Creative Media & Community Trust Corp
For the period ended Sep 30, 2024. Filed Nov 8, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 8, 2024
CMCT$3.69+3.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0000908311-24-000043
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-08.
0000908311-24-000063
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 150 previous paragraphs and 162 current paragraphs.
78 unchanged; 64 reworded; 14 added; 6 removed; 2 previous and 6 current paragraphs rearranged.
Tables are not compared: 11 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
Hotel Revenue: Hotel revenue decreased to $7.1 million for the three months ended September 30, 2024, compared to $7.9 million for the three months ended September 30, 2023. The decrease was due to a decrease in occupancy for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 as occupancy was negatively impacted by ongoing construction related to the Hotel Renovation, which began during the three months ended September 30, 2024, to renovate the hotel.
Current report
Multifamily Expenses: Multifamily expenses increased to $3.9 million for the three months ended September 30, 2024 compared to $3.3 million for the three months ended September 30, 2023. The increase was primarily attributable to increased occupancy, leading to increases in maintenance, cleaning, and other operating expenses for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.
Current report
Hotel Revenue: Hotel revenue was $31.2 million for the nine months ended September 30, 2024, consistent with $31.1 million for the nine months ended September 30, 2023.
Current report
Agreement, we made a $4.0 million repayment under the 2022 Credit Facility. On October 24, 2024, lenders under the 2022 Credit Facility and us entered into an agreement (the “Third Modification Agreement”) pursuant to which the lenders waived such event of default with respect to the test period ending September 30, 2024. Pursuant to the Third Modification Agreement, we will not be able to borrow under the 2022 Credit Facility without the consent of the lenders until certain conditions are satisfied, including delivery of a revised business plan acceptable to the lenders and re-establishing compliance with the financial covenant. Under the Third Modification Agreement, the aggregate commitments under the 2022 Credit Facility were reduced from $206.2 million to $169.3 million. Pursuant to the Third Modification Agreement, the lenders and us agreed that, starting April 1, 2025, excess cash flow generated by the borrowers under the 2022 Credit Facility will be deposited into a collateral account controlled by the administrative agent. The borrowers’ ability to withdraw funds from the collateral account will be limited to specified uses and subject to certain requirements. In addition, the lenders agreed (i) to modify the borrowing base formula to remove certain limitations on the inclusion of office, retail, flex office/industrial and standalone parking assets and (ii) subject to certain conditions, to release assets relating to the Sacramento Sheraton to facilitate a refinancing of such property. The Third Modification Agreement did not waive compliance with the financial covenant for the test period ending December 31, 2024 or any future period.
Current report
If we breach any financial covenant under the 2022 Credit Facility in the future and are unable to obtain a further waiver from the lenders thereunder with respect to such breach, an event of default would occur under the 2022 Credit Facility, which would allow lenders under the 2022 Credit Facility to, among other remedies, declare the unpaid principal amount of all outstanding loans, and all interest accrued and unpaid thereon, to be immediately due and payable. The occurrence of any future event of default would raise substantial doubt about our ability to continue as a going concern. Our management plans to address any possible future event of default under the 2022 Credit Facility by entering into new financing arrangements to repay amounts outstanding under the 2022 Credit Facility. We are in the process of obtaining refinancing for our hotel in Sacramento, California (the “Sheraton Refinancing”). If completed, we intend to use the proceeds of the Sheraton Refinancing to repay part of the amount outstanding under the 2022 Credit Facility and to pay for the Hotel Renovation described above. In addition, we are in the process of obtaining refinancing (the “Los Angeles Refinancing”) for three of our properties in Los Angeles, California. If completed, the proceeds of the Los Angeles Refinancing, along with a portion of the proceeds from the Sheraton Refinancing, are anticipated to be in an amount sufficient to repay all amounts outstanding under the 2022 Credit Facility, with the rest to be used for general corporate purposes. The Company expects that each of the Sheraton Refinancing and the Los Angeles Refinancing will close by the end of the first quarter of 2025.
Current report
Management believes that its plans to repay amounts outstanding under the 2022 Credit Facility are probable based on the following: (1) the we have executed term sheets with the respective lenders under the Sheraton Refinancing and the Los Angles Refinancing; (2) we expect that both the Los Angeles Refinancing and the Sheraton Refinancing will close by the end of the first quarter of 2025; (3) the favorable loan-to-value ratios (“LTVs”) of the properties that are the subject of the Sheraton Refinancing and the Los Angeles Refinancing and (4) our plans and efforts to date to obtain additional financing to be secured by two properties that it owns (in addition to the Sheraton Refinancing and the Los Angeles Refinancing), and the favorable LTVs of these two properties. Management’s plans are intended to mitigate the relevant condition that would raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the interim financial information contained in this Quarterly Report on Form 10-Q is issued. The consolidated financial statements contained in this Quarterly Report on Form 10-Q have been prepared assuming that the Company will continue its operations as a going concern and do not include any adjustments that might result from the outcome of events described in this paragraph.
Current report
In September 2024, at our option, we redeemed 2,589,606 and 2,167,156 shares of Series A1 Preferred Stock and Series A Preferred Stock, respectively, in shares of Common Stock and, additionally, we paid holder-requested redemptions of 1,010 shares of Series A1 Preferred Stock in shares of Common Stock. We currently plan to continue to satisfy some or all redemption requests submitted by holders of our shares Preferred Stock in shares of Common Stock during the fourth quarter of 2024 and are currently evaluating whether we will exercise our right to optionally redeem additional shares of Preferred Stock in shares of Common Stock.
