Creative Media

Good day and welcome to the Creative Media and Community Trust fourth quarter 2023 earnings call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Steve Alto Brando. Please go ahead, sir.

Hello everyone and thank you for joining us. My name is Steve Alto Brando, the portfolio oversight for CMCT. Also on the call today is Shaul Kuba, our chief investment officer, 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. 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. 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. 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. With that, I'll turn the call over to David Thompson.

Thanks, Steve, and thank you everyone for joining our call today. Despite a challenging 2023 for the real estate market, given the sharp rise in interest rates, we believe CMCT is well positioned to benefit from a real estate recovery, given our strong asset base in top tier markets, our differentiated capital structure that can amplify appreciation for common shareholders, and our expectation of savings on interest costs as short-term interest rates come down. Even through a difficult year for the market, CMCT had a number of highlights since we last spoke. Our multifamily occupancy rate improved. Our development pipeline made additional progress with construction continuing at our two new multifamily projects. Our office leased percentage has remained stable. We saw continued strength at our hotel asset and our liquidity remains strong. I'd like to first discuss our progress in the multifamily segment of our portfolio. As of the end of February, our multifamily occupancy improved to 84.5%, up 40 basis points from the third quarter. We believe it will make additional progress as we head into the busier spring and summer leasing season. Also, we continue to believe that we will see improved net operating income at the three multifamily properties we acquired last year, two in Oakland and one in Los Angeles, totaling 696 units. Two of those three assets are still in the lease-up phase, and the third asset has significant NOI growth opportunity as the in-place rents are substantially below today's market. As for our development pipeline, we expect to deliver two multifamily assets in Los Angeles, one later this year and one in mid-2025. When completed, we will have investments in five operating multifamily assets totaling 800 units. Between our required properties and development activity, we have made significant headway on implementing our plan to grow the multifamily side of our portfolio and achieve more balance between creative office and multifamily assets. In our office segment, our lease percentage remained stable in the fourth quarter at 84.4% in a challenging sector. We executed approximately 38,000 square feet of office leases in the quarter and 141,000 square feet for the full year of 2023. Our fourth quarter hotel segment NOI decreased 6% compared to the prior year as we faced a challenging comp. However, hotel NOI increased by 18% in 2023 compared to the year earlier period. Our lending NOI decreased year over year, primarily due to the securitization completed a year ago, which increased interest expense attributable to that segment. As for our liquidity, at the end of the fourth quarter, we had $19 million of cash on hand, $53 million availability under our revolver, and we continue to raise Series A1 preferred stock. With that, I will turn the call over to Shaul to give an update on our development pipeline.