Creative Media

Good day and welcome to the Creative Media and Community Trust third quarter 2025 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist 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 a touch-tone phone. To withdraw your question, please press star and then two. Please note this event is being recorded. I would now like to turn the conference over to Steve Alter Brando, Portfolio Oversight. Please go ahead.

Hello, everyone, and thank you for joining us. My name is Steve Altibrando, 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. 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 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 to everyone for joining our call today. I'll begin with an update on the progress we're making with our strategic initiatives and then review our results for the quarter. As a reminder, our key priorities remain focused on two main goals, strengthening our liquidity in our balance sheet and growing our multifamily business. To advance these objectives, which we first outlined last September, we've been executing a significant refinancing program and evaluating selective asset sales. Earlier this week, we announced that we have entered into a definitive agreement to sell our lending business. This business is primarily focused on originating SBA 7A loans for limited service hotels, and it was considered a non-core asset for the company. As of September 30th, the purchase price was estimated to be approximately $44 million and yield the company about $31 million after repayment of debt, transaction, and other expenses. The transaction remains subject to Small Business Administration approval as well as certain closing conditions. At the same time, we continue to make meaningful progress on our refinancing initiatives. Since last September, we completed financings on seven assets and put in place a warehouse facility for our lending division. This facility will be retired at the close of our sale transaction. We are also working on an upsize of our mortgage on Penfield, our creative office asset in Austin. After closing this financing earlier this year, we executed a lease with an investment-grade tenant, which should allow us to upsize the loan. We're now finalizing the loan documents with the lender. Taken together, these actions were important steps for the company. They provided proceeds that allowed us to significantly reduce our recourse debt, including the full retirement of our $169 million recourse credit facility earlier this year. They also supported our growth initiatives, including lease-up activity at our Beverly Hills, Culver City, Brentwood, San Francisco, and Austin properties, renovations at our hotel asset, new loan originations in our lending business, and enabled us to continue paying preferred dividends. Overall, we're encouraged by the progress we've made in improving liquidity. We are working to position the company to benefit from a recovering commercial real estate market, which is supported by lower interest rates, a significant uptick in office leasing activity, and improving economic conditions in the San Francisco Bay Area. Turning to third quarter results, our core FFO was negative $10.5 million, reflecting several items that impacted performance during the quarter. Our overall net operating income was $7 million compared to $9.8 million in the prior quarter. Within our office segment, NOI declined by approximately $500,000 from the second quarter, largely due to lower appraised value at one of our JVs. NOI modestly increased at our wholly owned properties. Hotel NOI was $850,000 in the quarter compared to $4.2 million in the second quarter. primarily reflecting disruption from our renovation of the public space. Q3 is also a seasonally slower quarter for the hotel. Our multifamily NOI increased by approximately $600,000 from the prior quarter. The improvement was primarily due to a lower appraisal at one of our JVs that impacted Q2 results, as well as a decrease in real estate tax expense at our consolidated properties in Q3. And finally, NOI from our lending segment increased by approximately $360,000, primarily due to a higher reserve taken in the second quarter. Looking ahead, we see opportunities to improve cash flow in 2026, supported by several key drivers. Continued improvement in office leasing activity, the full completion of renovations at our hotel asset, and steady gains in multifamily performance through higher rental rates, improved occupancy, and delivery of new units. We also expect the benefit from a more favorable interest rate environment. Before I turn the call over to Steve to provide more detail on the portfolio, I want to take a minute to thank Barry Berlin for his years of service. As part of the sale of our lending division, Barry will be stepping down as CFO in order to join the acquirer of the lending business. Brandon Hill will assume the role of CFO once the transaction is closed. Brandon has been intimately involved in CMCT for years, and we expect a seamless transition. Steve?