Current report
These above measures, taken together, will strengthen our balance sheet, improve liquidity and accelerate our transition towards premier multifamily properties. These actions should also better position the Company to take advantage of opportunities that are expected to arise in a recovering real estate market.
Current report
We have also been in discussion with the largest tenant at One Kaiser Plaza in Oakland, California, a property that is secured by a fixed rate mortgage with a balance of $97.1 million as of September 30, 2024, about renewing a portion of its existing lease. This extension would require a sizable capital investment by the Company for tenant improvements, leasing commissions and certain building improvements and may not meet the company’s return hurdles. In addition, as previously disclosed, the company has been focused on reducing its traditional office investments. We are exploring whether the lender holding the fixed-rate mortgage on the property will agree to loan concessions relating to such upfront capital costs. If we are unable to receive such concessions, we may elect to cease interest payments, such failure would constitute an event of default under the mortgage and would allow the lender to, among other remedies, declare principal and interest on the mortgage loan to be immediately due and payable.
Current report
For certain event of default under the 2022 Credit Facility, modifications of the 2022 Credit Facility relating to such event of default and steps undertaken by us to address such event of default, please see discussion under “Liquidity and Capital Resources - General” above.
Current report
Of the 2,773,657 shares of Series A1 Preferred Stock that have been redeemed, the redemption of 183,041 shares of Series A1 Preferred Stock were paid in cash (all of which were redeemed at the option of the holders). In September, the Company (at its option) redeemed 2,589,606 shares of Series A1 Preferred Stock, all of which were paid in shares of Common Stock, including all accrued and unpaid dividends as of each redemption date and, in addition, in September 1,010 shares redeemed at the option of the holders were paid in shares of Common stock, including all accrued and unpaid dividends as of the redemption date (collectively the “Series A1 In-Kind Redemptions”). The Series A1 In-Kind Redemptions resulted in the aggregate issuance of 32,998,865 shares of Common Stock, all of which were issued in September 2024.
Current report
Of the 4,480,262 shares of Series A Preferred Stock that have been redeemed, the redemption of 2,313,106 shares of Series A Preferred Stock were paid in cash (all of which were redeemed at the option of the holders). In September, the Company (at its option) redeemed 2,167,156 shares of Series A Preferred Stock, all of which were paid in shares of Common Stock, including all accrued and unpaid dividends as of each redemption date (the “Series A In-Kind Redemptions”). The Series A In-Kind Redemptions resulted in the aggregate issuance of 27,553,834 shares of Common Stock, all of which were issued in September 2024.
Current report
Of the 8,410 shares of Series D Preferred Stock that have been redeemed, all such redemptions were paid in cash and were redeemed at the option of the holder.
Current report
Dividends on Common Stock
Removed paragraphs (6)
Previous report
Hotel Revenue: Hotel revenue increased to $12.2 million for the three months ended June 30, 2024, compared to $11.7 million for the three months ended June 30, 2023. The increase was due to an increase in average daily rate and revenue per available room during the three months ended June 30, 2024.
Previous report
Office Expenses: Office expenses were $6.4 million for the three months ended June 30, 2024, the same as for the three months ended June 30, 2023.
Previous report
Multifamily Expenses: Multifamily expenses decreased to $3.1 million for the three months ended June 30, 2024 compared to $3.4 million for the three months ended June 30, 2023. The decrease was primarily attributable to lower property-level general and administrative expenses at multifamily properties in Oakland, California for the three months ended June 30, 2024 compared to the three months ended June 30, 2023.
Previous report
Hotel Revenue: Hotel revenue increased to $24.0 million for the six months ended June 30, 2024, compared to $23.2 million for the six months ended June 30, 2023. The increase was due to an increase in average daily rate and revenue per available room during the six months ended June 30, 2024.
Previous report
Provision for Income Taxes: Provision for income taxes was $558,000 for the six months ended June 30, 2024, consistent with $415,000 for the six months ended June 30, 2023.
Previous report
While the Company has been in discussions with the administrative agent of the 2022 credit facility to come to a satisfactory solution to the Company’s non-compliance with a financial covenant, there can be no assurance that such resolution will be achieved. If the Company is unsuccessful in coming to a resolution with the administrative agent of the 2022 credit facility, and is not able to re-establish compliance with the financial covenant for the test period ending September 30, 2024 or any future period, lenders thereunder may, among other remedies, declare their commitment thereunder to be terminated and/or declare the unpaid principal amount of all outstanding loans, all interest accrued and unpaid thereon, to be immediately due and payable, and foreclose on or take other secured creditor remedies with respect to the properties that secure the 2022 credit facility.
Reworded paragraphs (64)
Previous wording
This Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) 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 our 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 our plans and objectives relating to future growth and outlook. Such forward-looking statements are based on particular assumptions that our management 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 our 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 our development activities, (ii) our ability 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 our operations and profitability and (v) general economic, market and other conditions. Additional important factors that could cause our actual results to differ materially from our expectations are discussed in “Item 1A—Risk Factors” of the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 29, 2024 (the “2023 Form 10-K”). 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 our 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 included in this Form 10-Q will prove to be accurate. In light of the significant…
Excerpt shortened here; the source contains the full paragraph.
