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DATE

Friday, Nov. 14, 2025 at 12 p.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — David A. Thompson
  • Chief Financial Officer — Barry Neil Berlin
  • Executive Vice President — Steve Altebrando

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RISKS

  • Core FFO was negative $10.5 million, reflecting continued financial pressure and ongoing challenges in operating results.
  • Hotel segment NOI dropped significantly to $850,000 from $4.2 million sequentially, driven by renovation disruptions and seasonally lower demand.
  • Increased interest expense of $782,000 added to bottom-line losses due to higher aggregate debt outstanding.
  • Multifamily properties in Oakland experienced declines in occupancy and monthly rent per occupied unit net of concessions, partially offsetting NOI gains.

TAKEAWAYS

  • Lending Business Divestiture -- Entered into a definitive agreement to sell the lending business for an estimated approximately $44 million purchase price, yielding about $31 million in net proceeds after debt repayment and expenses, subject to SBA and closing approvals.
  • Recourse Debt Reduction -- Fully retired the $169 million recourse credit facility earlier in the year, significantly reducing recourse debt exposure.
  • Core FFO -- Reported negative $10.5 million for the quarter, compared to negative $11.5 million in the prior year period; sequential quarter not directly presented.
  • Net Operating Income (NOI) -- Total NOI was $7 million, a decline from $9.8 million in the prior quarter; office segment NOI decreased by approximately $500,000 sequentially, while multifamily NOI rose by about $600,000 and lending segment NOI rose by $360,000 due to lower reserves in the prior quarter.
  • Office Leasing Activity -- Executed 159,000 square feet of leases in the first nine months of 2025, a 69% increase from the same period last year.
  • Office Portfolio Occupancy -- 73.6% total leased at period-end; excluding the Oakland office property, occupancy reached 86.6%, up from 81.7% at 2024 year-end.
  • Multifamily Lease-Up -- Occupancy at 701 South Hudson rose to 81% from 68% sequentially; a fifth multifamily project, 1915 Park, is set to deliver 36 units this month.
  • Hotel Asset Renovation -- Nearing completion of an $11 million renovation at Sheraton Grand Sacramento, funded via $8 million key money from the Marriott agreement extension, internal cash flow, and additional mortgage funding.
  • Executive Transition -- CFO Barry Neil Berlin will exit following the lending business sale, with Brandon Hill assuming the CFO role post-closing.
  • SF Multifamily Market Dynamics -- San Francisco multifamily assets showing the lowest area vacancy since 2011 and third-quarter rent growth of 5.2%, the highest since 2015.
  • SBA Approval Risk -- Lending business sale is contingent on Small Business Administration approval and closing conditions.

SUMMARY

Creative Media & Community Trust Corporation (CMCT +36.43%) announced a definitive agreement to divest its lending business, which is expected to generate approximately $31 million in net proceeds, supporting liquidity initiatives. Management outlined meaningful recourse debt reduction, highlighted by the complete payoff of a $169 million facility earlier in the year, as well as continued focus on growing its multifamily portfolio with improving lease-up and new deliveries. Executed office leasing activity rose sharply, with a reported 69% increase in new leases signed year-over-year and a positive trend in occupancy rates, particularly outside of the Oakland office asset. The company nears completion of its hotel asset renovation program, utilizing key contributions from an extended Marriott agreement, with expectations for future cash flow improvements upon completion and normalization. A CFO transition was confirmed as Barry Neil Berlin prepares to depart in conjunction with the lending business transaction, and Brandon Hill is set to step into the role upon closing. No questions were raised by analysts or participants at the conclusion of the prepared remarks.

  • CFO Berlin stated, "Our FFO was negative $11.1 million, negative $14.75 per diluted share, compared to negative $28.4 million in the prior year comparable period," attributing the improvement mainly to lower redeemable preferred stock redemption expense and dividend reductions.
  • NOI decreases were attributed to specific segment drivers, with declines in NOI from office and hotel properties, partially offset by tax savings in multifamily and lower additions to credit loss reserves in lending.
  • Management underscored the expectation of a more favorable interest rate environment and increasing office leasing momentum to potentially benefit performance in 2026.
  • Office lease pipeline activity accelerated, while area-specific drivers in San Francisco and Oakland were noted as performance catalysts amid limited new construction in the Bay Area multifamily market.

