FFO")⁽³⁾¹ was $(8,656), or $(0.93) per diluted share.
• Core FFO attributable to common stockholders⁽⁴⁾¹ was $(6,953), or $(0.75) per diluted share.

Management Commentary

"We made additional progress on our previously announced plan 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 completed three property-level financings since the end of the third quarter and used the proceeds to reduce the balance on our recourse credit facility to $15 million (from $169 million). We are actively working to complete one more refinancing and intend to use the proceeds to fully repay and retire the recourse credit facility. We are continuing to evaluate asset sales and plan to invest potential proceeds principally in premier multifamily properties."

"In our multifamily segment, we made progress at our recently completed partial office to residential conversion at 4750 Wilshire / 701 S Hudson, with occupancy increasing to 37% as of today, up from 2% at the end of the third quarter. And we continue to expect our 36-unit multifamily development in Echo Park, Los Angeles to be completed in the third quarter of 2025."

"In our office segment, we executed nearly 176,000 square feet of leases in the fourth quarter. Finally, we completed the room renovation of all 505 rooms at our one hotel asset and anticipate commencing upgrades to the public spaces later this year."

Fourth Quarter 2024 Results

Real Estate Portfolio

As of December 31, 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"). Our Unconsolidated Joint Ventures contain one office property, one multifamily site currently under development, two multifamily properties (one of which has been partially converted from office into multifamily units and is now being classified as a multifamily property) and one commercial development site. The portfolio includes 12 office properties, totaling approximately 1.3 million rentable square feet, four multifamily properties totaling 696 units, nine development sites (three of which are being used as parking lots) and one 505-room hotel with an ancillary parking garage.

Financial Results

Net loss attributable to common stockholders was $16.6 million, or $1.78 per diluted share of Common Stock, for the three months ended December 31, 2024, compared to a net loss attributable to common stockholders of $16.3 million, or $6.66 per diluted share of Common Stock, for the same period in 2023. The increase in net loss attributable to common stockholders was driven by an increase in depreciation and amortization expense of $1.6 million, partially offset by an increase in FFO² attributable to common stockholders⁽³⁾ of $1.3 million (described below).

FFO² attributable to common stockholders⁽³⁾ was $(8.7) million, or $(0.93) per diluted share of Common Stock for the three months ended December 31, 2024 compared to $(9.9) million, or $(4.07) per diluted share of Common Stock, for the same period in 2023. The increase in FFO² attributable to common stockholders was primarily due to a decrease in redeemable preferred stock dividends of $1.3 million, a decrease in interest expense not allocated to our operating segments of $1.1 million, a decrease in transaction-related costs of $992,000 and a decrease in general and administrative expenses of $768,000. These were partially offset by a decrease of $1.6 million in segment net operating income as well as a loss on early extinguishment of debt of $1.4 million, which was recognized in the three months ended December 31, 2024.

Core FFO² attributable to common stockholders⁽⁴⁾ was $(7.0) million, or $(0.75) per diluted share of Common Stock for the three months ended December 31, 2024 compared to $(8.4) million, or $(3.46) per diluted share of Common Stock, for the same period in 2023. The increase in Core FFO² is attributable to the aforementioned changes in FFO², while not impacted by the decrease in redeemable preferred stock redemptions, transaction-related costs, or our loss on early extinguishment of debt as these are excluded from our Core FFO² calculation.

Segment Information

Our reportable segments during the three months ended December 31, 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 $9.2 million for the three months ended December 31, 2024, compared to $10.8 million for the same period in 2023.

Office

Same-Store

Same-store⁽²⁾ office segment NOI⁽⁵⁾ was $5.2 million for the three months ended December 31, 2024, an increase from $5.1 million in the same period in 2023, while same-store⁽¹⁾ office Cash NOI⁽⁶⁾² was $6.2 million for the three months ended December 31, 2024, a decrease from $6.5 million in the same period in 2023. The increase in same-store⁽²⁾ office segment NOI⁽⁵⁾ was primarily due to our same store unconsolidated office entities, which collectively experienced a decrease in the net unrealized loss on their investments in real estate compared to the prior year-period; this was partially offset by a decrease in rental revenue at our office property in Oakland, California, attributable to a decrease in occupancy resulting from a large tenant exercising a partial lease termination option. The aforementioned partial lease termination resulted in a larger impact to cash rental revenues as compared to straight-line rental revenues, leading to the decrease in same-store⁽¹⁾ office Cash NOI⁽⁶⁾² while our same-store⁽²⁾ office segment NOI⁽⁵⁾ was not as significantly impacted.