Current wording
This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) 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 our 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 our plans and objectives relating to future growth and outlook. Such forward-looking statements are based on particular assumptions that our management 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 our 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 our development activities, (ii) our ability 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 our operations and profitability and (v) general economic, market and other conditions. Additional important factors that could cause our actual results to differ materially from our expectations are discussed in “Item 1A—Risk Factors” of the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 29, 2024 (the “2023 Form 10-K”) and in Part II, Item 1A of this Quarterly Report on Form 10-Q. 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 our 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…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
The following discussion of our financial condition as of June 30, 2024 and results of operations for the three and six months ended June 30, 2024 and 2023 should be read in conjunction with the 2023 Form 10-K. For a more detailed description of the risks affecting our financial condition and results of operations, see “Risk Factors” in Part I, Item 1A of the 2023 Form 10-K and in Part II, Item 1A of this Quarterly Report. Capitalized terms used herein, but not otherwise defined, shall have the meaning ascribed to those terms in “Part I — Financial Information” of this Quarterly Report on Form 10-Q, including the notes to the consolidated financial statements contained therein. The terms “we,” “us,” “our” and the “Company” refer to Creative Media & Community Trust Corporation and its subsidiaries.
Current wording
The following discussion of our financial condition as of September 30, 2024 and results of operations for the three and nine months ended September 30, 2024 and 2023 should be read in conjunction with the 2023 Form 10-K. For a more detailed description of the risks affecting our financial condition and results of operations, see “Risk Factors” in Part I, Item 1A of the 2023 Form 10-K and in Part II, Item 1A of this Quarterly Report. Capitalized terms used herein, but not otherwise defined, shall have the meaning ascribed to those terms in “Part I — Financial Information” of this Quarterly Report on Form 10-Q, including the notes to the consolidated financial statements contained therein. The terms “we,” “us,” “our” and the “Company” refer to Creative Media & Community Trust Corporation and its subsidiaries.
Previous wording
The phrase “ADR” represents average daily rate. It is calculated as trailing six-month room revenue divided by the number of rooms occupied. For sold properties, ADR is presented for the Company’s period of ownership only.
Current wording
The phrase “ADR” represents average daily rate. It is calculated as trailing nine-month room revenue divided by the number of rooms occupied. For sold properties, ADR is presented for the Company’s period of ownership only.
Previous wording
The phrase “RevPAR” represents revenue per available room. It is calculated as trailing six-month room revenue divided by the number of available rooms. For sold properties, RevPAR is presented for the Company’s period of ownership only.
Current wording
The phrase “RevPAR” represents revenue per available room. It is calculated as trailing nine-month room revenue divided by the number of available rooms. For sold properties, RevPAR is presented for the Company’s period of ownership only.
Previous wording
As of June 30, 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. Our Unconsolidated Joint Ventures contain two office properties (one of which is being partially converted into multifamily units), one multifamily site currently under development, one multifamily property and one commercial development site. As of June 30, 2024, our 13 office properties, totaling approximately 1.3 million rentable square feet, were 82.5% occupied, and our one hotel with an ancillary parking garage, which has a total of 503 rooms, had RevPAR of $167.57 for the six months ended June 30, 2024, and our three multifamily properties were 92.5% occupied. Additionally, as of June 30, 2024, we had nine development sites (three of which were being used as parking lots).
Current wording
As of September 30, 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. Our Unconsolidated Joint Ventures contain two office properties (one of which has been partially converted into multifamily units), one multifamily site currently under development, one multifamily property and one commercial development site. As of September 30, 2024, our 13 office properties, totaling approximately 1.3 million rentable square feet, were 72.2% occupied, and our one hotel with an ancillary parking garage, which has a total of 503 rooms, had RevPAR of $145.74 for the nine months ended September 30, 2024, and our three multifamily properties were 92.0% occupied. Additionally, as of September 30, 2024, we had nine development sites (three of which were being used as parking lots).
Previous wording
We are a Maryland corporation and REIT. Our portfolio of investments currently consists of premier multifamily, Class A and creative office real assets in vibrant and improving metropolitan communities throughout the United States. We also own one hotel in northern California and a lending platform that originates loans under the Small Business Administration (“SBA”) 7(a) loan program. We seek to apply the expertise of CIM Group to the acquisition, development and operation of premier multifamily properties situated in vibrant communities throughout the United States. We also seek to acquire, develop and operate creative office assets that cater to rapidly growing industries such as technology, media and entertainment in markets with similar business and employment characteristics to our multifamily investments. All of our multifamily and creative office assets are and will generally be located in communities qualified by CIM Group as described further below. These communities are located in areas that include traditional downtown areas and suburban main streets, which have high barriers to entry, high population density, positive population trends and a propensity for growth. We believe that the critical mass of redevelopment in such areas creates positive externalities, which enhance the value of real estate assets in the area. We believe that these assets will provide greater returns than similar assets in other markets, as a result of the population growth, public commitment and significant private investment that characterize these areas.
Current wording
We are a Maryland corporation and REIT. Our portfolio of investments currently consists of premier multifamily, Class A and creative office real assets in vibrant and improving metropolitan communities throughout the United States. We also own one hotel in northern California and a lending platform that originates loans under the Small Business Administration (“SBA”) 7(a) loan program. We seek to apply the expertise of CIM Group to the acquisition, development and operation of premier multifamily properties situated in vibrant communities throughout the United States. While we may acquire, develop and operate creative office assets that cater to rapidly growing industries such as technology, media and entertainment in markets with similar business and employment characteristics to our multifamily investments, we intend to increase our focus towards premier multifamily properties. All of our multifamily and creative office assets are and will generally be located in communities qualified by CIM Group as described further below. These communities are located in areas that include traditional downtown areas and suburban main streets, which have high barriers to entry, high population density, positive population trends and a propensity for growth. We believe that the critical mass of redevelopment in such areas creates positive externalities, which enhance the value of real estate assets in the area. We believe that these assets will provide greater returns than similar assets in other markets, as a result of the population growth, public commitment and significant private investment that characterize these areas.