INDUSTRY GLOSSARY

  • Key Money: An upfront payment provided by a hotel operator (e.g., Marriott) as an incentive to property owners, often in exchange for extending a management contract or funding capital improvements.
  • SBA 7(a) Loans: U.S. Small Business Administration-backed loans commonly used for acquiring, refinancing, or improving business properties, cited here regarding limited service hotels.

Full Conference Call Transcript

David A. 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 and 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 seven loans for limited service hotels and it was considered a non-core asset for the company. As of September 30, 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 up on Penfield, our creative office asset in Austin. After closing this financing earlier this year, we signed 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.

We completed renovations at our hotel asset and new loan originations in our lending business 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. Multifamily NOI increased by approximately $600,000 from the prior quarter. Improvement was primarily due to a lower appraisal at one of our JVs that impacted Q3 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 to 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 Neil 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 Creative Media & Community Trust Corporation for years, and we expect a seamless transition. Steve?

Steve Altebrando: Thanks, David. We remain focused on improving property-level performance across all segments and growing our premier newer vintage multifamily portfolio. This continues to be a key growth area for us. Including our joint ventures, we now have four operating assets: 1150 Clay and Channel House in the Bay Area, and 701 South Hudson and 1902 Park Avenue in Los Angeles. We are making steady progress on the lease-up of 701 South Hudson, the residential portion of our partial office-to-residential conversion completed late last year. Multifamily occupancy at the property was approximately 81% at the end of the third quarter, up from 68% at the end of the second quarter.

As a reminder, the top two floors of the building were converted into 68 high-end residential units, while the Ground Floor creative office component known as 4,750 remains 100% leased. As mentioned on our prior calls, we believe there's an opportunity to develop additional units on the back surface lot of the property given recent zoning changes, and we continue to make progress on those plans. Our fifth project, 1915 Park in Los Angeles, will deliver this month. This 36-unit ground-up multifamily development is a joint venture with an international pension fund and is located adjacent to our office building at 1910 West Sunset in Echo Park, a highly desirable walkable submarket with attractive dining and entertainment options.

In Oakland, we saw a modest improvement in total occupancy during the quarter. We believe our properties will benefit from limited new construction in the Oakland residential market, as well as the ongoing recovery across the broader Bay Area. In San Francisco, multifamily properties continue to improve with area vacancy at its lowest level since 2011. The third-quarter rent growth of 5.2% in San Francisco is the strongest year-over-year growth rate since 2015. In addition, in January 2026, Samuel Merritt is opening its new campus, which is located just steps from our class A multifamily asset at 1150 Clay. The new campus is expected to draw 2,000 students and 500 faculty members.

We see meaningful opportunities to grow our multifamily net operating income through a combination of rising rents, increasing occupancy, lowering operating costs, and the delivery of our fifth asset this month. Turning to the office segment. Earlier this year, we noted that our leasing pipeline was very active, and that translated into very strong leasing activity. Through the first nine months of 2025, we executed 159,000 square feet of leases, a 69% increase compared to the same period last year. This follows 176,000 square feet of leasing activity in 2024. At the end of the third quarter, our office portfolio was 73.6% leased.

Excluding our one Oakland office property, our lease percentage was 86.6%, which was up from 81.7% at the end of 2024. Importantly, we believe the headwinds from COVID are largely behind us, and we're now beginning to see the benefits of return-to-office trends, which are creating tailwinds for our portfolio. Turning to our hotel, we believe we're entering 2026 from a position of strength following a couple of years of renovation-related disruption. We're nearing completion of our $11 million renovation of the public space at the Sheraton Grand Sacramento. This project includes upgrades to the ballroom, banquet space, public space, and food and beverage areas.