At December 31, 2024, the Company's same-store⁽²⁾ office portfolio was 70.6% occupied, a decrease of 1,280 basis points year-over-year on a same-store⁽²⁾ basis, and 71.0% leased, a decrease of 1,300 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 $60.48 at December 31, 2024, compared to $57.28 at December 31, 2023. During the three months ended December 31, 2024, the Company executed 175,654 square feet of leases with terms longer than 12 months at our same-store⁽²⁾ office portfolio.

Total

Office segment NOI⁽⁵⁾ decreased to $5.2 million for the three months ended December 31, 2024, as compared to $5.4 million for the same period in 2023. We had a decrease in our non-same-store office properties' segment net operating income related to our non-same-store unconsolidated office entities, which collectively experienced a decrease in the net unrealized gain on their investments in real estate compared to the prior year-period. This change, combined with the change in our same-store⁽²⁾ office segment NOI⁽⁵⁾, led to the decrease in total office segment NOI⁽⁵⁾.

Hotel

Hotel Segment NOI⁽⁵⁾ was $2.1 million for the three months ended December 31, 2024, a decrease from $2.9 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 during the three months ended December 31, 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:

Multifamily

Our Multifamily Segment consists of two multifamily buildings located in Oakland, California as well as two investments in multifamily buildings in Los Angeles, California, each owned through unconsolidated joint ventures (one of which, 701 S Hudson / 4750 Wilshire Boulevard, was reclassified from an office segment property to a multifamily segment property as of October 1, 2024, following the substantial completion of the conversion of two of the building's three floors from office-use into 68 for-lease multifamily units). Our multifamily segment NOI⁽⁵⁾ was $855,000 for the three months ended December 31, 2024, compared to $1.1 million for the same period in 2023. The decrease in our multifamily segment NOI⁽⁵⁾ was primarily due to an unrealized loss on investment in real estate at one of our unconsolidated joint ventures during the three months ended December 31, 2024. As of December 31, 2024, our Multifamily Segment was 81.7% occupied, monthly rent per occupied unit⁽⁸⁾ was $2,468 and net monthly rent per occupied unit⁽⁹⁾ was $2,319, compared to 79.3%, $2,805, and $2,074, respectively, as of December 31, 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 $980,000 for the three months ended December 31, 2024, compared to $1.3 million for the same period in 2023, primarily due to a decrease in premium income and a decrease in interest income as a result of lower loan originations and loan sale volume.

Debt and Equity

During the three months ended December 31, 2024 , the Company had redemptions of 180,942 shares of Series A1 Preferred Stock (40 shares were redeemed in cash and 180,902 shares were redeemed in shares of Common Stock) and had redemptions of 214,713 shares of Series A Preferred Stock (17,080 shares were redeemed in cash and 197,633 shares were redeemed in shares of Common Stock). These redemptions resulted in the collective issuance of 3,141,315 shares of Common Stock during the three months ended December 31, 2024.

In addition, during the three months ended December 31, 2024 we closed a variable-rate mortgage loan on our hotel property, with an initial advance of $84.3 million and a future advance component of up to $7.9 million, and closed a $105.0 million fixed-rate mortgage on three of our Los Angeles office properties. Following such refinancings, we repaid $154.3 million on our 2022 Credit Facility. Each of the refinanced properties were released as collateral from our 2022 Credit Facility.

Dividends

We declared preferred stock dividends on our Series A, Series A1 and Series D Preferred Stock for the fourth quarter of 2024. The dividends were payable on January 15, 2025 to holders of record at the close of business on January 5, 2025.

The dividend amounts are as follows:

*The quarterly cash dividend of $0.489375 per share represents an annualized dividend rate of 7.83% (2.5% plus the federal funds rate of 5.33% on the applicable determination date). The terms of the Series A1 Preferred Stock provide for cumulative cash dividends (if, as and when authorized by the Board of Directors) on each share of Series A1 Preferred Stock at a quarterly rate of the greater of (i) 6.00% of the Series A1 Stated Value, divided by four (4) and (ii) the Federal Funds (Effective) Rate on the applicable determination date, plus 2.50%, of the Series A1 Stated Value, divided by four (4), up to a maximum of 2.50% of the Series A1 Stated Value per quarter.

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.

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," "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, (v) general economic, market and other conditions and (vi) our ability to regain compliance with certain continued listing requirements for Nasdaq Global Market ("Nasdaq") and to prevent our Common Stock from being delisted from Nasdaq. 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, 2024 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

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 months and the years ended December 31, 2024 and 2023.

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 months and the years ended December 31, 2024 and 2023.

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 December 31, 2024 and 2023.

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