Previous wording
(2)Represents gross monthly base rent under leases commenced as of the specified periods, multiplied by 12. This amount reflects total cash rent before abatements. Where applicable, annualized rent has been grossed up by adding annualized expense reimbursements to base rent. Annualized rent for certain office properties includes rent attributable to retail. Total abatements, representing lease incentives in the form of free rent, for the twelve months ended June 30, 2024 and 2023 were approximately $2.2 million and $2.8 million, respectively. Giving effect to abatements, net annualized rent per occupied square foot was $58.34 and $54.56 as of June 30, 2024 and 2023, respectively (See Definitions for more detail).
Current wording
(2)Represents gross monthly base rent under leases commenced as of the specified periods, multiplied by 12. This amount reflects total cash rent before abatements. Where applicable, annualized rent has been grossed up by adding annualized expense reimbursements to base rent. Annualized rent for certain office properties includes rent attributable to retail. Total abatements, representing lease incentives in the form of free rent, for the twelve months ended September 30, 2024 and 2023 were approximately $1.8 million and $2.9 million, respectively. Giving effect to abatements, net annualized rent per occupied square foot was $59.52 and $54.64 as of September 30, 2024 and 2023, respectively (See Definitions for more detail).
Previous wording
During the three and six months ended June 30, 2024, we executed leases with terms longer than 12 months totaling 52,346 and 89,307 square feet, respectively. The table below sets forth information on certain of our executed leases during the three and six months ended June 30, 2024, excluding space that was vacant for more than one year, month-to-month leases, leases with an original term of less than 12 months, related party leases, and space where the previous tenant was a related party:
Current wording
During the three and nine months ended September 30, 2024, we executed leases with terms longer than 12 months totaling 4,850 and 94,157 square feet, respectively. The table below sets forth information on certain of our executed leases during the three and nine months ended September 30, 2024, excluding space that was vacant for more than one year, month-to-month leases, leases with an original term of less than 12 months, related party leases, and space where the previous tenant was a related party:
Previous wording
(1)Represents gross monthly base rent under leases commenced as of the specified period, divided by occupied units. This amount reflects total cash rent before concessions. Net of rent concessions granted in the specified period, monthly rent per occupied unit was $2,469 and $2,336 as of June 30, 2024 and 2023, respectively.
Current wording
(1)Represents gross monthly base rent under leases commenced as of the specified period, divided by occupied units. This amount reflects total cash rent before concessions. Net of rent concessions granted in the specified period, monthly rent per occupied unit was $2,444 and $2,100 as of September 30, 2024 and 2023, respectively.
Previous wording
Kaiser Foundation Health Plan, Incorporated, which occupied space in one of our Oakland, California properties, accounted for 29.5% of our annualized office rental income for the three months ended June 30, 2024.
Current wording
Kaiser Foundation Health Plan, Incorporated, which occupied space in one of our Oakland, California properties, accounted for 21.9% of our annualized office rental income for the three months ended September 30, 2024.
Previous wording
Net loss was$852,000 for the three months ended June 30, 2024 compared to a net loss of$18.4 million for the three months ended June 30, 2023, a decrease of $17.5 million. The decrease in net loss was primarily due to a decrease in depreciation and amortization expense of$14.0 million andan increase of$4.2 million in segment net operating income (discussed in more detail in the following Summary Segment Results).
Current wording
Net loss was$10.6 millionfor the three months ended September 30, 2024 compared to a net loss of$16.6 million for the three months ended September 30, 2023, a decrease of $6.1 million. The decrease in net loss was primarily due to a decrease in depreciation and amortization expense of$9.7 million, partially offset bya decrease of$3.6 million in segment net operating income (discussed in more detail in the following Summary Segment Results).
Previous wording
(1)During the three months ended June 30, 2024 and 2023, we recognized $567,000 and $315,000, respectively, of redeemable preferred stock redemptions. Such amounts are included in, and have the effect of increasing net loss attributable to common stockholders and FFO attributable to common stockholders because redeemable preferred stock redemptions are not an adjustment prescribed by NAREIT.
Current wording
(1)During the three months ended September 30, 2024 and 2023, we recognized $16.1 million and $352,000, respectively, of redeemable preferred stock redemptions. Such amounts are included in, and have the effect of increasing net loss attributable to common stockholders and FFO attributable to common stockholders because redeemable preferred stock redemptions are not an adjustment prescribed by NAREIT.
Previous wording
FFO attributable to common stockholders, which is a non-GAAP measure, was $(3.3) million for the three months ended June 30, 2024, an increase of approximately $0.9 million compared to $(4.2) million for the three months ended June 30, 2023. The increase in FFO was primarily due to an increase of$4.2 million in segment net operating income (discussed in more detail in the following Summary Segment Results). This was partially offset by an increase in interest expense not allocated to our operating segments of $952,000, an increase in redeemable preferred stock dividends of $1.7 million, and an increase in redeemable preferred stock redemptions of $252,000.