The renovation was funded through a combination of $8 million of key money received as part of the extension of our management agreement with Marriott, cash flow from the property, and future funding on the mortgage. As a reminder, we also renovated all 505 guest rooms last year. With that, I'll turn the call over to Barry, who will provide an update on our financial results. Thank you, Steve. Good morning.

Barry Neil Berlin: I'm going to spend a few minutes going over the comparative year-over-year financial highlights for 2025 versus 2024, starting with our segment NOI, which was $7 million in 2025 compared to $7.6 million in the prior year comparable period. Broken down by segment, the decrease of approximately $600,000 was driven by decreases of $400,000 for our office properties, $174,000 from our lending business, and $123,000 from our hotel property. Partially offset by an increase of $284,000 from our multifamily properties. Our office segment NOI for Q3 2025 was $5 million versus $5.4 million during Q3 2024.

The decrease was primarily driven by a decrease in NOI at an office property in Los Angeles, California, and at an office property in San Francisco, California, attributable to lower rental revenues resulting from a decline in occupancy, as well as NOI at an office property in Austin, Texas, as a result of higher real estate taxes. Our lending division NOI was $314,000 compared to $688,000 in the prior year comparable period, primarily due to a decrease in interest income as a result of loan payoffs and lower interest rates, partially offset by a decrease in interest expense resulting from net loan paydowns and a decrease in additions to current expected credit losses.

Our hotel segment NOI for Q3 2025 was $850,000 compared to $1 million in the prior year comparable period. The decrease was driven by a decrease in food and beverage sale revenues, partially offset by an increase in room revenue. Operations at our hotel property were negatively impacted by our lobby renovation project during Q3 2025, and our room renovation project during Q3 2024. Our multifamily segment NOI was $792,000 during Q3 2025 compared to $508,000 from the prior year comparable period. The increase was primarily driven by reductions in real estate taxes at our multifamily properties in Oakland, California, during 2025.

Partially offset by a decrease in revenues at our multifamily properties in Oakland, California, as a result of declines in occupancy and monthly rent per occupied unit net of rent concessions compared to the prior year comparable period. Below the segment NOI line, we had an increase in depreciation and amortization expense of $922,000 due to incremental increases to the depreciable asset base at our hotel property following our renovation projects, as well as an increase in interest expense of $782,000 driven by higher aggregate debt outstanding. Our FFO was negative $11.1 million, negative $14.75 per diluted share, compared to negative $28.4 million in the prior year comparable period.

The positive results in our FFO were primarily driven by decreases in redeemable preferred stock redemption expense of $16.1 million and through a reduction in redeemable preferred stock dividends of $2.7 million. Partially offset by the previously discussed decrease in total segment NOI and the increase in interest expense. Our core FFO was negative $10.5 million or negative $13.96 per diluted share compared to negative $11.5 million in the prior year comparable period. This increase in core FFO is attributable to the previously discussed reductions in redeemable preferred stock dividend offset by the decrease in segment NOI and higher interest expense. Core FFO calculations reconciliation items to determine FFO, that relate to preferred stock redemptions, transaction-related costs, and deemed dividends.

I would like to conclude by thanking David A. Thompson for his guidance over my roles with Creative Media & Community Trust Corporation since becoming public in 2014. More importantly, as my mentor for my roles in CIM, since then. Thank you, David. And while I am very excited to be following the lending division over to its new home, and I'm looking forward to helping its ownership grow and expand its horizons in the lending arena. I will truly miss the interaction with the ownership and executive management team at CIM that has supported me in my roles with the firm.

And lastly, to the amazing teams that I've had the pleasure to work with and that have made my job easier. That includes Brandon Hill, who was on the call today, who has guided the financial oversight for Creative Media & Community Trust Corporation since before I took the CFO position and who has patiently awaited his opportunity to take on the job of CFO. He is well suited to take on the role, and I congratulate him on being provided this opportunity. With that, we could open the line for questions.

Operator: We will now begin the question and answer session. To join the queue, please press star and then two. It appears there are no questions. I would like to conclude the conference. Thank you for attending today's presentation. You may now disconnect.