Creative Media & Community Trust (CMCT -12.46%) reported fiscal Q2 2025 results on Aug. 12, 2025, highlighting a core funds from operations (FFO) loss of $7.2 million and a year-over-year increase of over 55% in leasing activity through July 2025. The call detailed progress on debt refinancing, multifamily development, and ongoing hotel renovations, while also disclosing a decline in net operating income (NOI) to $9.8 million from $11.8 million in the prior quarter and continued strategic asset sale evaluations. (Fiscal Q2 2025 ended June 30, 2025.)

Leasing surge accelerates revenue recovery for CMCT

The office segment reported approximately 140,000 square feet of new leases through July, heavily concentrated in Los Angeles and Austin, resulting in total office occupancy of 70% at the end of the quarter (rising to approximately 80% when excluding Oakland). This expansion follows 176,000 square feet leased in 2024 and a major, nearly 11-year commitment from Boston Scientific for Penfield Creative.

"In 2025, we executed approximately 140,000 square feet of lease through July. This represents an over 55% increase from the prior year period. This activity is primarily driven from our Los Angeles and Austin properties."
— David Thompson, Chief Executive Officer

This sharp leasing momentum suggests increased activity and optimism in the market.

CMCT strengthens balance sheet with debt restructuring

Since September 2024, the company has secured financing on seven assets and extended debt maturities on two Bay Area multifamily properties to 2026 and 2027, respectively. These efforts enabled the full retirement of a $109 million recourse credit facility, which carried a balance of approximately $109 million at the end of 2024, and the establishment of a $20 million revolving credit facility dedicated to loan origination in June 2025.

"Since then, we have successfully secured property level financing on seven of our assets. The proceeds from these financings have allowed us to fully repay and retire our recourse credit facility, which carried a balance of approximately $109 million at the end of 2024. In addition, the financings have supported key growth initiatives, including lease-up efforts at our Beverly Hills, Culver City, Brentwood, and Austin properties and renovations at our hotel property in Sacramento."
— David Thompson, Chief Executive Officer

By eliminating near-term recourse debt and realigning maturities, the company reduces financial risk and unlocks capital to fund redevelopment and asset repositioning initiatives.

NOI compression underscores multifamily and office headwinds

Segment net operating income (NOI) declined to $9.8 million in fiscal Q2 2025 from $16.2 million in fiscal Q2 2024, with multifamily performance particularly impacted by unrealized losses, lower rents, and occupancy declines in Oakland. The company's lending division also reported a net operating loss (non-GAAP net operating income) of $47,000 due to loan payoffs and lower interest income.

"Our multifamily segment NOI was $189,000 during Q2 2025 compared to income of $2.3 million from the prior year comparable period. The decrease was driven by an unrealized loss on investment in real estate in one of our unconsolidated joint ventures during 2025 as well as a decrease in revenues at our multifamily properties in Oakland, California as a result of a decline in occupancy and monthly rent per occupied unit net of rent concessions compared to the prior year comparable period."
— Barry Berlin, Chief Financial Officer

The magnitude of NOI deterioration signals elevated execution risk and highlights the importance of successful lease-ups, rent increases, and cost controls in the rebalancing of the property portfolio.

Looking Ahead

Management expects net operating income growth in 2026 driven by stronger office leasing, completion of hotel renovations, and higher multifamily occupancy and rents, with additional upside if interest rates decline. The 1915 Park multifamily project in Los Angeles is set for delivery and lease-up in fiscal Q3 2025, while asset sales remain under review with no immediate announcements. No formal full-year quantitative FFO or NOI guidance was provided in the call.