Current wording
FFO attributable to common stockholders, which is a non-GAAP measure, was $(28.4) million for the three months ended September 30, 2024, a decrease of approximately $20.9 million compared to $(7.5) million for the three months ended September 30, 2023. The decrease in FFO was primarily due to an increase in redeemable preferred stock redemptions of$15.7 million, a decrease of$3.6 million in segment net operating income (discussed in more detail in the following Summary Segment Results) and an increase in redeemable preferred stock dividends of $1.2 million.
Previous wording
Multifamily Revenue: Multifamily revenue was $5.4 million for the three months ended June 30, 2024, compared to $4.1 million for the three months ended June 30, 2023. The increase was primarily attributed to higher rental revenues at our multifamily properties in Oakland, California due to increased occupancy and increased monthly rent per occupied unit, net of rent concessions, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023.
Current wording
Multifamily Revenue: Multifamily revenue was $4.8 million for the three months ended September 30, 2024, compared to $3.3 million for the three months ended September 30, 2023. The increase was primarily attributed to higher rental revenues at our multifamily properties due to increased occupancy and increased monthly rent per occupied unit, net of rent concessions, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.
Previous wording
Lending Revenue: Lending revenue represents revenue from our lending subsidiaries, including interest income on loans and other loan related fee income. Lending revenue was $2.6 million for the three months ended June 30, 2024, compared to $3.0 million for the three months ended June 30, 2023. The decrease was primarily due to a decrease in premium income as a result of lower loan sale volume and decreased interest income due to higher loan payoff volume during the three months ended June 30, 2024 compared to the three months ended June 30, 2023.
Current wording
Lending Revenue: Lending revenue represents revenue from our lending subsidiaries, including interest income on loans and other loan related fee income. Lending revenue was $2.7 million for the three months ended September 30, 2024, compared to $2.6 million for the three months ended September 30, 2023. The increase was primarily due to an increase in premium income as a result of higher loan sale volume, partially offset by decreased interest income due to higher loan payoff volume during the three months ended September 30, 2024 compared to the three months ended September 30, 2023.
Previous wording
Income (loss) From Unconsolidated Office Entities: The income from our Unconsolidated Joint Ventures included in office segment net operating income increased to $1.3 million for the six months ended June 30, 2024, compared to a loss of $774,000 for the six months ended June 30, 2023. The increase was primarily due to an unrealized gain on the value of real estate at one of the unconsolidated office entities recognized during the six months ended June 30, 2024.
Current wording
(Loss) Income From Unconsolidated Office Entities: The income from our Unconsolidated Joint Ventures included in office segment net operating income decreased to a loss of $834,000 for the three months ended September 30, 2024, compared to income of $1.6 million for the three months ended September 30, 2023. The decrease was primarily due to changes in the valuation of investments in real estate at our unconsolidated office entities which recognized a net unrealized loss during the three months ended September 30, 2024, compared to a net unrealized gain for the three months ended September 30, 2023.
Previous wording
Loss From Unconsolidated Multifamily Entity: The loss from our Unconsolidated Joint Venture included in the multifamily segment net operating income was $81,000 for the three months ended June 30, 2024, compared to a loss of $194,000 for the three months ended June 30, 2023. The decrease was primarily due to a decrease in the unrealized loss on the value of real estate at the Unconsolidated Joint Venture included in our multifamily segment during the three months ended June 30, 2024 compared to the three months ended June 30, 2023.
Current wording
Loss From Unconsolidated Multifamily Entity: The loss from our Unconsolidated Joint Venture included in the multifamily segment net operating income was $405,000 for the three months ended September 30, 2024, consistent with a loss of $422,000 for the three months ended September 30, 2023.
Previous wording
Interest and Other Income: Interest and other income, which has not been allocated to our operating segments, increased to $314,000 for the six months ended June 30, 2024, compared to $76,000 for the six months ended June 30, 2023. The increase was primarily related to interest earned on money market accounts during the six months ended June 30, 2024.
Current wording
Interest and Other Income: Interest and other income, which has not been allocated to our operating segments, was $158,000 for the three months ended September 30, 2024, generally consistent with $220,000 for the three months ended September 30, 2023.
Previous wording
Office Expenses: Office expenses increased to $13.3 million for the six months ended June 30, 2024, compared to $13.0 million for the six months ended June 30, 2023. The increase was primarily due to higher operating expenses at our office properties in Beverly Hills, California, and Los Angeles, California as a result of increased occupancy, and our office property in Oakland, California from increased utilities and repairs and maintenance expense. These were partially offset by lower real estate tax expense at our office property in Austin, Texas.
Current wording
Office Expenses: Office expenses increased to $7.6 million for the three months ended September 30, 2024, compared to $6.3 million for the three months ended September 30, 2023. The increase was primarily due to higher repairs and maintenance, utilities, and administrative expenses at an office property in Oakland, California and higher repairs and maintenance expenses and real estate tax expense at an office property in Austin, Texas.
Previous wording
Hotel Expenses: Hotel expenses increased to $7.8 million for the three months ended June 30, 2024, compared to $7.6 million for the three months ended June 30, 2023. The increase was primarily due to increased wage expenses during the three months ended June 30, 2024.
Current wording
Hotel Expenses: Hotel expenses increased to $6.2 million for the three months ended September 30, 2024, compared to $6.0 million for the three months ended September 30, 2023. The increase was primarily due to increases in room expenses as well as higher utilities, maintenance, and administrative expenses during the three months ended September 30, 2024.
Previous wording
Lending Expenses: Lending expenses represent expenses from our lending subsidiaries, including interest expense, general and administrative expenses and fees to related parties. Lending expenses decreased to $1.8 million, for the three months ended June 30, 2024, compared to $2.4 million for the three months ended June 30, 2023. The decrease was primarily due to a decrease in interest expense resulting from the amount of principal repayments on our SBA 7(a) loan-backed notes as well as a decrease in allocated payroll expenses, primarily as a result of lower loan origination volume.
Current wording
Lending Expenses: Lending expenses represent expenses from our lending subsidiaries, including interest expense, general and administrative expenses and fees to related parties. Lending expenses decreased to $2.0 million, for the three months ended September 30, 2024, compared to $2.2 million for the three months ended September 30, 2023. The decrease was primarily due to a decrease in interest expense resulting from the amount of principal repayments on our SBA 7(a) loan-backed notes, partially offset by an increase in current expected credit losses.
Previous wording
Asset Management and Other Fees to Related Parties: Asset management fees and other fees to related parties, which have not been allocated to our operating segments, were $425,000 for the three months ended June 30, 2024 compared to $627,000 for the three months ended June 30, 2023. The decrease was a result of a reduction in asset management fees related to a decrease in our net asset value, primarily resulting from a reduction in the fair value of our investments in real estate as of the end of 2023.
Current wording
Asset Management and Other Fees to Related Parties: Asset management fees and other fees to related parties, which have not been allocated to our operating segments, were $515,000 for the three months ended September 30, 2024 compared to $724,000 for the three months ended September 30, 2023. The decrease was a result of a reduction in asset management fees related to a decrease in our net asset value, primarily resulting from a reduction in the fair value of our investments in real estate as of the end of 2023.
Previous wording
Expense Reimbursements to Related Parties—Corporate: The Administrator receives compensation and/or reimbursement for performing certain services for the Company and its subsidiaries. Expense reimbursements to related parties-corporate were $612,000 for the three months ended June 30, 2024, generally consistent with expenses of $677,000 for the three months ended June 30, 2023.
Current wording
Expense Reimbursements to Related Parties—Corporate: The Administrator receives compensation and/or reimbursement for performing certain services for the Company and its subsidiaries. Expense reimbursements to related parties-corporate were $592,000 for the three months ended September 30, 2024, generally consistent with expenses of $524,000 for the three months ended September 30, 2023.
Previous wording
Interest Expense: Interest expense, which has not been allocated to our operating segments, increased to $8.3 million for the three months ended June 30, 2024, compared to $7.4 million for the three months ended June 30, 2023. The increase was attributable a higher average outstanding principal balances on our 2022 Credit Facility Revolver for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 and an increase in the SOFR components of interest rates on our variable-rate debt for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023.
Current wording
Interest Expense: Interest expense, which has not been allocated to our operating segments, increased to $8.8 million for the three months ended September 30, 2024, compared to $8.6 million for the three months ended September 30, 2023. The increase was primarily attributable to a higher average outstanding principal balance on our 2022 Credit Facility Revolver for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.
Previous wording
General and Administrative Expenses: General and administrative expenses, which have not been allocated to our operating segments, were $1.0 million for the three months ended June 30, 2024, generally consistent with $1.1 million for the three months ended June 30, 2023.
Current wording
General and Administrative Expenses: General and administrative expenses, which have not been allocated to our operating segments, were $1.4 million for the three months ended September 30, 2024, a decrease from $1.6 million for the three months ended September 30, 2023. The decrease was primarily due to a decrease in legal fees.
Previous wording
Transaction-Related Costs: Transaction costs, which related to potential real estate transactions, were $135,000 for the three months ended June 30, 2024, compared with no such costs for the three months ended June 30, 2023.
Current wording
Transaction-Related Costs: Transaction costs, which related to potential real estate transactions, were $526,000 for the three months ended September 30, 2024, compared with $38,000 for such costs for the three months ended September 30, 2023. The increase was primarily related to deferred offering costs that were written off and recognized during the three months ended September 30, 2024 related to Common Stock.
Previous wording
Depreciation and Amortization Expense: Depreciation and amortization expense decreased to $6.5 million for the three months ended June 30, 2024, compared to $20.5 million for the three months ended June 30, 2023. The decrease was primarily due to a decrease in acquired in-place lease intangible assets amortization at multifamily properties located in Oakland, California acquired during the first quarter of 2023, which were fully amortized as of December 31, 2023, partially offset by incremental increases to fixed asset depreciation expense related to the acquired properties.
Current wording
Depreciation and Amortization Expense: Depreciation and amortization expense decreased to $6.4 million for the three months ended September 30, 2024, compared to $16.1 million for the three months ended September 30, 2023. The decrease was primarily due to a decrease in acquired in-place lease intangible assets amortization at multifamily properties located in Oakland, California acquired during the first quarter of 2023, which were fully amortized as of December 31, 2023, partially offset by incremental increases to fixed asset depreciation expense related to the acquired properties.
Previous wording
Provision for Income Taxes: Provision for income taxes was $288,000 for the three months ended June 30, 2024, compared to $159,000 for the three months ended June 30, 2023. The increase is due to higher taxable income at our taxable REIT subsidiaries compared to the prior year period.
Current wording
Provision for Income Taxes: Provision for income taxes was $15,000 for the three months ended September 30, 2024, compared to $554,000 for the three months ended September 30, 2023. The decrease was due to lower taxable income at our taxable REIT subsidiaries compared to the prior year period.
Previous wording
Comparison of the Six Months Ended June 30, 2024 to the Six Months Ended June 30, 2023
Current wording
Comparison of the Nine Months Ended September 30, 2024 to the Nine Months Ended September 30, 2023
Previous wording
Net loss was $4.8 million for thesix months ended June 30, 2024 compared to a net loss of $25.9 million for thesix months ended June 30, 2023, a decrease of $21.2 million. Thedecrease in net loss was primarily due to adecrease in depreciation and amortization expense of $17.0 million, a$2.5 million decrease in transaction-related costs, andan increase of $4.9 million in segment net operating income (discussed in more detail in the following Summary Segment Results). These were partially offset by a$3.0 million increase in interest expense not allocated to our operating segments.
Current wording
Net loss was $15.3 million for thenine months ended September 30, 2024 compared to a net loss of $42.6 million for thenine months ended September 30, 2023, a decrease of $27.3 million. Thedecrease in net loss was primarily due to adecrease in depreciation and amortization expense of $26.7 million, a$2.0 million decrease in transaction-related costs, andan increase of $1.3 million in segment net operating income (discussed in more detail in the following Summary Segment Results). These were partially offset by a$3.3 million increase in interest expense not allocated to our operating segments.
Previous wording
(1)During the six months ended June 30, 2024 and 2023, we recognized $1.4 million and $688,000, respectively, of redeemable preferred stock redemptions. Such amounts are included in, and have the effect of increasing net loss attributable to common stockholders and FFO attributable to common stockholders because redeemable preferred stock redemptions are not an adjustment prescribed by NAREIT.
Current wording
(1)During the nine months ended September 30, 2024 and 2023, we recognized $17.5 million and $1.0 million, respectively, of redeemable preferred stock redemptions. Such amounts are included in, and have the effect of increasing net loss attributable to common stockholders and FFO attributable to common stockholders because redeemable preferred stock redemptions are not an adjustment prescribed by NAREIT.
Previous wording
FFO attributable to common stockholders, which is a non-GAAP measure, was $(9.2) million for the six months ended June 30, 2024, a decrease of $180,000 compared to $(9.0) million for the six months ended June 30, 2023. The decrease in FFO was primarily due toa$3.0 million increase in interest expense not allocated to our operating segments and a $4.1 million and $685,000 increase in redeemable preferred stock dividends and redemptions, respectively. These were partially offset byan increase of $4.9 million in segment net operating income (discussed in more detail in the following Summary Segment Results) as well as a$2.5 million decrease in transaction-related costs.
Current wording
FFO attributable to common stockholders, which is a non-GAAP measure, was $(37.6) million for the nine months ended September 30, 2024, a decrease of$21.1 million compared to $(16.5) million for the nine months ended September 30, 2023. The decrease in FFO was primarily due toa$16.4 million increase in redeemable preferred stock redemptions and an increase of $5.3 million in redeemable preferred stock dividends as well as a$3.3 million increase in interest expense not allocated to our operating segments. These were partially offset byan increase of $1.3 million in segment net operating income (discussed in more detail in the following Summary Segment Results) and a$2.0 million decrease in transaction-related costs.
Previous wording
During the six months ended June 30, 2024 and June 30, 2023, we operated in four segments: office, hotel and multifamily properties and lending. Set forth and described below are summary segment results for our operating segments (dollar amounts in thousands).
Current wording
During the nine months ended September 30, 2024 and September 30, 2023, we operated in four segments: office, hotel and multifamily properties and lending. Set forth and described below are summary segment results for our operating segments (dollar amounts in thousands).
Previous wording
Office Revenue: Office revenue includes rental revenue, expense reimbursements and lease termination income from office properties. Office revenue increased to $28.7 million for the six months ended June 30, 2024, compared to $27.5 million for the six months ended June 30, 2023. The increase was primarily due to higher rental revenues at an office property in Beverly Hills, California due to increased occupancy.
Current wording
Office Revenue: Office revenue includes rental revenue, expense reimbursements and lease termination income from office properties. Office revenue increased to $42.5 million for the nine months ended September 30, 2024, compared to $41.5 million for the nine months ended September 30, 2023. The increase was primarily due to higher rental revenue at our office property in Beverly Hills, California as a result of increased occupancy.
Previous wording
Multifamily Revenue: Multifamily revenue was $10.2 million for the six months ended June 30, 2024, compared to $5.3 million for the six months ended June 30, 2023. The increase was primarily attributable to the six months ended June 30, 2024 benefiting from two full quarters of income from properties acquired during the three months ended March 31, 2023.
Current wording
Multifamily Revenue: Multifamily revenue was $15.0 million for the nine months ended September 30, 2024, compared to $8.6 million for the nine months ended September 30, 2023. The increase was attributable to higher occupancy and increased monthly rent per occupied unit, net of rent concessions, as well as the nine months ended September 30, 2024 benefiting from three full quarters of income from properties acquired during the three months ended March 31, 2023.
Previous wording
Lending Revenue: Lending revenue represents revenue from our lending subsidiaries, including interest income on loans and other loan related fee income. Lending revenue was $5.2 million for the six months ended June 30, 2024, compared to $5.7 million for the six months ended June 30, 2023. The decrease was 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 during the six months ended June 30, 2024 compared to the six months ended June 30, 2023.
Current wording
Lending Revenue: Lending revenue represents revenue from our lending subsidiaries, including interest income on loans and other loan related fee income. Lending revenue was $7.9 million for the nine months ended September 30, 2024, compared to $8.2 million for the nine months ended September 30, 2023. The decrease was 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 during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.
Previous wording
Income (loss) From Unconsolidated Office Entities: The income from our Unconsolidated Joint Ventures included in office segment net operating income increased to $1.2 million for the three months ended June 30, 2024, compared to a loss of $710,000 for the three months ended June 30, 2023. The increase was primarily due to an unrealized gain on the value of real estate at one of the unconsolidated office entities recognized during the three months ended June 30, 2024.
Current wording
Income From Unconsolidated Office Entities: The income from our Unconsolidated Joint Ventures included in office segment net operating income decreased to $487,000 for the nine months ended September 30, 2024, compared to income of $837,000 for the nine months ended September 30, 2023. The decrease was primarily due to a decrease in unrealized gain recognized on the value of real estate at one of the unconsolidated office entities recognized during the nine months ended September 30, 2024.
Previous wording
(Loss) income From Unconsolidated Multifamily Entity: The loss from our Unconsolidated Joint Venture included in the multifamily segment net operating loss was $524,000 for the six months ended June 30, 2024, compared to income of $638,000 for the six months ended June 30, 2023. The decrease was primarily due to an unrealized loss on the value of real estate at the Unconsolidated Joint Venture included in our multifamily segment during the six months ended June 30, 2024.
Current wording
(Loss) Income From Unconsolidated Multifamily Entity: The loss from our Unconsolidated Joint Venture included in the multifamily segment net operating income was $929,000 for the nine months ended September 30, 2024, compared to income of $216,000 for the nine months ended September 30, 2023. The decrease was primarily due to an unrealized loss recognized on the value of real estate at the Unconsolidated Joint Venture included in our multifamily segment during the nine months ended September 30, 2024.
Previous wording
Interest and Other Income: Interest and other income, which has not been allocated to our operating segments, increased to $170,000 for the three months ended June 30, 2024, compared to $76,000 for the three months ended June 30, 2023. The increase was primarily related to interest earned on money market accounts during the three months ended June 30, 2024.
Current wording
Interest and Other Income: Interest and other income, which has not been allocated to our operating segments, increased to $472,000 for the nine months ended September 30, 2024, compared to $296,000 for the nine months ended September 30, 2023. The increase was primarily related to interest earned on money market accounts during the nine months ended September 30, 2024.
Previous wording
Hotel Expenses: Hotel expenses increased by 4.9% to $15.6 million for the six months ended June 30, 2024, compared to $14.9 million for the six months ended June 30, 2023. The increase was primarily due to increased wage expenses during the six months ended June 30, 2024.
Current wording
Hotel Expenses: Hotel expenses increased by 4.1% to $21.8 million for the nine months ended September 30, 2024, compared to $20.9 million for the nine months ended September 30, 2023. The increase was primarily due to increases in room expenses as well as higher utilities, maintenance, and administrative expenses during the nine months ended September 30, 2024.
Showing the first 40 of 64 pairs. Open the source sections for the rest.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
Office Revenue: Office revenue includes rental revenue, expense reimbursements and lease termination income from office properties. Office revenue decreased to $13.8 million for the three months ended September 30, 2024, compared to $14.0 million for the three months ended September 30, 2023. The decrease was primarily due to lower occupancy at an office property in Oakland, California, partially offset by higher rental revenues at an office property in Los Angeles, California due to increased occupancy and at an office property in Beverly Hills, California due to higher rent per occupied square foot.
Current report — wording carried from elsewhere
Office Expenses: Office expenses increased to $20.8 million for the nine months ended September 30, 2024, compared to $19.4 million for the nine months ended September 30, 2023. The increase was primarily due to higher operating expenses at our office property in Oakland, California from increased utilities and repairs and maintenance expense.
Current report — wording carried from elsewhere
2024 compared to the nine months ended September 30, 2023 and an increase in the SOFR components of interest rates on our variable-rate debt for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023.
Current report — wording carried from elsewhere
Provision for Income Taxes: Provision for income taxes was $573,000 for the nine months ended September 30, 2024, compared with $969,000 for the nine months ended September 30, 2023. The decrease was due to lower taxable income at our taxable REIT subsidiaries compared to the prior year period.
Current report — wording carried from elsewhere
7(a) loans receivable as assets on our consolidated balance sheet and the SBA 7(a) loan-backed notes as debt on our consolidated balance sheet.
Current report — wording carried from elsewhere
As of September 30, 2024, we had issued 12,040,878 shares of Series A1 Preferred Stock, 8,251,657 shares of Series A Preferred Stock and 56,857 shares of Series D Preferred Stock and received aggregate net proceeds of $459.1 million after commissions, fees and allocated costs.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Office Revenue: Office revenue includes rental revenue, expense reimbursements and lease termination income from office properties. Office revenue was $14.1 million for the three months ended June 30, 2024, consistent with $14.0 million for the three months ended June 30, 2023.
Previous report — wording carried elsewhere
On a short-term basis, our principal demands for funds will be for the acquisition of assets, development or repositioning of properties (as further described below) (including pre-construction costs such as obtaining entitlements and permits and architectural work), or re-leasing of space in existing properties, capital expenditures, paying interest and principal on current and any future debt financings, SBA 7(a) loan originations, paying distributions on our Preferred Stock and Common Stock and making redemption payments on our Preferred Stock. We may finance our future activities through one or more of the following methods: (i) offerings of shares of our common stock, par value $0.001 per share (“Common Stock”), preferred stock or other equity and/or debt securities of the Company; (ii) issuances of interests in our operating partnership in exchange